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Who owns forest carbon?

Blog | Mon, 01 Nov, 2021 · 9 min read
Who owns forest carbon?

Carbon rights or emission reduction (ER) titles have been defined in different ways, often leaving a very simple question unanswered: who owns carbon sequestered through REDD+ actions? Governments? Communities who implement REDD+ projects? Landowners? To answer this question, at least partially, one must look at how countries regulate their ownership and transition processes for REDD+.

What are carbon and ER rights?

In general terms, forest carbon or ER rights can be defined as intangible assets, created by legislative and contractual arrangements, that allow for the recognition of separate benefits arising from forest carbon stocks. ER rights can be linked to the ownership of land and trees or run as separate interests linked to the land. Alternatively, a carbon right can be defined in terms of which parties have the right to sell, trade and purchase the carbon credit for offsetting purposes. Carbon stocks in the forestland should prove to be additional in order to generate incentives. Therefore, ownership of carbon rights also carries obligations and risks like the permanence of ERs and the displacement of ERs, amongst other things.

National legal systems influence the way legislators might define ER rights. Differentiation is also needed among:

  1. ownership rights related to forest goods or eco-system services;

  2. the entitlement for REDD+ results, in terms of beneficiary rights aiming to identify who will be rewarded for their efforts in generating ERs; and,

  3. the right to sell, trade, and purchase the carbon credit.

Additionally, in many REDD+ countries, there are customary or traditional legal systems which influence the interpretation of land and carbon rights.

Primary owners of ER rights

Generally, individuals or entities entitled to own or administer ERs include landowners and those who have contributed to, or will implement, activities to reduce emissions with particular emphasis on vulnerable groups and the government. In Côte d'Ivoire, as the country was developing a benefit-sharing plan to implement REDD+, there was a growing need to clarify who owns emission reductions and to refine eligibility criteria and modalities of distribution of REDD+ results-based payments. A draft decree regulating REDD+ investments, including ER titling is currently under approval in the country. In Côte d'Ivoire, vulnerable groups, such as women and youth, are considered to be beneficiaries, despite not always being rights holders.

Sometimes, the lack of clarity regarding the ownership of emission reductions might generate some friction among parties who fail to understand who is entitled to transfers such ERs. In Mexico, a review of ownership of emission reductions was undertaken in the context of the UN-REDD Programme. This review defined the context while proposing some legal options, such as clarifying beneficiary rights. Amendments to the forestry law, aiming to clarify the institutional setting related to benefit-sharing and emission reduction rights, are now under consideration by the country’s Congress.

Excluding competing rights by third parties and double counting

Accessing international carbon finance schemes requires clarity surrounding ownership of emission reduction titles in order to avoid competing claims. For example, Chile has clarified its interpretation of emission reduction titling as part of its preparation for a Green Climate Fund (GCF) proposal.

In Chile, emission reductions are the result of a set of policies and incentives that have the purpose of stopping degradation and deforestation. In the context of the country’s proposal to the GCF, they will be administered by the National Forest Corporation (CONAF). Ownership of the emission reductions, paid for by the GCF, will not be transferred to the GCF but will remain with the country. Payments are recorded in the UNFCCC web portal, and corresponding emission reductions could be listed in a national registry or on the UNFCCC web platform. These emission reductions will no longer be eligible for sales or compensation. In addition, the Benefit-Sharing Plan linked to the National Strategy on Climate Change and Vegetation Resources (ENCCRV) expects that CONAF will develop collaborative agreements with local forest landowners that aim to regulate the rights, responsibilities and obligations of the parties accessing non-monetary REDD+ RBP benefits.

Avoiding double counting of carbon sequestration is essential where there are overlaps between claims from projects and government-led REDD+ programmes. For example, the Verified Carbon Standard (VCS) regularly checks that projects comply with laws and regulations that govern the ownership and transfer of emission reductions. Because of this, project developers should be keen to support governments in clarifying regulations surrounding the issue of emission reduction titling, in order to harmonize project level versus jurisdictional REDD+ standards. Therefore, involving them in law development processes from the very start can be beneficial.

Due to challenges associated with traditional forestry property law systems, more clarity

regarding emission reduction rights is needed. A more stable enabling body, that guarantees contracting parties minimum and appropriate forms of legal protection, would stimulate investments in REDD+ and protect vulnerable groups.

In order to limit global temperature rise as outlined in the Paris Agreement, countries around the world are now increasing their efforts to reduce greenhouse gas emissions. Emission reduction titles and other aspects related to REDD+ initiatives have valuable roles to play in achieving this goal. For this reason, it is vitally important to simplify and clarify emission reduction rights, to incentivize people to action and to increase accessibility to results-based payments.