Greenhouse Gas Protocol: Development Of The Land Sector And Removal Guidance
Compiled By: Dr Jacob Crous From Material Provided By The World Resources Institute And The Workable Solutions Group*
The Greenhouse Gas Protocol (GHG P) is a multi-stakeholder partnership of businesses, nongovernmental organisations (NGOs), governments and others convened by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). Launched in 1998, the mission of the GHG P is to develop internationally accepted greenhouse gas (GHG) accounting and reporting standards and tools, and to promote their adoption in order to achieve a low emissions economy worldwide. The focus of this guidance is on corporate GHG reporting whereas the Intergovernmental Panel on Climate Change (IPCC) guidance documents focus on National GHG reporting.
The aim of corporate GHG reporting is to:
- Inform mitigation strategies by understanding the GHG emissions/ removals impacts of a company.
- Set targets and track performance in GHG emissions and removals.
- Report GHG inventories including GHG emissions and carbon removals and report progress toward GHG mitigation goals.
In early 2019, WRI developed a survey to assess the demand for additional Greenhouse Gas Protocol guidance on carbon dioxide removals (natural and technological), bioenergy, land use and land use change. The survey was distributed online and ran from January to April 2019. A total of 417 individuals responded to the survey from businesses, governments, NGOs, academic/research institutions and consultants across over 50 countries. The most common reason respondents cited for why they were not accounting for landbased activities was a lack of guidance. Thus, in early 2020, GHG Protocol started with a process to develop Land Sector and Removals Guidance (LSRG) (https://ghgprotocol.org/land-sector-andremovals-guidance) to address:
- Removals: Accounting and reporting for carbon dioxide removals and storage.
- Land sector emissions and removals: Accounting and reporting for greenhouse gas emissions and removals from agriculture, forestry, other land use and land use change.
- Biogenic products: Accounting and reporting for greenhouse gas emissions and removals from the production and consumption of biogenic products such as bioenergy.
A global, inclusive, multistake holder process in partnership with companies, government agencies, NGOs and other experts and stakeholders from around the world, was used to develop this standard, similar to previous standards development, e.g. GHG Protocol Corporate Standard (2004), the GHG Protocol for Project Accounting (2005), the Corporate Value Chain (Scope 3) Standard (2011), etc. The new guidance built on existing approaches, such as the IPCC guidelines for national GHG inventories, GHG Protocol Agricultural Guidance and others. Part of the process was to pilot test the draft guidance by a set of companies to gain real-world feedback on the practicality and usefulness of the draft guidance to ensure the final guidance is well suited to their needs. Another key element was that the guidance should have a user-friendly technical design to ensure a true and fair account of emissions, removals and sequestration and provide comprehensive guidance for land sector accounting aligned with international best practices; based on key GHG accounting principles (relevance, accuracy, completeness, consistency and transparency). Two principles, conservativeness and permanence, were added to the initial five principles with the release of the first draft guidance document.
The WRI and WBCSD convened five stakeholder groups (Secretariat, Advisory Committee, Technical Working Group, Review Group and Pilot Testing Group) to oversee and develop the new guidance. The original plan was to convene the Technical Working Group (TWG) in Q1 of 2020 and to finalise and publish the standard guidance by Q2 2023.
The global Forest Sector embraced and contributed significant resources to the development of the LSRG, anticipating that it would serve as a useful reporting tool that would help companies to account for their land-based carbon inventory. However, five years after the GHG P launched the guidance development, the finalisation of the LSRG has suffered delays and politicisation. The most concerning problems with the GHG P-LSRG are:
- Issues with scientific accuracy, unnecessary complexity and basic auditability have prevented effective consensus on the draft standard. For businesses to be able to use it, the guidance must be auditable and rooted in science.
- Specifically, the last-minute introduction of “intervention accounting” for the Forestry Sector has made the guidance unusable for companies. This methodology seeks to force companies to compare their annualcarbon inventories against counterfactual scenarios
- for example, a world without human activity (thus measuring forest carbon against a no-harvest counterfactual scenario). This is not a GHG P guidance requirement for any other sector.
- While most elements of the draft LSRG standard 29 are usable, workable and have broad stakeholder acceptance, the inclusion of “intervention accounting” for forest lands would essentially exclude forestry – one of the greatest natural climate solutions – from climate action. Global climate goals will be difficult, if impossible, to reach without increased net carbon sequestration through forests and renewably sourced products.
