Forest revenues from reduced carbon emissions

The potential for raising revenues from protecting forests is attracting

attention worldwide.
Here’s a simplified explanation.
Carbon emissions
The burning of fossil fuels and clearing of forests is changing the chemical
composition of the atmosphere. CO2levels are 35 per cent higher than they
were before industrialization. If the current rate of increase continues, there
could be a doubling by 2050. Other gases like methane and nitrous oxide
from agriculture are also increasing in concentration. Scientists’ concern is
that these ‘greenhouse gases’ will raise global temperatures, increase sea
levels
and lead to more extreme weather events. The risk to future generations
justifies action now to curb emissions growth.
Forests are a strong “carbon sink (a ‘reservoir’ of CO2).” Through
photosynthesis, forests
consume carbon dioxide. Using energy from sunlight, forests ‘eat’ the
carbon atom in the
carbon dioxide molecule, using it to create sugars and other nutrients and
releasing the
leftover oxygen. While all plants do this, tall, dense forests are the most
efficient in terms of how much carbon a square hectare of forest can remove
from the atmosphere. Deforestation limits the amount of carbon dioxide
being removed from the air and usually the trees are burnt after being cut
down in a ‘chop and burn’ method. This releases the carbon in the tree
which combined with oxygen adds carbon dioxide into the atmosphere.
Current forest losses worldwide account for almost one fifth of global CO2
emissions.
Carbon Trading
The carbon trade came about in response to the Kyoto Protocol. Signed in
Kyoto, Japan, by some 180 countries in December 1997, the Kyoto Protocol
calls for 38 industrialized countries to reduce their greenhouse gas emissions
between the years 2008 to 2012 to levels that are 5.2% lower than those of
1990.
The idea behind carbon trading is similar to the trading of securities or
commodities in a marketplace. Carbon is given an economic value, allowing
people, companies or nations to trade it. If a nation buys carbon, it would be
buying the rights to burn it, and a nation selling carbon would be giving up
its rights to burn it. The value of the carbon would be based on the Ethiopian
Protected Areas, A ‘Snapshot’, March 2012
James Young (james@ayzosh.com) 02/04/2012 39
ability of the country owning the carbon to store it or to prevent it from
being released into the atmosphere. (The better you are at storing it, the more
you can charge for it.)
A market is then created to facilitate the buying and selling of the rights to
emit greenhouse gases. The industrialized nations for which reducing
emissions is a daunting task can buy the emission rights from another nation
whose industries do not produce as much of these gases.
The market for carbon is possible because the goal of the Kyoto Protocol is
to reduce
emissions as a collective.
Carbon trading seems like a win-win situation: greenhouse gas emissions
may be reduced while some countries reap economic benefit. Critics of the
idea suspect that some countries will exploit the trading system and the
consequences will be negative. While carbon trading may have its merits,
debate over this type of market is inevitable, since it involves finding a
compromise between profit, equality and ecological concerns.
There are two ways to trade emissions; mandatory and voluntary. Mandatory
emissions trading schemes have strict compliance rules (under the United
Nations Framework Convention on Climate Change - UNFCCC). The
voluntary market provides companies with different options to acquire
emissions reductions.
As a result of UNFCCC, large amounts of finance for forested nations is
made available to get 'ready' for REDD (e.g. building governance, national
REDD strategies and monitoring systems
REDD (Reduced Emissions from Deforestation and Degradation)
Forest areas are often worth more harvested than left standing. REDD is a
mechanism that aims to change incentive structures in favour of protecting
forests.
The details of how REDD will work in practice are still being agreed, but at
the 2009
Copenhagen Conference of the Parties of the United Nations Framework
Convention on
Climate Change, US$ 3.5 billion was committed to speed up REDD policies,
guidelines and activities.
A REDD mechanism could provide compensation to governments,
communities, companies or individuals if they have taken actions to reduce
emissions from forest loss below an established reference level. The
sustainable management of forests then becomes a smart economic decision,
as well as a smart decision for the environment.
Although funding towards REDD will likely take many different forms, one
option that is often discussed is to link REDD to carbon markets in
developed countries. Companies could then meet their emission reduction
commitments by channeling funding to REDD in forest-rich
Countries. Carbon markets would generate significant funding for REDD –
at a scale rarely seen before. There is a risk, though. If REDD does not work
as intended, its failure could reduce or even eliminate reduction efforts in
developed countries.
The idea of supporting countries to protect their forests sounds simple. But
governments have only limited control over many of the drivers of
deforestation.
There are a number of difficult questions that have yet to be fully answered
including:
• How do you ensure that REDD leads to emissions reductions that are “real
and
Additional,” meaning they would not have happened without a REDD
programmed?
• How do you know that reducing deforestation in one place will not cause
increased
Deforestation in another? This is what is called “leakage.”
• How do you know that REDD will not just be a temporary fix, but rather
will protect forests permanently?
• How do you ensure that REDD will not adversely impact the rights and
livelihoods of the Millions of people who live in or around forests,
especially in poorly governed states?
• How do you measure, report and verify emission reductions from forests?
This is
especially challenging for measuring reductions in forest degradation.
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