This RFC is in response to the RFC posted by KlimaDAO on September 7th, 2022: Carbon Project Development Initiative
The primary goal of the project activity is to cultivate teak plantations in the degraded forest reserves to improve the livelihood of the local communities and biodiversity, which will ultimately help to combat climate change by increasing the sequestration capacity of carbon dioxide and other greenhouse gasses. In addition, the project activity is also providing needed employment to the forest-fringed communities; supporting community-led natural resource management and regeneration to promote reforestation; improving Nutrition, food security and local livelihoods through sustainable use of forests and trees and related income generation;
The project activity is managed by the Private Afforestation Developers Organisation (PADO), an umbrella organization of private forest plantation developers in Ghana. They are the legal owners of the plantations located in Ghana; Kumasi at Kwamisa Forest Reserve located at Offinso Forest District within the Ashanti Region of Ghana. The reserve lies midway between Kumasi-Techiman and the Kumasi–Sunyani Road, about 35 miles north of Kumasi. The area is approximately bounded by the following coordinates: Latitudes between 7o 05' North and 7o 14' North Longitudes between 1o 50'West and 1o 57'West. PADO was incorporated in 2010 as per the Companies code, 1963 (Act 179) as an association and out of it, PADO Investment Limited was established and incorporated in 2016 as a subsidiary and a commercial business entity of PADO
Project Development Document: https://registry.verra.org/app/projectDetail/VCS/3425
The ARR activity is carried out and monitored according to the approved project methodology ARACM0003 for a project period of 40 years. Project crediting period will be renewed three times with a total project crediting period not to exceed 100 years.
Before the implementation of the project, a massive fire in 1983 engulfed the area in flames, led to high degradation of the forest cover and a severe hunger crisis in the region. The government of Ghana formed a private investment strategy in 1999, where private investors signed 50-year lease agreements to stimulate large-scale afforestation as it was a huge task for the government. There was a lot of illegal logging, which further worsened the situation. PADO has over 18 years of experience in restoring degraded forest lands and has planted trees in approximately 7,000 hectares of land with the engagement of the local communities.
Ghana's forest definition is a minimum of 15% canopy cover, a minimum height of 5 meters, and a minimum area of 1 hectare based on the IPCC's threshold for these structural parameters and the Marrakesh Accords. Based on this threshold, the degraded land did not fall in this category, and the project area had not been cleared of native ecosystems ten years before the project start date. The ARR involves the establishment of the teak plantation, and this will increase carbon sequestration and/or reduce GHG emissions by establishing, increasing, or restoring vegetative cover (forest or non-forest) through the planting, sowing or human-assisted natural regeneration of woody vegetation.
Thus, its eligible for historical crediting under the category Afforestation, Reforestation and Revegetation (ARR).
Organisation name Private Afforestation Development Organisation (PADO)
Role in the project Project Developer
Conditions prior to Project Start
Ghana has one of the highest rates of deforestation in Africa—up to 2% per year within the high forest zone (HFZ) (FAO 2006)—and the country has lost more than 85% of its forest cover in the last 100 years (Hansen et al. 1999). Cocoa production has been one of the prime deforestation drivers in this zone since the 1950s, and other factors include the conversion of forested lands to annual crop agriculture (slash-and burn agriculture), illegal logging, and the uncontrolled harvesting of non-timber forest products (NTFPs) and forest fires. (Republic of Ghana 2010).
The project will contribute to the sequestration of GHG emissions from the atmosphere. The Teak Plantation which is wood biomass, will be implemented on a degraded forest reserve. Without human influence and financial support, it will remain degraded. This will be mainly due to rapid depletion unstable reserve stocks. This would accelerate the loss of carbon sinks and adverse climatic conditions, negatively impacting the socio-economic activities of the region.
PADO's focus is on planting trees to restore the area, improve biodiversity, and to improve the
livelihoods of the local communities around the degraded forests. Consequently, the project will
increase the capacity of sequestration of carbon dioxide and other greenhouse gases by
increasing the carbon sinks through increased forest and vegetative cover.
Output and Activities
Improved organizational capacity of PADO to engage in cross-sectoral processes and influence forest sector policies and laws. PADO has increased tree-based enterprise and business capacity for the benefit of its members and supply of sustainable and legal plantation timber products to the domestic and international markets. PADO members have improved capacity in silvicultural and forest management practices and integrating climate resilient livelihood approaches on their forest landscapes. PADO members have improved access to social and cultural services.
Install good internal governance systems and procedures that ensure PADO builds an effective secretariat that support business needs of members. The Organizational Capacity Assessment Tool (OCSAT) will be a very good tool to identify, plan and undertake activities for strengthening good organizational culture within PADO.
