January 15, 2018…

January 15, 2018

Vidya Anderson
Project Manager
Ministry of the Environment and Climate Change
Environmental Programs Division
Program Planning and Implementation Branch
135 St. Clair Avenue West
Floor 11
Toronto, Ontario
M4V 1P5

Dear Ms. Anderson,

Re. EBR Registry Number: 013-1634 Developing a Voluntary Carbon Offsets Program for Ontario

On behalf of Ontario Nature and Environmental Defence we are pleased to submit the following comments and recommendations regarding the Ministry of the Environment and Climate Change’s (MOECC) proposed development of a voluntary carbon offsets program for Ontario.

Generally, our organizations support the government’s intent, as presented in the EBR posting, to develop a “quality, branded, voluntary carbon offset class for use by government, the private sector and others, as an additional way to enable market participants to reduce their greenhouse gas (GHG) emissions.” We understand that it is to be “separate and distinct from the proposed compliance offsets program and capped emitters will not be able to use voluntary carbon offset credits to meet their compliance obligations under the cap and trade program.” We agree that voluntary carbon offsets present “a unique opportunity to leverage land-use activities to fight climate change” and integrate environmental co-benefits into Ontario’s climate action initiatives. We also agree that, if effectively designed and implemented, the program will “improve the resilience of our communities to climate change” while protecting valuable agricultural lands and ecosystems for the future.

a) Environmental Co-benefits
We support the government’s intent to require project developers to include environmental co-benefits in addition to GHG reductions in the voluntary carbon offset program (p. 9). When leveraging land use activities to mitigate climate change, it makes sense to consider other government commitments and priorities, including biodiversity conservation, wetland conservation and Great Lakes protection. The government must ensure, however, that these other co-benefits are above and beyond (not instead of) a full carbon offset.

Further, there needs to be a more explicit emphasis on biodiversity conservation as one of the intended environmental co-benefits. Except for a passing reference to biodiversity on pp. 11 and 12, the discussion paper fails to consider the significant potential benefits for biodiversity, focusing instead on “services” such as flood control, water quality improvements, etc.

Recommendation 1: Proceed as planned with the requirement for environmental co-benefits and ensure that they are in addition to achieving a full carbon offset.

Recommendation 2: Prioritize biodiversity conservation as one of the desired co-benefits of voluntary carbon offsetting.

b) Additionality
The principle of additionality is universally recognized within both carbon offsetting and biodiversity offsetting programs, yet it is not mentioned in the discussion paper. It is critical that MOECC insist on additionality as a basic requirement of voluntary carbon offsets.

Gold Standard principle 5 requires that all projects demonstrate “impacts that are additional as compared to their baseline scenario (i.e. the benefits of the Project are beyond a business-as-usual scenario).” Explained in section 3.5.1.1 of the Gold Standard for the Global Goals, Principles & Requirements, Version 1 (July 2017), additionality means that project impacts “in terms of climate security (mitigation or adaptation) and sustainable development are beyond those that would have occurred in the absence of the certified Gold Standard project” (https://www.goldstandard.org/globalgoals). In other words, in order to be creditable as an offset, the outcome(s) must be over and above (i.e., additional to) what would have come about if the project had not taken place.

It is important to note that the Gold Standard applies the requirement for additionality to both climate and sustainable development outcomes. Similarly, MOECC will need to ensure that additionality applies to both GHG outcomes and environmental co-benefits. Project outcomes must be above and beyond what is already required of those who wish to participate in the voluntary carbon offsetting program. In terms of commercial forestry, for example, licence-holders will need to go above and beyond what is already required under the Crown Forest Sustainability Act and related policy in terms of reforestation and forest conservation measures. Complying with regulatory requirements does not meet the test of additionality.

Recommendation 3: Require that both carbon offsets and environmental co-benefits be additional to the baseline or business-as-usual scenarios, including any regulatory requirements.

A related issue that will need to be addressed is that of averted loss, i.e., preventing the loss of existing ecosystems or biodiversity values through conservation. The discussion paper refers, for example, to both wetland restoration and conservation as means of producing carbon offset credits (p. 12).

Restoration (beyond what is required by law) can readily be understood to potentially result in additional beneficial outcomes (though not necessarily - see Maron M. et al., “Faustian Bargains? Restoration Realities in the Context of Biodiversity Offset Policies.” Biological Conservation, 155 (2012), pp. 142, 145–146).

Conservation, however, presumably means conserving what already exists. Under what circumstances then can conservation achieve additionality? It can be anticipated that Indigenous communities, landowners and municipalities (who are among the offset providers contemplated in the discussion paper) will have an interest in receiving credit for the wetlands, forests and other ecosystems that they have conserved through good stewardship.

The biodiversity offsetting literature deals in depth with the question of averted loss, a controversial subject. On one hand, vis-à-vis the present-condition baseline, averted loss does not add any on-the-ground improvement. It does not, in itself, “add anything to the ecological value of the offset site.” (Poulton, D. Biodiversity Offsets: A Primer for Canada. A report prepared for Sustainable Prosperity and the Institute of the Environment. Ottawa: 2014, p. 35). Indeed, because negative impacts occur without any on-the-ground improvement, averted loss can be considered to entrench a baseline of decline.

