Project Report:
Climate Treasure: Bringing Tropical Forest Credits into the Global Carbon Market
Purpose
- Explores and develops market-based solutions.

Summary

Tropical deforestation releases up to 20% of total global greenhouse gas emissions—roughly equivalent to the fossil fuel emissions of the United States. If rainforest nations had economic incentives to protect their forests—if their forests were worth more alive than dead—we could keep more than 300 billion tons of carbon out of the atmosphere, sustain critical global ecosystems, alleviate poverty in developing nations, and provide early and important value to the world’s carbon markets. We propose to continue our work on Reducing Emissions from Deforestation and Forest Degradation (REDD). The most significant breakthrough with regard to our REDD policy objectives was Brazil’s announcement of a deforestation reduction target of 70% within ten years, below the average annual deforestation of the decade from 1996 – 2005, or 19,500 km² per year.

Description

U.N. spotlight shines on efforts to reduce deforestation

September 24, 2009

by Annie Petsonk, EDF International Counsel

Last night, in New York at Climate Week, I attended the UN Secretary General’s High Level Event on Reducing Emissions from Deforestation and Degradation in Developing Countries (REDD). As I sat in the giant Economic and Social Council hall at the UN, watching heads of state preparing to speak, I couldn’t help but marvel how far forest issues have come in the climate treaty talks.
Five years ago, at the 2004 Conference of the Parties to the UN Framework Convention on Climate Change, in Buenos Aires, Argentina, when EDF and the Dutch government (which then held the rotating Presidency of the European Union), wanted to convene a quiet, off-the-record, informal round table on forests and climate change, the topic was considered to be so sensitive that the session was held in a hotel far outside of the conference center. Of the handful of governmental representatives who dared to attend, most took pains to make clear that they were not speaking in any official capacity, and did not want to be quoted. And most non-governmental campaigners seemed hesitant to be seen there.

Today, the REDD event was opened by Secretary General Ban Ki Moon and the President of the World Bank. Heads of state from Congo, Guyana, Norway, Papua New Guinea, Sweden on behalf of the European Union, and Australia, as well as ministers from Indonesia, Democratic Republic of Congo, Ecuador, Bolivia, Japan, Colombia, China, and Bangladesh all spoke on the record, with press in attendance. Heads of major non-governmental organizations proudly attended. The room was packed with hundreds of people. And the event and a series of conferences in the lead-up to it engaged leaders like Wangari Maathai, the Nobel Peace Prize Winner for her work with women in Africa planting trees, and indigenous leaders around the world.

Five years ago, the idea of compensating nations that reduce deforestation emissions across-the-board was considered strange, controversial, highly charged. Today, bilateral programs, notably those of Norway and Australia, and forest carbon partnership programs of the World Bank, are plowing hundreds of millions of dollars into forest protection and capacity-building for participation in carbon markets that compensate communities for protecting forests.

Five years ago, Government delegates from the United States and Australia decried climate science and disparaged the Kyoto Protocol. Yesterday at the UN President Obama profiled his administration’s initiatives to address climate change, and signaled his willingness to work with congressional leaders to get U.S. legislation enacted. Australian Prime Minister Kevin Rudd stated that “forest carbon market mechanisms must be included in the Copenhagen agreement, and said that the forest carbon issue “must be taken from the margins to the center of what we do.”

Five years ago, developing countries, including China and Brazil, insisted that they would not act before the United States did, and the conventional wisdom was that Brazil would not make any commitment to reducing emissions for some 50 years or more. Yet today developing countries led the high level session, pledging to reduce emissions from deforestation and ramp up forest protection provided that the financing is made available. Yesterday in the UN General Assembly, Chinese President Hu Jintao announced China will endeavor to increase forest coverage by 40 million hectares and forest stock volume by 1.3 billion cubic meters by 2020 from the 2005 levels. And President Lula of Brazil earlier announced Brazil’s effort to seek to reduce deforestation 70% from today’s levels over the next decade. Since deforestation emissions account for well over half of Brazil’s national emissions, that constitutes a major step. Now the biggest Amazon states have taken deforestation reduction targets too. Next week Amazon and Indonesian governors will be meeting with Governor Schwarzenegger in California to determine how to move forward with REDD in U.S. and tropical states.

REDD’s gone from the footlights to the spotlight in five years. REDD is unlocking the stalemate between north and south. And as Japan’s Minister of Environment, Sakihito Ozawa, made clear at the High Level Event, because it is one of the most urgent and most cost-effective strategies, REDD has the potential to unlock steeper commitments from industrialized nations. Now the challenge is, as Prime Minister Rudd stated, to take it from the margins to the center of what we do.

Here in the United States, the Waxman-Markey bill that passed the House of Representatives on June 26, 2009, embraces a set of provisions that could do just that. The principles behind these provisions have the support of a wide range of companies and NGOs, from American Electric Power, Duke Energy, Starbucks, Shell, and Walt Disney, to EDF, the Natural Resources Defense Council, the Sierra Club, the Union of Concerned Scientists, and Conservation International, among others.



