Tag: Special Interest Law Policy

30 April 2015 | LIMA, Peru | The alpacas of Peru are prized for their soft, fluffy wool, and farmers have been raising them on the steep puna grasslands high in the Andes above Lima for millennia. Alpacas also have soft, padded hooves; the bottoms of their feet are more like house slippers than like street shoes, which means they can plod around on the grass without stampeding the absorbent dirt into an impenetrable hard surface. Cows and sheep, however, are a different animal completely: their hard hooves compress the dirt, and when they graze, they yank the grass out of ground rather than snipping it with their teeth the way alpacas do. This all results in grasslands that repel water rather than absorb it, contributing to a feast-or-famine cycle in Lima, which is the world’s second-largest desert city after Cairo.

In the wet season, the rivers that flow down from the Andes break their banks, while in the dry season, they slow to a trickle – and those cows and sheep are one reason for that. On top of that, the soils are carbon-rich, and as they’re degraded, carbon is released into the atmosphere.

Then there are the natural swamps and bogs that, like the soils, have traditionally absorbed water in the wet season and released it in the dry season. Over the last century, they’ve been drained so animals can graze, and that makes the downstream wet seasons wetter, and the dry seasons even drier.

Earlier this month, the city’s water utility, SEDAPAL (Servicio de Agua Potable y Alcantarillado de Lima), announced it would funnel nearly 5% of the water fees it collects from users into addressing this issue. Some of the money will go into programs that help farmers better manage their livestock – in part by rotating their animals, but also by keeping fewer – but fatter – cows. Other funds will go to close the drainage ditches so that wetlands can replenish their stored volumes, and deep infiltration of surface water regulation processes will recover, while some will go to restore pre-Incan “amunas” that siphon water off high-altitude streams in the wet season and funnel it into the mountain itself, where it filters down through the rocks over several months and emerges from springs in the dry season. Of the activities, restoration of amunas will likely provide the greatest impact and at the lowest cost, according to a cost-curve analysis carried out by Ecosystem Marketplace publisher Forest Trends and Consorcio para el Desarrollo Sostenible de al Ecorregií³n Andina (CONDESAN).

“As the regulatory agency of Water and Sanitation in Períº, it is our responsibility to protect and preserve the river basins,” says Fernando Momiy Hada, President of national water regulator SUNASS (Superintendencia Nacional de Servicios de Saneamiento). “‘Gray infrastructure tools,’ like pipes and sewers, have their place, but we need to restore and protect the watershed, and re-grout the amunas to preserve and increase the quality and the quantity of water in the river basins.”

The funds will be divided between two activities: 1% of the total water tariff, or PEN 70 million (USD 23 million), will go explicitly to green infrastructure; while 3.8%, or PEN 266 million (USD 89 million) will be used for climate change adaptation and disaster risk reduction more generally.

The PEN 70 million investment is more than any other Latin American city or water utility has ever committed to green infrastructure.

Lima’s challenges are far from unique. Due to extreme water shortages, California is imposing dramatic water use reductions and, as a result of an extreme drought, Sí£o Paulo, Brazil, the world’s fourth-largest city, is contemplating similar measures. The water crisis is front page news every day these days – and Lima is taking a very important and big step into the right direction.

“Latin America is a hotbed of innovation when it comes to tackling the global water crisis, and Peru is a leading country in Latin America,” says Michael Jenkins, President and CEO of US NGO Forest Trends, which conducted the cost-curve analysis. “This is exactly the kind of leadership and creativity we need if we’re going to confront similar challenges around the world.”

SUNASS tentatively approved the proposal on March 26 followed by a public hearing that took place this month. Based on the public hearing, SUNASS anticipates it will be approved next month with no changes to green infrastructure and climate change adaptation funds.

Lima’s water utility, SEDAPAL, had submitted a proposed budget that included a plan for investing PEN 12 million (USD 4 million) in green infrastructure for the city. The approved budget is nearly six-fold that proposal.

The voluntary carbon market arguably delivers benefits to larger society, but only a narrow slice of us are buying. Sheldon Zakreski of The Climate Trust says it’s time for the US federal government to step in with more loan guarantees and outright purchases that would give the market support until private-sector buying materializes.

This article was originally posted on The Climate Trust website. Click here to read the original.

1 May 2015 | Depending who you talk to, the offset market is either alive and well, or dormant.

Consider two recent Ecosystem Marketplace reports. The Taking Stock of the role of Offsets in Corporate Carbon Strategies report notes that in 2013, 14% of companies that disclose their carbon emissions purchased a volume of offsets equivalent to avoiding the emissions associated with using 117 million barrels of oil. Meanwhile, the State of the Voluntary Carbon Markets 2014 report described a stagnant market in 2013 where three of every four offsets were sold to pre-existing clients.

These two truths underscore a huge opportunity, as well as presenting some peril for the future of the voluntary offset market. Although there is clearly a strong foundation of corporate voluntary buyers, the lack of diverse offset supply is a huge impediment to attracting new buyers to the market. Worse yet, if left unchecked, it will likely result in notable departures from the market as companies look for innovative ways to address greenhouse gas emissions.

The Good

The use of offsets as part of a company’s corporate social responsibility (CSR) strategy gained traction as a widespread practice in the early to mid-2000s. Despite the economic recession that began in late 2008, and the failure of federal cap and trade legislation, many companies that began buying offsets in the mid-2000s are still committed to offsets.

Additionally, although federal carbon legislation has failed to re-emerge, corporations are continuing to lead the way towards putting a price on carbon. The CDP (formerly the Carbon Disclosure Project) compiled a database last year that showed 150 companies globally, 29 of which are U.S.-based, use an internal carbon price ranging from $6 to $60 per metric ton of carbon dioxide equivalent emissions.

This near ten year track record of unwavering commitments to addressing corporate carbon footprints, points to the fact that concern and action on greenhouse gas emissions is here to stay; the issue transcends political cycles. It’s been 9 years since An Inconvenient Truth was released, and seven since Congress defeated federal cap and trade legislation.

Even more promising is the cutting-edge corporate trend towards greening their supply chains. Although this is part of a larger initiative, a role for offsets exists here, as last year’s State of the Voluntary Carbon Market research found that 2% of 2013 corporate offset purchases were practice change/supply chain motivated.

The Bad

The offset market is stagnant. Don’t get me wrong. There are notable initiatives from active voluntary buyers such as Microsoft, Interface, Chevy, Coke, Seattle City Light, and Google. These are companies that are truly to be commended for their ongoing commitments, but when was the last time a new entrant has embarked on a significant offset purchase commitment? Meaningful expansion of notable commitments are few and far between.

It could be that most companies are still focusing largely on direct reduction activities. Many offset leaders are well aware that in order to walk the talk, it is wise to strive for substantial internal progress prior to making a noteworthy commitment to offsets. If this is the case, and a rise in offset purchases is inevitable, what kinds of projects and supply will these new entrants find if they decide to buy? Unfortunately this is where the ugly comes into play.

The Ugly

If a company that is interested in entering the market were to assess current supply options, it would find a market long on dated vintages from established sectors such as landfill gas, and a dearth of new project types. For comparison sake, imagine a mobile device market where your choices are various several year old Blackberries, and iPhones or Galaxies are largely a pipe dream. That is basically the state voluntary buyers are encountering in today’s offset market. The result is that there is pent up demand that goes unfilled due to a lack of choice.

Like every other nascent sector, diversity is key for the offset market to grow and stabilize. The promising news is that a lot of groundwork has been done to introduce those iPhone and Galaxy type offsets into the marketplace, especially in the agriculture sector. The challenge lies in what can be done to advance those sectors and provide safeguards that will foment the generation of meaningful volumes of supply.

The Showdown—What Needs to be Done?

There are three key areas that could kick-start the implementation of projects and the generation of new sources of supply.

1. Don’t just build it—test it

Voluntary market certification standards such as the American Carbon Registry, Climate Action Reserve and Verified Carbon Standard are doing their part to diversify supply by launching new project standards, also known as protocols. In the last few years alone, several new protocols have been introduced in the agriculture sector that offer a pathway for generating offsets through grasslands conservation, rice cultivation and nutrient management practices on farms and in fields.

Such efforts are necessary to diversify supply, but simply releasing a new protocol doesn’t mean that the market will rush to adopt it.

While protocols help in providing a useful guide, they do not eliminate the risks of actually monitoring, verifying and issuing new offsets. This is important because third-party verification is essential for generating real and credible offsets that can be traded. Verification is also generally the largest cost offset suppliers will face. Additionally, there have been several instances were verified volume for new offset project types are generated at a fraction of the anticipated rate.

The implication here is that there is a huge “first mover disadvantage” and worse yet, some promising offset sectors could de dead on arrival following the first verification of the first project.

Mitigating verification risk by subsidizing the initial verification is one way to overcome this uncertainty. This is something standards setting organizations could consider. Otherwise, they face the risk of investing substantial time and effort developing and releasing protocols that are not adopted by offset project developers.

2. Plant the seed and watch it grow

Given this chicken-egg scenario where buyers are staying out of the market due to lack of supply and suppliers aren’t diversifying the market due to uncertain demand, if ever there was a need for a large new buyer to enter the market, now is the time. Such a buyer exists in the federal government—where a recent executive order increased their prior reduction commitment (28% below 2008 levels by 2020) for federal agencies to 40% below 2008 levels by 2025. The Council on Environmental Quality estimated that the original executive order would result in 101 million mtCO2e reductions by 2020. If federal agencies were allowed to use greenhouse gas offsets as 8% of the reductions they must achieve under the executive order, The Climate Trust estimates they could demand up to 1.35 million offsets per year, creating 15% growth in the voluntary carbon market.

