The World Bank Forest Carbon Partnership Facility’s latest hot air scam: Retroactive credits

By Chris Lang

The World Bank’s Forest Carbon Partnership Facility recently changed its rules to allow governments to sell REDD credits from their Emissions Reductions Programmes before the programmes even started. The FCPF has decided that credits can be back-dated to 1 January 2016.

A presentation at the most recent Carbon Fund meeting in November 2020 explains that several REDD countries asked the FCPF for this change:

Predictably, the Bank doesn’t mention that the FCPF’s Carbon Fund will now be handing over millions of dollars to governments that have done absolutely nothing to reduce emissions.

If, for example, commodity prices decreased that might result in reduced deforestation. In that case, governments can now receive payments from the Carbon Fund for the temporary reduction in deforestation. Of course when commodity prices goes back up, the deforestation rate will once again increase.

The World Bank will be paying for hot air.

None of this is to suggest that the World Bank just needs to tighten up its standards in order to “improve” its REDD credits. The FCPF has wasted millions of dollars, and more than a decade, without saving a single hectare of forest. Scrapping the FCPF is way overdue.

In a note about these retroactive credits, the Facility Management Team mentions that this change will create new credits that can be fed into offsetting schemes such as the aviation industry’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA):

In addition, CFPs [Carbon Fund Partners] could decide that any ERs [Emission Reductions] generated prior to the unconditional acceptance of the ER Program into the portfolio . . . could either i) be potentially included in an ERPA [Emission Reductions Payment Agreement] with CFPs or ii) not be included in an ERPA with CFPs but be issued by the FCPF and be available to parties outside of the ERPAs with CFPs (for example to airlines under CORSIA).

One of the Facility Management Team’s arguments for generating large numbers of hot air credits is that other offsetting standards such as Verra, the American Carbon Registry, the Gold Standard, and The REDD+ Environmental Excellence Standard allow credits to be issued before the project has been validated.

But this just highlights a flaw in all the offsetting standards. The World Bank is (as usual) joining in a race to the bottom.

Question in the German Bundestag: How much hot air?

On 9 February 2021, Maria Flachsbarth , Parliamentary State Secretary in the Federal Ministry for Economic Cooperation and Development (BMZ), replied to a question about the FCPF’s retroactive credits. The question came from Uwe Kekeritz, of Alliance 90/The Greens. Below is an official translation of Kekeritz’s question and Flachsbarth’s answer (the original in German is available here).

In her response, Flachsbarth quotes a figure of 12% of Carbon Funds payments going to retroactive credits. This figure is based on “current estimates by the Forest Carbon Partnership Facility”, she says. But how on earth the FCPF came up with this figure is anyone’s guess:

Kekeritz’s question: How high does the Federal Government estimate the likely proportion of Carbon Fund payments that will result from from the change in the accounting period in the Forest Carbon Partnership Facility (FCPF) glossary in January 2021 (“Crediting period start date”) for backdated savings that will be paid out of the total share of payments, and how, in the view of the Federal Government, can it be ensured that the criterion of additionality of the emission reductions can be met if the declared reduction is made before the Emissions Reductions Programme (ERP) or even before the country was admitted to the Carbon Fund, although none of the ERPs that have so far come into force is being fully implemented?

Flachsbarth’s answer: The proportion of Carbon Fund payments affected by the change in the crediting period that you mention, will be about 12%, according to current estimates by the Forest Carbon Partnership Facility (FCPF). This estimate is preliminary, as payments in the Carbon Fund are only made for proven emissions reductions. The necessary monitoring reports from the federal states are not yet available.

To ensure the criterion of the additionality of the emission reductions paid for by the Carbon Fund participants, the following agreements were made:

• The country / jurisdiction is included in the Carbon Fund portfolio, has started to implement measures as part of the Emission Reduction Program (ERP) and can provide evidence of this.
• Relevant safeguard mechanisms relating to the program and the national forest monitoring system are operational.
• The conditions of the methodological framework of the Carbon Fund with regard to carbon accounting and avoidance of double counting are met from the start date.
• An independent verification checks that the criteria have been met after the first report has been sent.

From the perspective of the Federal Government, this fulfills the criterion of additionality.