By Federica Bietta, Managing Director of the Coalition for Rainforest Nations

September 13, 2022, New York

Lee White, Gabon’s Minister of Water, Forests, Sea, and Environment has announced that Gabon, a nation of two million people that occupies a territory the size of Colorado, will come to market with an offering of 90 million tonnes of sovereign carbon credits achieved under the United Nations Framework Convention on Climate Change (UNFCCC) Reducing Emissions from Deforestation and Forest Degradation (REDD+) mechanism. Originated in 2005 by the Coalition for Rainforest Nations, REDD+ is a well-defined conservation initiative covering over 90% of the world’s rainforests

The news was greeted in these pages with a July article titled, “Huge Looming REDD+ Issuance from Gabon Sparks Unease in Voluntary Market,” sizing Gabon’s prospective issuance at “a fifth of all the nature-based credits that have ever been issued across the main voluntary carbon market (VCM).”

Here’s why buyers and market participants should look positively on the news. Trading carbon credits generated from the five REDD+ activities including reductions and removals, conservation, sustainable management, and enhancement of forest stocks at national scale is an absolute necessity if markets are to play an effective role in meeting the 1.5C Paris Agreement warming target. As a reminder, all IPCC pathways for limiting warming to 1.5 C involve reversing deforestation by 2030, and reversing tropical deforestation is one of the most cost-effective ways to decarbonize.

Buy to Retire

Buyers who seek to buy and retire high quality credits — be they corporations meeting a net positive goal; mission-driven high net worth funds or foundations, or nations wishing to use markets to slow, stop and reverse tropical deforestation should take note. With its track record of over 9 billion tonnes registered, UNFCCC REDD+ is an issuance machine. Gabon’s credits represent accomplished reductions, removals, conservation, sustainable management, and enhancement of forest stocks, not a promise to do so in the future. So will the roughly 800 million tonnes of post-2021 issuance in the pipeline from countries such as Papua New Guinea and others.

Government Action

Thanks to Gabon’s rainforests and some of the world’s tallest mangrove forests combined with strong government policy, the country has removed roughly 1 billion tonnes of net CO2e from the atmosphere over the past decade. Gabon’s rainforest is part of the much larger Congo Basin rainforest. This mega forest plays a crucial role in regulating the weather for the Nile Delta’s 400m-and-growing population and as a stronghold for biodiversity. As a result of its forest conservation, Gabon is now home to three-quarters of the world’s forest elephants and has seen their number grow from 60,000 to 95,000 during Gabon’s crediting reference period.

Gabon itself is considered High Forest, Low Deforestation (HFLD) with 88% forest cover, the second highest after Suriname. Its government committed to the Paris Agreement and implemented three key national policies: its Sustainable Forestry Management law (2005); the creation of 3 million hectares of national parks; and a ban on raw timber exports. All its forests are either protected areas, managed production forests, or community lands, which its Forestry Ministry manages. But, as Gabon’s Nationally Determined Contribution to the Paris Agreement emphasizes throughout, Gabon needs to access climate finance in exchange for these ecosystem services.

In its NDC Gabon pledges to continue to absorb about 100 million net tonnes of CO2 equivalent per year, but this is subject to continued access of Gabonese wood products to international markets and “access to a carbon market for its sequestrations in the form of ITMOs (Internationally Transferred Mitigation Outcomes) with a competitive carbon price and/or tailored international non-market support.”

Gabon’s Sustainable Transformation Depends on Carbon Finance

Sustainable timber is one of Gabon’s key initiatives to help combat its high unemployment rate, which runs 20% on average, and steeper still among the young. The average age of a Gabonese person today is 22.5. As an OPEC nation with dwindling supply, Gabon’s leadership wants to create sustainable jobs to capitalize on this demographic dividend. Gabon’s NDC details its planned transformation toward a more sustainable economy, including implementing a “zero flaring” plan in the oil industry, sustainable agriculture, and importantly, transforming its timber industry.

Its NDC outlines that by processing timber locally, the value-added in the national economy will be multiplied tenfold, to $10 billion per annum, while its 30,000 current jobs can grow to 300,000 by 2030. This will happen in part through supplementing timber production from natural forests through afforestation with carbon positive plantations in savanna areas.

If payments for carbon and ecosystems become a reality in the future, Gabon’s NDC states, they would make sustainable logging more financially profitable, which would further strengthen the model, “making selective harvesting more competitive with other land uses, that destroy forests, such as growing soybeans and raising cattle. They would also make it possible to subsidize the costs of managing protected areas and forest concessions. The mastered scenario is based on the conditionality that these payments see the light of day.”

Rigorous Measurement, Results & Verification (MRV)

To issue REDD+ credits, a nation must publish a National Plan that aligns with its Paris Agreement NDC. This ensures that country-wide incentives are in place to help compete against illegal logging and other activities that cut down trees.

National scale action eliminates the possibility of leakage as forest monitoring extends to the entire country with a combination of satellite imagery and ground truthing. Participating nations must also have an information system on how the Cancun safeguards are being addressed and respected.

Under REDD+, sovereign governments decide how proceeds from sales of forest credits will be used. Gabon’s are earmarked for investments in forest communities and in public health and education as well as for paydown of the national debt. This stands in contrast to the less than transparent revenue distribution of some forest project level schemes (erroneously using the REDD+ name) that have traded in the VCM. To counter this lack of oversight rainforest nations such as Honduras, Papua New Guinea, Indonesia, and India have imposed moratoria on non -UNFCCC credits.

Under UNFCCC REDD+, countries calculate and report a Forest Reference Level (FRL) to the UNFCCC. There is a technical assessment of the Forest Reference Level by 2 independent experts trained and tested by the UNFCCC on IPCC guidelines. The Redd+ results – emissions reductions and removals measured as progress from the FRL – also undergo a rigorous technical analysis, by a different set of independent experts. After a preliminary assessment, reviewers prepare a list of questions and may request more information. This begins iterative discussions until the reviewers’ draft assessment is complete and sent to the country for further comment.

The UNFCCC Secretariat may request a country make necessary improvements and resubmit, effectively rejecting a submission. In such cases, the entire process begins again but is usually quicker. These reviews can be seen in the technical annex to the government’s biennial update reports. All country submissions are available on the UNFCCC Lima REDD+ Information Hub.

In terms of Paris Agreement interoperability, the agriculture, forestry, and other land use (AFOLU) greenhouse gas inventory used in the calculation of the forest reference level is also an input into the country’s accounting for its NDC. Sovereign credits issued beyond 2021 are Internationally Transferrable Mitigation Outcomes (ITMOs) under the Paris Agreement and will have to be adjusted by the country on their inventory. A corresponding adjustment will take place only if the unit will be counted towards the NDC of the purchasing country.

REDD+ sovereign credits’ offer national scale atmospheric integrity and the ability to seamlessly integrate with Paris Agreement national accounting. Sovereign credits from Gabon and other REDD+ issuers offer a timely solution to keep rainforests – a vital natural climate solution – working for current and future generations.

Federica Bietta is the Managing Director of the Coalition for Rainforest Nations. Bietta is an internationally recognised expert in the development of international agreements related to climate change and specific mechanisms that include emissions resulting from tropical deforestation. Before joining the CfRN, Bietta worked for a major European bank and forged professional relationships with Fortune 500 Companies such as: Tyco, General Electric, ADP, AIG, and IBM.