What Verra’s new REDD+ Methodology does and doesn’t mean for the Nature-Based Solutions Market

Verra announced a major update to its REDD methodology on November 27, 2023; in short, this will see all Verra REDD+ projects transition (by 2025) to using country-level baselines produced by groups like Space Intelligence, under contract from Verra, rather than project developers producing those baselines themselves.

The conversations and work on this update started in 2020, long before the recent critiques of REDD+ projects’ impact, in a process which Space Intelligence Chief Scientist Professor Ed Mitchard has contributed to. The methodology’s update does make revisions on areas recently put into question: namely the accuracy and conservativeness of baseline data, which feeds into the credit issuance calculations from a project, and so is a net positive for the market.

Having worked with Verra throughout the development and construction of the methodology, we’ve compiled our view on this notable update for the next phase of nature-based solutions (NbS).

 

1. The Updates In Summary

• Verra will now lead and manage the baseline setting process, using data developed covering whole ‘jurisdictions’ (normally whole countries, but sometimes regions of countries where the country size is very large), following a robust development process with tests to ensure the data meets stringent requirements
  

 

• Verra is embracing more advanced technologies, employing advanced remote-sensing technologies and the latest scientific methods. This enables robust confidence intervals to be provided with the deforestation estimates, and ensures that there is no bias in these estimates, preventing over-crediting.

 

• Projects are allocated a risk-weighted proportion of a jurisdictions’ predicted deforestation. Expected deforestation in the whole jurisdiction over the six year validity of the new baselines will be based on the deforestation in the previous 10 years. A rigorous risk-mapping process will enable a portion of this baseline to be allocated to projects based on their area and the risk level of forest they contain. Projects will not be able to issue more credits than are allocated to them by this baseline.
  

 

• Verra will increase collaboration with national governments, with similar conservative methods and data sharing; this means that the Verra VCS REDD+ baselines will likely closely match jurisdictional baselines as reported by countries to the UNFCCC as part of the Forest Reference (Emissions) Levels. Through this, projects will be able to enhance efforts to achieve national climate action targets outlined in the Paris Agreement without causing inconsistencies or confusion.
  

 

• Verra has reduced the baseline reassessment period from ten years to six in all Verra methodologies that address avoiding unplanned deforestation. 

 

2. What does it all mean for project developers, funders, and credit buyers?

From our perspective, we see three key outcomes from this update for the market:

A Scaling of investment into REDD projects

NbS have a critical role to play in addressing the climate crisis, but investment into high-impact projects needs to be rapidly scaled to do so (IUCN, 2021). Claims of over-crediting have hampered investment through 2023 but this update from Verra is a key step to ensure buyers of credits have full confidence that a carbon credit purchased genuinely means there is at least 1 tonne of CO2 less in the atmosphere than there would otherwise have been.

Consequently the hope is this confidence will enable the REDD+ sector to grow, with us ending this decade with a much greater proportion of at-risk forest protected by a REDD+ projects than there is now. We are confident that if this happens it will greatly reduce the rate of deforestation.

 

A Scale in Supply Alongside Quality of Projects

Demand is still present in the market; we talk to many corporates still looking to buy NbS credits, including REDD projects, but they are encountering a lack of supply, driven in part by credit pricing volatility.

The development of supply has been hampered through recent volatility but is more systematically restricted by the high startup costs of a project, lengthy lead times to credit issuance, and also uncertainty in things like additionality that impact project viability and funding.

By moving the creation of baselines from a developer responsibility to a registry responsibility, this should reduce one of the more costly and complex startup costs. It is excellent that this change will also increase the accuracy and consistency of the data used to underpin the credits issued by the projects.

 

A Broader Recognition of the Level of Accuracy Remote Sensing can Provide

When considering these methodology updates, Verra recognised how advancements in remote sensing and their application by nature data providers who prioritise quality, such as Space Intelligence, can provide the accuracy needed to address some of the challenges in the market.

We were selected by Verra to produce data for both Kenya and Tanzania, a total of around 150 million hectares, and have delivered maps and data to them on forest coverage and activity data on deforestation.

We’re supportive of an approach that prioritises localised on-demand maps, which are of a much higher quality than global maps where generalised class definitions and differences in ecology and climate limit accuracy.

We believe approaching this work on a per-country basis that uses inputs about local conditions and also employs human-in-the-loop validations is the only way to ensure accuracy: this knowledge is critical to identify where local factors, such as seasonality, can impact the output or where different economic factors are drivers of deforestation.

 

3. And what does it not mean?

Verra’s announcement is certainly a meaningfully positive change for REDD projects and we at Space Intelligence welcome this update with open arms.

While Space Intelligence was selected as the data provider for two of the jurisdictions, from an objective perspective we recognise that Verra’s intention with the update is to improve integrity, quality, and ultimately the impact of nature-based solutions in stopping and reversing climate change.

And that is only a good thing.

But we also fully agree that project impact claims should be tightly reviewed by all interested parties: developers, funders, and credit buyers and no methodology for baseline creation will be the panacea to ensuring quality and impact.

As such, it still means that to truly assess and showcase impact buyers and developers should:

 

1. Go beyond baseline data

While in theory baselines should be more accurate for new and existing REDD projects from 2025, this jurisdictional approach will not provide data on actual performance of projects. Under the new methodology, the collection of that data will still be the responsibility of the project developer.

We would strongly encourage developers to use independent third parties, such as Space Intelligence or other organisations approved by Verra, to collect activity data for the baselines to have the necessary monitoring data on the project area and leakage belt. This will ensure the transparency and integrity of these data are as high as those used to create the project baselines.

We would also encourage project developers to go beyond collecting only activity data on deforestation, as required by the methodology. Data on degradation and regrowth are available, for example through our CarbonMapper product. These provide a whole ecosystem assessment of forest carbon change, and add a further layer of transparency and confidence to the changes in a project site.

 

2. Go beyond Carbon
   

REDD projects inherently have significant positive impacts on local communities and local biodiversity. This new REDD methodology Verra has released is only about carbon, but the overarching Verified Carbon Standard and the associated Climate, Community and Biodiversity Standard that all REDD projects adhere to, insists that projects must have positive impacts on both carbon levels and local life.

A well designed REDD project will involve communities from the start, and its main activities to reduce deforestation will purposefully be aimed at improving community opportunities and living standards. This is normally achieved through some combination of direct cash transfers and funding projects in communities (for example tree nurseries and training on growing cacao, market development for cash crops, ecotourism, or education). Similarly, a REDD project inherently helps protect biodiversity, as they protect high biodiversity forests from destruction.

We believe projects should do a better job of making the data they collect on communities and biodiversity public, so that this positive side of REDD is communicated. It is these ‘co-benefits’ that should make REDD credits so enticing to a purchaser: not only do they stop carbon entering the atmosphere, but at the same time they help some of the world’s poorest people and the world’s most vulnerable species. As Verra’s new methodology reduces the carbon risk, it should allow these co-benefits to come to the fore, raising the price of credits and their brand value.

 

How Space Intelligence Supports NbS Projects

Our extensive expertise in satellite remote sensing, AI & data analytics, and forest ecology enables highly accurate and comprehensive nature data to support corporations, investors, and carbon project developers across:

• Nature-based project origination, due diligence, and impact analysis.
• Audit-grade carbon and habitat maps for carbon project MRV.
• Land use change and nature impact analysis for corporate disclosure reporting.

Learn more about our solutions for nature-based project developers and credit investors.