Explainer Series | Within boundary removals role in climate performance claims

This latest explainer series article sets out Toitū Envirocare’s position and scientific foundations on removals as a topic and explains their role within our carbon certification programme. This does not include or factor in our position or role of offsets.

What is a removal?

A lot of discourse currently give reference to accounting approaches for removals. This explainer aims to describe key concepts and explain the difference between ‘within boundary’ removals vs carbon credits (‘offsetting’). This then flows onto clarifying the role of removals in climate performance claims, which in Toitū’s programme relates to the Toitū net carbonzero and Toitū Climate Positive certification programmes.

Removal definition:

Toitū Envirocare programmes are founded on ISO standards, which takes into account the international science and best practice. ISO 14064-1:2018 defines a removal as being a “Withdrawal of a GHG [greenhouse gas] from the atmosphere by GHG sinks”. These include enhancing biological sinks of CO₂ and using engineered solutions to achieve long-term removal and/or storage. Examples of biological sinks include forestry, Soil Organic Carbon, and Blue Carbon. Examples of engineered solutions include Direct Air Carbon Capture (DACC), Bioenergy with Carbon Capture and Storage (BECCS), and “enhanced weathering”.

Toitū has experienced and is aware of confusion and misinterpretations of climate performance claims that involve the use of removals.

Firstly, we see confusion on what a removal is. For example, we’ve seen multiple enquiries implying that a company’s emissions avoidance or reduction activity (e.g., on site renewable electricity generation) is a removal and should be treated as such.

Our position is that a removal is a withdrawal of a GHG from the atmosphere by GHG Sinks. In contrast, a carbon credit is a tradable, non-tangible instrument representing one tonne of carbon dioxide-equivalent that is reduced, avoided, or sequestered by a project and is certified to an internationally recognised carbon accounting standard. Whilst an offset is the practice of compensating for GHG emissions by retiring carbon credits.

The most common misconception of removals

The most common misconception case is the perception that all removals are, or should be, the same characteristics of an offset i.e., a tradable carbon credit that’s been cancelled on a registry. With this confusion comes the expectation that the removal should adhere to all the commonly accepted quality criteria of a carbon credit, such as additionality, permanence, and leakage. This is not the case - a removal is not a tradable carbon credit.

A carbon credit is typically used if an organisation’s net emissions balance is greater than zero and it needs to offset the residual balance from outside its measurement boundary. The quality criteria for carbon credits are, in part, to address the fact that the purchaser is buying the credits as individual one-off transactions, i.e., once purchased, the buyer typically has no further influence or control over the management and reversal risk of the credit being purchased. Hence, for purchased credits, the credit project owner has the responsibility and accountability of maintaining the removal as being ‘true’. In contrast, when accounting for removals within the organisation’s boundary, the organisation making the climate performance claim has ultimate responsibility and accountability.

What are the key practical areas of removals?

Practical outcomes are considered to be what will actually be achieved, from a global emission balance perspective. This can be considered across three main areas:

1. Measurement
2. Carbon Accounting
3. Climate performance claims

Measurement

Firstly, we see value in measuring as many removals and related liabilities within the measurement boundary as possible, noting that this is dependent on the availability of robust and verifiable quantification methods. This is consistent with the other side of the balance sheet, whereby an organisation should seek to measure as many emissions as possible within the same measurement boundary, including their supply chain.

The rationale for ‘measuring as many removals as possible’ is simply based on the concept that you can’t manage what you don’t measure. Having the measurement also provides the basis for seeking opportunities to enhance the amount of carbon removed by a GHG sink, and to prevent emissions from reversal events. This opens up the opportunity to improve the measurement accuracy through refined or upgraded methodologies, and the possibility of adding in ‘resilience’, ‘durability’ or ‘reversal risk’ assessments of the carbon ‘reservoir’ (e.g., a forest).

The approach to ‘measure as many removals as possible’, is not constrained to compliance related definitions of a carbon reservoir. For example, forest age, area, species types, tree height, and canopy cover do not limit an organisation measuring the removal under a voluntary reporting programme. The rationale here is that the global atmosphere does not distinguish between removals occurring from a compliance defined reservoir or any other definition.

The principle of improving the measurement quality and accuracy also applies. Toitū guidance follows the ISO standards family of carbon accounting, given the Toitū programmes’ are ISO accredited.

Note that ISO measurement standards also refer to quantifying the carbon stored in reservoirs, i.e., in order to understand the potential carbon that could be emitted into the atmosphere, should a reversal event occur (e.g., fire, windthrow, earthquake). In such an event, the reporting organisation must measure this as an emission, which therefore flows onto the net emissions balance and any related climate performance claims.

So, removals represent both a benefit but also a liability in the form of stored carbon at risk of reversal.