Currently, federal agencies are allowed to purchase renewable energy certificates to meet this target, while offset purchases are prohibited. Removing this constraint could add millions of tons of demand to the market, while saving taxpayer dollars to the extent offsets cost less than other emission reduction options available to federal agencies.

Federal government support of offsets in general—and agriculture specifically—could have the exponential effect of drawing corporate buyers, especially food and beverage companies that are motivated by greening their supply chain.

3. If it falls—catch it

The third impactful area that could expand supply offerings are financial models that mitigate price risk. Here exists a significant role for impact investors, program related investments from foundations, and government agencies that could invest in, and provide guarantees for nascent agriculture offset projects. Upfront funding is crucial to bridge the many months (sometimes years) it takes to develop a project, as well as launch and verify offsets. However, securing such funding on viable terms has proven elusive; perhaps a barrier that could be bridged is if a guarantee is provided that the funding will be repaid. One way to do this is to apply federal loan guarantee programs to certain offset project types. Full disclosure, The Trust occupies the role of providing early stage capital to carbon reduction projects.

The voluntary carbon offset market has shown resiliency, but it is still a young market that requires nurturing in order for it to grow and flourish. This market will never compare in size and scope to regulated markets, but further investment in building the capacity in the voluntary market is needed. An investment will not only diffuse further knowledge on how to design, implement and operate successful offset projects and deepen the engagement level of corporations, it will also provide a useful roadmap as the policy debate on subnational, national and global emission reduction initiatives proceeds.

Sheldon Zakreski is the Director of Risk Management at the Climate Trust. He can be reached at [email protected].

The argument over voluntary approaches to conserve at risk-species like the greater sage-grouse isn’t waning. Meanwhile, new research applying the mitigation hierarchy to the agriculture and forestry sectors finds net positive impacts for biodiversity are possible and a separate report finds commodity subsidies driving deforestation vastly outweigh conservation finance to protect forests.

This article was originally posted in the Mitigation Mail newsletter. Click here to read the original.

21 April 2015 | Greetings! In honor of those Mitmail readers whose next few weeks are dominated by preparing for exams or handing in dissertations, we thought we’d provide you all with some homework.

Your mission, if you choose to accept it, is to brush up on one of the “Three Cs”: commodities, candidate species, and carbon. Each is an emerging force that’s poised to radically change business-as-usual for biodiversity conservation and finance. So if you normally skim over these issues as you read our news briefs, this month pick a “C” to take a few minutes to get up to speed on.

If you choose commodities: Read our latest on applying the mitigation hierarchy to the agricultural and forestry sectors. Then get some background on the challenge: learn how commodity subsidies driving deforestation vastly outweigh conservation finance to protect forests, and how questions are emerging regarding the effectiveness of sustainable commodity roundtables. Finally, read about a new way to pair conservation finance and commodities, in which the Althelia Climate Fund is helping a sustainable cocoa project in Peru use carbon finance as collateral against loans to get the project off the ground. The project will then shift over time to sustainable cocoa production as its main revenue stream.

If you choose candidate species: Start with this piece introducing the concept of Habitat Exchanges, which help entities that impact imperiled – but not yet federally listed – species to pay to restore and protect critical habitat elsewhere, in order to keep those species from further decline. (Though arguably the system is set up for the energy and mining industries – not so much other sectors like agriculture.) Sounds good in theory, right? But as the first conservation bank for the greater sage-grouse prepares to open its doors in Wyoming, it’s beating back attacks from both sides of the political spectrum over whether voluntary mitigation really is the right mechanism to keep the grouse off the Endangered Species List.

If you choose carbon: You’ll also want to read the article on how a sustainable cocoa project in Peru is using carbon finance to leverage start-up capital but isn’t exactly a carbon project. Then for a counterpoint, check out Mongabay’s reporting on efforts to get carbon projects going in Brazil’s Cerrado, which illustrates the larger point that carbon storage and biodiversity values don’t always go hand-in-hand. But! A carbon market that assigns higher values to biodiversity-rich areas could help undo fifty years of biodiversity decline on land, according to a new study. You have the weekend to ponder this challenge, dear reader.

Finally, Forest Trends is hiring a Senior Communications Associate and a Research Assistant for Ecosystem Marketplace’s new Supply Change initiative. Scroll down to the Job Openings section for descriptions.
Cheers,

—The Ecosystem Marketplace Team

If you have comments or would like to submit news stories, write to us at [email protected].

21 April 2015 | Africa generates very little in the way of greenhouse gas emissions, but it’s especially vulnerable to droughts and flooding from climate change, which threaten to disrupt food and water supplies. Poor infrastructure, high poverty rates and little access to capital only enhance the continent’s vulnerability, the United Nations says.

To avert disaster, African countries are already gearing up for the 21^st Conference of the Parties (COP 21) to the UN Framework Convention on Climate Change (UNFCCC), which takes place in Paris at the end of the year. At last week’s Africa Carbon Forum (ACF), delegates called for stronger emphasis on results-based climate finance for both mitigation and adaptation to climate change, and they reiterated their support for market-based mechanisms like the Clean Development Mechanism (CDM), which allows emissions-reducing projects to earn certified emissions reduction (CERs) that can be traded to meet overall national reduction goals.

“Participants particularly highlighted the usefulness of the CDM’s established rules in measuring, reporting and verifying results and its possible role to help define and clarify the content of INDCs,” the UNFCCC said in a press release. “The workshop also concluded that African countries could look at how best to link and leverage finance through the Green Climate Fund at the same time as increasing use of the CDM.”

“I agree with Ministers that the last 10 years in the implementation of the Clean Development Mechanism is a very valuable asset and that market mechanisms can play a significant role in raising the level of ambition, and supporting climate action,” said Hakima El Haite, the Delegate from Morocco’s Ministry of Environment.

Clean Energy, Green Agriculture

Roughly 730 million people across Africa rely on traditional forms of cooking using wood, which harms health and destroys forests, according to the International Energy Agency Africa Energy Outlook 2014. This report also found 625 million Africans lack secure access to electricity. ACF participants urged addressing this issue with the CDM, along with other tools that leverage private sector money.

“There is a great opportunity for the private sector to invest in a low carbon future for Africa, using market forces to bring innovative technologies so that the continent can develop in a sustainable way,” said Dirk Forrister, the President and CEO of International Emissions Trading Association, a business organization focused on greenhouse gas emissions trading. “The Paris agreement can help facilitate this by setting the right parameters for business to invest, including rules and guidelines for carbon markets.”

Preserve and Improve the CDM

Delegates repeatedly called for the CDM to not only be preserved, but improved to include climate-smart agriculture and urban development and build a more sustainable economy overall, according to the UNFCCC’s summary of the event. Forum participants noted the importance of addressing these key issues in African countries’ Intended Nationally Determined Contributions (INDCs), the post 2020 climate action plan each nation intends to take. The plans are submitted to the UNFCCC ahead of COP 21.

“In these last eight months before Paris, the focus must shift from restating negotiating positions to finding common ground solutions,” said UNFCCC Deputy Executive Secretary Richard Kinley. And according to another participate at the ACF, John Christensen of UNEP (United Nation Environment Programme). “African countries are ready to contribute and agree to a fair and balanced international agreement.”

Water brings life, but torrential downpours bring sludge and sewage overflow – contributing pollution around the world. In the United States, the Environmental Protection Agency is under pressure to regulate more aggressively, but, increasingly, NGOs and local authorities are moving ahead with cost-effective stormwater management plans of their own.

20 April 2015 | Stormwater, the dirty water that flows off pavement, rooftops and other impervious surfaces, is one of the biggest sources of water pollution in the United States. The U.S. Environmental Protection Agency (EPA) is charged with managing this pollution, but the agency is failing to enforce its own rules, according to many environmental groups.

The Conservation Law Foundation (CLF) and the Natural Resources Defense Council (NRDC) are suing the EPA – in separate lawsuits – in relation to the agency’s enforcement of stormwater regulation and the effectiveness of those rules.

Such legal actions have traditionally been the main recourse for environmentalists looking to promote better management of stormwater runoff, but legal action alone often creates a situation where the party with the best lawyer wins – or at least the lawyers do. And the actual cost of compliance is seen as a fraction of the cost of litigation. For that reason, several environmental organizations have been bringing carrots to accompany their sticks.

The Voices of Opposition

“EPA’s hearing very loudly from polluters in the development industry that oppose stronger stormwater requirements,” said NRDC attorney Rebecca Hammer.

Companies often equate the cost of compliance with the cost of construction or they view procedures to account for stormwater runoff flowing into waterways as an unknown – and frightening – liability. However, compliance costs make up a fraction of the overall cost of a development project, and Hammer argues that building things like permeable pavement, green roofs, and rain gardens – now called “green infrastructure” – saves companies money in the long run.

The stormwater rushing off impermeable surfaces dumps far more pollution into waterways than porous pavements that absorb and filter toxins. The result of these impervious areas is a contaminated pool of dirty water draining into rivers and streams, the CLF said in a statement speaking specifically about the Charles River watershed in Massachusetts. Gray infrastructure, then, equals a greater stormwater discharge cost for a property owner.

There is growing evidence supporting this concept that green infrastructure is in the business owners’ best interest. American Rivers, a conservation organization restoring US rivers, published a report in 2012 which found that these nature-based solutions can lower capital costs and operational expenses while increasing energy efficiency so energy costs are reduced. It also leads to an increase in property value and reduced costs associated with flooding.

And last year, the EPA projected a green infrastructure plan to manage stormwater for Lancaster, Pennsylvania could save the city $660,000 per year by lessening the treatment of wastewater. It also has the potential to deliver $4 million worth of energy, air quality and climate-related benefits.

