Changes to Compensate’s project portfolio – international standards were not enough

Tuesday, March 24, 2020

The writer Niklas Kaskeala is Compensate’s Head of Sustainability.

Compensate aims for a large project portfolio, which enables us to channel all compensation payments to the most cost effective, reliable and sustainable means of carbon capture. Our independent Scientific Advisory Panel assists us in this work. The panel monitors research and practical applications in the field and assesses the carbon capture potential of the proposed projects, guiding Compensate project mapping.

New criteria for projects

The Panel sprung into action in early 2020, when we collaborated to build a new criteria for selecting the carbon capture projects Compensate uses. We want to make sure that all projects from which Compensate buys emission reduction units have a positive impact on the climate, but also on biodiversity, human rights, and for local communities. The new criteria helps us identify these projects. You can check the new criteria here (PDF).

We evaluated roughly 20 carbon capture projects, which were all certified by either the VCS or the Gold Standard. Both are internationally renowned standards, widely accepted as the best, most reliable in the field. However, out of the 20 projects, only 2 passed the criteria set forth by Compensate’s panel, scoring enough points to be recommended for Compensate to use.

A big problem we faced in the evaluation was lacking documentation. It was simply impossible for us to evaluate many of the projects because crucial documents are either nowhere to be found or grossly outdated. For this reason, the Vichada project in Columbia will be removed from our portfolio for the time being. Vichada’s certification documents were being updated while we were conducting the evaluation. If and when all necessary documents become available, we will re-evaluate the use of Vichada.

Another important reason for disqualifying projects has to do with problems with human rights and the wellbeing of local communities. Many of the evaluated projects have led to situations in which local people have been forced out of their lands and homes. In addition, some projects have not adequately ensured that its activities actually benefit the local communities.

Some concerns were also raised about the climate integrity of certain projects. Even when Compensate’s built-in overcompensation model is taken into account, the panel sees that some projects cannot believably address questions regarding carbon leakage and additionality risks.

Two projects move forward: Kariba and Cardamom

In the end, two projects scored high enough on the criteria for the panel to recommend them to Compensate. These projects are the Kariba REDD+ in Zimbabwe, which has been in Compensate’s project portfolio since April 2019, and the Southern Cardamom REDD+ in Cambodia. Both are forest protection projects. However, the panel’s decision was not unanimous.

In its decision, the Panel emphasized that, while both projects scored high enough to be recommended, they are not completely risk-free. The biggest risks identified are:

  • Corruption and conflicts in the project countries

  • Possible problems in the baseline (how the area would develop without the project)

  • Missing, critical information in the project documentation, which, however, can be found in other sources

  • Compatibility with the Paris Agreement’s article 6

  • Unrealistic expectations of the permanence of the project.

The Panel recommended that Compensate take these risks into account by scaling overcompensation in relation to the estimated climate risks. From now on, Compensate will scale the overcompensation factor per project using the evaluation scoring. The overcompensation factor will now rise from the earlier fivefold to a bit over sixfold.

Next, Compensate and the Panel will begin to develop a tool to better understand risks regarding the baseline.

The Panel’s recommendation of the Kariba and Cardamom projects is valid until the end of 2020. The Panel requires Compensate to re-evaluate projects at the end of the year based on the criteria and to investigate the possibility of conducting an independent evaluation of both projects.

Our work to ensure sustainability continues

This process has proven that our collaboration with scientists, a strict evaluation criteria and high overcompensation are more than necessary to ensure both climate integrity and real positive impact. The process has also demonstrated just how difficult it is to find projects that match this high level of demand for quality.

Compensate will continue to evaluate new projects together with the Scientific Advisory Panel. Our goal is to expand and to diversify our project portfolio. Next, we will also look for projects beyond land use and forestation.

It’s evident that carbon capture projects aren’t yet free of problematic issues. But to truly mitigate the climate crisis, carbon capture is something we definitely need in our toolbox. Our job and responsibility at Compensate is to ensure that all means of carbon capture are done as sustainably as possible.

By creating our own criteria we’re now challenging the whole field and its current standard. We’re not done nor anywhere near finished. We will continue to raise the bar.

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