Options for addressing the risk of non-permanence for land-based mitigation in carbon crediting programmes

To address climate change, we must reduce greenhouse gas emissions and scale up carbon dioxide removal from the atmosphere. Carbon crediting programs incentivize these actions by issuing tradable credits for each tonne of CO₂ equivalent reduction. However, not all carbon credits guarantee permanent carbon storage, especially those issued for land-based mitigation activities. These activities often face non-permanence risks (or ‚reversal risks‘), which arise when carbon stored in forests or soils is rereleased (for example, due to natural disturbances like fires or human activities like harvesting). Carbon crediting programs use various strategies to manage reversal risk, such as monitoring and compensation of reversals, temporary crediting or issuance deductions.

Moreover, the countries in which the mitigation activity is located (‘host countries’) face additional challenges, as they remain responsible for reversals, irrespective of the carbon crediting programmes' approaches for compensating for reversals. This could potentially impact their national climate targets (NDCs).

This report is divided into three parts: in the first part, we discuss what reversals are, how they are quantified, and what influences the risk of reversals. In the second part, we look at how carbon crediting programmes manage these reversal risks. In the last part, we analyse how host countries can address their liability regarding reversals in the context of their national climate targets.