5.6 Reversals and Buffer Pools

5.6.1 General

This section outlines how reversals are handled on the NCS registry, through the use of buffer pools.

All reversals will be reviewed by the NCS team.

It is important to note that changes to calculations resulting from updates to methodologies are not considered reversals and generally will not affect previously issued credits. However, the NCS will monitor for significant impacts due to methodology updates to ensure overall quality and address system-level impacts (e.g., considerable evolution of scientific consensus).

5.6.2 Reversals

Project proponents must monitor for reversals as specified in a project's monitoring plan and promptly report any reversals to the NCS if identified. At the verification following a reversal, the project proponent must report the relevant monitoring data for any reversal that has occurred, which will be assessed by the verifier as part of the verification process. Reversal data from projects will be made public.

When a reversal is identified, credits will be canceled from the shared buffer pool to compensate for the reversal. The number of credits to be canceled must equal the size of the reversal.

In cases of gross negligence or fraud, the liability falls directly on the project proponent. If it is found that a reversal occurred due to intentional misrepresentation of data or failure to uphold agreed-upon monitoring and reporting standards, the buffer pool can not be used and additional penalties may be imposed. These penalties may include increased buffer pool contributions, suspension of future credit issuance, or removal of the project from the registry. The NCS reserves the right to take legal action in extreme cases of fraud.

If project assumptions such as the starting stock (e.g., initial carbon stock levels) are found to be significantly different from what was initially reported—whether higher or lower—these changes must be addressed immediately. If the initial assumptions were overly optimistic or underestimated, the project proponent must recalibrate the project’s GHG accounting accordingly. This may involve adjusting the baseline and, in some cases, recalculating the amount of credits already issued.

5.6.3 Buffer Pool

The main insurance mechanism to address uncertainty in storage and compensate for reversal events is the shared buffer pool. All projects transfer 15% of the issued verified mitigation outcomes to the buffer pool. Methodologies may set a higher default buffer contribution or include provisions for project-specific contributions, but the buffer contribution may not be lower than 15%.

Credits in the buffer pool cannot be used for any other purpose than cancellation to compensate for reversals.

Furthermore, reversals are classified as either avoidable or unavoidable, as determined by the NCS, in consultation with selected VVB(s) and/or independent subject matter experts.

In the case of an avoidable reversal, the project proponent is responsible for replacing lost credits needed to guarantee the integrity of claims made by buyers. This can mean purchasing credits equal in character and quality to NCS credits, as determined by NCS, to compensate for the reversal.

If an unavoidable reversal occurs, such as through force majeure, the project proponent may draw from the shared buffer pool.