But despite this mounting evidence on the benefits of green infrastructure, it isn’t typically incorporated into core business practices or investment strategies, a study by The Nature Conservancy, an environmental nonprofit, found. And as it stands, the key drivers for implementing green solutions are regulations. Brian Van Wye of the District of Columbia Department of the Environment (DDOE), notes how much farther along green programs with regulatory drivers are over the DDOE’s voluntary programs. “The regulated area is 10 times the size of the area that we’re able to touch with our voluntary programs,” he said.

Cities Leading the Way

But while the majority of businesses and places aren’t particularly supportive of nature-based solutions, there are a few areas where developers and local decision-makers are. A good example is Philadelphia, where the city’s water department has linked stormwater fees to the amount of impervious pavement on a property. More concrete means a higher bill.

The pricing structure incentivizes businesses to green their property and even includes a provision that allows property owners to write off their upgrade costs against future stormwater fees. However, that write-off could take years to materialize and doesn’t eliminate the upfront costs for companies.

Nonetheless, Philadelphia’s program spreads awareness on the importance of stormwater management, the lack of which Hammer called part of the problem. Developers aren’t aware of the benefits and don’t take advantage of the opportunities, she said.

Washington, D.C. is one city taking advantage of the opportunities. The city created the Stormwater Retention Credit (SRCs) trading program to provide flexibility in complying with new stormwater standards issued to D.C. through the EPA’s MS4 (Municipal Separate Storm Sewer System) permit. The program, which is the first stormwater retention trading program in the U.S., allows property owners to generate SRCs for voluntarily implementing green infrastructure that reduces stormwater runoff. They can then trade their SRCs with others needing to meet regulatory requirements.

Van Wye credits the “progressive-minded development community” as one of several reasons D.C.’s program has met with success thus far. The MS4 permit is also unique to D.C. in that the city receives clean water rules directly from the federal government while most U.S. cities typically receive these rules from their states. The DDOE was looking for the best methods to meet these new standards that dealt with stormwater retention in a way that was both effective and fair to the regulated group, Van Wye said.

“In terms of trading, we realized we could allow a lot of flexibility to development while at the same time generating as good or better benefits for the water bodies,” he said.

Like in Philadelphia, the D.C. program incentivizes property owners to upgrade gray infrastructure to green. And these property owners are eligible to receive discounts on their stormwater fees down the line. The trading aspect of D.C.’s program also creates a revenue stream that can lead to installing more green stormwater controls.

Last fall, the SRC program transacted its first trade – 11,013 SRCs worth $25,000. The seller of these credits was a property manager, Ann Benefield for condominiums in Northwest D.C. As the city’s first group of development projects becomes subject to the stricter stormwater regulations, program developers are expecting demand to emerge.

More Innovation on the Horizon

Ecosystem Marketplace’s latest State of Watershed Investments report also highlighted the potential of another innovative approach: public-private partnerships to harness finance for green infrastructure. The private partner provides upfront capital and assumes implementation and financial risks while the public participant funds the project over the long term and manages maintenance.

In the Chesapeake Bay, where regulation regarding stormwater controls is tightening, project developers expect these types of partnerships to leverage hundreds of millions of dollars in the coming decades. That money is much needed in a place where implementing necessary stormwater controls is estimated to be as high as $15 billion.

Projects like the Re.invest Initiative, partially funded by the Rockefeller Foundation, are encouraging these public-private partnerships as a means to build more sustainable stormwater systems. The project is a collaboration among eight U.S. cities – Honolulu, Milwaukee, New Orleans, El Paso, Hoboken, Miami Beach, Norfolk and Virginia Beach – and engineering, law and finance firms to create public-private partnerships that will build resilient infrastructure.

Innovative projects such as the Re.invest Initiative, along with what is being done in Philadelphia and Washington, D.C., are moving forward despite the legal entanglements and slowdowns at the federal level. Hammer emphasizes this progress in saying local governments can step up and enforce the type of standards NRDC would like to see at the national level.

Additional resources

Several U.S. states are considering joining existing cap-and-trade programs such as the Regional Greenhouse Gas Initiative to comply with pending carbon rules from the federal government. However, a major obstacle in doing so is the tight deadlines that federal officials have set for states to submit compliance plans.  

17 April 2015| Want to join an existing cap-and-trade program in the United States? The nine Northeastern states participating in the Regional Greenhouse Gas Initiative (RGGI) are ready to welcome with open arms any of their counterparts who want to use the carbon trading program to comply with upcoming regulations from the United States Environmental Protection Agency (EPA).

“The waters are warm – dive on in,” Janet Coit, Director of RGGI member Rhode Island’s Department of Environmental Management, said at an event hosted by nonprofit think tank Center for Climate and Energy Solutions (C2ES).

Not so fast.

Literally, time is a major obstacle for states wanting to join existing carbon trading programs such as RGGI or California’s cap-and-trade program as a compliance mechanism, according to state regulators speaking at the C2ES event.

The EPA announced its proposed Clean Power Plan to limit carbon pollution from existing power plants last June, with a final rule scheduled to be released this summer. The rule will mainly affect coal-fired power plants, with the goal of cutting emissions from electricity generation 30% below 2005 levels by 2030. States must submit compliance plans to the EPA in the summer of 2016 – either complete plans or initial plans with requests for 1-year or 2-year extensions. States would be eligible for a two-year extension to June 2018 – with a progress report due in June 2017 – if their compliance plan is part of a multi-state plan.

For the RGGI states, those deadlines are “completely doable because we have already been through that process and we have a system that works,” Coit said. “If people wanted to join RGGI, depending on what the rule says, they might be able to declare their intentions in time. But would we be able to work through how to bring in a state within the timeframe is the question.”

It took the RGGI states five years to develop and launch the program, followed by another few years of public consultations and analysis that underpinned the 2014 revamp of the program. So there might not be enough time for new states to join RGGI as a compliance option if the EPA remains strict about the summer 2016 deadline. Even a June 2018 extended deadline could be tough to meet given RGGI’s rule-making process.

The EPA outlined several potential compliance options for states, including market-based programs to reduce carbon, investments in existing or new energy efficiency programs or expansion of renewable energy initiatives – or a combination of these strategies. Market-based programs would allow regulated entities to trade emissions reductions units to reduce the cost of compliance, as long as the state met an overall cap. The agency explicitly mentioned that the emissions reductions generated by RGGI and California’s cap-and-trade programs would be approved under EPA’s guidelines – a concrete recognition of regional market-based programs.

The emissions of capped sectors in California have dropped 3.8% in the first two years of the compliance program. RGGI states have achieved 40% cuts in emissions in the power sector since 2005.

“EPA has given the states a gift by giving us all this flexibility,” said Martha Rudolph, Director of Environmental Programs for the Colorado Department of Public Health & Environment. “Yet, there’s so much flexibility that trying to figure out what we’re going do in a short timeframe is very difficult.”

The tight deadlines, if left unaltered, could even have the “unintended consequence of discouraging people from exploring regional solutions, and I think that would be a shame,” she said.

The Trail Leads Northeast

There has been a movement in the Virginia state legislature and among NGOs for the state to join RGGI as an “off-the-shelf solution” to complying with the EPA’s regulation. So joining RGGI is one of the options, said David Paylor, Director of the Virginia Department of Environmental Quality.

“But we don’t know what RGGI is going to look like in the context of the Clean Power Plan yet,” he said. “It’s our view that RGGI is going to have to be reformed a little bit and that is something that we would look at, along with all of the other options, to see what makes the most sense. Market-based solutions are likely to make a lot of sense.”

Joining a regional carbon trading program could gain momentum in the state if companies support this compliance approach, Paylor said.

“When it comes to carbon pricing, I would say in Virginia that’s going to have more legs the more the business community gets behind it,” he said. “And we’re finding that much of the business community is still in the ‘we’re not quite sure’ stage.”

Businesses and individuals are reticent about policies such as carbon pricing that could increase energy costs for consumers, particularly in states that currently have low costs, even if implementing a carbon pricing program would be more cost effective in the long term, the regulators observed.

“Even though it’s the least cost, it doesn’t feel that way to them,” Paylor said.

But the Trail Goes Cold out West

Rudolph sees a different hurdle for Colorado in joining a regional cap-and-trade program such as RGGI or California’s program – which is currently linked to the Canadian province of Quebec and could eventually be linked to Ontario – to comply with the pending EPA rules. Her state has a diverse energy mix, more than half of which comes from coal-fired power plants, and gets its energy from two investor-owned utilities, several municipal utilities and rural electric associations, which creates significant challenges in developing a carbon pricing program in the state.

“Frankly, I think it’s going to be difficult for us to pursue that, although if it comes to us we certainly won’t say no,” she said. “The amount of time the rule gives to set up any kind of plan is very short and the type of plans, like RGGI or the California plan, would be frankly in the timeframe nearly impossible for us to set up.”

But there are “smaller, less complex trading programs that caught my eye” such as a state-only plan that allows regulated entities to trade credits with each other, Rudolph said.

“That is a more modest type of trading proposal that I think may have legs in states like Colorado,” she said. “We have not talked about that as an option, but that is something I’d be putting on the table for consideration.”

Paylor suggested a solution could be to start with an intrastate carbon trading program that transitions into an interstate approach. “And we’re having discussions with other states now to try to keep the maximum number of options open as we go forward and see what the rule looks like,” he said.

Australia drew the ire of the environmental community when it backed away from its carbon pricing program last year and established a nearly AU$2.6 billion Emissions Reduction Fund in its place. With the first auction coming up this week, critical issues still need to be resolved, including whether the funding will be sufficient to incentivize new emissions reduction projects.

