Carbon credits from forest projects have become a prominent approach in combating climate change in Thailand. But will it all add up?
As the world intensifies its efforts to curb greenhouse gas emissions, Thailand is at the forefront, promoting the rise of the voluntary carbon credit market. This initiative has become a pivotal mechanism for meeting the greenhouse gas reduction goals outlined in the Paris Agreement.
Thailand Voluntary Emission Reduction Project (T-VER) serves as the primary platform for carbon credit trading, adhering to national standards. Remarkably, from 2016 to 2022, the trading volume of carbon credits soared by 144%, along with a 131% increase in purchase prices.
The most sought-after carbon credits in Thailand are linked to forestry projects, commanding a record high of 2,000 baht per metric tons of carbon dioxide equivalent (tCO2e) — nearly tenfold higher than that of other types, such as bioenergy or solar energy projects, and achieved in under seven years.
However, the conditions of these forest and green space carbon credit projects, especially REDD+ projects aimed at conserving existing forests to maintain their carbon sequestration capabilities, may risk generating ‘phantom carbon credits’ by overestimating greenhouse gas reductions.
Data from February 20, 2024 show that 19 out of 24 REDD+ projects are located in community forests or state forest reserves protected by the Community Forest Act (2019) or the National Reserved Forest Act (1964), which are already under conservation.
These projects are part of Thailand’s T-VER and are listed as “projects not required to prove additionality (Positive List).” This means they don’t need to demonstrate how the carbon sequestration in existing forests is increased by the carbon credit market.
Despite the doubts and uncertainties, the government continues to promote community forest carbon credit projects to combat climate change, generate income, and increase the budget for forest management across the country.
Meanwhile, the private sector is interested in partnering with local communities to invest in community forest carbon credit projects to reduce greenhouse gas emissions and achieve carbon neutrality.
Who owns community forest carbon credits?
The Forest Resource Management Office manages community forests in Thailand under the Royal Forest Department.
Communities interested in participating in carbon credit projects must seek approval from the Royal Forest Department before registering the project under the T-VER.
According to the Royal Forest Department’s Regulations on Carbon Credits Sharing from Forest Planting, Conservation, and Restoration (2021), the project owner holds the carbon credit ownership rights.
The Royal Forest Department can enter into agreements to share carbon credits with project developers, and community forest committees may also co-own the project and have rights to the credits.
Additionally, participants in the project must cover all expenses related to developing the T-VER project.
What does it take to obtain community forest carbon credits, and what are the costs?
Exploring the processes and expenses of community forest carbon credit projects, we consider a hypothetical 1,000-rai (1.6 square kilometers) project over ten years (as per T-VER forest project conditions), with three certification requests throughout the project.
The total expense is 1.21 million baht or more than $US 32,800.
Addressing the high costs:
who will support the community?
“Many communities have planned projects but face obstacles during verification due to high costs.” Vichai Pengreuang, Chairperson of the Community Forest Committee Tambon Ton Peung, and Chairperson of the Community Forest Network Tambon Mae Pong, Chiang Mai
The complexity of documentation and the significant costs of carbon trading, ranging from hundreds of thousands to millions of baht (the equivalent of $US 3,200 – 32,000), can be major barriers preventing many communities from bearing the expenses on their own.
Communities seeking to develop carbon credit projects need support both financially and operationally.
One solution is the collaboration among civil society, private sector, and government to fund and assist communities through the “Carbon Credit from Community Forests for Sustainability” project initiated by the Mae Fah Luang Foundation in 2021.
This project supports communities in preparing documents, providing technical assistance, project implementation, and funding.
The Mae Fah Luang Foundation is an intermediary to raise funds, assist with documentation, and handle technical steps such as sampling plots and project registration.
It also serves as a connector between the private sector, aiming to achieve carbon reduction goals through purchasing carbon credits, and communities needing budgets for forest maintenance and income generation.
Communities receive funding to cover T-VER project-related fees, eliminating the need for villagers to invest their own money.
The funds are allocated to community support funds at 300 baht/rai/year (US$ 8/0.0016 km2/year) for the first three years, which can be used for forest maintenance and livelihood development.
Communities typically do not receive dedicated forest management budgets from the state, only occasional project-based funding.
As of February 27, 2024, 24 P-REDD+ projects are registered under T-VER, with 19 projects developed and managed jointly by the Royal Forest Department, the Mae Fah Luang Foundation, and the communities.
“If communities manage forests well, companies can use the carbon credits for offsets or in their net-zero pathways,” stated M.L. Dispanadda Diskul, CEO of the Mae Fah Luang Foundation, in an article on Thairath Online published on 26 November last year.
“We are finding ways to scale the business quickly, as conservation is urgent. We must follow rules and avoid greenwashing while ensuring community benefits.”
He added in another interview on the TTB Channel 5 on 14 February last year that; “Our carbon credit project principle is to avoid cutting trees before planting, as it reduces biodiversity, which is crucial.”
How much funding do communities receive from the project?
Under the Carbon Credit from Community Forests for Sustainability project, private sector funding through the Mae Fah Luang Foundation provides 2,500 baht/rai (US$68/1.6 km2/year) for the first six years of the project, subject to field assessments.
The funds are divided into “support registration process” for system implementation and community forest and “community fund”.
The foundation will support around 700 baht/rai (US$19/1.6 km2) for six years to cover T-VER project system setup and registration.
The community will receive 300 baht/rai/year (US$8/1.6 km2/year) for three years for forest management and sustainable development, with annual audits by the foundation.
