Differentiating REDD+ from Restoration Projects: Safeguarding the Integrity and Competitiveness of Brazil’s Carbon Market

The Brazilian Coalition on Climate, Forests and Agriculture acknowledges the significant progress represented by the regulation of Law No. 11.284/2006 through Decree No. 12.046/2024. This milestone marks a significant step towards establishing robust governance for the sustainable use of our natural resources, reinforcing Brazil’s commitment to forest resource conservation and climate change mitigation. However, despite this progress, the Coalition has concerns that must be adequately addressed to ensure the effectiveness and integrity of the country’s climate change policies. 

Our main concern relates to the inclusion of Afforestation, Reforestation and Revegetation (ARR) activities within the scope of REDD+ (Reducing Emissions from Deforestation and Forest Degradation). Including these activities could lead to regulatory confusion and undermine both the effectiveness and funding of different projects, which have their own methodologies and objectives. As in previous statements, we stress the importance of maintaining a clear distinction between the different approaches. Incorporating ARR into REDD+ frameworks could significantly weaken the role of these projects in the carbon market, having a negative impact on their attractiveness to investors and the valuation of restoration credits.

The Coalition also expresses its concern over the absence of clear methodologies for avoided deforestation (REDD+), particularly given the current inoperability of CONAREDD. The lack of robust guidelines in this crucial area hampers efforts to effectively implement these activities, weakening Brazil’s climate mitigation efforts. Without a proper set of methodological definitions, avoided deforestation projects face uncertainty, which discourages them from attracting investment and hinders their integration into the carbon markets.

The Brazilian Coalition has repeatedly highlighted that the key purpose of the REDD+ mechanism is to conserve and protect existing forests by directly addressing the drivers of deforestation and forest degradation. Merging the line between restoration projects and REDD+ could devalue ARR credits, undermining investment appeal and international market acceptance. Moreover, the absence of robust guidelines for the implementation of REDD+ could hinder the development of the carbon market related to avoided deforestation.

Below we highlight some topics for deeper analysis:

I – Distinguishing between the concept of REDD+ under the UNFCCC and forest restoration within the voluntary carbon market.

It is crucial that “Restoration” activities are not conflated with the “REDD+” concept, despite it include the “enhancement of carbon stocks” component. Both mechanisms pursue different objectives, and their methodologies and valuations follow different approaches.

The key distinction between REDD+ and ARR lies in the concepts of removing and reducing greenhouse gas (GHG) emissions. REDD+ is primarily focused on reducing GHG emissions, while ARR focuses on removing carbon from the atmosphere, i.e. carbon sequestration. This differentiation is crucial, both from the operational aspect of the projects and in terms of attracting funding, which is an important factor in the success of the projects.

Although the “+” in REDD+ can be considered an enrichment, this practice is complementary and not at the heart of the activity. The focus of REDD+ remains the reduction of emissions resulting from deforestation and forest degradation. The increase in carbon stocks associated with REDD+ is related to the “plus” added later to the original concept but should not be seen as the core of the activity. 

Therefore, when discussing the inclusion of ARR activities in the scope of REDD+, it is important to remember that the focus of REDD+ is emission reduction. Overemphasizing the removal component can divert attention from the original function of reducing emissions and compromise the integrity of the concept. This difference in approach is also reflected in the methodologies:

1. Baseline: In REDD+, the baseline represents an estimate of the GHG emissions that would occur if deforestation or forest degradation continued according to historical trends—essentially, the emissions avoided through the implementation of forest conservation projects or strategies to curb deforestation and degradation. Additionally, any increase in carbon stocks resulting from improved management practices may also be considered. In ARR, the baseline assumes a scenario with no forest, where the land remains degraded, and no carbon sequestration occurs. Consequently, the carbon removed from the atmosphere through reforestation efforts is quantified.
2. Methodology: REDD+ and restoration have different methodologies in the different Certification Standards, including the United Nations Framework Convention on Climate Change (UNFCCC).
3. Valuation: REDD+ and ARR credits have different values, with the second category being more highly valued on the market due to the removal component. In addition, REDD+ was initially created by the UNFCCC as a payment-by-results mechanism, for the amount of deforestation avoided, not for the area of forest planted or restored.
4. Cost: In REDD+, the cost of generating credits is primarily tied to conservation efforts, including actions that prevent deforestation and degradation (e.g., command-and-control measures, prevention strategies, and land management). In contrast, ARR involves not only the costs of protecting the area but also additional expenses for activities like tree planting, seeding, and assisted natural regeneration. These restoration efforts are significantly more expensive, requiring the purchase of materials and increased field labor. While the costs of REDD+ activities remain relatively steady throughout the project, restoration costs tend to be much higher in the initial years. Consequently, the investment profiles of these two approaches differ substantially, necessitating distinct funding strategies. 