14 April, 2015 – To many environmental and business leaders, Australia had a solid climate policy in place, centered around the country’s carbon tax and a planned emissions trading system (ETS). But in scrapping the country’s carbon tax last year, these leaders now believe the government reversed the progress the country was making in contributing to an international solution to the climate challenge.

“It’s certainly been disappointing to see it unfold that way,” Simon Bradshaw, Climate Change Advocacy Coordinator for Oxfam Australia, said of the government’s abandonment of its carbon pricing program.

The Liberal Party of Australia, led by Prime Minister Tony Abbott, replaced the carbon tax with an Emissions Reduction Fund (ERF), which maintains the objective of helping achieve Australia’s emissions reduction target of 5% below 2000 levels by 2020. The government has provided nearly AU$2.6 billion to establish the ERF and plans to buy offsets from competing sellers in a reverse auction.

“Australia is firmly committed to our 2020 emissions reduction target,” a spokesperson for the Department of the Environment said. “It is ambitious and comparable to other developed countries’ targets.”

But officials from energy-intensive industries, local government, carbon offset project developers and other stakeholders believe that emissions reduction target is not strong enough as it stands, according to a poll conducted by the Carbon Market Institute (CMI), which assists Australian businesses in managing risks and opportunities in national and international carbon markets, in Australia in September 2014. Seventy-six percent of respondents supported Australia adopting a stronger 2020 emissions reduction target.

“The government really doesn’t care about climate change,” said Martijn Wilder, an Australia-based Partner with law firm Baker & McKenzie. “The government came up with this stupid Emissions Reduction Fund policy at a time when it was under a bit of pressure. It’s just an alternative to an emissions trading scheme and now they are sort of stuck with a bad policy.”

The first test of this new policy comes on Wednesday at 9:00 am Australian Eastern Standard Time when the first ERF auction – scheduled to last for two days – is set to begin.

An Invisible Price

The real uncertainty relates to the offset price the government will accept under the ERF. The regulator will apply a benchmark price – the maximum amount it will pay for emissions reductions – for each auction and only bids below the benchmark will be considered. Indeed, the lowest-cost projects will be selected at auction and proponents will not be able to see what others are bidding.

The AU$23 carbon tax incentivized significant pre-compliance offset purchases in 2012 – five million tonnes of carbon dioxide equivalent (MtCO2e) developed for the CFI, according to Ecosystem Marketplace’s State of the Voluntary Carbon Markets 2013 report. The AU$23 carbon tax meant that offsets priced at the regional average of $8.8 per tonne reported that year or $14.2 per tonne last year were a cost-effective compliance option. Now, without a set emissions cap and carbon price, the price could plummet.

If the bidding price of offsets sold at auction remains high, however, the AU$2.6 billion funding for the ERF could quickly be exhausted, given the volume of existing projects expected to bid in. The Clean Energy Regulator says additional funding will be considered in future budgets, but environmental experts such as Bradshaw are not optimistic that the fund will be replenished. They see the new policy as expensive compared to the cost-effective market solutions that would have been implemented under the previous policy.

Legacy Offsets

Even prior to the legislated policy shift from carbon pricing to the ERF, Australia implemented changes impacting carbon offset projects. The country included improved forest management (IFM) within the national accounting submitted to the United Nations Framework Convention on Climate Change (UNFCCC). That meant that any offsets issued to voluntary IFM projects, such as the Tasmania forestry project developed under the Verified Carbon Standard (VCS) would, from January 1, 2013 and beyond, be double counted and so are no longer eligible to generate voluntary offsets, observed Jerry Seager, Chief Program Officer for the VCS.

Existing projects initially developed under the Carbon Farming Initiative – a legislated offsets scheme adopted in 2011 to allow farmers and land managers to earn carbon offsets by storing carbon or reducing greenhouse gas emissions on forest or agricultural land – were automatically registered under the ERF. Under the new ERF policy, the federal government will purchase Australian carbon credit units (ACCUs) from legacy CFI projects, which will allow existing participants to secure a return from eligible projects – if the offsets are competitive at auction.

The fund will build on the CFI by offering emissions reduction opportunities to a range of sources beyond the land sector, including energy efficiency improvements in the commercial building sector, according to the Clean Energy Regulator.

“The legislation around the offsetting hasn’t really changed other than expanded to include more projects,” Wilder said. “That’s a positive sign.”

This raises the question of whether the fund will only support existing projects or drive investment in new projects. Only 21% of the 245 individuals surveyed by CMI believed the ERF would provide opportunities to fund their emissions abatement projects, with 50% disagreeing or strongly disagreeing with the notion. The survey, completed before the ERF legislation was officially passed, found that 40% of respondents believed the ERF should not be implemented at all while another 39% advocated for implementation with more funding, according to CMI.

“The way Australia has implemented the Emissions Reduction Fund is not using markets so much as just using government money, which can provide support to some projects, but is not fully harnessing the market and directing private capital into markets,” Seager said. “Certainly, there may be opportunities for the fund to support some projects, but it’s not going to be a fully scaled-up solution that is fully harnessing the power of private capital. That’s the challenge.”

Keeping Emission Reductions Safe

The ERF will come equipped with a safeguard mechanism aimed at ensuring emissions reductions paid for by the ERF will not be offset by significant increases in emissions elsewhere in the economy. It will encourage large emitters not to exceed historical emissions levels, with the baselines set using data already reported under the National Greenhouse and Energy Reporting Scheme (NGER). The safeguard mechanism is scheduled to start on July 1, 2016, and will apply to roughly 140 entities that emit more than 100,000 tonnes of carbon dioxide each year – roughly half of the country’s emissions.

The safeguard mechanism has yet to be designed, with the government planning to release rules for the mechanism in October. But the new approach means that industry has no obligation to reduce its emissions, and it’s uncertain that the ERF can have a positive impact on reducing emissions without a cap.

Australia Versus the World

Australia has been on the wrong end of climate initiatives, observers say, aside from its AU$200 million over four years pledge to the Green Climate Fund (GCF), made during the UNFCCC negotiations in Lima, Peru in December. But there is concern that the GCF pledge will be Australia’s only contribution to the $100 billion per year promised by developed countries to the developing world by 2020.

“I think (the GCF pledge) was a sign they were feeling pressure from the international community and Australian civil society,” Bradshaw said. The GCF pledge was a welcome sign, but “I think the risk is that it’s seen as Australia’s overall commitment to climate finance.”

The Australian government committed to a review of its emissions reduction targets this year as part of its preparations for the UNFCCC negotiations in Paris at the end of 2015, with plans to publish its proposed climate plan, known as its Intended Nationally Determined Contribution (INDC), mid-year. A taskforce has been established to advise the government on the INDC. Setting a post-2020 emissions reduction target will be the focus of that process.

Oxfam has calculated a fair contribution for Australia would include a cut in domestic emissions by at least 40% by 2025 and at least 60% by 2030. The fair contribution refers to the country’s share of the global ‘carbon budget’ – a total tolerable amount of global carbon pollution, beyond which the risks for people and planet are unacceptable, according to Oxfam.

The CMI respondents highlighted the importance of China, the United States and the European Union, with about 80% saying Australia should look to the targets and actions of each of these nations or blocs in calibrating its post-2020 target.

“The Australian government knows that other countries are doing things, but it will do what it thinks is best for Australia,” Wilder said. “And we have a really, really hard right-wing, anti-climate government.”

Australia became the first country in the world to repeal its carbon price just as other countries such as China and South Korea have implemented or are moving toward national ETS programs. And, regardless of what other countries are doing, the government has no plans to revisit the possibility of a carbon pricing mechanism — a mechanism that created a market worth $6.6 billion in its first year of operation, according to CMI’s State of the Australian Carbon Market 2013 report.

“The Australian Government is determined to reduce emissions, but without a carbon tax,” the spokesperson said.

Bradshaw observed that the government has been “fairly defiant” about repealing the carbon price.

“Australia, for reasons we may never understand, is swimming against international trends,” he said. “They really did paint themselves into a corner with this and they may regret that” as the need to reduce emissions becomes clear. “It’s hard to see how that’s not going to involve carbon pricing.”

10 April 2015 | With historic droughts playing out in different parts of the globe, it seems that water is at the top of everyone’s mind. For the first time ever, groundwater legislation was introduced in drought-plagued California, shortly followed by mandatory water restrictions. Meanwhile, Sao Paulo, Brazil and Taiwan run dry – perhaps waiting for better water resource management.

But just how to manage this increasingly scarce resource is the constant question among those working in the water space. And the answer continues to evolve as policymakers, practitioners and scientists account for new factors like more people and a changing climate.

Center to the issue of water management is cities-hubs of not only water consumption but food and energy also and key to the water-energy-food nexus. A recent breakthrough regarding water management in cities came in the form of Lima, Peru’s new water tariff. The bill allows for nearly 5% of collected water fees to be devoted to green infrastructure, climate change adaptation and disaster risk reduction. Over a 5-year period, an estimated $112 million will be collected to address these issues. It’s a significant step forward in terms of not only actual progress made but also a huge show of leadership on the side of Peru’s water regulator-SUNASS (National Sanitation Service Superintendence), said Gena Gammie, a Manager in NGO Forest Trends’ Water Initiative

So it’s also a milestone cultivated in part by Forest Trends (publisher of Ecosystem Marketplace) over the past three years through its Watershed Services Incubator, a partnership with the Peruvian Ministry of Environment to develop cost-effective methods that would keep the water flowing in one of the world’s largest desert cities.