Funds cannot be used for political purposes, road construction, or personal benefits. Allocations for years four to six would be 300 baht (US$ 8) per carbon credit per year, subject to foundation review and potential future changes.
How are carbon credits allocated?
Once carbon credits are generated from a project, a key question arises: How are these credits allocated among stakeholders such as the community, the private sector, the Mae Fah Luang Foundation, and the government? What proportions are considered fair?
One of the main incentives for the private sector to support such projects is the acquisition of carbon credits to offset their greenhouse gas emissions as part of their business operations, aiming for Carbon Neutrality or Net Zero Emissions.
This trend is pushing the private sector to be more environmentally responsible. Meanwhile, communities need income to support forest management and improve local living conditions as a reward for their efforts in forest conservation.
According to government regulations, the allocation of carbon credits from forest projects in state-owned forests cannot be arbitrarily decided but follows specific guidelines set by the relevant agencies such as the Royal Forest Department, the Department of National Parks, and the Department of Marine and Coastal Resources.
The conditions vary based on forest types, such as conservation forests or mangroves, and the type of project, generally divided into two major categories: afforestation and forest maintenance projects, and conservation, restoration, and community forest management projects.
For P-REDD+ projects or community forest carbon credit projects, the allocation of benefits is governed by the Community Forest Policy Committee’s regulations on governance, maintenance, and utilization of wood and forest resources in community forests (2023).
The allocation is 40% to the community forest management committee, 50% to the project applicant, and 10% to the Royal Forest Department.
However, in the case of the “Carbon Credit from Community Forests for Sustainability” project managed by the Mae Fah Luang Foundation, the allocation for community forest projects conducted during Phase 1-2 (2020-2021) was determined to be 90% to the community forest management committee and 10% to the Royal Forest Department, according to the interview with the Community Forest Management Office, Royal Forest Department, as of 17 April.
This aligns with the Community Forest Policy Committee’s regulations (2023) which state, “Collaborating project developers are not entitled to request a share of carbon credits under this regulation.”
For subsequent projects, the allocation will follow Article 18, with 40% to the community forest management committee, 50% to the Mae Fah Luang Foundation, and 10% to the Royal Forest Department.
The ambiguities of “benefit sharing”
REDD+ community forest carbon credit projects attract private sector support and motivate villagers to care for forests due to Mae Fah Luang Foundation funding. However, from the villagers’ perspective, what tangible “benefits” do they receive?
Vichai Pengreuang illustrates the background, process, and budget received, providing an example of community feedback.
However, when inquiring about the tangible benefits of the allocation of carbon credits generated by the project, there was a lack of confidence and clear understanding.
The community did not see the project agreements and detailed information in writing before the project began.
This led to uncertainty about the allocation of support funds and the sharing of carbon credits from the project, especially during the project’s fourth to sixth years, where clarity from the Mae Fah Luang Foundation was still lacking.
It raises the question of how this lack of clarity and incomplete information affects the community’s bargaining power to protect its interests. Are the benefits received worth the community’s effort in maintaining the community forest?
These questions indicate the need to review the “quality of carbon credits” to ensure they genuinely address climate change.
High-quality carbon credits should result from significant reductions in greenhouse gasses, have minimal negative social impacts, and be fair to the communities, the main stakeholders in these projects.
This ensures the projects do not become mere “greenwashing” tools that primarily benefit polluters offsetting their emissions through carbon credit purchases.
Amid uncertainty regarding the clear distribution of “benefits” from community forest carbon credit projects, many REDD+ forest carbon offset projects are still in their early stages.
Only the Ban Khong Ta Bang community forest project in Phetchaburi province has been certified for carbon credits, with a total certified carbon amount of 5,259 tCO2eq, valued at approximately 2,629,500 baht (US$ 71,600).
The Royal Forest Department owns and develops this project and has not yet traded carbon credits in the market.
Krisada also questions the fairness of placing the burden of forest management on the villagers living around community forests.
Despite efforts to address the resource shortage for communities investing in REDD+ community forest carbon credit projects involving private sector investment, the lack of clarity, particularly in the benefit-sharing arrangements between investors and forest-managing communities, poses a risk of creating ‘low-quality carbon credits.’
These could negatively impact communities and society.
multi-dimensional impacts of Community Forest Carbon Credit projects
Besides the carbon credits, we must emphasize the social and environmental impacts that may occur.
Impacts on communities
Impacts on environment
Despite efforts to address the resource shortage for communities investing in REDD+ community forest carbon credit projects involving private sector investment, the lack of clarity, particularly in the benefit-sharing arrangements between investors and forest-managing communities, poses a risk of creating ‘low-quality carbon credits.’ These could negatively impact communities and society.
The Thailand Greenhouse Gas Management Organization (TGO) promotes the Premium T-VER or high-standard T-VER projects. This aims to elevate the quality of projects from the T-VER Standard, the registration standard for all forest projects as of May this year, to meet international standards.
Projects under this enhanced standard must genuinely reduce greenhouse gasses, support sustainable development, and prevent negative impacts.
However, monitoring and scrutinizing existing community forest carbon credit projects operating under lower standards is crucial.
It is also essential to question the clarity of the operational conditions set by the agencies and organizations involved with the communities to protect stakeholders and watch for potential social and environmental impacts.
This story was produced with support from Internews’ Earth Journalism Network for the “It’s a Wash” special report. The original story can be found here.
Story and production: Punch Up, stories and interviews: Kornkamon Srivat, interviews and photography: Chalayfun Ditphudi, photography: Jirat Warattanawong
