The Rainforest Standard™ is the world’s first forest carbon credit standard to fully integrate requirements and protocols for carbon accounting, socio-cultural/socio-economic impacts, and biodiversity outcomes. In 2009, Cargill S.A. and other sponsors invested in a unique collaboration among Columbia University’s Center for Environment, Economy, and Society (CEES|CU), and five leading environmental trust funds (ETFs) from Amazon Basin countries (Brazil, Colombia, Peru, Ecuador, and Bolivia) to create an innovative forest carbon standard that would attract significant levels of private capital to support projects that would provide meaningful long-term reduction of carbon dioxide emissions from forest conversion (popularly referred to as Reduced Emissions from Deforestation and Degradation – REDD – projects). Less than three years after the initial investment, The Rainforest Standard™ was formally launched at Rio+20 in June 2012.
Although by 2009 several standards had been produced that dealt with forest carbon emission reductions, project-level REDD had not caught on in the investment communities that were trading in UNFCCC-sanctioned CERs (Certified Emission Reductions) authorized under its Clean Development Mechanism protocol or in the EU-ETS, the world’s largest cap and trade system. Forest emission reductions were seen as suspect, largely due to their temporary nature. Forests not cut down in the first (or any year) of a project could be cut down later, potentially negating any emission reductions for which the project had been credited – or for which offset purchasers were allowed to increase their emissions. In addition to this “permanence” problem, other serious problems in crediting reduced forest carbon emissions were identified. For example, coming up with a business-as-usual baseline scenario was fundamental to many standards, but valid modeling was, and still is, elusive. In some quarters, REDD began to be perceived as just another rich-nation scheme to remove wealth from resource-wealthy but capital-poor nations. And within some countries, REDD began to be seen as a way for that country’s wealthier segments to strip resources from indigenous or forest-community peoples.
The mandate for The Rainforest Standard™ was to overcome these real and/or perceived problems, and to pave the way for large-scale investment in emission reductions that were real, permanent, and involved, justifiably, no reputational risk for purchasers.
To that end, The Rainforest Standard’s first Guiding Principle was that RFS Projects generate real, additional, measurable, verifiable, registrable, transparent, and permanent reductions in CO2e emissions by reducing forest conversion, thereby enabling buyers and sellers of RFS Credits™ to contribute to climate change mitigation, forest protection, sustainable development, poverty reduction, enhancement of quality of life of forest communities, and biodiversity conservation.
The permanence of emission reductions was given a top priority. The Rainforest Standard™ principle that emission reductions must be permanent to justify credit revenues was achieved by applying both (a) a set of financial-legal mechanisms among which a project developer could choose, and (b) protocols that recognized the socio-economic/socio-cultural reality that reductions will not be permanent unless economic benefits flow fairly to all local forest users and owners, who would otherwise have no stake in their permanence.
The CEES|CU collaboration with the ETFs identified internationally-recognized experts that led teams of experienced professionals in five distinct domains that required in-depth analysis and problem-solving: Biodiversity, Economics and Finance, Legal and Regulatory, Science and Technology, and Socio-Economic/Socio-Cultural. After two years of work by these five advisory teams, their recommendations were assessed and integrated into a thorough, consistent, and coherent set of final recommendations that served as the foundation for the drafting of The Rainforest Standard™. This draft was then reviewed by eight independent reviewers, each an internationally-recognized expert in a specific field. Following revisions based on that review, The RFS was launched at Rio+20, translated into Spanish, Portuguese, and Bahasa-Indonesian and published on the CEES|CU website.
Despite the development of an integrated forest carbon emission reduction standard that is credible, practicable, marketable, and compatible with international, national, and subnational trading schemes, investment following the launch of The Rainforest Standard has not materialized. The Rainforest Standard teams identified the reason for the lack of significant investment as a general unease with forest emission reduction projects, which have not entirely satisfied concerns about baseline validity, permanence, and reputational risk.
Recognizing this potential marketability limitation, CEES|CU and the five ETFs carved out a special niche for funding reduced emissions in Protected Areas. This was especially important to the ETFs, many of which were charged with the responsibility for finding alternative funding mechanisms for those Protected Areas. The Rainforest Standard™ specifically identified Protected Area financial support as the sole exception to its Additionality requirements. While normally a legal requirement to protect forests (laws or binding contracts that prohibit or limit removals) would disqualify a project from earning credits, it is widely recognized that forests that are technically mapped as Protected Areas are vastly underfunded and are protected in name only.
This realization led to the development of The RFS Protected Area Credit™ system, whose first demonstration project has been funded by USAID-Indonesia and launched in January 2014. In Brazil, ICMBio, the agency responsible for the federal protected area system, has preliminarily designated the Tapajós-Arapiuns Extractive Reserve as the site for an RFS Protected Area Credit™ demonstration project. Several other Latin American countries are also taking the first steps toward organizing RFS Protected Area Credit™ projects.
The RFS Protected Area Credit™ system is based on a simple set of principles. First, there must be recent and frequent unauthorized removals of forest inside the park (adjacent regional removals or “drivers” are not relevant). Second, a best practices management plan (including local community participation) must be in place or developed, and a budget for that plan produced. Third, the historical protected area management spending inside the park must be ascertained. The difference between what has actually been spent and the best practices management plan budget constitutes the Best Practices Management Plan Budget Deficit. During a crediting period following the commencement of an RFS Protected Area Credit™ project, the percentage of emissions that actually occurred instead of what had historically occurred is calculated. That percentage is multiplied times the Best Practices Management Plan Budget Deficit and the resulting amount is the RFS Protected Area Credit Payment Amount.
One RFS Protected Area Credit™ is issued for each ton of CO2e estimated to have not been emitted annually during the crediting period. The calculated Payment Amount is the total for all the RFS Protected Area Credits™.
Several unique features about this system are noteworthy. All RFS Protected Area Credits™ must be retired and cannot be traded. (This reduces significantly the reputational issues associated with REDD “profiteering.”) Credit buyers must enter into long-term purchase commitments; however, their commitment is only funded if verified credits are produced, so their funding is performance-based, not an unconditional endowment or donation.
As a result of these and other features, it is anticipated that the investment in these credits will only come from entities committed to long-term reductions in CO2e, forest and biodiversity conservation, and local community quality of life (e.g., companies with substantial carbon footprints or significant impacts on forests and the communities that live in around them). These investments will recognize that, in the words of the CEES|CU motto: Environment, Economy, and Society – In It Together; one cannot thrive if the others do not thrive as well.