New Zealand Core Carbon Principles for CO2 removals (NZ-CCP).

For forests in New Zealand and green claims made in New Zealand

Principles should be met by anyone seeking to make claims relating to forestry carbon removals. The New Zealand Core Carbon Principles (“NZ-CCP”) have been established to provide this guidance.

NZ core carbon principles for voluntary forest carbon sequestration.

Subject to exceptions noted below, the issue is not necessarily how much forestry CO₂ sequestration is claimed to have occurred, but what express and implied claims, e.g., about longevity of storage of that CO₂ capture or the alleged or implied positive effects of claimed carbon capture in fighting climate change, are also made. The focus is whether all express and implied claims made are lawful (not deceptive or misleading).

  • If claims as to the existence of forestry CO₂ sequestration are qualified, such as it has not been measured, then there is no reason such claims cannot be made. The effect on pricing of such a qualification is another matter. Measurement, or lack of it, is not the focus per se, rather the focus is on all claims, whether concerning measurement or not, being lawful.

  • Clearly if a claim is made as to measurement, it cannot be deceptive or misleading, as is the case with any other express or implied claim.

  • All claims must be assessed not only as to what they expressly say but what they imply, whether by omission of facts or use of ambiguous language.

  • In relation to forestry CO₂ sequestration (capture) there will normally be an implied claim that captured CO₂ is stored for a long period and that this helps fight climate change.

  • It cannot be proved capturing CO₂ helps fight climate change in the measure of its capture if there is a substantial or real risk it will be reversed before 2100.

When a proposed green statement, said to be supported by forest CO₂ capture, is tested against the standard it cannot be misleading or deceptive, there is little integrity in measuring past forestry CO₂ sequestration where a substantial or real risk it will be reversed before 2100 exists.

  • It will likely be deceptive or misleading if a carbon capture claim implies that the risk doesn’t exist; or fails to mention it as a qualifying factor.

  • It will also likely be deceptive or misleading in not discounting, if not ignoring, any measurement of carbon capture to reflect the substantial or real risk of reversal prior to 2100.

  • This applies principle 1 above. Measurement rules are tested in the voluntary space, subject to any other limiting regulations, by whether they are misleading or deceptive. If they are not, it is irrelevant how they are to be applied. The private market will determine value.

If forestry CO₂ sequestration, whether past or prospective, can be proved to exist until 2100, there is no reason a statement to that effect should not be made if it can be proved to be neither deceptive nor misleading.

  • To be able to make and defend such a solid green statement it would be necessary to have robust methodology.

No-one can sell “voluntary carbon credits” if they don’t exist as a legally recognised form of personal property, distinct from the trees which comprise the carbon element allegedly detached from them.

  • It is not clear that “voluntary carbon credits”, so called, exist as a form of property in New Zealand. Such credits cannot be compared to cryptocurrency, e.g. it is intended most will be surrendered at some point.

  • It is likely to be deceptive and misleading to imply something exists if it doesn’t.

  • This risk does not exist if an intervenor pays for the right to make green claims, providing the person also having the right agrees not to make such a claim. Other factors, such as a nexus between the intervention and the sequestration, will still need to be proven.

  • However, recognition of “voluntary carbon credits” as a form of separate property not only allows their sale but removes the need for a nexus between a green claim and the payment for the “voluntary carbon credits”.

Governments may allow tonnes of forestry CO₂ sequestration acquired from or able to be sold on a voluntary market to be used towards meeting some mandatory requirement or may prevent them being used unless they meet some standard, such as a way of measuring them, or proof of storage over a defined period.

  • Where this occurs the above carbon principles may be modified.

  • It will always be a relevant inquiry, however, whether mandatory regulations applying to voluntary CO₂ sequestration over-ride the requirement that green claims, if made, cannot be deceptive nor misleading. If they do not over-ride them, using forestry CO₂ sequestration to meet some mandatory requirement will not also allow unlawful green claims to be made.

  • An example of a mandatory requirement that can be met by using voluntary forest CO₂ sequestration may be a foreign import restriction on goods needing to meet the importer’s domestic regulations.

  • An example of a regulation that prevents green claims being made unless it is met may be a restriction on claims that can be made for a certain type of activity (such as carbon capture and storage by burial). Complying with such a regulation won’t necessarily excuse the need to comply with other laws when making a green claim, such as those applying to misleading or deceptive representations or behaviour.

The voluntary CO₂ sequestration market is already statutorily regulated by limits on what lawful green claims can be made to consumers and financial market participants.

  • Examples are fair trading acts and market participant conduct regulations.

  • Someone “buying” tonnes of CO₂ sequestration need not make green claims about them, but in most instances they will.

  • Most of the following principles are directed to the making of green claims by an entity having acquired tonnes forestry CO₂ sequestration.