One such method under consideration by SUNASS is basically restoring pre-Incan canals, called amunas, which allow water to trickle slowly down the Andes Mountains arriving at the bottom just in time for Lima’s dry season. The amunas funnel water across the mountains instead of directly down. What’s more, a Forest Trends report found that amuna restoration – among other green solutions – is more cost-effective than the gray approaches assessed. And with the significant funding directed to initiatives such as this through the water tariff, the odds are in favor of moving the work on the amunas forward.

The water tariff will show how these green infrastructure approaches can address water scarcity, Gammie said. “It’s one part of the solution that’s been underutilized, but we’re now seeing the policy and mechanisms that can make a difference.”

Every Three Years

It’s a message Gammie plans on taking to the World Water Forum, a major convening of private and public representatives aimed at improving sustainable water resource management, happening this week from the 12-17 in Daegu, South Korea.

Hosted by the World Water Council, an international platform for the future of water, the World Water Forum is a big deal. Occurring every three years, it’s a high-level ministerial meeting that attracts CEOs and other top actors from the private sector as well.

This time, the forum was organized using a participatory process where all participants in the forum develop what are called ‘implementation roadmaps.’ These roadmaps are frameworks clarifying the activities and objectives pertaining to water management that governments and private companies are working on. They all feed into the forum’s four themes: Water Security for All; Water for Development and Prosperity; Water for Sustainability: Harmonizing Humans and Nature; and Constructing Feasible Implementation Mechanisms.

Forum events will address these themes through solutions and new data. For instance, one event addressing the fourth theme will discuss closing a finance gap estimated at trillions of dollars. It’s the gap in finance needed to fix existing water infrastructure that’s decaying and then also to construct new infrastructure that ensures the developing world has access to clean water. The panel will specifically look at identifying indicators to determine the role green as well as multi-purpose infrastructure plays in filling this gap. The indicators can then be used to evaluate finance for sustainable water management, according to the event description.

Tough Questions

What will the top topics of this World Water Forum be? It’s likely the current water shortages will come up in many discussions. “Hopefully, the forum will be able to identify and share some solutions that cities can use to mitigate these crises,” Gammie said.

Another topic related to current events that is sure to make its way into the forum’s dialogues is the Sustainable Development Goals (SDGs) negotiations. The United Nations is set to establish them this year with a singular goal focused on water, among other objectives relating to water.

“The World Water Forum will definitely be informed by those negotiations to help direct its own implementation roadmaps,” Gammie said.

Participants like Gammie expect the SDGs to be a key subject among high-level policymaker discussions asking questions such as how should water be positioned within the SDGs Because of the forum’s focus on water management, ensuring the SDGs adequately encompass all matters surrounding water management to achieve sustainable development will also most likely be debated.

“It’s a big year for the world,” Gammie said, referring to the SDGs. It’s fitting then that the World Water Forum is happening this year as well.

It’s also fitting that Fernando Momiy Hada, the President of SUNASS, will be on hand to discuss the groundbreaking water tariff, which has implications for other cities struggling with their own versions of water stress.

Additional resources

6 April 2015 – The race against deforestation is being won or lost hectare by hectare in the tropical rainforest countries that also provide the majority of the world’s agricultural commodities. But subsidies for commodities that drive deforestation may be undermining the efficacy of financial incentives for conserving forests and their carbon content, according to a new working paper by the Overseas Development Institute (ODI), a United Kingdom-based think tank.

Agricultural subsidies worth at least $486 billion in 2012 dwarf the $8.7 billion total that developed countries have committed towards Reducing Emissions from Deforestation and Degradation of forests (REDD+) since 2006, the report finds. However, financial incentives for avoiding deforestation would be much more effective if countries address the heavyweights on the other side of the scale, the researchers, Will McFarland, Shelagh Whitley and Gabrielle Kissinger, argue.

“Instead of raising the cost of GHG (greenhouse gas) emissions or penalizing activities linked to forest loss and degradation, the balance of government support is in the form of subsidies to the production and consumption of the key commodities that are driving forest loss,” they write.

The Big Four deforestation drivers

Alongside population growth and rising incomes, global appetites for deforestation-driving commodities – namely beef, soy, palm oil, and timber – is set to expand over the next few decades, according to research by Forest Trends, Ecosystem Marketplace’s publisher. Agriculture accounts for 70% of deforestation in tropical countries.

The economic signals for clearing forests to make way for agricultural commodities are strong. Brazil is the world’s largest beef producer, with exports contributing $7 billion to the economy – 3% of total export income. Soy covers more than a third of Brazil’s arable land and exports to China, the European Union, and elsewhere earned $26.2 billion in 2010. In Indonesia, palm oil covers a fifth of agricultural land and exports reached $17.6 billion in 2012, with timber contributing another $10 billion.

As the top two deforesters in the world by land area cleared annually, Brazil and Indonesia are ground zero for figuring out how REDD+ financing can work with existing policies. Deforestation currently accounts for up to a fifth of global GHG emissions and preventing further deforestation is one of the most effective levers to pull to mitigate climate change in the short term, according the United Nations Framework Convention on Climate Change (UNFCCC).

Competing incentives

Governments have various motivations for putting subsidies in place, the ODI study finds. Subsidies may aim to ensure food security, create energy security by encouraging homegrown biofuel production, or serve as temporary buffers against commodity price shocks. But once in place, subsidies are difficult to remove – even if they have outlived their original purpose. Interest groups that benefit from subsidies lobby for their persistence, and governments often keep subsidies in place to garner political support, the researchers find.

Subsidies may accelerate environmental degradation in various ways, the ODI paper argues. They may draw more investment to industries such as beef and palm oil than the market would otherwise support. They may lower the cost of consumption of agricultural products, leading to overconsumption. They may remove incentives for natural resources industries to operate efficiently. And, if commodities are sold below market price, they may deprive domestic governments of tax revenue that could otherwise be invested in enforcing conservation regulations.

The working paper identifies eight beef and 16 soy subsidies in Brazil and 19 soy and 10 timber subsidies in Indonesia.

Brazilian cattle farmers have access to loans worth an estimated $218 million per year, and the below-market interest rates are credited with significantly reducing costs for producers. Brazilian soy growers have benefitted from about $540 million annual investment in roads, railways, and ports that help them get their product to market.

In Indonesia, developers benefit from about $800 million in annual concessional loans to develop commercial plantations for pulp and paper, with a government goal of establishing plantations across nine million hectares by 2016. Subsidies for smallholders palm producers led to the proliferation of palm oil plantations over an additional two million hectares between 2000 and 2009. A domestic mandate to produce fuel with at least 7.5% biofuel content is also encouraging palm expansion.

Overall, “levels of REDD+ finance stand in stark contrast to domestic subsidies, with average annual domestic agriculture subsidies in Brazil and Indonesia exceeding REDD+ finance by factors of 70 and 164 times, respectively,” the ODI paper finds.

Reweighting the scales

REDD+ financing could be used in part to reform subsidies to key commodities in a way that avoids further forest loss, the ODI paper suggests. In fact, the researchers identify examples of subsidy reforms that have already addressed the drivers of deforestation. The most successful example, according to the paper, is Brazil’s reform of its rural credit system in 2008 to require compliance with legal and environmental requirements. This resulted in an estimated $1.4 billion not loaned to out-of-compliance farmers between 2008 and 2011. The majority of this finance would have gone to supporting illegal beef production, leading to an estimated 15% increase in the rate of forest loss during those years.

There are also opportunities for subsidies to work harder in forests’ favor, according to ODI, particularly when it comes to intensification, or producing the same yields on less land area and with fewer inputs. Indonesia’s current palm oil yields of 3.8 tons per hectare fall below Malaysia’s yields of 4.6 tons per hectare. Smallholders in particular lag behind the productivity of private or government-owned plantations, indicating that with technology and financial support, smallholders could increase output without expanding plantations into the forest.

The ODI paper argues that these opportunities to shift the economic incentives around agriculture and forests should be an essential part of REDD+ process, both by phasing out or reforming subsidies that encourage deforestation and by designing any new incentives for REDD+ so that they complement other domestic efforts to shape private investment.

“There is current momentum on subsidy reform,” the authors write, citing countries’ emerging climate plans under the UNFCCC as well as the UN Sustainable Development Goals being developed for post-2015 as potential opportunities to rejigger agricultural subsidies to align with low-carbon development objectives.

Another key opportunity comes with the pending disbursement of the $10.2 billion in developed country pledges to the Green Climate Fund (GCF) established under the UNFCCC to support emissions reductions projects in developing nations. Norway, a major donor country, sees the GCF as an important channel for distributing REDD+ finance.

Thus far, finance for REDD+ “readiness,” or activities that will prepare countries to receive payments on the condition of successfully reducing deforestation, have not focused on changing subsidies connected to deforestation. However, this doesn’t have to be the case, the ODI paper argues.

“REDD+ finance could be used as a resource to support transparency, and as a lever to encourage subsidy reform,” the authors write.

Additional resources

As countries submit their plans to cut greenhouse gas emissions – commitments known as Intended Nationally Determined Contributions, or INDCs – ahead of this year’s international climate negotiations, the role of forests and land use in this agreement is still developing. This article will be updated often to offer summaries of how land use is included (or not) in INDCs as they are submitted to the United Nations Framework Convention on Climate Change (UNFCCC).

If you want to read the INDC documents, they are all available here.

GABON*

INDC submitted: April 1, 2015

Notable because: It’s the first African country to submit an INDC.

The basics: Gabon will cut emissions by at least 50% by 2025 compared to a business-as-usual scenario.

