REDD: Offsetting Emissions to Save Natural Forests

REDD - Reduced Emissions from Deforestation and Degradation is a proposed mechanism to protect the world's remaining tropical rainforests and reduce greenhouse gas (GHG) emissions. Since the UN Framework Convention on Climate Change (UNFCCC) Conference of Parties 11 (COP11) in 2005, the REDD mechanism has had an official subcommittee negotiating its terms of reference. It has been a controversial mechanism as it can be implemented in many ways, and discussions about perverse incentives and negative side effects are fierce. The benefits scarcely need describing.

 The REDD Mechanism seeks to solve two problems at the same time: deforestation with its loss of ecosystem benefits, and reduction of a major source of GHG in the atmosphere. The creation of offset credits from this mechanism can generate the financial means to remove deforestation drivers such as poverty (subsistence agriculture) and industrial agriculture (clearing for soy, corn, or cattle). Giving a standing tree a monetary value in the form of offset credits is expected to reduce the incentives to convert forests. A US analysis of the costs of emission reduction in the energy sector without and with forestry credits, found including forestry resulted in a 95% savings in the cost of mitigation.

History

The ultimate goal of the 15th Conference of Parties (COP) of the UNFCCC in Copenhagen was to get all member states to sign a binding global climate agreement - a successor of the 1997 Kyoto treaty to apply after 2012. All that was achieved was an aspirational accord, left for each party country to commit to by January 31st. The Copenhagen Accord did emphasize the REDD Plus mechanism. During the Kyoto negotiations, avoiding deforestation was excluded as an official UN climate action mechanism. At the climate conferences in Montreal (2005), it had been put back on the agenda as the next largest contribution (15%-20%) of GHGs to the atmosphere; at the same time devastating biodiversity, water supply and quality, altering local climate patterns, affecting agriculture production, and resulting in droughts and other unexpected negative side effects. The loss of worldwide forest cover reduces forests' annual capacity to sequester emitted GHGs and acts as a buffer to global warming. The awareness of this problem led to the development of voluntary REDD projects and various financial commitments to develop methods and fund pilot projects.

The Basic REDD Mechanism

The REDD idea is simple: reduce the projected business-as-usual deforestation and increase future forest carbon stock through conservation and restoration or silvicultural treatments, and receive credits for the avoided emissions and/or increased sequestration. These credits can be sold to entities (countries or companies) that are either obliged by regulation to offset their emissions above their cap or voluntarily want to offset their emissions.

In this way the REDD mechanism saves forests and reduces emissions, creating a financial benefit for forest ecosystem values while supplying companies with offset credits to help smoothly convert their businesses into the low carbon economy. While simple, discussions/disputes around the REDD mechanism included complex questions such as scope (what countries under which condition, definitions of deforestation, degradation, sustainable forestry), financing (regional or country fund-based, or project marketbased), accounting, monitoring methods (based against average estimates, or based on detailed local data collection), leakage (effect on the market and substitution), and local stakeholder involvement (with special focus on forest communities and indigenous peoples).

In 2007, COP13's Bali Action Plan committed to resolving these complex issues and tabling new REDD rules in Copenhagen. The confusion the political accord created within the UNFCCC process prevented this, despite the fact that all parties agree on the text for an enhanced REDD, called REDD Plus.

REDD Plus

Despite Copenhagen's setback, it was satisfying after years of effort to have the mechanism filled out to become what is now called REDD Plus, which includes:

1. Reducing emissions from deforestation
2. Reducing emission from forest degradation
3. Conservation of forest carbon stocks
4. Sustainable management of forests
5. Enhancement of forest carbon stocks

Including sustainable forest management and enhancement of forest carbon stock increases the flexibility of the mechanism in practical forest operations. This permits the REDD mechanism to include most forested land that has been degraded in the past or is under unsustainable practices today.

USA and Canada

Developed countries like the USA and Canada are also instituting avoided forest conversion mechanisms. How private projects fit into a national forest cap (including programs to reduce carbon emissions) is emerging differently in each country, however, through the Western Climate Initiative there are some parallels. At the same time, both countries are working together to develop a North American Forest Carbon Standard for implementation in late 2011 or 2012, which will include its own protocols and methodologies for REDD. How these standards will fit into a national reduction strategy and whether they will be supported by a bilateral agreement or through NAFTA still has to be determined. They are expected to play a similar offset role within the NA cap-and-trade system as the REDD projects will play in the expected future international cap-and-trade system.