The introduction of intervention accounting raised some serious governance concerns as it was introduced at the end of a fouryear stakeholder process without stakeholder vetting or pilot testing to provide robust practical evidence on the suitability of these methods. The intervention accounting proposal was developed without input from the Technical Working Group (TWG) that oversaw development of every other technical element of the LSRG.
During the September 2023 workshop, where the proposal was introduced, TWG members across many disciplines vocally rejected the concept. The intervention accounting proposal currently under LSRG consideration will apply only to forests, which is not consistent with, or comparable, to other GHG P approaches that apply across sectors. The same system-wide GHG quantification approaches should be applied to all land uses, whether land is used for forest or agriculture or a solar farm or managed primarily for in-forest carbon off-sets or for wood production.
Recently the GHG P implemented a strategy and organisational review process to have a more formalised governance process and to increase transparency and speed of standards development. A Steering Committee will oversee the organisational governance. A new Independent Standards Board (ISB), consisting of leading global experts, will oversee the standards development process and ultimately approve the final standards and guidance. Under the oversight of the Independent Standards Board, Technical Working Groups (TWG) will be convened on specific topics to develop the technical content of the standards and Review Groups, open to all stakeholders, will provide feedback on draft standards. Pilot Testing Groups may also be convened as needed (https://ghgprotocol.org/ourgovernance).
After the original LSRG Advisory Group was unable to resolve the forestry carbon accounting issue, it was decided to bring in a professional service firm to support the Secretariat in the process to reach a resolution on this matter. This firm was recently selected by the ISB. The ISB is now also in process to convene a forest carbon accounting TWG and recently sent out invitations to various individuals. The TWG will be tasked to refine the current options or propose new solutions. Currently, the Forest Carbon Accounting Technical Working Group is developing proposals to be submitted to the Independent Standard Board. The new timeline for the publication of the Standard and Guidance is Q4 2025. All meeting documents and minutes are available in a public repository: https://ghgprotocol.org/standardsdevelopment-and-governancerepository.
We are at a critical juncture. The climate cannot afford any more wasted time. The world needs a practical global forest carbon accounting standard that is rooted in science and common sense. Such a standard would bring consistency to the forest and forest products sector and allow companies to provide a real, authentic and complete accounting of their carbon inventory.
Figure 1 helps illustrate how each approach can be used to assess emissions or emissions impacts over time.
ADDITIONAL INFORMATION ON COUNTERFACTUALS OR INTERVENTION ACCOUNTING
To quote GHG P: “Two of the important distinctions between inventory and project/intervention accounting are (1) the assessment boundary and (2) the reliance on observed data vs counterfactual scenarios. Whereas the inventory accounting approach uses boundaries defined by emissions sources owned or controlled by the reporting organisation and in the company’s value chain, the project/intervention accounting approach identifies all potential primary and secondary impacts of the project/intervention in question and assesses the GHG emission increases or reductions from the baseline relative to the project activity. For this reason, inventory accounting approaches quantify direct emissions that have occurred, and thus theoretically all direct (scope 1) emissions values could be summed within a defined geographical or political region to equal total emissions of that region if there were complete reporting. Inventory accounting, however, does not quantify impacts of an organisation’s individual actions. By contrast, project/intervention accounting provides a holistic view of the impacts of a specific intervention relative to what would have otherwise occurred, including the system-wide impacts beyond the GHG inventory boundary. However, project/intervention accounting does not allocate total system emissions or removals that have occurred, nor does it provide a comprehensive quantification of all an organisation’s emissions.”
WHY COUNTERFACTUALS ARE NOT AN APPROPRIATE REQUIREMENT FOR A LAND SECTOR GHG INVENTORY
A counterfactual of what would have happened in the past has no relationship to a current GHG annual reporting inventory. Reporting methodologies must meet the purpose of the reporting system, which is to track emissions and removals of a corporate entity and its value chains over time.
Inclusion of counterfactuals are inappropriate within a corporate GHG inventory because they undermine the integrity of reporting data by introducing hypothetical scenarios which are often subjective and cannot be tracked or proved.
