Leakage

Leakage refers to the unintended increase in greenhouse gas emissions outside a project’s boundaries, often due to the displacement of activities like deforestation to regions where nature protection is less effective.

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Leakage, and how to calculate it, attracts a lot of discussion and disagreement. The complexity of tracking exactly how much demand has been shifted, where it has been shifted and the relative performance of those logging/timber projects in terms of carbon sequestration, not to mention the effects these shifts have on prices, business models and therefore demand etc. makes leakage incredibly difficult to estimate.

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One the one hand it seems unfair to penalize an effective deforestation avoidance project if demand shifts elsewhere, since no single deforestation avoidance project can be held responsible for reducing the global demand for timber. We are also aware that leakage is one more discount which tends to penalize nature-based carbon credits over and above dubious technology-based carbon credits.

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On the other hand where proving carbon additionality is paramount, it seems reasonable to assume that leakage won’t be 0%, and it is our view that leading third-party certification standards understate leakage compared with the research literature. In order to take into account these contrasting positions Native presents two additionality figures for carbon. The first additional Additional CO₂e will not take into account leakage, and CO₂e offset will set a very high estimate for leakage. Buyers can use these figures as they please, although it is our recommendation that Additional CO₂e is not suitable to be used as offsets emitted today.