Inclusion of land use: Gabon notes that 88% of its land area is covered by forests and the country therefore acts as a net carbon sink, absorbing four times the carbon dioxide it emits. Since 2000, Gabon has adopted a Forest Code, created 13 national parks that ban logging across large areas, and created a National Land Use Plan that identifies carbon-rich forests. However, the country notes that it does not want to rely on international carbon finance to preserve its forests, stating that these market mechanisms hinder its sovereign economic development.

*This INDC was submitted in French and has been roughly translated.

RUSSIA*

INDC submitted: March 31, 2015

Notable because: Russia’s submission means that two-thirds of industrialized nations covering 80% of emissions from developed countries have now released their climate plans.

The basics: Russia will limit emissions to 70-75% of 1990 levels by 2030, on one condition…

Inclusion of land use: Russia’s commitment is conditional on the “maximum consideration” of forests in emissions accounting under the UNFCCC. The country notes that it houses 70% of the world’s boreal forests and 25% of the world’s forests overall. Protecting these forests is the “most important element” of Russia’s climate policy, the INDC states.

*This INDC was submitted in Russian and has been roughly translated.

UNITED STATES

INDC submitted: March 31, 2015

Notable because: The United States is the second largest emitter in the world.

The basics: The U.S. will reduce emissions 26-28% below 2005 levels by 2025.

Inclusion of land use: The U.S. does not intend to use international carbon market mechanisms to meet its targets – a move that would appear to exclude mechanisms such as Reducing Emissions from Deforestation and forest Degradation (REDD+). However, it will account for emissions from the land sector using a “net-net” approach, which in UNFCCC-speak means subtracting the net emissions in the accounting period from the net emissions in 1990, the base year for most countries. This land-use carbon accounting will include emissions by sources and removals by sinks as reported in the Inventory of United States Greenhouse Gas Emissions and Sinks, including everything from cropland to forest land to wetlands to rice cultivation.

NORWAY

INDC submitted: March 27, 2015

Notable because: Norway has been an early and consistent supporter of international efforts to reduce deforestation through payments for performance to REDD projects. Its International Climate and Forest Initiative has funding up to three billion Norwegian Krones ($517 USD) per year pledged to avoided deforestation efforts, from the Brazilian Amazon Fund to the Congo Basin Forest Fund.

The basics: Norway will cut emissions at least 40% by 2030 compared to 1990 levels.

Inclusion of land use: Accounting emissions from the land-use sector remains a question mark for Norway. “Net removals” of greenhouse gases by forests accounted for 10.1 million tonnes of carbon dioxide equivalent (MtCO2e) in 1990 – about a fifth of Norway’s total emissions in that year. As forests grow, Norway projects that the land-use sector will account for 21.2 MtCO2e in net removals by 2030. The country does not currently have a final position on land-use carbon accounting, but plans to work with European Union member states to come up with one. Depending on the outcome, “the commitment would need to be recalculated to ensure that the ambition level stays unchanged,” according to the INDC.

MEXICO

INDC submitted: March 30, 2015

Notable because: Mexico was the first developing country to submit an INDC.

The basics: Mexico will unconditionally reduce its emissions 25% under the business-as-usual scenario by 2030. With access to financial resources and technology under an international agreement, the country has set a more ambitious “conditional” target of a 40% emissions cut.

Inclusion of land use: Mexico’s INDC states that the country will reach zero deforestation by 2030 and focus reforestation efforts in riparian zones, to promote ecosystem-based adaptation in important watersheds.

EUROPEAN UNION

INDC submitted: March 6, 2015

Notable because: It covers 28 Member States and sets the tone for an entire region.

The basics: The European Union and its Member States will reduce domestic emissions at least 40% by 2030 compared to 1990 levels.

Inclusion of land use: The EU’s INDC states that “Policy on how to include Land Use, Land Use Change and Forestry into the 2030 greenhouse gas mitigation framework will be established as soon as technical conditions allow and in any case before 2030.” A previous EU decision sets rules for how to account for carbon emissions from the land use sector, but is just a first step.

The United States published its eagerly anticipated national climate action plan to the United Nations web site on Tuesday, highlighting an economy-wide target of reducing greenhouse gases by 26-28% below 2005 levels by 2025 – a target that will not be reached through the use of international carbon market mechanisms. The plan, known as its Intended Nationally Determined Contribution (INDC), also lays out the country’s carbon accounting approach for the land sector.

31 March 2015 – The United States has set an “ambitious” goal to reduce its greenhouse gas (GHG) emissions as part of a new international climate agreement aimed at stemming the rise of global temperatures – a goal that does not rely on the use of international carbon market mechanisms.

Nearly 200 governments are planning to reach a new climate deal in Paris in late 2015. The anticipated agreement will take effect in 2020 and seeks to prevent global warming rising 2 degrees Celsius above pre-industrial levels and to adapt societies to existing and future climate change.

The U.S., one of the largest emitters in the world, has committed to an economy-wide target of reducing GHGs by 26-28% below 2005 levels by 2025 as part of this international effort, according to its Intended Nationally Determined Contribution (INDC), submitted to the United Nations Framework Convention on Climate Change (UNFCCC) on Tuesday. The emissions reduction target is not a surprise given the bilateral climate deal that the U.S. reached with China in November 2014, which uses the same numbers.

“The target is fair and ambitious,” the United States said in its INDC. “The United States has already undertaken substantial policy action to reduce its emissions, taking the necessary steps to place us on a path to achieve the [interim] 2020 target of reducing emissions in the range of 17% below the 2005 level in 2020.”

The U.S. highlighted several regulatory actions already implemented, including the adoption of fuel economy standards and energy conservation standards for building emissions. The country also observed that several federal agencies are engaged in additional regulatory actions designed to further drive down GHG emissions, including the Environmental Protection Agency’s proposed regulations to cut carbon pollution from new and existing power plants and to address methane emissions from landfills and the oil and gas sector.

Achieving the target set out in its INDC will require a further emission reduction of 9-11% beyond its 2020 target compared to the 2025 baseline and a substantial acceleration of the 2005-2020 annual pace of reduction to 2.3-2.8% per year, approximately double the current pace, according to the INDC.

“The U.S. proposal demonstrates real leadership, and should encourage other countries to put forward solid offers in the run-up to Paris,” said Alden Meyer, Director of Strategy and Policy for the Union of Concerned Scientists (UCS). “While the United States can and should do even more to reduce its emissions over the next decade, the U.S. offer is quite ambitious, given Congress’ unwillingness to take any action to deal with climate change. It underscores President Obama’s continued commitment to making full use of his existing authority to address the climate crisis.”

“This is a serious and achievable commitment,” said Jennifer Morgan, Global Director, Climate Change Program for the World Resources Institute.

The organization’s research has determined that the United States can reach its proposed target to cut emissions 26-28% from 2005 levels by 2025 under its existing federal authority, she added.

While the U.S. has pledged its best efforts to achieve a 28% reduction, the country does not intend to utilize international market mechanisms to implement its 2025 target at this time, according to the INDC. That would appear to exclude mechanisms such as REDD+ (Reduced Emissions from Deforestation and forest Degradation).

However, several observers highlighted the positive role of state-level market mechanisms in reducing carbon pollution in the United States.

“Carbon pricing programs in nine Northeast states and California have reduced emissions and generated investments in clean energy and energy efficiency, which are helping save consumers money,” said UCS President Ken Kimmell said, referring to the Regional Greenhouse Gas Initiative and California’s cap-and-trade program.

Considering the land sector

The U.S. also laid out its accounting approach for the land sector in its INDC. The country intends to include all categories of emissions by sources and removals by sinks, as reported in the Inventory of United States Greenhouse Gas Emissions and Sinks. This includes everything from cropland to forest land to wetlands to rice cultivation.

The INDC also specifies that the U.S. will account for the land sector using a “net-net” approach, which in UNFCCC-speak means subtracting the net emissions in the accounting period from the net emissions in 1990, the base year for most countries. This is in contrast to the “gross-net” approach, which considers net emissions from the land sector without comparing them to a baseline year.

Consistent with Intergovernmental Panel on Climate Change (IPCC) guidance, the U.S. will use a “production approach” to account for emissions from harvested wood products. This means accounting for emissions from wood product exports but not those from imports, as the “stock change approach” does.

The U.S. may also exclude emissions from natural disturbances, consistent with the IPCC guidance, according to its INDC. These may include wildfires, insect and disease infestations, and extreme weather events that are “beyond the control of, and not materially influenced by” the country in question.

“There are material data collection and methodological challenges to estimating emissions and removals in the land sector,” the U.S. stated in its INDC. “Consistent with IPCC Good Practice, the United States has continued to improve its land sector GHG reporting, which involves updating its methodologies. The base year and target for the U.S. INDC were established on the basis of the methodologies used for the land sector in the 2014 Inventory of United States Greenhouse Gas Emissions and Sinks and the United States 2014 Biennial Report.”

The big picture

Two thirds of industrialized countries covering 65% of GHG emissions from the industrialized world have now established their climate plans for the new agreement, with many of these contributions also reflecting plans to increase the ambition of emissions reduction over time, observed Christiana Figueres, UNFCCC Executive Secretary.

“Over the coming months we expect many more nations to come forward to make their submissions public,” she said. “The pace at which these contributions are coming forward bodes well for Paris and beyond.”

The European Union, Switzerland, Norway, Mexico and the U.S. – the first five jurisdictions out of the gate with their INDCs – account for nearly one third of global emissions.

More industrialized countries are expected to come forward with their INDCs over the next few months, followed by many developing countries. An effort is underway to assist developing countries to prepare their INDCs for submissions, with governments including Australia, Germany, France, the United Kingdom and the U.S. providing financial, technical and other assistance to about 100 developing countries. The French government, for example, has committed around three million Euros to support the preparation of INDCs of about 20 Least Developed Countries, including Small Island Developing States.

