The pilot project involves a soon-to-be QEII covenanted native block of approximately 600 hectares in northern Hawke’s Bay. Pāmu will lease the land to BNZ, with BNZ including it in its value chain and greenhouse gas inventory while funding biodiversity protection work on the land.

Annabel Davies, Pāmu nature investment officer, told Carbon News that the land lease model allows BNZ to bring carbon removals into their operations while investing in biodiversity enhancement.

“BNZ can recognise the land on its balance sheet and account for the carbon removals from the forest. The landowner [Pāmu] can undertake nature enhancement activities that are also aimed at increasing the native carbon sink.”

Davies says the pilot project addresses “a known impediment” to native carbon and biodiversity enhancement activities in New Zealand: “The costs on landowners for little [or] no recompense.”

New Zealand company CarbonCrop will provide a platform offering measurement, monitoring, allocation, and traceability services related to the carbon removals, and the project will be included in Toitū’s annual audit of BNZ for net carbon zero certification.

Davies says the process was designed to be accessible to others and scalable in the future. “It is important to note that this is the first, and there will be some lessons learned as we work through phases, including an independent audit.”

Additionality?

The BNZ/Pāmu project involves pre-1990 forest land, which isn’t eligible to earn carbon credits in the NZ ETS. Such older forests are considered part of the "status quo" rather than intentional “additional” new mitigation, with 1990 recognised as the benchmark for global land-use and forestry and New Zealand’s carbon emissions and removals calculated against this baseline.

There are questions around the integrity of the kind of removals BNZ is targeting, known as “insetting” in a company’s values chain, with a much less robust process required than if the company were purchasing carbon credits that meet Integrity Council for the Voluntary Carbon Market (ICVCM) standards.

‘Additionality’ is one of the ICVCM’s ten ‘core carbon principles’ for carbon offsets, while additionality requirements for direct supply-chain removals for a GHG inventory are unclear.

Pāmu says enhancement activities such as pest control, fencing, and replanting will mean the forest is storing additional carbon.

“The removals will be attributable to a sink (in this case a growing forest) that is receiving additional interventions aimed at enhancing the removal rate. The key to this project is that it enables financial reinvestment into the land, to improve the quality of the forest and undertake activities appropriate for the New Zealand context such as pest control, replanting, and fencing, allowing native species to grow and enhancing the forests' ability to store carbon,” says Davies.

However, additionality in the context of values-chain removals counted in a company’s greenhouse gas inventory is controversial internationally. The New Climate Institute and Carbon Market Watch’s Corporate Climate Responsibility Monitor argues that non-additional insetting is effectively unregulated offsetting and suffers from integrity and transparency failures.

Such removals could be considered greenwashing because they are still purportedly “offsetting” a company’s real and permanent emissions in its GHG inventory, without meeting the same robust standards as carbon credits.

‘Not offsetting’

Carbon News asked Toitū why it would allow this kind of GHG inventory accounting using removals that are arguably less robust than ETS credits (NZUs), at the same time Toitū is planning to phase out the use of NZUs for offsetting, in line with global best practice.

In an emailed statement Belinda Mathers, Toitū chief Science and Integrity officer, argued that BNZ wasn’t using the carbon removals for offsetting.

"The approach being used by BNZ focuses on direct, in-boundary removals under ISO 14064-1, rather than offsetting.”

“Toitū Envirocare remains committed to transitioning to use of high quality, ICVCM (Integrity Council for Voluntary Carbon Markets) carbon credits when using an offsetting approach.”

Carbon News also asked how the project would avoid double counting against NZ's Paris Agreement targets.

“Where removals are also counted within New Zealand’s targets, we treat this as a contribution, consistent with our commitment to high-integrity climate action," Mathers said.

GHG Protocol standard?

In a combined media release, Pāmu and BNZ claimed the project is “designed to adhere to” Greenhouse Gas Protocol Corporate and Land Sector and Removals Standards.

However this standard specifically excludes forestry carbon removals, with a possible update to include forestry not expected for some time.

When asked to clarify, Pāmu and BNZ said in a statement that this standard played an important role in informing the design of this model, “providing an indicator" of what could come for accounting and reporting forest carbon removals.

“We considered the GHG Protocol Guidance issued on the release of the LSR standard which stated: ‘Until the release of an updated LSR Standard that includes forest carbon accounting, companies choosing to disclose forest carbon impacts should be transparent about their chosen methodology.’

“The key to this project has been to remain transparent about what established and future standards this model can adhere to, including this project being implemented under established global emissions accounting standards. We acknowledge though, that future iterations of the Land Sector and Removals Standards that address forestry removals may have additional requirements.”

Carbon News also asked Pāmu whether they were aware of CarbonCrop, the company providing a platform to measure, monitor, allocate, and trace the carbon removals, making headlines for selling low-integrity carbon credits.

Pāmu replied that the project is being implemented under established global emissions accounting standards.  

“Pāmu has been using CarbonCrop as a platform to measure, monitor, allocate, trace, and report GHG data for a number of years now, and having been through several independent audit cycles, is confident in the approach being taken. CarbonCrop is not the provider of a Standard, nor an issuer of carbon credits. Their work on this initiative will be subject to independent assurance by Toitū.”