There Must be a Pony in Here Somewhere: Progress in Copenhagen on Reducing Emissions From Deforestation

Amid the considerable discord that marked the recent Copenhagen talks, there was progress on a proposal to prevent deforestation and land degradation. The program for Reducing Emissions from Deforestation and Degradation, dubbed “REDD,” began two years ago. Now the Copenhagen Accord envisions a “REDD-plus” program that could be finalized in 2010, which could see billions of dollars flowing from developed to developing nations in part from the sale of carbon offsets.

Background

Deforestation is responsible for nearly one fifth of GHG emissions, more than the entire global transportation sector and second only to the energy sector.[1] The International Panel on Climate Change argues that reducing and/or preventing deforestation is the mitigation option with the largest and most immediate carbon stock impact in the short term per year globally.[2]

REDD was adopted in U.N. climate discussions in Bali, Indonesia, two years ago as a basic framework for promoting early action. So far, REDD has assisted countries in identifying the drivers of deforestation, developing methods and tools for measuring and monitoring GHG emissions, and access to financial and technical assistance.[3] The first nine pilot programs are located in the Democratic Republic of Congo, Tanzania, Zambia, Indonesia, Papua New Guinea, Vietnam, Bolivia, Panama, and Paraguay. In October 2009, Argentina, Cambodia, Ecuador, Nepal, and Sri Lanka joined the program. Until recent announcements in Copenhagen, primary financial support for REDD came from Norway, Spain, and Denmark.[4]

REDD is a component of, the U.N.’s Clean Development Mechanism (“CDM”). The CDM, defined in Article 12 of the Kyoto Protocol, allows a country with an emissions-reduction or emissions-limitation commitment under the Protocol to implement an emissions-reduction project in developing countries to earn saleable, certified emission reduction credits which can be counted toward meeting Kyoto targets.[5] The CDM has not proven successful in the forestry sector due to complex rules, methodologies and registration costs, the lack of transferability of temporary credits assigned to projects, and the exclusion of credits from the EU’s Emission Trading System, which is currently the largest global carbon market.[6] REDD’s role with the U.N. framework is to facilitate and expedite forestry related projects with the intent to increase the role of forest preservation and land use conservation within an international offsets scheme.

REDD Developments in Copenhagen

The approach to REDD in Copenhagen negotiations was significantly different from the 1997 negotiations on the Kyoto Protocol. In Kyoto, although countries committed to curbing their industrial emissions, they got no credit for reducing emissions through changes in forest practices and land use. Leading up to and through Copenhagen, REDD evolved to not only compensate countries for preserving forests, but would also extend to other natural landscapes like peat soils, swamps, and fields.

An agreement brokered by the U.S., China, India, and South Africa in Copenhagen calls for the “immediate establishment of a mechanism including REDD-plus.” While finalizing REDD-plus was stalled by the stalemate over the broader climate deal, there is hope that there was enough momentum in Copenhagen to see a final REDD-plus agreement emerge in 2010, perhaps outside of an overall climate treaty.[7] In fact, a final outcome may occur as early as the June climate conference in Bonn, according to Louis Verchot, principal climate changes scientist for the Center for International Forestry Research (“CIFOR”).[8]

To capitalize on the progress in Copenhagen, the UNFCCC said leaders had also agreed to establish a Copenhagen Green Climate Fund to facilitate quick action in the absence of an overarching treaty. This will mobilize the promised $30 billion funding from developed countries on mitigation, adaptation, technology, REDD and capacity-building.[9] REDD-plus also received a significant boost when Australia, France, Japan, Norway, the United Kingdom, and the United States collectively agreed to dedicate $3.5 billion as initial public finance towards fast-start climate change financing for the program over the 2010 to 2012 period.[10] In a joint statement, the countries said that these funds are an initial investment in developing countries that put forward ambitious REDD-plus plans and that achieve forest emission reductions according to their respective capabilities. The donor countries also committed to scaling up this investment after the initial period.

