With a background in economics and a wealth of experience in climate finance, carbon credit projects, and reforestation, Casper Van der Tak sheds light on the dynamic shifts in the carbon credit economy, the significance of reforestation in recent years, and the evolving landscape of sustainability, in an interview for MORFO 's white paper on The Future of Reforestation Carbon Credits. Van der Tak's insights provide valuable guidance for companies investing in carbon credits and reforestation programs, geared toward individuals and organizations involved in these initiatives, including project developers, buyers, investors, and stakeholders.
Can you introduce yourself?
An economist by training, I have been working on climate change since 1996. Part of my work is related to climate finance, where I help organizations formulate their climate change targets and support their achievement tracking. I also assist companies in their applications for concessional climate finance from the GCF and in the design of climate finance programs. Another part of my work involves advising several carbon credit project developers and carbon credit buyers. This can be technical, related to project development, but it can also be focused on the marketing of carbon credits and the general approach and strategy in the carbon markets. My advisory role at MORFO has so far been mostly focused on strategy and marketing.
What do you see as the most significant changes in the reforestation-related carbon credit economy in recent years?
When I started working in the carbon markets, the Clean Development Mechanism (CDM) and its product, the Certified Emission Reductions (CERs) were the main things. These were primarily used for compliance purposes in the EU Emission Trading System (ETS): to comply with the emission caps, enterprises covered under the ETS could either reduce their emissions, buy allowances from other enterprises covered under the ETS with a surplus of allowances, or use CERs (and similar products from Joint Implementation activities). At that time, reforestation was not very popular in the market, because the emission reductions resulting from reforestation were not permanent. So while forestry CERs could be used in the ETS, that use was temporary, and forestry CERs would at some point be replaced with other permanent emission reductions. Essentially, the use of forestry CERs was a temporary solution to be replaced with a different solution at a later point in time.
Currently, the carbon markets have refocused completely, and produce offsets that are used for voluntary compliances purposes. “Visuals” matter a lot, and reforestation-based carbon credits have a great appeal to companies and the general public. For that reason, although when I started renewable energy and energy efficiency based carbon credits were much more popular than reforestation ones, this has completely turned around. Reforestation, and more in general, nature-based solutions, have become much more popular.
If I may venture a guess, I believe in the near future markets may shift their attention to a combination of nature-based solution and energy efficiency and renewable energy - efficient use of biomass to produce renewable energy. Nature-based energy solutions or NBES - you hear it first at MORFO!
Do you see any fundamental differences between carbon credits based on reforestation and other types of credits?
Personally I believe that reforestation gets too much “credit”, if you forgive the pun. Now the dominant narrative is that reforestation as a source of carbon credits is good, afforestation is good, renewable energy and energy efficiency as sources of carbon credits are bad, which to me is overly simplistic. It depends on the underlying projects and technologies. Of course, reforestation and afforestation can be great projects with great social and environmental co-benefits, if properly designed. For example, following MORFO’s approach to reforestation and afforestation is a proper form of rewilding that almost completely recreates the natural ecosystem with high biodiversity value. Such projects deserve a high valuation in the market and will provide buyers and investors with assurances that they contribute to the fight against climate change and contribute to biodiversity.
As an advisor to companies investing in carbon credits and reforestation programs, how have your interactions with stakeholders changed in recent years? What is your primary advice concerning reforestation carbon credits, and what are the main challenges?
One of the main changes I've noticed is that buyers and investors are increasingly concerned about project quality, as well as hidden project issues such as overestimated emissions reductions, past land conflicts, invasive species, money not reaching the local population despite promises, etc. It seems that more and more buyers and investors want to get involved early in project development to ensure that the projects they are associated with are completely sound. There is a premium for co-developed projects, and this can offer an excellent opportunity for an organization like MORFO.
Everyone is focused on prices these days. Is this a major issue for you? Why or why not?
Yes, when project developers hire me for the marketing of the carbon credits, they want me to achieve the highest possible price for them! There is actually quite a bit of differentiation, with buyers willing to pay higher prices for what are perceived to be high quality projects.
How could we ensure transparency and credibility in carbon credit projects to build trust among investors and stakeholders?
I advise to let buyers, investors and stakeholders in at an early stage. Identify the partners you want to work with, and give full access to all relevant information related to a project. Also, when there is a potential problem with the project, be upfront about it.
Is the topic of high-quality carbon credits the right one? Why?
High quality carbon credits is the current direction. More and more initiatives exist to guarantee the quality of the projects, and more and more buyers are concerned that they will offset their emission with poor quality carbon credits, so ensuring that the offsets meet the expectations of the buyers becomes increasingly vital.
What are the most difficult obstacles you currently face in your work?
There have been some negative publications about the carbon markets, and as a result, buyers and investors are now overly cautious. An example is a potential transaction that I facilitated, where there had been negative publicity over a land conflict in the past. In the end, that publicity caused the transaction to be canceled. The fact of the matter was that the land conflict pre-dated the project development, and that the project developer had made all efforts to resolve the issues. On a voluntary basis, the project developer engaged the Compliance Advisor Ombudsman (CAO) process to resolve the problems, and the case was successfully resolved (and is being used by the CAO as a successful case study). Scrutiny is good, but sometimes it goes too far…
With the growing emphasis on sustainability, how do you see the future of carbon credits and reforestation initiatives shaping the global environmental landscape?
Not only as a source of carbon credits, but also as a source of biodiversity credits. The MORFO future is bright!