Other major players include the Global Environment Facility and the UN Environment Programme; the European Union through programmes such as Clima South, Clima East or ClimDev; Germany through the GIZ; and the U.S. through various channels including the Low Emission Development Strategies partnership.

“It is most encouraging to witness this government to government cooperation and how bilateral and multilateral organizations have stepped up and coordinated support to developing countries to ensure they get maximum benefit in preparing INDCs,” said Don Cooper, head of the UNFCCC’s Mitigation and Data Analysis programme.

In October, the UNFCCC will produce a synthesis report aggregating the impact of all the submitted INDCs, Figueres said.

“The initial INDCs will clearly not add up to the emissions reductions needed to keep the global temperature rise under 2 degrees C, which is one reason why the Paris agreement must factor in a long-term emission trajectory based on science,” she said.

In addition, the Paris talks will need to outline how finance will be mobilized and scaled up to support the action and ambition of developing countries now and over the decades to come, Figueres said.

Additional resources

This article was originally posted on the AnthropoZine. Click here to read the original.

30 March 2015 | Mexico and Norway last week submitted their “Intended Nationally-Determined Contributions” (INDCs) to the United Nations web site. Mexico’s is available here, and Norway’s is here. All submissions are being posted to the UN’s INDC page, which you can find here, and they are also being summarized on the World Resource Institute’s CAIT Paris Contributions Map (see below) in a way that’s designed to offer comparability and transparency.

Praise for Mexico

Like Indonesia and several other emerging countries, Mexico isn’t using a baseline year, but instead proposes to reduce its emissions to a level 25% below a “business as usual” scenario by 2030, with that target increasing to 40% below business as usual if it receives technical and financial support within the context of a global agreement.

“Mexico’s leadership in making this announcement confirms that we are in a new era, in which all nations have a role to play in the collective fight against climate change,” said Nathaniel Keohane, Vice President for International Climate at the Environmental Defense Fund (EDF). “Since the Copenhagen conference in 2009, there has been a lot of talk about ‘bottom-up’ climate action — but nobody has really known what that looks like. Now the contours of the ‘bottom-up’ world are beginning to come into focus: Countries are taking on ambitious national commitments, supported by bilateral and regional ties — such as the strong relationship between the US and Mexico.”

“While the devil is in the details, Mexico’s plan to peak its emissions by 2026 is particularly encouraging and should inspire others to follow a similar course, said Jennifer Morgan, Global Director, Climate Program, World Resources Institute. “As a country that enacted a groundbreaking, comprehensive climate change law in 2012, Mexico clearly understands the threat of climate change and the economic benefits of smart action for its citizens and is now going further.

Additional resources

As with any bureaucratic process, submitting the INDCs (Intended Nationally-Determined Contributions  ) to the UN has been tied up in delays, extensions and some fudging. But earlier this week, the World Resources Institute launched the CAIT Paris Contributions Map to translate the submissions from wonkspeak into plain language, and also to map them in a way that will help us all keep score.

This story has been adapted from a WRI blog post by Jenna Blumenthal, Mengpin Ge, Johannes Friedrich and Thomas Damassa. Click here to view the original. This article was also posted on the AnthropoZine.

27 March 2015 | Earlier this week, the World Resources Institute (WRI) launched its CAIT Paris Contributions Map, a new tool on the CAIT Climate Data Explorer for tracking and analyzing intended nationally determined contributions (INDCs), which are the national climate action plans that will form the basis of a new international climate change agreement, set to be finalized during a high-level climate summit in Paris in December (COP 21).

Countries are supposed to submit their plans to the United Nations Framework Convention on Climate Change (UNFCCC) by the end of March, with an automatic extension to mid-year for those unable to meet the deadline. To shine a light on the process, WRI will be watching the UNFCCC web site for new INDCs and then translating the mitigation-related elements of country plans into a uniform format on the map, making it easy for users to explore what information countries have submitted, how countries’ plans compare to one another and where more information can be helpful.

Try out the tool below or open it in a new window

Analyzing the Current INDCs

Only Switzerland and the European Union (EU) have released their INDCs thus far. Other major economies are expected to announce their INDCs by the end of the month. Already, some initial findings are emerging:

Switzerland plans to reduce its greenhouse gas emissions 50 percent below 1990 levels by 2030 and has additional emissions-reduction goals in 2025 and 2050. Its contribution is quite transparent in detailing how the country plans to achieve its 2030 target. For example, it specifies that the country will use credits from international market mechanisms, such as offsets, and how it seeks to avoid“double counting” reductions inside and outside its borders. It also generally describes how the country’s contribution can be considered fair and ambitious in the global effort to limit Earth’s overall temperature rise to 2 degrees C (3.6 degrees F) compared to pre-industrial levels, thus preventing some of the worst impacts of climate change.

Likewise, the EU transparently addresses many critical aspects for how it will achieve its goal of reducing its emissions at least 40 percent below 1990 levels by 2030. The contribution provides a list of the sectors and gases covered, and includes methodologies for estimating emissions.

However, a few key elements of the EU INDC could use more detail. In particular, further clarity on assumed accounting approaches for emissions and reductions from the land use, land-use change and forestry (LULUCF) sector would strengthen the contribution. This lack of transparency can have implications for interpreting the contribution’s expected outcomes. For example, there is a debate as to whether including LULUCF in the 2030 target—and counting carbon sequestration—could make it easier for other sectors, such as buildings and transport, to make less serious cuts in their emissions.

Transparency Matters

INDCs are the primary mechanism for governments to communicate their climate plans to the rest of the world prior to the Paris summit. What countries put in them–and whether or not they follow through on their plans–has implications for us all. The ability to clearly understand countries’ INDCs and what they mean for future emissions and climate impacts is critical for ensuring success.

The interactive map creates transparency around these INDCs, which can help:

• Build trust and accountability among countries. Governments and other stakeholders can see what other countries hope to achieve with their INDCs.

• Encourage others to track and build momentum in the run-up to Paris. Transparent INDCs are likely to inform and influence what other countries submit. As INDCs are announced, some countries may become inspired to mirror approaches that others propose.

• Assess ambition. Once more countries—particularly large emitters like the United States, China and India—submit their contributions, analysts can use information from the map to assess whether collective reductions are sufficient to limit global average temperature rise to 2 degrees C (3.6 degrees F).

In the weeks and months to come, we will continuously update the CAIT Paris Contributions Map so it can serve as the go-to place for learning about countries’ mitigation contributions. In the meantime, users can explore the CAIT Pre-2020 Pledges Map, which profiles mitigation pledges that countries submitted to the UNFCCC in 2009 and 2010 and are working to implement through 2020.

24 March 2015 | When the Tolo River People of Colombia wanted to save their forest, they used a financing mechanism known as REDD (Reducing Emissions from Deforestation and forest Degradation) to fund their conservation by generating carbon offsets for the carbon sequestered in their trees. When the rubber tappers of the Rio Preto Extractivist Reserve (Reserva Extrativista Rio Preto) wanted to stave off deforestation in the Jacundí¡ National Park (Floresta Nacional de Jacundí¡), they also tapped the carbon markets – and they soon hope to join roughly 40 other community-based forest carbon projects identified in the latest State of the Forest Carbon Markets report, which found hundreds of projects globally, covering enough forests to fill the entire country of Vietnam.

REDD is a massive conservation success – arguably the biggest of all time; but it’s nowhere near big enough to halt the soaring greenhouse-gas emissions from deforestation. To really fix the mess, we must attack both demand and supply: we must, in other words, stifle our own ravenous appetite for consumer goods that drive deforestation, and we must create an environment on the ground to ensure that commodities are harvested legally and sustainably.

REDD has proven effective on the supply front, but can it be scaled up? And if so, what aspects of “project-based” REDD can work at the “jurisdictional” – or statewide level?

The Limits of Project-Based REDD

Isolated REDD projects have been used to rescue endangered patches of forestat around the world, but often the loggers and cattlemen who are denied access in one location simply move down the road – an activity that carbon accountants call “leakage”. Project developers do account for it, and in theory they subtract the leakage from their total offsets, but the only way to eliminate leakage is to spread carbon accounting and control across entire jurisdictions.

“That’s how it was always supposed to be,” says Dan Nepstad, Executive Director and Senior Scientist at the Earth Innovation Institute. “No one ever wanted all these scattered, isolated projects dotting the forest, and even in the 1990s, it was a given that we needed jurisdictional programs to have a real impact.”

Jurisdictional REDD: A Dream Deferred

REDD was on the United Nations agenda as early as the First Conference of the Parties (COP 1) to the United Nations Framework Convention on Climate Change (UNFCCC) in Berlin in 1995, but it had a different name: Avoided Deforestation, or “AD”.

The premise, however, wasn’t much different than it is now: Governments would first measure their historic rates of deforestation across their entire jurisdiction, then they’d negotiate agreement on which actions impact it, and they’d come up with a way to pay for reduced deforestation across the entire jurisdiction, with individual projects “nesting” within those jurisdictions to test new methods that work and reward early action.

The basic science was already there too, because timber companies and foresters had been using allometric equations to estimate the amount of wood in a forest for decades, and it wasn’t a big leap to extrapolate the amount of carbon. The fuzzy part, scientifically, was calculating the “carbon flows” over time and determining reference levels for deforestation and then figuring out which actions could be rewarded for changing it. Socially, there were fears that sudden flows of money into the forest would accelerate rather than counter the land-grabs that were pushing indigenous people aside, or that indigenous people would be frozen out of traditional hunting grounds while cattlemen continued to chop forests at will.

