METHODOLOGY ELEMENT ASSESSMENT REPORT: VCS Version 3 Methodology Assessment Report: Baseline and Monitoring Methodology for Avoiding Planned Deforestation of Undrained Peat Swamp Forests 2000 Powell Street, Suite 600 Emeryville, CA 94608 www.scscertified.com Methodology Baseline and Monitoring Methodology for Avoiding Planned Deforestation of Element Title Undrained Peat Swamp Forests Version Version 7.0 Methodology Methodology Element Category Sectoral Scope(s) 14 v3.0 1 METHODOLOGY ELEMENT ASSESSMENT REPORT: VCS Version 3 Report Title Methodology Assessment Report: Baseline and Monitoring Methodology for Avoiding Planned Deforestation of Undrained Peat Swamp Forests Report Version 2.0 Assessment Criteria VCS Standard v3.2 and associated documents as described in Section 1.3 Client Terra Global Capital LLC Pages 126 Date of Issue 31 August 2012 Prepared By Scientific Certification Systems Contact Todd Frank 2000 Powell Street, Suite 600 Emeryville, CA 94608 510.452.9099 www.scscertified.com Approved By Todd Frank Work Carried Out By Ryan Anderson, Lead Verifier Carly Green, Technical Expert Zane Haxton, Technical Reviewer v3.0 2 METHODOLOGY ELEMENT ASSESSMENT REPORT: VCS Version 3 Summary: This report documents the first assessment of the proposed VCS methodology “Baseline and Monitoring Methodology for Avoiding Planned Deforestation of Undrained Peat Swamp Forests,” developed by Terra Global Capital LLC. The methodology includes criteria for estimating baseline and project scenario emissions from avoided conversion of production peat swamp forests based on legally approved conversion rates or historical deforestation rates observed in a proxy area. It includes procedures for estimating emissions from peat burning, peat oxidation, peat drainage, rice production, agricultural intensification, and biomass removal, as well as carbon stock changes in the aboveground tree, aboveground non tree, belowground, dead woos, soil organic carbon, and long lived wood products pools. The assessment was carried out by Scientific Certification Systems and used the Verified Carbon Standard Version 3.2 and its supporting documents as criteria. SCS used document review and interviews with the methodology developers as a method for the assessment and issued findings in the form of new information requests, opportunities for improvement, and non-conformance reports during the assessment process. These findings were responded to by the methodology developer, which led to revisions in the methodology throughout the process. At this time, all findings have been adequately responded to, and it is the opinion of SCS that the methodology complies with all of the assessment criteria, and the assessment team has no restrictions or uncertainties with respect to the compliance of the methodology element with the assessment criteria. v3.0 3 METHODOLOGY ELEMENT ASSESSMENT REPORT: VCS Version 3 TABLE OF CONTENTS 1 Introduction ............................................................................................................................................ 6 1.1 Objective ....................................................................................................................................... 6 1.2 Scope and Criteria ........................................................................................................................ 6 1.3 Summary Description of the Methodology Element ...................................................................... 6 2 ASSESSMENT APPROACH ................................................................................................................ 6 2.1 Method and Criteria ....................................................................................................................... 7 2.2 Document Review ......................................................................................................................... 8 2.3 Interviews ...................................................................................................................................... 8 2.4 Use of VCS-Approved Expert ....................................................................................................... 8 2.5 Resolution of Any Material Discrepancy ....................................................................................... 8 2.6 Internal Quality Control ................................................................................................................. 8 3 ASSESSMENT FINDINGS ................................................................................................................... 9 3.1 Applicability Conditions ................................................................................................................. 9 3.2 Project Boundary ........................................................................................................................... 9 3.3 Procedure for Determining the Baseline Scenario ...................................................................... 10 3.4 Procedure for Demonstrating Additionality ................................................................................. 10 3.5 Baseline Emissions ..................................................................................................................... 11 3.6 Project Emissions ........................................................................................................................ 12 3.7 Leakage ....................................................................................................................................... 13 3.8 Quantification of Net GHG Emission Reductions and/or Removals ........................................... 13 3.9 Monitoring .................................................................................................................................... 13 3.10 Data and Parameters .................................................................................................................. 14 3.11 Use of Tools/Modules ................................................................................................................. 14 v3.0 4 METHODOLOGY ELEMENT ASSESSMENT REPORT: VCS Version 3 3.12 Adherence to the Project Principles of the VCS Program .......................................................... 15 3.13 Relationship to Approved or Pending Methodologies ................................................................. 15 3.14 Stakeholder Comments ............................................................................................................... 15 4 Resolution of Corrective Action Requests and Clarification Requests ............................................... 16 5 Assessment Conclusion ...................................................................................................................... 16 6 Report Reconciliation .......................................................................................................................... 16 7 Evidence of Fulfilment of VVB Eligibility Requirements ...................................................................... 16 8 Signature ............................................................................................................................................. 18 Appendix A- List of Findings ...................................................................................................................... 19 Appendix B- Responses To Comments ................................................................................................... 102 v3.0 5 METHODOLOGY ELEMENT ASSESSMENT REPORT: VCS Version 3 1 INTRODUCTION 1.1 Objective Assess conformance of the new methodology with VCS Standards. Evaluate the new methodology based on guidance given under the Verified Carbon Standard Program, including an assessment of VCS program requirements and the following: eligibility criteria, baseline approach, additionality, project boundary, emissions, leakage, monitoring, data and parameters, and adherence to the project-level principles of the VCS program. Determine the need for clarification or requests for change to the proposed new methodology. Determine approval status in the first independent assessment of the double approval process. 1.2 Scope and Criteria The scope of this report encompasses an assessment for the new methodology against the following requirements of the Verified Carbon Standard (VCS): VCS Standard Version 3.2 VCS AFOLU Requirements Version 3.2 VCS Guidance Document: Methodology Approval Process Version 3.3 The assessment was performed using the client-supplied new methodology and other supporting documentation. The assessment process involved: Assessment of the conformance of the new methodology with VCS standards; Assessment of new methodology based on the VCS “Scope of Assessment of New Methodologies”; Assessment of the new methodology related to the determination of the baseline scenario; Evaluation of the new methodology related to the selection of relevant GHG sources, sinks, and reservoirs for monitoring or estimation; Evaluation of the new methodology related to the quantification of GHG emissions and/or removals; Evaluation of the new methodology related to the quantification of overall GHG emission reductions and removal enhancements; Assessment of the new methodology related to management systems and data handling; Assessment of the new methodology related to the determination of leakage and additionality; and Development of an Assessment Report.