California releases updated Tropical Forest Standard: Here are the highlights and why CARB should endorse it

The California Air Resources Board (CARB) this week released an updated version of the proposed Tropical Forest Standard (TFS) for consideration at its September 19 Board meeting. CARB made some important changes to the TFS in response to feedback from members of the California Assembly, indigenous leaders, environmental groups, environmental justice advocates, and subject-matter experts.

Endorsement of the TFS would value tropical forests for the extensive climate benefits they provide. It would also be a major step forward for tropical forests and the communities who live in and defend them. And these proposed changes would make the TFS even stronger in the fight against tropical deforestation.

In general, the changes CARB has made – responding to public and policymaker feedback – add detail and clarity that strengthen the accountability built into the TFS. The more specificity, the easier it is to ensure the standard is upheld and ultimately helps deliver the emission reductions from stopping tropical deforestation that the climate so desperately needs.

Here are the key changes to the proposal. (A Tropical Forest Standard refresher may be helpful before diving in.)

Greater clarity to ensure that emission reductions are additional.

It is important to ensure that credits are going to reductions that would not have happened on their own; only additional reductions merit credit. The revised TFS clarifies that the crediting baseline (the level of emission reductions where crediting could begin) below a jurisdictions’ emissions reference level (their historic level of emissions) is intended to ensure that only new reductions receive credit – not those that the jurisdiction is undertaking anyway. Thus, jurisdictions must demonstrate that they have contributed their “own effort” to reducing emissions before being eligible to receive credits.
Important new detail on requirements for independent third-party verification.

The revised TFS spells out that in addition to regular reporting and verification of emission reductions, the annual reporting requirements also apply to implementation of social and environmental safeguards by an independent third party. This means the same level of rigor applied to accounting emissions for crediting also applies to ensuring environmental integrity and human and indigenous rights.
Additionally, the TFS now details the international standards independent third-party verifiers need to meet to do this work. A jurisdiction cannot just have anyone verify their emission reduction programs – it must be a body that is internationally recognized as having expertise in this field and that any potential risks to impartiality are addressed.
More stringent requirements to ensure permanence of emission reductions.

The intention of any forest carbon-crediting program is that emission reductions are permanent, but there is always some risk that part of that progress in reducing emissions is somehow undone (known as a “reversal”). To mitigate this risk, the TFS specifies that all jurisdictions must undergo a “reversal risk assessment” to determine how large of a buffer pool (the emergency savings account) of credits must be set aside as insurance against any future reversals. A minimum of 10% of credits must be saved, even in the lowest risk jurisdictions, but that could potentially be a much higher level if jurisdictions are higher-risk.
Clarification of requirements to avoid emissions leakage.

It is important that emission reductions in one jurisdiction are not simply those emissions moving somewhere else – this is emissions leakage. The TFS makes clear that any jurisdiction that wants to receive credits must have a plan in place to address the root causes of tropical deforestation. Those are often economic pressures to sell or burn tropical forests. The efforts to address these root causes must be verified regularly by an independent third party and uphold all of the social and environmental safeguards. Jurisdictions have to demonstrate how the causes of deforestation have been replaced with more sustainable economic activity.
Increased specificity on social and environmental safeguard requirements.

The TFS now spells out in attachments exactly what social and environmental safeguards are expected to be upheld, including the Guiding Principles for Collaboration and Partnership Between Subnational Governments, Indigenous Peoples, and Local Communities. These are a set of principles promulgated by indigenous leaders and adopted by the Governor’s Climate and Forest Task Force specifying how local and indigenous communities want to engage with jurisdictions. These principles must be adhered to by any jurisdiction wanting to sell credits into California’s carbon market.
Clarification that forest carbon credits fall under existing offset limits.

The TFS now makes clear that any credits potentially transacted in the future in California’s market would be subject to the existing offset limits already in California’s cap-and-trade regulation. That is, from 2021-2025 only 4% of an entity’s compliance obligation can be offset, increasing to 6% in 2026. Half of these must provide direct environmental benefits to California, but international forest carbon credits, if allowed into the program under future regulatory changes, would still fall under the 4% and 6% limit.
Taken together, these changes to the proposed Tropical Forest Standard represent increased accountability built into the standard. Greater detail, clarity, and stringency mean that potential partner jurisdictions know exactly what is expected of them, and what would and would not be accepted in California’s carbon market.

We urge the California Air Resources Board to endorse the updated Tropical Forest Standard when it meets next month.