Project Update, February 11, 2009

EDF’s international climate and air team is moving full-steam ahead with its objective of securing the inclusion of developing country participation through the Reduction of Emissions from Deforestation and forest Degradation (REDD) in a post-2012 global deal that may be reached at the December 2009 climate talks in Copenhagen, Denmark.

The 14th Conference of the Parties ("COP-14") to the UN Framework Convention on Climate Change (UNFCCC) and the 4th Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP-4) met in Poznan, Poland December 1-12, 2008. Being the midpoint in the process launched in Bali and expected to end in Copenhagen in December 2009, the Poznan negotiation session was not expected to reach any major decisions. While the outcomes for REDD were sufficient to keep momentum alive, many key issues that could have been resolved (like agreement that deforestation can be measured from space with confidence) are still up in the air, and other issues, such as indigenous rights, generated weak language that could hamper support for REDD. The bottom line is that almost all REDD issues still need to be negotiated, a tall order for getting REDD as a key mitigation component of the post-2012 global agreement. Nonetheless, a number of breakthroughs and successes provide ample momentum to make that goal attainable.

The most significant breakthrough with regard to our REDD policy objectives was Brazil’s announcement of a deforestation reduction target of 70% within ten years, below the average annual deforestation of the decade from 1996 – 2005, or 19,500 km² per year. Brazil’s overall emissions reduction would equal 4.8 billion tons of CO2, or about half as much yearly emissions reduction as would be achieved by implementing the Kyoto Protocol. The government had previously released a National Plan on Climate Change that was heavily criticized by NGOs, because it contained no targets.

The goal for Copenhagen in December 2009 is to establish a global agreement with broad participation, most notably from the United States, that sets aggressive targets and achieves broad agreement for the inclusion of market-based REDD. Coupled with our burgeoning efforts to reach out to the labor, agriculture, and business communities in United States, we will continue over the course of the next few months to advocate our ideas on REDD to decision makers, including the leaders from the world’s indigenous communities, at the various upcoming UNFCCC negotiations sessions and REDD specific conferences and meetings at points all across the world. Through these efforts, we are optimistic that these objectives will be met.

Final Report, January 4, 2010

Environmental Defense Fund's goal with the Reducing Emissions from Deforestation and Forest Degradation (REDD) project was to put in place a new international framework by the end of 2009 that would deliver market-based incentives to reduce carbon emissions from deforestation and degradation in developing countries. Despite some disappointing results at the recent international climate conference in Copenhagen, there were some noteworthy steps forward, including an important agreement on rainforest protection that can be plugged into an international treaty framework sometime in 2010.

The NGO alliance that EDF and our partners painstakingly built over the past several years to advance REDD held strong at Copenhagen, delivering a coherent negotiating document detailing the elements of an effective REDD program. Although the new REDD agreement will need more comprehensive work to become fully operational, it was close to complete, containing relatively few “brackets” or open-ended areas. Most important, since the concept of forest credits has now been widely legitimized, a whole new game has emerged for reducing global greenhouse gases. In other good news coming out of Copenhagen, the US Department of Agriculture announced that it would join Australia, France, Japan, Norway and the UK in providing initial public funding for a related program called REDD+ (REDD Plus). The program provides funding for poor countries that are attempting to plant trees and expand their forest cover. Pending a final deal on REDD+, this coalition will provide $3.5 billion over three years for the effort, of which the US will put up $1 billion.

Critical factors and achievements in REDD development in 2009
In the months preceding Copenhagen, EDF worked with colleagues to provide economic analysis and market design, to build support from tropical forest nations, and to develop mechanisms for carbon forest credits in specific markets, including California, Brazil, and Indonesia.

As part of a team of international experts convened by the Center for International Forestry Research, EDF’s Dr. Ruben Lubowski prepared a policy brief circulated during the 14th Conference of Parties meeting in December, 2008, in Poznan, Poland, with a longer accompanying paper available online, on the “Contribution of REDD to Stabilizing Greenhouse Gas Concentrations: Lessons from Economic Models.” The brief reviewed results from economic modeling of REDD to date and highlighted the economic rationale for including REDD in a market-based system. (http://www.edf.org/documents/10485_Role_of_REDD_in_stabilizing_GHG_Concentrations_Lubowski.pdf)

Dr. Lubowski also worked collaboratively with representatives from Conservation International, the Terrestrial Carbon Group, the Woods Hole Research Center, and the Center for Social and Economic Research at East Anglia University on the design of the Open Source Impacts of REDD Incentives Spreadsheet (OSIRIS). OSIRIS is a free, transparent, accessible and open source decision support tool that enables a click-of-a-button comparison of global, regional and country-by-country emissions reduction, deforestation and revenue impacts of alternative approaches to providing positive economic incentives for REDD. The tool was used to support the UNFCCC negotiations on REDD. (http://www.conservation.org/osiris/Pages/overview.aspx)