Living and Dead Carbon

The emission trading market sees these mechanisms as offsetting the cost of energy reduction caps until new low carbon technologies are fully deployed. There is also an emerging carbon sinks market, which expects REDD, afforestation and reforestation, and similar programs in other ecosystems such as grasslands, wetlands, and agriculture to be taken together with forests to set up a stand-alone climate initiative for "living" carbon that will work independently alongside the energy reduction market (which seeks to reduce "dead" or fossil carbon). That view sees the two parallel initiatives taken together to be the only way to prevent catastrophic +2oC warming. Following is information on the current role of the REDD mechanism as envisioned in Copenhagen:

Financing

Each REDD approach will be determined nationally, and the World Bank Forest Carbon Partnership facility has already committed to funding 25 national REDD strategies. While each country has to comply with the basic rules of the UNFCCC, these permit financing through two different mechanisms. The first mechanism funds the cost for stopping deforestation through voluntary donations raised by developed countries that are placed in a large international fund, which rewards countries that lower their deforestation rates compared to historical rates. Brazil has set up The Amazon Fund (www.amazonfund.org). The second mechanism is a market-based approach, which rewards projects that reduce deforestation by issuing offset credits into regulatory or voluntary markets. Some countries expect to use both funding options.

Controversy

Over the last few years, the REDD mechanism has been controversial, due to the risk of non-permanence (fire, pests, politics), leakage (log market and social effects), and the possible negative effect valuing forests might have on land prices, which will affect the poorest people and perhaps access to food.

Leakage is the displacement of deforestation drivers such as logging, subsistence agriculture, and industrial agriculture to a different forest area not under protection, so that there is no net benefit. Some environmental groups are opposing REDD as it would give large emitters a cheap way out of their responsibility and not reduce actual emissions. There are also fears the new added forest value will result in the dislodgement of indigenous forest people.

These issues have been taken very seriously and future protocols will have to address these potential negative effects.

The Future

How the REDD Plus mechanism will be implemented, and under which conditions, remains to be seen, as different tropical forest countries are determined to use different approaches. The negotiations in Copenhagen resulted in a framework that permits differing in-country approaches, and leaves the technical and market sides of these projects to be worked out later.

The voluntary carbon market is mainly supplying a demand created by companies to position themselves as carbon neutral. This market is valuable as it has been used to develop methodologies as well as test monitoring and verification techniques. The World Bank, large companies, and nature organizations have supported pioneering REDD projects, which has enabled the development of protocols and methods to guarantee the real offsets that reduce overall global emissions.

Though the REDD Plus draft text was tabled in Copenhagen without brackets or options, meaning it had the complete consensus agreement of all nations that had worked diligently on the REDD subcommittee for the previous two years, it was not passed by the UNFCCC during the political session. So it is unclear now if the protocol will become active in 2012 in the same form in which it was tabled.

In the meantime, funding from developed countries like Norway (that committed $450 million a year to 2020), and initiatives like the Prince of Wales Rainforest project ($250 million total), and the Congo Initiative co-directed and partially funded by former Prime Minister Paul Martin ($200 million), will use the readiness period to develop pilots that find solutions for outstanding disagreements/ problems. It is not expected that these readiness projects will immediately result in a significant decrease of global deforestation, though the state of Amazonas has already demonstrated proof of that concept, reducing deforestation by over 50% from 2004 levels.

The addition of the US to the global carbon market anticipated in 2010 or 2011 is expected to mobilize REDD projects on a global scale.

Potential REDD Plus Influence on the Silviculture Industry

All of this may increase the demand for silviculture. The main deforestation driver is not timber - it is pressure from cattle grazing and other agriculture production. However, the legal and illegal logging industry contributes significantly to global deforestation. With an increase in conserved natural forests globally, and reduced legal and illegal logging, the price of wood may rise, driving an increase in investment in plantation forests, especially in tropical countries. The application of the REDD Plus mechanism to degraded forest areas will also increase the demand for forest restoration and silvicultural treatments to enhance forest carbon stock.

Both plantation and restoration treatments will increase growth rates and overall carbon stocks and be rewarded with carbon credits, so it is expected that overall, the silviculture industry will benefit from the REDD Plus mechanism.

Frederik Vroom, Forest Analyst, BARCA Panama, is presently working on the Embera Wounaan indigenous REDD Plus project in the Darien. Contact him at [email protected].