PADO leadership capacity strengthened to participate in the implementation of its advocacy and lobby initiatives to effectively engage in national policy processes.
Organize quarterly dialogue meetings within PADO executive structures to receive concerns from PADO members as part of the implementation of OCSAT outcomes. Besides organizational build up, 50% of effort will be geared towards empowering women members and actively work towards gender equality within PADO.
Conduct value chain analysis for tree-based businesses and supply of plantation timber products on international and domestic markets.
Conduct a Market Analysis and Development process, leading to a business plan for PADO for the development of tree-based businesses and supply of legal and sustainable timber products to the domestic and international markets.
Use already existing tree nurseries to train PADO members to establish their own nurseries. This will be done in collaboration with the Forestry Research Institute of Ghana (FORIG) to train members of PADO in basic nursery practices, establishment and maintenance in order to apply the knowledge and produce their own seedlings in the long run.
Collaborate with already existing climate change initiatives and funding mechanisms to access input support for PADO members.
Organize meetings for PADO executives and members to identify key social services that will benefit members of the association. Particular emphasis will be given to services like education, health insurance among others that will benefit women and youth members of PADO.
Hold multi-stakeholder meetings at 2 District Assemblies to seek for support for the identified social and cultural services for members of PADO. Members of PADO are clustered in the Ashanti, Brong Ahafo and Volta regions of Ghana. Two District Assemblies where membership of PADO is concentrated will be selected for such consultative meetings.
The Kwamisa Forest Reserve is located at Offinso Forest District within the Ashanti Region of Ghana. The reserve lies midway between Kumasi-Techiman and the Kumasi–Sunyani Road about 35 miles north of Kumasi. The area is approximately bounded by the following coordinates: Latitudes between 7o 05'North and 7o14'North Longitudes between 1o50'West and 1o57'West.
Pool Specifications - ARBO
SOIL ORGANIC CARBON FRAMEWORK METHODOLOGY
AFFORESTATION/REFORESTATION GHG EMISSIONS REDUCTION & SEQUESTRATION METHODOLOGY
VM0021 Soil Carbon Quantification Methodology, v1.014
VM0026 Methodology for Sustainable Grassland Management (SGM), v1.114
VM0032 Methodology for the Adoption of Sustainable Grasslands through Adjustment of Fire and Grazing, v1.014
VM0021 Soil Carbon Quantification Methodology, v1.014
VM0026 Methodology for Sustainable Grassland Management (SGM), v1.114
VM0032 Methodology for the Adoption of Sustainable Grasslands through Adjustment of Fire and Grazing, v1.0
VM0024 Methodology for Coastal Wetland Creation, v1.014
VM0027 Methodology for Rewetting Drained Tropical Peatlands, v1.014
VM0033 Methodology for Tidal Wetland and Seagrass Restoration, v2.014
VM0036 Methodology for Rewetting Drained Temperate Peatlands v1.014
AR-ACM0003 (CDM) - This is the methodology of the project proposed here.
The Proejct impacts natural habitats and its surrounding communities across 9 separate Sustainable Development Goals (“SDGs”)
PADO provided employment and income to about 3,200 forestfringed community members throughout the operational areas.
Community members are allocated parcels of land to undertake medium scale farms or to interplant food crops (plantains, tomatoes, groundnuts) during the early years of plantation establishment, i.e., first 3 years. The farmers are entitled to 100% benefit from the agricultural
The equal employment opportunities for youths and women who are the most vulnerable to effects of climate change in the region will improve their livelihoods.
Good Jobs & Economic Growth
The standard of living has improved due to good income from the plantation and the Taungya system. Short term jobs are created for members in forest-fringed communities around the plantation. PADO provides employment and income to about 3,200 forest-fringed community members throughout the operational areas.
Responsible Consumption & Production
Community members are advised to use dead wood and sawdust for firewood instead of using fresh wood. Association members and Forestry Commission members are educated on energy conserving measures. In the plantations, it is forbidden to use dangerous chemicals that contain heavy metals. However.
The project activities involve afforestation/reforestation practices, education on climate-smart agriculture, natural water collecting, growing crops alongside trees, that shall contribute meaningfully to the restoration of the forested environments that existed in the area, including many of its ecosystem services such as conservation of biodiversity, clean water, soil conservation and climate change mitigation.
Life on Land
The project activities will halt continued biodiversity loss by promoting tree growth in the region through use of welldesigned monitoring modules. The increased forest cover will promote protection of threatened animal/bird species in the area by providing safe habitats for their existence.
Peace, Justice & Strong Institutions
Because of the coordination between the Forestry Commission and security agencies, illegal activities in the plantation and the neighboring communities have decreased. The project aims at bringing peace, justice and provide equal opportunities to each member of the community disregard of their sex, age (etc.).