Reporting accuracy will be compromised. Applying counterfactuals is not an accurate reflection of the annual inventory of GHG emissions and removals at a company level. Treating sustainably managed lands as sources of emissions based on a comparison to unmanaged lands is not representative of actual terrestrial carbon fluxes. Requiring this approach would force a company to report inaccurate information.
Counterfactuals cannot be evidenced, and therefore audited, in an inventory reporting context. Counterfactuals are almost always theoretical and can rarely be proved. The guidance must be implementable and auditable, or it will not be used by companies.
Counterfactual accounting for annual inventory reporting purposes contradicts the stated principles of the GHG P. The GHG P Corporate Accounting and Reporting Standard is based on, in the words of the World Resources Institute, “accurate, complete, consistent, relevant and transparent accounting and reporting of GHG emissions by companies and organisations, including information on setting organisational and operational boundaries, tracking emissions over time, and reporting 0emissions.”
Reporting methodologies should be based on science. The Intergovernmental Panel on Climate Change (IPCC) uses an approach (called the managed land proxy) to distinguish humancaused changes in forest carbon stocks from natural causes. This is the approach used in the current GHG P draft and is used by countries when they report to the United Nations Framework Convention on Climate Change (UNFCCC). There is no reason to break from this precedent.
WHEN COUNTERFACTUALS ARE APPROPRIATE
Counterfactuals are typically used to estimate the benefit of a changed course of action (how a given activity has reduced emissions against a baseline). For example, counterfactuals are often used to identify the indirect climate impacts of corporate strategy, action or capital allocation in climate transition planning and scenario analysis. Counterfactuals play an important role in targetsetting, which is different from inventory reporting.
Counterfactuals in carbon accounting typically focus on how actions taken today could affect outcomes in the future, not on how outcomes might be different today if the past were altered. The counterfactual approach introduced to the LSRG process does not align with the typical way in which counterfactuals are used in carbon accounting (comparing emissions and removals in a project baseline to those in absence of the project).
The counterfactual proposal being considered by WRI considers the impact of the impossible – changing the past – instead of a focus on how to make the best
possible decisions going forward based on today’s reality.
WHAT IS AT STAKE IF COUNTERFACTUALS ARE REQUIRED FOR INVENTORY ACCOUNTING
The entire point of a GHG inventory – which is to produce a report on corporate emissions that stakeholders can use to compare companies and sectors – is undermined. Key stakeholders could no longer compare one inventory to another, because only certain companies would need to use this approach only for certain emissions; worse, they would need to create their own mechanisms to execute the guidance and would use very different approaches.
A system that is overly complex, confusing, incompatible with regulatory and investor expectations, and does not provide useful methods to report factual information, is unlikely to be used by companies. Use of multiple alternative reporting approaches will create confusion for investors and others seeking clarity through a common system.
Forest-based climate solutions are at risk. If accounting systems do not make it feasible for forest sector companies to provide accurate accounting of both emissions and removals, the Forest Sector cannot contribute meaningfully to a net-zero transition in the most critical decade required for action. Finance in nature-based solutions will be compromised. To be clear, this will put 1.5 degrees irrevocably out of reach. The stakes are incredibly high.
The Forest Sector will find it difficult to use interconnected GHG reporting systems that base their methodologies on the GHG P. These include the Science Based Targets initiative (SBTi) Forest,
Land and Agriculture (FLAG), the International Sustainability Standards Board (ISSB), the Task Force on Climate Related Disclosures (TFCD), the Climate Disclosure Project (CDP), a number of national government reporting paradigms such as those used by the UK, and carbon market compliance systems such as the EU’s Emissions Trading System (ETS). The GHG P is a necessary foundational accounting step before many climate mitigating activities such as target-setting
and appropriate development and use of forest-based carbon credits, can be put to use.
Companies cannot acquire and count biogenic technical removals (BECCS) for their net-zero targets in the absence of a standard accepted inventory accounting system. Such a limitation would not apply to nationally determined contributions under the United Nations Framework Convention on Climate Change (UNFCCC).
* This group consists of representatives from leading forest management and forest products companies aiming for a workable solution to the GHG Protocol Land Sector and Removals Guidance. These companies have either pilot tested the draft guidance, participated in the technical working groups of the protocol development, serve on the advisory council or are closely tracking the guidance with the intent to implement the final guidance. Jane Alonso from Alonso Strategic Consulting, LLC is the main coordinator of this group.
Source: Forestry In Focus
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