The achievement of the Paris Agreement goals will rely on a combination of financial and policy mechanisms and action from both public and private actors and all sectors of the economy to urgently reduce global emissions. Carbon markets can play a key role in the transition process, incentivizing the development of low-carbon initiatives and forest conservation, by creating an economic incentive for reducing emissions as cost-effectively as possible. This role is recognized and facilitated through Article 6 of the Paris Agreement and the associated Paris Rulebook, adopted in Glasgow at COP26.
The role of carbon markets in climate finance is growing as transactions continue to increase, particularly in the Voluntary Carbon Markets (VCM). According to Forest Trends, as of 2016, offsets equivalent to 1.1 billion metric tonnes of carbon dioxide emissions (BtCO2e) have been transacted voluntarily. Accelerating ambition and implementation of climate action in forests, as part of countries’ goals in their Nationally Determined Contributions (NDCs) is necessary to reach net-zero emissions. Carbon markets may serve as one mechanism to drive the investment needed at the regional, national, and local levels to achieve these goals. If designed and implemented well, carbon markets represent a potential opportunity to access critically needed finance to support forest conservation and restoration efforts. However, integrity in carbon markets is essential to ensure that the use of carbon credits strengthens – rather than undermines – global action towards achieving the goals of the Paris Agreement.
High-integrity in carbon markets must ensure the application of robust environmental and social safeguards and respect the rights of Indigenous peoples and local communities. Indigenous Peoples and local communities (IPLCs) are recognized as the most effective forest stewards and, therefore, should have access to more finance for their continued efforts to protect and restore forests. They have expressed a need for further capacity building on carbon markets to facilitate their informed engagement to participate in standard-setting; access finance, and exercise their rights.
If Indigenous Peoples, countries, and other stakeholders accessing carbon markets are going to be able to meet demand from private sector buyers, market-based standards, NGOs, and local stakeholders alike for higher quality units with demonstrated additional sustainable development impacts, there needs to be a greater upfront investment in capacities to build robust and integrated systems to be able to effectively implement in line with expectations. This includes establishing participatory processes, ensuring appropriate community engagement from design to implementation; ensuring consistency with the rights and interests of affected Indigenous peoples and local communities; and developing processes for ensuring just and equitable benefit sharing arrangements for Indigenous and local communities.
This webinar, hosted by the Forest Declaration Platform and the UN-REDD Programme, aimed to provide the space for capacity building on these topics, by convening Indigenous peoples and local communities with technical experts from partners of the Forest Declaration Platform during the UN Permanent Forum on Indigenous Issues.
Frances Seymour, Distinguished Senior Fellow at World Resources Institute (WRI), and Jennifer (Jing) Tauli-Corpuz, Global Policy and Advocacy Lead for Nia Tero, delivered opening remarks. Frances set the stage for the event by calling to level the playing field between carbon market buyers and sellers in a way that respects Indigenous peoples as the rightful stewards of forests. She summarized the history of carbon markets and their intersection with IPLCs and recognized that climate finance has not yet reached the community level. Jennifer underlined the importance of acknowledging free, prior, and informed consent and securing tenure for Indigenous peoples as a matter of “high integrity” in carbon markets.
Kimberly Todd, Technical Specialist from UNDP’s Climate & Forest Programme, then provided an introductory presentation on carbon finance in the context of achieving Paris Agreement goals (see slides here in English, Spanish, French, and Portuguese) providing an overview of carbon markets, the main components of Article 6 and compliance markets, key decisions taken at UNFCCC COP 26 in Glasgow, voluntary carbon markets, and considerations for social and environmental integrity in carbon markets.
Following this introductory presentation, the audience heard two examples of carbon market projects from Indigenous communities in Tanzania and Brazil. Isack Bryson, Yaeda Project Manager, explained the lessons and successes of the Yaeda Valley Project and highlighted the power of its participatory planning process, which involves local communities in all aspects from planning to budgeting and monitoring. Chief Almir Narayamoga Surui of the Paiter Surui People in the Brazillian Amazon shared lessons from the Surui Forest Carbon Project and stressed the undeniable importance of government support and recognition of Indigenous sovereignty and autonomy.