Partnerships & For the Goals
PADO partners with other organizations in the restoration and management of the degraded forest reserves. A case example of partnership is with Kumasi wood Clusters Association in the
building of organization structure an d training services to the forest fringe communities and FAO in the fire prevention and protection and the Forest commission in the technical requirements of the project.
Assuming $240,000 initial investment, 14,276 of credits will be purchasable within the coming 12 months. Please see below the expected timing overview of future credits issuances
10,798 credits issued: Vintages 2023 and 2024
13,250 credits issued: Vintages 2024 and 2025
16,198 credits issued: Vintages 2025 and 2026
20,146 credits issued: Vintages 2026 and 2027
978,952 credits issued: Vintages 2027 to 2059
Purchase of forward contract. Price: $15.90/tonne; 14,276 tonnes available; expected delivery Q1 2024, latest. The project developer will act on its best efforts to deliver the expected credits within the communicated timeframe or earlier. In the event the developer encounters difficulties in delivering the credits where the delay exceeds 6 month, Aither will ensure to provide alternative credits of similar technology.
REDD+ projects with CCB are currently trading > $14 for vintages newer than 2018 in the SPOT market. Afforestation and projects considered as ‘nature-based carbon removal’ hold a $2-5 premium over REDD+, thus similar credits to those from the project proposed in this RFC have a value of around $16-20/tonne in the market. As forward purchases offer the acquisition of newer vintages and are generally priced at a discount or at current spot levels to comparatively older vintages, it is arguably an acquisition of better value if the buyer is able to wait for the expected delivery. As more corporates join the VCM market and commence offsetting their annual emission targets, a purchase today of a credit delivered in the future offers the opportunity to pre-empt rising prices and purchase a young credit at better price levels.
Part of the proceeds are distributed back to the community located in project’s proximity. 9 SDGs are expected to be achieved
1) No Poverty
2) Zero Hunger
3) Gender Equality
4) Good Jobs & Economic Growth
5) Responsible Consumption and Prodution
6) Climate Action
7) Life on Land
8) Peace, Justice and Strong Institutions
9) Partnerships for the Goals
It fosters multi-scale additionalities involving social and environmental impacts.
The global economic year commenced with high inflationary supply pressures that caused further hawkish monetary interventions by central banks. As we recollect, the war in Ukraine and the end of the pandemic caused inflationary price pressures on imported and raw materials, as well as energy prices; and, paired with ascending salaries and the sudden need for central banks to initiate hawkish rates policies, most countries have or are expected to enter into a mild recession in the near future.
Global corporations have been rather caught by surprise on sudden spikes in interest rates, arguably due to a decade of low interest rate periods, which forced an exit of a lethargically comfortable period of free money. As corporate leverage recently exceeded pre-financial crisis levels, stark rising rates caused companies to fail to maintain targeted profitability levels. Such stark price and rates fluctuations have likely caused a sudden reduction in aspirations for carbon neutrality.
In fact, voluntary carbon markets experienced a demand slump that has crept during the majority of 2022 and the beginning of 2023, causing average prices to reduce by over 50% across certain technologies and geographies. Experts predict corporates and end users requiring to recalibrate profitability forecasts that remain aligned to a newly established rising cost environment. Thus, such corporates could be expected to restart climate efforts and VCM related offsetting investments towards the end of Q1 2023.
African linked removal projects appeared to have remained resilient or even exempt to such negative price fluctuations, likely due to African projects’ general beneficial infrastructure and health standards improvements to its nearby communities. The logic conclusion follows that African projects resemble greater embedded value and downside protection that results in firmer price stability during cyclic periods of price contractions.
Furthermore, we believe the current short-termed price adaptation suggests a strong buying opportunity for acquiring carbon credits today. We expect prices to experience sudden demand spikes of similar magnitude to last year’s market circumstances, which could see certain projects double in price by the end of this year.
We therefore rate this African based project as a stark buying opportunity due to its embedded downside protection towards previous price contractions and the momentary buying opportunity.
Aither’s history in the carbon market and current efforts to accelerate on-chain carbon adoption make our organization a natural ally to the work that KlimaDAO is undertaking. We believe KlimaDAO’s launch was a watershed moment for the VCM and are hopeful to collaborate with the DAO as we explore pathways to bring our carbon projects toward the digital frontier which is Web3.
As part of this proposal, we pledge to support the launch of liquidity into C3’s new carbon pools via co-marketing activities and by providing a seminar to a large quantum of our 6,000+ existing corporate clients on how digital carbon can be sourced and utilized for their sustainability initiatives.