Reversal risk and the buffer pool
Land-based projects assess the risk that stored carbon is released again, and deposit a Minimum Buffer Percentage (MBP) of 12% to 40% of their MCUs in the CR-I Buffer Pool. A High risk in any category makes a project ineligible.
Who it applies to
AFOLU projects that enhance removals, in sectoral scopes 14 (afforestation and reforestation) and 15 (agriculture). The VVB or the NCCF Governing Council can require other sectors to use the tool too. Risk is assessed over a 100-year Minimum Project Term from the project start.
Risk categories
| Category | Risk types |
|---|---|
| Financial | Funding shortfall, IPP bankruptcy, access to buyers, MCU price uncertainty, long breakeven period |
| Management | Lack of expertise, insufficient staff, lack of tools and QA/QC, inadequate planting material |
| Social | Land rights, community support, land-use change, improper harvesting, overgrazing or encroachment |
| Political | Change in land type, external policy change, war |
| Natural | Drought, flood, pests and diseases, natural fire, extreme weather |
Scoring
Each risk type is scored for probability and impact, from 1 to 5 each, before and after mitigation. Its score is probability × impact, up to 25. A category’s ranking is its post-mitigation score as a percentage of the maximum: Low up to 12%, Medium above 12% to 40%, High above 40%.
A project with any category ranked High cannot be registered.
Minimum Buffer Percentage
| Grand total risk score | MBP |
|---|---|
| Up to 12% | 12% |
| Above 12% to 15% | 15% |
| Above 15% to 20% | 20% |
| Above 20% to 25% | 25% |
| Above 25% to 30% | 30% |
| Above 30% to 35% | 35% |
| Above 35% to 40% | 40% |
| Above 40% | Not eligible |
Contributing
- Contribute at least the MBP at every issuance, from the project’s own MCUs, MCUs from other projects of any scope and vintage, or a mix. State the choice in the Monitoring Report.
- Own MCUs go straight to the pool with no issuance fee. MCUs from another project are transferred through the online form within 15 working days of the issuance approval.
- Insurance can supplement the buffer but cannot replace it.
- Buffer MCUs cannot be transferred or traded, and cannot be pre-sold.
If no reversal occurs, buffer MCUs are held for 100 years from the project start, then cancelled up to the MBP deposited; any excess is credited back to the IPP.
Sources
- Tool for GHG Reversal Risk and Buffer Contribution v1.0, sections 2 to 4 and 6.5
- Registration and Issuance Procedure v1.0, section 8
- Carbon Standard v1.1, section 8
