New GHG Protocol standard provides clear guidance on land use change emissions

The Greenhouse Gas Protocol (GHG Protocol) recently released its long-awaited Land Sector and Removals Standard (LSRS). Building on the 2022 draft, the new standard sets out a detailed methodology for companies to account for emissions from land use change and land management, as well as carbon removals. The publication of this guidance greatly increases the standardisation and credibility of land sector carbon accounting, supporting companies in setting and implementing emissions reduction targets in line with the Science Based Targets initiative Forest Land and Agriculture (SBTi FLAG) Guidance.

The LSRS includes detailed guidance on how companies should measure emissions arising from deforestation and other natural ecosystem conversion. For most companies that source agricultural or forestry products, these land use change emissions are a major contributor to their total emissions footprint. Experts from the AFi Coalition contributed to development of the LSRS, helping to ensure that the newly-published document provides methods for land use change emissions accounting that align with the Accountability Framework's guidance on assessing deforestation and conversion in supply chains. 

Among other improvements, the final standard introduces a practical new option for land use change accounting, clarifies that natural ecosystems that are present on farms can be included in Scope 1 and 3 boundaries, and provides more direction regarding key methodological choices. These changes and their implications for companies are explained below.

Practical options for calculating land use change emissions at different scales  

The standard provides a hierarchy of approaches to calculate land use change emissions based on different levels of traceability and data availability. These include a new option—jurisdictional direct land use change—that was not in the 2022 draft. Companies are instructed to select the most accurate calculation approach that their current traceability and data availability allow.

• Direct land use change (dLUC): When companies have traceability to land management units (such as farms), they can directly account for land use change emissions at this level.
• Jurisdictional direct land use change (jdLUC): When companies know that some of their sourcing arises from a given sourcing area, they can calculate dLUC for all relevant production units in the area, and assign emissions to their inventory based on the amount sourced from the area. This calculation requires knowing the boundaries of all farms in that sourcing area that produce the sourced commodity. Results are comparable with dLUC results, so companies can move smoothly from one to the other if traceability improves.
• Statistical land use change (sLUC): If a company lacks traceability to a known sourcing area, or does not know the locations of all farms in a sourcing area that produce the sourced commodity, the company can use sLUC. This approach involves assessment of all deforestation and conversion in a given land area (which can range from subnational to national to global) and allocates the associated land use change emissions across different products from the area. Companies can use sLUC emission factors provided by third-party databases, such as the one being developed by the World Resource Institute’s Land and Carbon Lab.

The addition of jdLUC enables companies to directly account for land use change in known sourcing areas, even without full traceability. When companies act to reduce deforestation and conversion tied to a given product across a sourcing area, this translates via jdLUC calculations into lower emissions associated with that product in their Scope 3 inventory, and allows them to make progress towards meeting emissions reduction targets. This approach thus has the potential to incentivise, and allow companies to benefit from, actions to reduce deforestation and conversion across their sourcing areas.

Clarity that accounting for land use change and ecosystem protection should consider the whole production unit 

The standard instructs companies to calculate direct land use change at the level of the production unit (described as a ‘land management unit’ in the LSRS). This aligns with the AFi position that companies should assess and report compliance with no-deforestation or no-conversion policies at the level of the production unit (not smaller land units, such as individual fields). 

In addition, the LSRS states that standing natural ecosystems on land management units may be considered in scope for a company’s emissions accounting. Therefore, companies can calculate emissions reductions or removals associated with conservation or restoration occurring on those lands. This can include areas of standing forest or intact natural grassland, as well as buffer strips or other features.

Criteria for including natural ecosystems within production units (referred to as ‘proximate and adjacent non-productive lands’ in the LSRS), are aligned with the Accountability Framework as well. To be included as part of a land management unit, these lands should fall under a single management plan, and be connected bio-physically, ecologically, and/or socio-economically to the productive lands. Guidance on how emissions and removals on those lands are calculated is subject to forthcoming guidance on forest carbon accounting. In the interim, companies should follow the safeguards laid out in the LSRS and be transparent about accounting methodologies.

More prescriptive guidance on methodologies to allocate land use change emissions

The new standard is more prescriptive than the 2022 draft in requiring or recommending specific methodologies to link land use change emissions to commodity volumes over space and time. The LSRS now prioritises methodologies that allocate a greater portion of emissions to land use change that is more recent in time and that is associated with commodities that are experiencing the greatest expansion in production area. This in turn has impacts on the decisions that companies may make when determining how to reduce emissions in their inventories. 

Accounting for emissions over time: In most cases, companies are instructed to use linear discounting to account for past land use change emissions. Using this approach, the share of land use change emissions decreases annually starting from the year when the land use change event occurred. This assigns higher emissions to recent land conversion than to conversion that occurred in the more distant past. By allowing past deforestation to phase out of company inventories more quickly, the standard incentivises companies to prioritise addressing new and ongoing deforestation and conversion risk.

Accounting for emissions over space: Where the 2022 draft offered two options for allocating sLUC emissions among different commodities in a given area, the final LSRS is more prescriptive in requiring use of the ‘product expansion’ method in most cases. Using this method, emissions in an area are allocated to a given commodity based on the relative expansion of production land for each commodity. This method helps to capture causal drivers of land use change by allocating a greater share of emissions to products that are increasing in area. 

No standardised guidance for forestry 

The LSRS does not include guidance related to forest carbon accounting, as it was originally intended to. Forest carbon accounting refers to calculating the amount of carbon that might be emitted or removed via the management of forests and other natural ecosystems. These calculations are used by companies that produce or source forest products to claim emissions reductions or carbon removals associated with management of standing forests in their supply chains. In the absence of standardised guidance, companies are instructed to be transparent about the methodology they use.

While this omission reduces the potential for near-term methodological alignment for carbon accounting in the forestry sector, it does not affect the ability of companies in all sectors to make robust claims about emissions reductions associated with reduced and avoided deforestation.  

An integrated approach for achieving forest and climate goals

With the release of the new standard, companies now have a full suite of aligned resources for managing land sector emissions. The LSRS helps companies account for emissions linked to their operations and supply chains, while SBTi FLAG enables them to set emissions reduction targets related to land management and land use change. Both of these tools are aligned with the Accountability Framework, which enables companies to take a single integrated approach to addressing deforestation, conversion, and associated emissions in their supply chains. 

Visit the AFi’s web page on land sector emissions to learn more about how reducing supply chain deforestation and conversion can support companies to meet climate goals.