The panel that followed presented high-integrity carbon market standards for forests and opportunities for Indigenous peoples. Panelists Lucia Madrid, Senior Policy Manager from Architecture for REDD+ Transactions (ART) Secretariat, Daniel Ortega, co-Chair of the Expert Panel from Integrity Council on Voluntary Carbon Markets (IC-VCM), and Mark Kenber, Co-Executive Director for External Affairs for the Voluntary Carbon Markets Integrity Initiative (VCMI) opened the discussion by sharing opportunities for Indigenous peoples to engage with these global standards and benefit from carbon markets, with an emphasis on how these initiatives can ensure the perspectives and experiences of IPLCS are incorporated in their outcomes.
The discussion then shifted to Indigenous perspectives on what must take place in these high-integrity carbon market initiatives. Hindou Oumarou Ibrahim, member of the Mbororo pastoralist people in Chad and President of the Association for Indigenous Women and Peoples of Chad (AFPAT), set the tone by imploring Indigenous peoples to be recognized as equal partners in carbon finance, not as recipients or beneficiaries. Tuntiak Katan, member of the Shuar People, Vice Coordinator of the Coordinator of Indigenous Organizations of the Amazon Basin (COICA), shared a similar message on mutual collaboration as partners and stressed the importance of strengthening traditional knowledge and practices as a viable solution to the climate crisis.
The event ended with closing remarks by Leticia Guimarães, Senior Global Technical Advisor on Climate and Forests at UNDP, who summarized the day's event with three main takeaway messages:
- Indigenous Peoples and local communities (IPLCs) are the most effective forest stewards and their efforts need to be recognized and further incentivized through performance-based finance and carbon markets. IPLCs must be in the drivers’ seat of carbon market initiatives that affect their territories.
- IPLCs want direct access to climate finance for forests, therefore a greater upfront investment is needed to establish participatory processes and ensure appropriate community engagement from design to implementation. Financial intermediaries are a recent trend, IPLCs need to evaluate which organizations are best positioned to represent their interests.
- The rights of IPLCs need to be safeguarded and further enhanced by carbon market mechanisms and processes that are consistent with and strengthen their rights and interests, and allow for just and equitable benefit sharing.
Recordings of the dialogue are available in English, Spanish, and Portuguese on the Forest Declaration Platform YouTube page, here. (Note: due to technical difficulties, the French recording only includes the final panel and closing remarks.)
Resources from Speakers:
- Kimberly Todd’s presentation on “Carbon finance in the context of achieving Paris Agreement goals” is available in English, Spanish, French, and Portuguese
- Yaeda Valley Project:
o Fact Sheet: https://drive.google.com/file/d/1YwhaoLEfRz99mhD8U_C5uxdfg4nf1pAg/view
o Project webpage: https://www.carbontanzania.com/our-projects/yaeda-valley/
o Case Study: https://www.equatorinitiative.org/2019/07/30/yaeda-valley-project/
- The Story of the Surui Forest Carbon Project: https://www.ecosystemmarketplace.com/articles/story-surui-forest-carbon-project/
- Architecture for REDD+ Transactions (ART) Resources
o Summary of TREES in Spanish, Portuguese, English, French and Bahasa: https://www.artredd.org/trees/summaries-guidance/
o Safeguards and HFLD primers (there are also other primers and visual guides in these languages): https://www.artredd.org/trees/summaries-guidance/?sub=primers-and-visual-guidesEnlace
o ART webinar presentations in English, Spanish and Portuguese: https://www.artredd.org/trees/summaries-guidance/?sub=webinar-presentations
- Voluntary Carbon Markets Integrity initiative (VCMI): https://vcmintegrity.org/
- Integrity Council on Voluntary Carbon Markets (IC-VCM): https://icvcm.org/
Other relevant resources:
- Voluntary Carbon Markets Primer by Climate Focus: https://vcmprimer.org/ (only available in English)
- Forest Trends resources:
o ESP: https://www.forest-trends.org/publications/entendiendo-leaf-y-art-trees/
o PORT: https://www.forest-trends.org/publications/acesso-a-financiamento-para-reduzir-o-desmatamento/
- Sink or Swim: How Indigenous and community lands can make or break NDCs: https://www.climatefocus.com/publications/sink-or-swim-how-indigenous-and-community-lands-can-make-or-break-nationally-determined (available also in Spanish and Portuguese).