Forest communities’ battle for carbon market share

As the world grapples to combat climate change, scientists agree that protecting what remains of the Earth’s vast rainforests is a key priority. When forests are lost, less carbon can be absorbed from the atmosphere. And when trees are burned to clear land for agriculture, the release of vast quantities of CO2 further accelerates global heating.
The importance of forests in “offsetting” greenhouse gas emissions has long been recognised. Many forest landowners, including a growing number of national governments, offer carbon credits in returning for conserving forests and avoiding emissions.
Achieving “buy-in” from forest communities – who, in some cases, have been part of the forest ecosystem for thousands of years – is widely regarded as a decisive factor in the success of these forest carbon projects. Efforts to keep trees standing are unlikely to succeed if forest dwellers are left impoverished and under financial pressure to harvest trees and clear their land.
Over the past decade, various mechanisms to reward forest communities for their role in conservation have come into being. Yet the track record of the voluntary carbon market in delivering benefits to communities looks decidedly mixed. With time running out to save the world’s vulnerable rainforests, ensuring the forest custodians benefit from carbon projects is more urgent than ever.
It is still surprisingly easy for investors and governments to agree massive land deals for forest carbon projects without even consulting forest communities.
Blue Carbon LLC, a UAE-based company founded in October 2022, has quickly become notorious, opens new tab for seeking concessions that resemble colonial-era land deals. The firm signed a memorandum of understanding with the Liberian government last year for a concession covering around 10% of the country’s area. It plans to use the land to generate carbon credits through restoring and preserving forests.
But almost 30 NGOs penned a statement claiming that the agreement could threaten the livelihoods of one million people and extinguish community land ownership across large parts of Liberia. Blue Carbon has not responded to the criticisms in detail, but says it is committed to “engaging local communities” in Liberia.
The firm is not putting all its carbon eggs in one basket: it has also agreed MoUs with multiple other countries in Africa and elsewhere. Its conservation agreement with Zimbabwe, signed last September, covers 7.5 million hectares, around one-fifth of the country.
Mark Moroge, vice president for natural climate solutions at the Environmental Defense Fund, told The Ethical Corporation that “the devil is always in the details” with forest carbon agreements. The lack of clarity around what Blue Carbon has agreed with countries such as Liberia means it is impossible to be confident about the quality of its proposed projects, he says. And a lack of engagement with local civil society groups will be “important to remedy” if Blue Carbon’s projects are to have a positive impact.
“One thing that we can reasonably assume is that if folks aren’t sufficiently engaged in free, prior and informed consent processes, if they don’t feel as though they have a voice or vote in these processes, you’re not going to get social buy-in,” says Moroge. Unless forest communities continue to act as “champions for ongoing forest conservation”, forest carbon projects will not succeed, he warns.
Yet there are signs that progress is being made in delivering financial benefits to countries that reduce deforestation, and in distributing these benefits to forest communities.
The World Bank-led Forest Carbon Partnership Facility (FCPF) has now made payments to multiple countries for their efforts to reduce deforestation and enhance forest protection – often known as REDD+.
Ghana received its first payment from the FCPF in January 2023, around 15 years after it began a dialogue with international stakeholders. Speaking at a media briefing in March, Roselyn Fosuah Adjei, director of climate change at Ghana’s Forestry Commission, said that 69% of the funds that Ghana receives from the FCPF are earmarked for communities.
The ability to provide these tangible benefits on the ground is “introducing confidence into the whole carbon market”, Fosuah Adjei said. “Now we have communities receiving carbon payments that (are) tangible in their hands, in their accounts – and we have governance arrangements in place that are empowering them to utilise these funds themselves.”
Moroge agrees that Ghana is a success story showing how “transformative impacts” can come out of forest carbon projects. “I believe more good is happening than is being reported right now,” he says, adding that progress in countries like Ghana, “reinforces my belief and my view that forest carbon markets can, and are in places, working very well”.
