FAQ (Frequently Asked Questions)

Questions 1-5

1) Is this the only possible credible system?
No. The proposed system is one possible way of building a credible market approach to terrestrial carbon; we would welcome better alternatives or suggestions to improve ours.

2) Are there other ways to set a credible National Terrestrial Carbon Budget?
Yes. Provided they are consistent with the Principles set out in Section 2 (especially Principle 1), possible methods might include:

• Using the projections of future terrestrial carbon emissions that nations report as part of IPCC communications to calculate the Tradable Terrestrial Carbon (after review by experts).
• Asking Seller Nations to prepare a sustainable development land management plan (mapping and classifying land into protection, production, infrastructure, and conversion land), and including as Tradable Terrestrial Carbon only terrestrial carbon on land that is planned for conversion.

3) Who decides if a nation joins the system?
Joining the system is voluntary but once a nation has joined, there are obligations. This is no different from the vast majority of international agreements. Nations would determine for themselves if and how they will become and remain compliant with the system and how they will distribute rights, obligations, impacts, compensation, participation, and revenues as well as how they will make choices between economic, social and environmental outcomes.

4) Does this rely on a “global deal”?
The system does not rely on all nations participating. It would work with just two nations (eg, the mooted partnership between Australia and Papua New Guinea), as part of a multi-lateral carbon market, or as part of an international carbon market created under the successor to the Kyoto Protocol.

5) Would this work under other proposed approaches like the “fund” approach, “nested” approach, and “dual markets” approach?
The proposed system would be complementary to a “fund” approach under which nations contribute resources to an international fund and forested nations access those resources based on taking specific steps forward on reducing their deforestation and becoming market-ready. As set out in Principle 4, they are not mutually exclusive.
The system would work under:

• The so-called “nested” approach, which allows terrestrial carbon credits to be generated through project-level activity during a specified transition period before a nation has implemented national accounting and monitoring of terrestrial carbon.
• A “dual markets” approach, which creates demand for terrestrial carbon credits independently of other greenhouse gas emissions sectors (ie, terrestrial carbon credits cannot be used to offset industrial emissions). It is worth noting that such approaches lead to different shadow prices for carbon in different uses. This means that the cost of reducing overall carbon emissions is not minimised.

It would also work under a system that transitions from a “fund” approach to a “dual markets” approach to an eventual fully fungible carbon market approach (whether or not a “nested” approach is also used).