On the other hand, some argue that conservation or averted loss can provide an offset when assessed against a probable future scenario where loss at a particular site is likely to occur (e.g., through conversion to a different land use). In the US, for example, though conservation or averted loss is the least preferred option for wetland offsetting, it is allowed when “the resources are under threat of destruction or adverse modifications.” (McKenney and Kiesecker, p. 171. McKenney, B.A. and J.M. Kiesecker. “Policy Development for Biodiversity Offsets: A Review of Offset Frameworks.” Environmental Management, 45 (2010): 165-176; Poulton 2015 p. 39). Stewart Elgie, associate director of the University of Ottawa's Institute of the Environment, contends that on public land where development rights are allocated and development is likely to occur, offsets should be granted if those rights are relinquished. (Comment made during Biodiversity Offsets in Canada Conference, Ottawa: February 13-14, 2014). Nevertheless, determining whether there is a legitimate risk of loss that would be addressed through conservation is always open to some degree of speculation and uncertainty (Poulton, 2014, p. 35). As Martine Maron et al. (2012) contend:

Only biodiversity benefits that are additional to a baseline scenario (what would have happened without the impact or the offset) count as valid offsets. The baseline scenario must reflect both probable future threats and any genuine future intentions to redress those threats. Too many schemes overlook the latter.

At the very least, for averted loss to be considered as an offset, a means of land securement (e.g., outright acquisition, designation as a protected area) that will maintain or improve upon the status quo is needed to meet the requirement of additionality.

Recommendation 4: Consult with Indigenous communities and stakeholders on the advisability of including averted loss within the offsetting program and ensure that related standards and protocols fully address additionality.

c) Permanence and Liability for Project Reversal
Permanence is another principle generally supported in offsetting schemes. There are two main ways in which the benefits of a carbon offset can be lost prematurely (i.e., reversal risk): 1) human risks (e.g., intentional change of land use), or 2) natural risks (e.g., fire, disease, etc.).

On one hand, permanence with respect to land use change is likely more straight-forward. For example, in Victoria, Australia, all offsets must be permanently secured “by an agreement registered on title or by transfer of land to a Crown land reserve.” In the U.S. wetland offsets system, “the goal … is to ensure permanent protection of all compensatory mitigation project sites.” (Poulton 2015, p. 37). The expectation is that offsets are to be permanent, wherever legally possible, with the understanding that this could be achieved through conservation easements, restrictive covenants, or the transfer of title to resource agencies or not-for-profit conservation organizations.

The principle of permanence may, however, present a barrier to landowner participation in voluntary carbon offsetting in cases where landowners wish to maintain land use options for the future. In Alberta, for example, there has been pushback against the use of conservation easements to achieve permanence (Vic Adamowicz, “Alberta Land Stewardship: Biodiversity Offsets as a Component of Land use Planning,” Presentation at the Biodiversity Offsets in Canada Conference, Ottawa: February 13–14, 2014). There are also risks to permanence where there is unclear land tenure or ongoing disputes (e.g., potential conflict between activities allowed under the Mining Act versus the Crown Forest Sustainability Act).

On the other hand, permanence may be more difficult to achieve where risks to natural, GHG releasing occurrences are high, particularly those that are exacerbated by climate change. For example, higher fire frequency and size could result in loss of carbon sequestration or storage benefits prematurely. One solution is to require a buffer against natural losses (i.e., only allow 60 percent of the estimated carbon offset to be sold). The buffer would depend on the estimated risk of loss.

Regardless, there are likely to be circumstances where land-use change or natural events will occur and destroy or reverse the carbon sequestration paid for by the offset, such as those described above. In these cases the carbon offset has been negated and the protocol should describe who will hold liability for this reversal and for what period. Failure to address and assign liability weakens the value and effectiveness of the offset.

Recommendation 5: Consult with Indigenous communities and stakeholders to identify and evaluate approaches to ensure the permanence of carbon offsets and environmental co-benefits.

d) Monitoring and verification
We fully support the MOECC’s intent to ensure that voluntary carbon offsets are “rigorous in quality and standard” through the development of GHG quantification standards and protocols (p. 9). Monitoring and verification of environmental co-benefits also will be key to the credibility of the system. If participants are to receive public recognition, a key impetus for many emitters to seek voluntary offsets, the integrity of the system must achieve the highest standards. This is even more so the case where participants are hoping their voluntary offsets will count as emission credits in future mandatory reduction programs. We note however, that there is nothing in the discussion paper about third party verification, and while monitoring is identified as a key element of the “offset pathway,” roles and responsibilities are not addressed (p. 7).

The ministry should look to the Gold Standard Principle 4 for guidance on monitoring and verification (https://www.goldstandard.org/globalgoals). A monitoring and reporting plan, including indicators, is a key element of project design (sections 3.3.2.1; 3.1.3.3; 3.4.2) and implementation (Principle 4 (a), (c)). There is a verification and performance certification (Principle 4 (c) as well as verification and performance review processes (3.2.2.3).

Recommendation 6: Set out standards and processes for monitoring, including planning and implementation. Identify requirements, roles and responsibilities with respect to validation and verification.

In closing, we thank you for the opportunity to comment on this proposal and wish the MOECC success in developing a robust voluntary carbon offsets program for Ontario that enhances community resilience to climate change and protects the natural world and agricultural lands for the future.

Yours truly,

Dr. Anne Bell
Director of conservation and Education
Ontario Nature

Tim Gray
Executive Director
Environmental Defence

[Original Comment ID: 211997]