One of the critical achievements in the REDD Copenhagen agreement was a technical decision on measuring and monitoring forest emissions. This had been a sticking point in both national and international arenas. Because carbon market incentives for stopping deforestation or degradation can reward only real, verified emissions reductions, accurate measurement is absolutely necessary. EDF supported the publication in May, 2009 of an overview of the latest technologies and techniques for measuring and monitoring carbon emissions from deforestation, written by the preeminent expert on forest monitoring. The paper concluded that the current array of available remote sensing methods are fully adequate for REDD and could be implemented globally now. The major obstacles to doing so are political, institutional and budgetary, rather than scientific or technical. The issue of forest monitoring has largely been resolved because this paper proved that accurate monitoring can be done. (http://www.edf.org/documents/10333_Measuring_Carbon_Emissions_from_Tropical_Deforestation--An_Overview.pdf)

EDF has also been working with outside researchers (the U.S. Environmental Protection Agency, the International Institute for Applied Systems Analysis (IIASA), the International Food Policy Research Center (IFPRI), and the Joint Research Center (JRC) of the European Commission, and others) to analyze remote sensing data in order to predict patterns of global deforestation and land use under different economic scenarios and market-based incentives.

EDF also helped to advance a REDD agenda in Brazil, where the government recently declared it will allow limited market-based crediting for REDD. The proposal provided a heightened level of legitimacy to REDD and has sent a strong signal to other developing tropical nations that are still considering their options. In conjunction with our work in Brazil, REDD credits are poised to play a role in the emerging California Carbon Market. We helped build a consensus between US and Brazilian stakeholders that led the governors of California and several other US states to sign a memorandum of understanding with Brazil and Indonesia — a critical step toward developing standards and criteria for REDD credits to be traded on California’s carbon market.

EDF has and will continue to work in concert with indigenous people from the Amazon and Congo Basins as well as a number of environmental NGO partners to assist developing countries with their REDD readiness programs, which will focus on implementing REDD market mechanisms in a fair and equitable manner.

REDD and US climate policy
The Copenhagen REDD agreement will ensure that tropical forest credits are an integral part of the new international climate treaty that will be negotiated when (and if) the US Senate passes its own legislation. At that point the mechanisms for REDD credits can be more precisely articulated for specific domestic and international carbon markets.

Over the past year, we built coalitions and educated policy makers about the benefits of incorporating REDD provisions into US climate legislation. The “Tropical Forest & Climate Unity Agreement,” developed by a broad-based partnership including EDF, put forth a set of consensus principles on international forests for US climate legislation, most of which were ultimately included in the House bill. (Summary of REDD Provisions in ACES: http://www.edf.org/documents/10439_REDD_provisions_in_ACES.pdf.)

The American Clean Energy and Security Act (ACES), which passed in July 2009, allowed forest credits to be used as international offsets in the U.S. carbon market. The bill’s REDD provisions authorize the EPA administrator, in conjunction with the Secretary of State and US AID, to enter into agreements with countries on reducing emissions from deforestation. Underscoring the importance of measurement and monitoring, to be eligible for offset crediting countries will have to demonstrate reductions in total emissions nationwide, or in large-emitting states and provinces, getting to zero net deforestation within 20 years. The bill also sets aside 5% of the US carbon allowance pool and directs that value to be used to assist tropical forest nations in participating in this program, to eventually achieve a cumulative amount of 6 billion metric tons of reductions by 2025.

ACES and the new UN agreement on REDD will be closely examined in Congress as the Senate now turns its attention toward working on its own climate bill.

We note that no Walker Foundation funds were used for lobbying purposes.

Purpose

When standing forests are given economic value, developing countries have financial incentives not to cut them down. We seek, by yearend 2009, to put in place a new framework that delivers market-based incentives to reduce emissions from deforestation and degradation in developing countries (REDD). Our timetable is driven by the fact that nations will gather in Copenhagen in December 2009 to conclude the new international climate treaty. EDF and colleagues will provide the economic analysis and market design solutions that can help guide the international discussion, address key questions that otherwise may act as obstacles, build support from tropical forest nations, and ensure that REDD credits are an integral part of the new climate treaty and that mechanisms for forest credits are well-articulated in domestic and international carbon markets.

Scope

REDD credits can encourage some of the major emitting developing countries to participate in a global carbon market through reductions in deforestation emissions. REDD has the potential to provide the single most powerful means of compensating nations for protecting the world’s remaining tropical forests and the globally significant biodiversity and watersheds they shelter. Action by tropical forest developing nations to address their carbon emissions through the global market can help spur the US to be a leader on climate. And, with the proper structures to assure transparency and security, REDD credits can be brought to the market much earlier than many other types of carbon credits and play an important role in managing compliance costs for countries with mandatory carbon caps, helping smooth the capital investment transition to a new energy economy and help reinforce the political will needed to achieve deep reductions in carbon emissions.

Amount Approved
$25,000.00 on 12/15/2008 (Check sent: 12/22/2008)


  Related Organizations
Environmental Defense Fund  


climatetalks_bonn.jpg
EDF staffers brought their policy expertise to the climate talks in Bonn, Germany.

Attachments
climatetalks_bonn.jpg
WSJ Article on Climate Offsets (PDF)

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Posted 10/1/2008 6:25 PM
Updated   1/4/2010 5:11 PM

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