II – REDD+ at the UNFCCC: deforestation and restoration factors

Since its creation under the UNFCCC, the REDD+ mechanism has focused primarily on reducing emissions associated with deforestation and forest degradation. Decision 1/CP.16 (FCCC/CP/2010/7/Add.1) and subsequent decisions of the Parties to the Convention encourage countries to adopt policies to address the drivers of deforestation.

It is noteworthy that no COP decision includes restoration activities within the scope of REDD+. Even in those COP decisions that mention “reforestation” or “restoration,” these activities pertain to existing forests, not to degraded areas. Indeed, an examination of the Cancun Safeguards (Decision 1/CP.16 (FCCC/CP/2010/7/Add.1)) reveals no mention of restoration in the context of REDD+ activities. In contrast, restoration initiatives are primarily focused on addressing areas that have been degraded due to alternative land use practices, which suggests that they do not directly address the underlying causes of deforestation.

A review of the various COP decisions, including the “Warsaw Framework,” reveals that the UNFCCC established the REDD+ mechanism with the objective of addressing the underlying causes of deforestation and forest degradation. This entails identifying and addressing the current drivers of these phenomena within existing forest ecosystems. While the Warsaw Framework does mention reforestation and restoration activities, these are discussed in the context of existing forests. 

In contrast to conservation projects, restoration projects concentrate on regions that have experienced at least a decade of land degradation and land use changes. Consequently, restoration efforts may not directly tackle the immediate drivers of deforestation and forest deterioration, as they address issues that originated in a different point in time.

III – Carbon stock: assumes existing forest

It is crucial to underscore the concept and scope of “forest carbon stock enhancement” within REDD+ activities, as delineated in item “e” of paragraph 70 of Decision 1/CP.16 (FCCC/CP/2010/7/Add.1). Not all activities that enhance carbon stocks are automatically included within the framework of REDD+. The UN-REDD Programme defines the term “carbon stock” as the quantity of carbon stored within a reservoir. Accordingly, in the context of REDD+, this reservoir is the existing forest.

Hence, forest carbon stock enhancement in REDD+ refers to increasing the carbon stored in the existing forest. An example of such an enhancement is the interruption of logging in an area.

To be considered a REDD+ activity, the action that promotes carbon stock enhancement must comply with the parameters defined by the COP, i.e.: i) reduce emissions from deforestation and forest degradation and ii) existing forest.

Furthermore, it is important to acknowledge that restoration is a distinct process that typically occurs in areas devoid of forest cover, where the original natural ecosystem characteristics have been compromised. The objective of restoration is to reverse this degradation.

IV – Restoration implications of REDD+: devaluation of ARR credit

Historically, restoration projects have garnered greater acceptance compared to REDD+ projects, which have been previously accepted as part of the Kyoto Protocol’s Clean Development Mechanism. Furthermore, they have been met with a positive reception in the voluntary carbon market. To illustrate, the SBTi (Science Based Target Initiative), which offers guidance to companies on their decarbonization strategies, only accepts removal credits as a form of emissions compensation. Consequently, ARR credits are frequently sold at a premium price relative to conservation projects, reflecting the higher costs associated with restoration initiatives.

Additionally, it is crucial that the definitions set forth in Brazilian standards align with those adopted internationally, given the prospect of future integration with international markets under the Paris Agreement. In this context, an overly broad definition of REDD+ that includes activities not recognized by other markets could have adverse effects. 

Recognizing the distinction between these two types of projects is essential to prevent restoration projects and their credits from being adversely affected in carbon markets. Failure to do so could result in: i) a lack of funding for projects currently being developed, and ii) jeopardizing the acceptance of these credits in future integration with international markets, ultimately leading to a significant drop in price in both cases.

V – Final Remarks: financing restoration projects at stake

The sale of removal carbon credits is a crucial source of funding for the restoration of native species in Brazil. The new legislation’s alignment of restoration activities with REDD+ may inadvertently diminish the competitive advantage of Brazilian restoration credits, deterring investment and jeopardizing the growth of restoration activities in the country, which are already a priority for the Executive Branch.

The scope of REDD+ activities should not be conflated with that of restoration in Brazilian regulations. To safeguard the efficacy of the legislation and the integrity of the carbon markets, it is imperative that CONAREDD formulates comprehensive regulations on avoided deforestation methodologies, ensuring that distinctions between the distinct types of projects are maintained and that the carbon market continues to adequately value restoration initiatives.

The Brazilian Coalition remains committed to the development of public policies that promote forest conservation and restoration. It is our conviction that well-designed regulations will be pivotal to ensuring the success of climate change mitigation efforts and to maintaining Brazil’s competitiveness in the international carbon market.