While some details remained to be worked out, any major points of disagreement, such as the rights of indigenous forest dwellers and how forests are defined, appear to have been resolved through compromise and answered in the draft text of the long-term cooperative action (“LCA”).[11] Moreover, the most current draft contained elements that many countries viewed as significant progress. For example, it included improved safeguards to prevent the conversion of natural forests to plantations, and affirmed that developing countries take steps to ensure that emissions cuts from REDD programs are permanent and additional, and can be measured, reported, and verified.[12] A key UNFCCC technical body also completed its work at Copenhagen on methodological issues around carbon measurement and monitoring and delivered agreed draft text.[13]

Criticisms, of course, abound. For example, the draft text does not mention earlier options to set a hard target to halt and reverse the loss of forest cover, which had been proposed in earlier drafts at 50 per cent by 2020, by 25 per cent from current levels by 2015, or halted entirely by 2030.[14] Concerns continue over “leakage,” i.e. ensuring that forest protection in one region does not lead to forest degradation in another. To address this, many countries back a national approach to ensure that any emissions reduction from REDD projects are accounted on a national level, rather than a sub-national level that could drive deforestation in another region.[15] However, donor countries have expressed concern over a national approach due to concerns over government instability, inadequate structure for monitoring, reporting and verification, and the lack of tangible, project-related results such as biodiversity conservation and poverty reduction.[16] The current LCA calls for national strategies, but allows for sub-national strategies where appropriate.[17]

Perhaps the most important challenge facing REDD is the complexity of measuring the amount of carbon in a forest, swamp, or field, or the lost storage capacity for changes in use of the environments. While protocols and methodologies exist, each presents their own shortcomings.[18] For detailed discussion of the challenges in calculating carbon offsets from forests and other land uses, see Offsets for Greenhouse Gas Emissions: Clarifying the Role of Forestry and Agriculture, Marten Law Group, Environmental News, August 5, 2009 and Carbon Offsets Protocol Unlikely to Satisfy Competing Interests, Marten Law Group, Environmental News, September 30, 2009.

Opportunities for REDD-plus in the United States

The development of REDD-plus is being closely watched in Congress, where climate legislation is currently stalled in the Senate. The House-passed climate change bill, H.R. 2454, would impose a cap on GHG emissions that would start in 2012, when the producers and importers of fuels such as gasoline, diesel, jet fuel, and fuel oil would be required to acquire emission allowances for the GHG content of the fuels they sell, and electric utilities would need allowances for their burning of coal and natural gas.[19] The cap would expand to industrial sources in 2014, and to natural gas distributors in 2016. Under this cap-and-trade system, companies that cannot meet their GHG emissions limits could buy extra permits by investing in forest preservation programs abroad. Other habitats that absorb carbon dioxide, such as peat bogs, swamps, and fields could also be eligible for payments. This would provide U.S. companies with the opportunity to “reduce” their own emissions at a lower cost, and/or trade these offsets in a commodity-type market.

REDD-plus will not, however, prove easy to implement from the U.S.’ perspective. For example, the House Bill requires that at least half of all offset credits come from international sources. While REDD-plus should provide one mechanism for U.S. companies to meet this requirement, a report from the National Commission on Energy Policy (“NCEP”), an independent bipartisan think tank on energy policy, has expressed concern over the practical difficulties associated with ensuring the verity and reliability of international offset projects.[20] The NCEP report is particularly skeptical of the House Bill’s assumptions regarding the scope and timing of reviewing, approving, and implementing numerous individual international offsets projects. Based on EPA and international statistics, the report predicts that the bill would require EPA to approve 10,000 projects within three years of the start of the program, which is over seven times the number of projects registered under the CDM. Further, the consistent criticism that many registered CDM projects have failed to deliver the projected carbon reductions suggests that EPA will have difficulty identifying enough quality international projects to provide the requisite credits under the bill, even with the projects supervised under the REDD-plus program.[21]

At this point, the U.N. timetable for REDD-plus expects the offsets program to begin in earnest in 2013. While the international preparatory work made progress in Copenhagen, the next step – determining the specifics of how the funding mechanisms will be implemented – will prove to be challenging.

For more information on REDD-plus and other aspects of offset credits and climate change legislation, please contact Alyssa Moir or any member of Marten Law Group’s Climate Change practice group.