Carbon Accounting

Practical considerations on carbon accounting relate literally to who is accountable for measuring and managing the removal and liability, and how this occurs on the inventory balance sheet. The numbers should transparently show the direct removal owner and where applicable, the flow of the removal to the indirect owner. This is important for verification, climate performance claims, and supporting disclosure that substantiates the claim.

For organisations, removals can be categorised as direct and indirect. Direct removals enjoy the benefits of being under full ownership and control of the reporting organisation. Indirect removals usually exist upstream in the supply chain, such as on the land owned by suppliers of raw materials used by the reporting organisation. Hence, the reporting organisation has some influence and control, but this will vary depending on factors such as how significant they are as a customer to the supplier, and the formality of the supplier relationship. However, it should be highlighted that multiple parties measuring (but not accounting on the balance sheet) removals does present an increased opportunity to enhance and prevent emissions.

These aspects lead onto addressing the risk of double counting, whereby multiple customers of the same supplier could account for the same removal. The Toitū programme approach to this risk is to require a ‘removals agreement’ (or equivalent) between the reporting organisation and their supplier. This agreement includes confirmation that the supplier is allowing the reporting organisation the rights to account for the removals within their inventory. By doing so, the supplier forgoes the opportunity to use the removals on their own inventory.

For organisations with direct removals that are not signing over the accounting rights to their customer, the organisation still needs to sign a removals agreement to confirm this is the case, and to confirm the removal will not be registered as a carbon credit (if the removal is eligible under a credit standard).

Therefore, the owner of a direct removal effectively needs to choose whether they either use the removal to reduce the net balance of their own emissions inventory, or allow it to contribute to reducing the net emissions of their customer, or register it as a carbon credit.

The organisation’s decision to use the removals to reduce the net emissions balance (and thus reduce the offset requirement) should include consideration of a number of risk items, such as those listed below. It is likely that recognised removals for reducing the net offset requirement will be a subset of the total measured removals in any given emissions inventory.

• Ownership/rights to the removal: The entity seeking use of the removal should be able demonstrate they hold the rights to the carbon removal.
• Biodiversity, indigenous species: The entity seeking use of the removal should review perception risk, on the extent of indigenous vs exotic species. It is a recommendation that where relevant, the entity influences management of the removal to promote increased indigenous species on any given site.
• Land use capability: It is recommended that the entity seeking use of the removal identifies the Land Use classification, to ensure there is no perverse outcome of removals expanding into high grade productive land classes.
• Permanence: The entity seeking to recognise the removals is required to develop and implement Removals Agreements (or equivalent) between their organisation and the removal supplier. Sufficient clause(s) are needed to show the removal is, and will continue to be permanent. Should removals be reversed, purchasing carbon credits will be required to maintain validity of the climate performance claim, or surplus removals from within the overall pool of removal suppliers used to top-up the lost carbon.
• Double counting: The entity seeking to recognise the removals is required to develop and implement Removals Agreements (or equivalent) between their organisation and the removal supplier. This needs to include clause(s) to ensure the removal owner will not sell the rights to the carbon removals claimed during the time period of the related climate performance claim.

Climate performance claims

Climate performance claims relate to how the use of removals aligns with the overall integrity of the organisations intent to genuinely take ambitious action on reducing their direct and indirect climate impacts. This needs to be viewed on gross emissions and net emissions basis, with sufficient transparency and narrative to clearly communicate the basis of the ‘headline claim’. This brings in the importance of having ambitious gross emission reduction targets, to avoid actual or perceived scenarios whereby an organisation is simply operating with ‘business-as-usual’ emissions and simply relying on removals for ongoing zero net emissions claims. An ideal outcome over time is conceptually shown in Figure 1.

Figure 1: Summary of ideal outcomes of emissions and removals.

Summary

Removals are a withdrawal of a GHG from the atmosphere by GHG sinks. Removals reside in the form of direct ownership by an organisation, and indirectly within an organisations value chain boundary.

For climate performance claims within Toitū’s net carbonzero and Climate Positive certification programmes, our position is summarised in Figure 2. In addition to the summary diagram, we highlight the following key items:

1. In-boundary removals are not offsets, carbon credits, or insets. They are removals that contribute to reducing the net emissions of an organisation inventory or product footprint.
2. Ambitious gross emission reductions are still required by entities using removals in a climate performance claim.
3. Removals are also an emissions liability and entities must manage these accordingly.
4. Where possible, organisations should identify and implement opportunities to enhance the removal rate and amount being stored.
5. Headline climate performance claims do need adequate disclosure in the narrative of the claim, including transparency of both the emissions and removals side of the balance sheet.
6. Claims using removals do need to ensure the removal is not registered as a carbon credit or other programme associated with claims.

Figure 2. Summary of our position on removals accounting within climate performance claims.