Any core carbon principles for CO₂ removals should first reflect legal limitations as to what can or cannot be done, or said, or omitted to be done or said. It critically undermines the creditability of any core carbon principles if this is not done.

  • This will need to be addressed on a country-by-country basis.

  • Both foresters and emitters may be subject to different legal constraints.

  • Calling something a “voluntary carbon credit” or describing something similarly amorphous, can never provide an immunity from applicable laws. . 

Carbon stored in a tree is part of the tree and the tree is part of the land on which it stands. There can be different interests in land or in relation to the land, but a tree may not be able to be dealt with separately from interests in land unless it is dealt with consistently with them.

  • The carbon stored in a tree cannot at present be used in a way that defeats the rights of registered land interests. But it might be recognised within those constraints.

  • ISO has no standards that apply to property (carbon) that cannot be dealt with separately from land which stored carbon forms part of.

  • With there presently being no mandatory New Zealand rules for "voluntary carbon credits", it is necessary to have some defendable voluntary rules. The NZ-CCP are such in relation to green claims. The NZ-CCP will respond to reasoned debate about amendments that should be made.

Interventions with a forest owner that help capture and provably store carbon for long periods, which would not otherwise necessarily be the case, can support green claims by an intervener, providing they are not deceptive or misleading.

  • An accurate green claim, assuming the intervention claimed occurred, might be “I have intervened to enable 1m tonnes of CO₂, both past and future, to be permanently and provably captured until at least 2100 and have done so as part of an effort to remediate past and future emissions I have been or will be responsible for”.

  • Such a green statement may be made in conjunction with a statement about efforts to also reduce emissions.

To meet IPCC and UNFCCC goals the planet needs significant net carbon sequestration between now and 2030, and then from 2030 to 2050. Both before and after 2050 it needs all previous carbon captured to stay captured until 2100. That means that proof of permanence of capture is critical.

  • It is likely deceptive and misleading (breach of Fair Trading and Market Participation regulations) to imply that carbon captured to date will remain captured until 2100 if that cannot be reasonably proven to be the case.

  • Consumers will assume such an implication unless there is a clear qualification.

  • Implying cutting down a tree will help meet the required goals is likely deceptive and misleading (breach of Fair Trading and Market Participation regulations) unless it can be reasonably shown to be true.

A law in any country against cutting down a tree before 2100 should be ignored as support for a green claim unless it can be shown that laws in the country where a tree is growing are, and will be, robustly enforced.

  • It is likely deceptive and misleading (breach of Fair Trading and Market Participation regulations) to imply that the carbon in a tree must remain captured until 2100 if the laws cited in support of this claim cannot be proved to be routinely and robustly enforced.

  • New Zealand is a country that meets this test.

  • A test that merely notes that enforcement of laws is out of the hands of the person claiming the intervention, does not prove permanence.

  • Payment of money if trees are expectedly or unexpectedly felled does not help the planet. It is merely a cash transfer.

  • Payment of any money without a causal connection to the intervention that ensured permanent capture to 2100 does not help the planet meet its 2030, 2050 and 2100 goals and is also merely a cash transfer.

A tree must not only have legal longevity but also not be exposed to material and atypical or catastrophic mortality risks, such as fire, in the period before 2100.

  • It is likely deceptive and misleading (breach of Fair Trading and Market Participation regulations) to imply that no such risks exist if they do.

  • New Zealand is one of the few countries in the world able to meet tests for both legal and silviculture longevity.

A green statement that an intervention has resulted in stored carbon being captured until 2100 when it had not previously been, cannot be made if a tree has already been robustly covenanted against felling before 2100 or there are other robust legal constrains in place preventing that happening.

  • Such a legal constraint may be a law or regulation in a high rule of law country (preventing felling before 2100).

  • An existing covenant against felling, if it expires, or is likely to expire, some time before 2100, may allow felling to occur before that date.

  • Where future acts or omissions are being assessed, the principle of conservatism should be applied to assess what can be assumed about the chances of felling compared with the certainty that a proper (and robustly enforced) covenant forest will remain until 2100.

If carbon said to be permanently captured by an intervention, which would not otherwise have been, has been counted for another reason, for example under an ETS, but the latter can still be reversed before 2100, that should not of itself make a green statement based on proven permanence, deceptive or misleading. However, for the purposes of optics it may be preferable not to count both reversable captures.

  • Additionality is a concept necessary for historic stock change accounting for voluntary carbon credits but is itself suspect if it does not require captured sequestration to remain provably captured until 2100. If that cannot be proved, noting it may not be necessary to do, e.g. under an ETS, historical sequestration is always conditional and therefore of limited integrity.