As well as receiving funding through the FCPF, last December Ghana and Costa Rica became the first countries to agree to sell carbon credits under a jurisdictional REDD+ programme to the LEAF coalition, opens new tab. The coalition includes multinational corporations and governments that provide “results-based payments” to countries that reduce deforestation.
Like Ghana, Costa Rica is seeking to direct revenues from forest carbon projects to communities. Tatiana Martinez, a leader of the indigenous Bribri people, told The Ethical Corporation that two communities began receiving payments last year and have used the funding to support entrepreneurs and invest in infrastructure such as school facilities.
There is clearly far more work to do in scaling such approaches. Martinez points out that it took more than 10 years of dialogue and negotiation before communities in Costa Rica started receiving payments. And she adds that the first REDD+ projects in Costa Rica followed a “Western” process, especially in their early stages. The government needs to take the right cultural approach in how it engages with forest communities, she emphasises, in order to make sure they fully understand the processes.
Improving the mechanisms for negotiating benefit-sharing agreements will help forest communities receive their fair share of the carbon revenue pot. But a bigger issue remains: what if the pot itself is not as large as hoped for?
High-profile scandals around poorly designed offsetting schemes have shaken confidence in the voluntary carbon market. And many of the schemes that have received the most intense scrutiny are REDD+ projects intended to avoid emissions.
Prices for carbon avoidance credits are usually much lower than credits for carbon removal projects, such as for direct air capture, which take carbon from atmosphere. Read more, opens new tab.
Partly, this reflects difficulty in proving that carbon avoidance projects do what they say on the tin; many of the REDD+ projects labelled “worthless” in media reports purport to protect forests that do not appear to truly be in immediate danger.
A basket of 10 forest carbon projects on Singapore-based Climate Impact X’s Nature X contract are currently trading at about $1.50, having launched last July at $5. (By contrast, CIX this week launched its first carbon removals contract, a basket of 12 Afforestation, Reforestation and Revegetation projects, with an opening price of $13.10.)
Last month, Mikkel Larsen, CIX’s chief executive, unexpectedly announced plans to depart, opens new tab, saying he wanted to focus on his family.
He had previously said, in a LinkedIn post to mark International Forests Day, that the prices for forest carbon credits “barely cover the marginal cost, much less properly renumerate local communities”, and penalised governments in emerging countries that have successfully preserved their forests.
In response to the crisis of confidence in the voluntary carbon market, various organisations are redoubling their efforts to ensure that “high-integrity” projects can be reliably verified. The LEAF coalition, for example, will only purchase carbon credits that comply with the REDD+ Environmental Excellence Standard, opens new tab, known as TREES, implemented by the Architecture for REDD+ Transactions (ART). It guarantees a base price of at least $10 a tonne, which will be paid by the corporates who buy the credits.
“A true cause for optimism,” says Moroge, is that initiatives such as ART TREES mean it is now much easier to distinguish high-integrity forest carbon projects from “those that aren’t going to be passing muster”.
This week the Integrity Council for the Voluntary Carbon Market named the first carbon-crediting programmes assessed as meeting the high-integrity criteria set out in its Core Carbon Principles (CCPs).
ACR (formerly American Carbon Registry), Climate Action Reserve (CAR) and Gold Standard have been approved as CCP-eligible programmes by the Integrity Council’s governing board. However ICVCM was reported as saying it needed more time to assess the eligibility of Verra, which accounts for about 70% of the market.
Meanwhile, advocates of forest carbon projects are redoubling their efforts to convince credit purchasers that favouring removals over avoidance is an illogical approach. Ghana’s Roselyn Fosuah Adjei cites a leaky bathtub analogy – noting that it would be an “exercise in futility” to simply remove water from a leaky tub, rather than fixing the leak.
It must also be recognised that tropical forests are more than simply carbon sinks. They support the planet’s richest biodiversity and provide livelihoods for as many as 1.6 billion people. The importance of their conservation cannot be measured solely through the simplistic lens of carbon profit and loss.

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