A green statement that is neither deceptive nor misleading will not only successfully resist regulatory and consumer attacks, including for greenwashing, but may meet auditor, banker and insurer requirements and may also qualify for climate risk disclosures. It may also insulate directors of emitters from those risks.

  • Appropriate rules may recognise the legal and economic realities that foresters and emitters usually need to comply with the demands of auditors, bankers, insurers, and the like, as well as compliance with mandatory reporting requirements. And a green claim that will, or may, offend mandatory reporting standards, or applicable consumer or market participation regulations, may not be approved by these compliance counterparties.

  • Appropriate rules may also recognise the legal and economic realities that emitters have boards of directors who must themselves obtain professional indemnity insurance, and who may not be unable to do so if their company is not in compliance with all applicable regulations and mandatory reporting requirements.

A green claim must establish a causal nexus between an intervention causing a forester to covenant against felling a forest until at least 2100, and the claim itself.

  • In many cases it is only the person paying a forest owner to execute such a covenant that can claim a causal nexus between the payment and the covenant.

  • In some cases, an emitter may still be able to claim such a nexus if an intermediary has made the payment and all parties know that it was only made because an emitter would eventually be the ultimate funder.

  • The exception to this is “voluntary carbon credits” being at some point recognised as a separate form of personal property. Once so recognised that property can pass without the need for such a nexus, but may not meet other core carbon principles if it can still be defeated by the transfer of real property in the trees sequestering the carbon.

Claims for carbon offsetting may be deceptive and misleading if the claims made for forest CO₂ sequestration are themselves, expressly or impliedly, deceptive, or misleading.

  • In this context "offsetting" refers to the practice of claiming an emitter is relieved of an obligation to reduce emissions to the extent it has acquired alleged CO₂ capture credits from a forester, directly or indirectly.

  • These claims include express or implied claims as to alleged permanence of the CO₂ sequestered. As noted above, it is likely deceptive and misleading (breach of Fair Trading and Market Participation regulations) to imply that the carbon in a tree must remain captured until 2100 if the laws cited in support of this claim cannot be proved to be routinely and robustly enforced.

  • It may also include failure to comply with other principles above.

  • This principle is additional to a second reason why offsetting is conceptually suspect, being that the world needs both permanent CO₂ capture as well as reductions of emissions to meet IPCC goals.

A green statement should not only be certified or approved by an independent party applying a published and rigorous standard, but it should have an independent second party sustainability assurance or the like from a recognised international certifying body which complies with these core carbon principles.

  • This is amply justified by the example of Verra, once responsible for certifying the majority of worldwide so-called VERs. In early 2023 it was found that over 90% of its certified credits did nothing to help the planet.

  • Claims by self-appointed certifiers of voluntary green claims, like voluntary carbon credits, where these are recognised, need independent second party sustainability assurance or similar.

Green statements should be recorded on a recognised registry to ensure that they are tracked, and interventions are not recorded more than once.

Certificates of proven green statements shall provide comprehensive and transparent information on the forest now permanently sequestering carbon; robust quantification of the volume of carbon certified as now or to be sequestered until 2100, and the causal link between the intervention and the novel permanence.

  • This should be based on empirical, scientific and industry modelling.

  • Where areas of discretion arise, that discretion should be exercised by independent registered and statutorily regulated consultants and lawyers.

  • If lawyers are signing off relevant documents, they should hold practising certificates issued by their law society and should be practising on their own account.

The voluntary market in tonnes CO₂ forestry sequestration is not directly concerned with how governments measure CO₂ forestry sequestration as and if required under international treaties they have bound themselves to.

  • Under the Paris Agreement and other international treaties governments may measure, amongst other things, increases and decreases in CO₂ forestry sequestration. This invariably measures historic changes only.

  • This is not merely a reporting function but impacts on what actions governments may take to reduce NDC deficits.

  • However, the fact historic increases in CO₂ forestry sequestration have already been counted under an international agreement does not prevent an intervenor claiming but for their prior intervention that sequestration would not have occurred.

Qualifiers

Nor is the voluntary market directly concerned with how governments measure CO₂ forestry sequestration for the purposes of granting, recognising, or the surrendering of units under a mandatory government emissions trading scheme or similar.

  • Rules requiring additionality, preventing double counting, and the like may prevent voluntary forestry tonnes CO₂ sequestration being recognised if the same sequestration has been recognised under a mandatory government emissions trading scheme or similar.

  • Because they are statutory, ETS and similar regimes often operate without requiring proof of additionality, no double counting etc. That may mean they continue to operate even if CO₂ forestry sequestration has already been recognised for voluntary carbon market purposes.

  • However, the fact historic increases in CO₂ forestry sequestration have already been counted under a mandatory government emissions trading scheme does not prevent an intervenor claiming but for their prior intervention that sequestration would not have occurred.

For further information fill out the form below or contact info@nz-ccp.co.nz