To say there were loose ends is an understatement, but climate talks were there to tie them up. Yet, when the Kyoto Protocol emerged from COP 3 in Kyoto, Japan in 1997, REDD was off the UN table and relegated to voluntary markets, where it continued to evolve under real-world conditions. Over the next 15 years, carbon accounting proved to be incredibly robust, and standards like those developed under the Climate, Community & Biodiversity Alliance emerged to ensure indigenous rights. At the same time, forest communities that embraced REDD found themselves able to earn income from their stewardship of the land.

As a result, and in response to calls for pilot initiatives, individual projects proliferated – with valuable patches of forest, often at the frontiers of deforestation, being saved as swathes were being destroyed to make way for palm-oil plantations and cattle grazing.

The Return of Jurisdictional REDD

Within the UNFCCC, REDD stayed on ice until Papua New Guinea wrangled it back onto the agenda at the 2005 Climate Talks in Montreal (COP 11) – but even then, talks languished. In 2010, REDD was the sole bright spot in the otherwise dismal Copenhagen Accord, and by 2011, governments around the world were harvesting the lessons of the voluntary carbon markets to launch jurisdictional REDD initiatives which allowed for individual nested projects within them – a process that’s relatively easy from a carbon-accounting perspective.

“When we talk about setting an integrated approach for REDD+ for the Amazon states that is nested at the national level, it might seem difficult, but it’s actually much simpler than trying to set the baseline for a project or smaller area,” says Pedro Soares, Climate Change Program Coordinator for Manaus-based NGO Instituto de Conservaçí£o e Desenvolvimento Sustentí¡vel do Amazonas (IDESAM), which was recently hired by the Brazilian state of Rondí´nia to help it advance a jurisdictional REDD program there.

The UNFCCC and World Bank, however, steered clear of anything involving offsets and drifted towards purely jurisdictional approaches that left individual projects in the lurch.

Then, at the 2013 climate talks in Warsaw, the UNFCCC finally agreed on a REDD Rulebook for jurisdictional REDD that had substantially less rigor than that of voluntary markets, opening the door to a renewed interest in nesting. Also in Warsaw, the US, UK, and Norway launched a financing mechanism for jurisdictional REDD initiatives that support commodity-certification programs.

For more on nested REDD, read Peruvians Hope Nested Approach Today Will Halt Deforestation Tomorrow

For more on Acre’s jurisdictional REDD program, read Acre and Goliath: One Brazilian State Struggles To End Deforestation

For more on the interplay between palm oil and forest carbon, read How A Primatologist, An Industrialist, And An Ecosystem Entrepreneur Took On Big Palm Oil And Won

Since then, nesting has come back, at least in theory. The Indonesian government, for example, said last year it was exploring the possibility of acting as a buyer of last resort for REDD offsets, which it may aggregate and sell them on the market with a state guarantee, although that program is on hold as the country restructures its REDD regime.

Brazilian States Move Forward

Back in Brazil, Rondí´nia’s neighbor, Mato Grosso, has slashed its deforestation rates 90% and created the country’s most advanced regime for keeping track of REDD payments.

By far the most innovative, however, is Acre, which has completely reinvented the jurisdictional REDD concept, with a comprehensive program that is involving indigenous people across the state. Today, nearly 90 percent of Acre’s forest cover remains intact, thanks to its innovative approaches to forest management. But success moving forward for Acre will mean diminishing its dependence on an ever-expanding beef industry.

According to a 2012 study, more than 80 percent of Acre’s deforestation is driven by the beef and dairy sectors, and these industries aren’t going away. Beef and ranching alone supply 92 percent of the state’s total export revenues, and they are expected to grow even further in the years to come thanks to efforts to intensify activities on the existing land footprint.

But Acre also became the first Brazilian state to fully implement a management plan – which divided the entire land base into geographical zones that restrict specific extractive activities; at the same time the state government supported the growth of natural rubber, furniture, flooring, and Brazil nut processing industries.

A number of forces pushed Acre into action. As reported in Ecosystem Marketplace, the 1980s saw marginalized rubber tapper communities losing their lands to ranchers and logging interests, but forest leader Chico Mendes pushed for the establishment of reserves to maintain the forest economy. His actions cost him his life in 1988, but in his absence, a movement lives on in his name.

REDD and PES

Acre is conducting a massive experiment in jurisdictional REDD – one through which the state receives payments for reducing deforestation across its entire jurisdiction, but then distributes the money as payments for other ecosystem services – such as river maintenance – or simply to support sustainable land-use practices once common among indigenous people.

Driving it is the 2010 SISA (Sistema de Incentivos para Servicos Ambientais) legislation, which established the foundation for financing the maintenance and restoration of environmental services across the state, including a framework to establish linkages with emerging markets for environmental ecosystem services. This framework means indigenous people, rubber tappers, and small farmers can earn Payments for Environmental Services (PES) by practicing sustainable agriculture and protecting endangered rainforest. For indigenous people, SISA explicitly aims to support traditional methods of farming and forest management that have proven to be more suitable for the rainforest than are the western methods brought by the newcomers.

In 2012, the German REDD Early Movers Programme (REM) made in its first transaction – paying cash to “retire emission reductions” from avoided deforestation in Acre. Commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by the KfW Development Bank and the Gesellschaft fí¼r Internationale Zusammenarbeit (GIZ), the REM program promotes forest conservation and is designed to strengthen performance-based payments for demonstrated emission reductions – providing “bridging finance” for countries engaged in mitigating climate change.

A REDD Financing Solution for Pristine Igarapé Lourdes?

What makes the concept of PES so promising is that it provides a potential, albeit less lucrative avenue to bring funding into an indigenous territory where the people have been good stewards to the land. Take the Igarapé Lourdes territory in Rondí´nia, where the prospects of earning carbon offsets are murky given that there is little actual deforestation, but where indigenous people have a proven history of maintaining the forest. Prior to the November election, Rondí´nia ‘s State Secretary of Environment launched a series of meetings in four separate municipalities to introduce the concepts of climate change, REDD+, and the potential to implement state-level regulations for REDD+.

“The former governor of Rondí´nia was re-elected in November, which is really good for REDD and climate issues, because he supported the Surui project,” says Pedro Soares.

It’s still early days for jurisdictional REDD across the rest of the Amazon states of Brazil. The first step will be to figure out how to establish, for each state, a baseline and a benefit-sharing mechanism and monitoring strategy that will fit under the national requirements.

“Under a state level law, the Igarapé Lourdes is going to receive a certain amount of credits by their forest area, and by their forest area condition,” says Pedro Soares.

What that means here is that they may not have significant deforestation pressure, but they will be able to secure some REDD funding to develop their life plan, the roadmap from which their forest-sustaining economy of the future can begin.

“How we can push money into the indigenous areas, and how can we how we lead this to the market, and how will it be applied?” asks Soares. “These are the questions we are most concerned about.”

Discussions about implementing jurisdictional REDD at the state level in Brazil could lead to something much bigger. A plan currently exists, led by NGOs like IDESAM, to implement a “jurisdictional” REDD system across the entire Brazilian Amazon, with a vision to eventually nest both individual REDD projects and state-level REDD within the Brazilian national government’s Brazil’s National Climate Change Plan, which is part of a national policy that established official Amazon deforestation targets of 80 percent by 2020. The ultimate goal is to create an integrated approach for REDD+ for the Amazon states that is nested at the national level.

Additional resources

21 March 2014 | The Colorado utility Denver Water delivers clean drinking water to 1.3 million people spread across more than 335 square miles, and most of that water comes from rivers and reservoirs that capture run-off from forest-covered hills in clearly-delineated watersheds. The forests both protect the steep slopes from erosion and regulate the flows of water by mopping it up and then releasing it slowly over time.

But climate change has extended summers in Colorado just enough to give the northern pine beetle the comfort it needs to multiply like never before. The bug has taken full advantage – devouring bark at a rate ten times higher than ever recorded, killing trees and leaving them scattered like kindling for wildfires.

And those fires now take hold with increasing frequency, reducing the forest to lumps of silt and sludge. Lush slopes degenerate into unstable masses of goo. The water upon which the city depends becomes muddy and irregular, which makes it more difficult – and expensive – to assure people they can turn on their faucets and trust the drinking water that comes out.

Enter the US Forest Service (USFS), which is charged, in part, with ensuring clean headwaters by maintaining healthy forests.

Both the USFS and Denver Water are struggling to meet their budgets in the face of these challenges, so in August of 2010 the Forest Service’s Rocky Mountain office cut a $33 million deal with the Denver utility to proactively manage 38,000 critical acres in five key watersheds – if Denver Water comes up with half the money.

Denver Water took the offer, despite – or perhaps because of – its own struggles with a slew of disaster-related expenses, including a $26 million bill to remove silt and mud from a reservoir in just one wildfire-damaged watershed.

Convinced that spending money now will save money in the long run, the utility agreed to finance the removal of dead trees in sensitive areas among other activities that will halt the beetle’s massive tree-eating ventures by implementing water fees that will amount to about $27 dollars per household over the next five years.

Five years on, the project is operating under budget, and it’s expanded in both scope and ambition, says program manager Don Kennedy.

More Coverage, Less Cost, and a New Partner

The initial objective of 38,000 acres has since risen to 46,000, but the program only spent $14.5 million – versus the allocated $16.5 million – on the necessary fuel treatments (mechanical underbrush removal to lessen the intensity of fire), restoration and prescribed burning.

With the extra funds, the program was able to partner with the Colorado State Forest Service, a longtime partner of Denver Water, along with the Coalition for the Upper South Platte, a nonprofit conservation organization. The extra partnership meant additional treatment in sensitive areas that further protect the region’s water supply.

And for the most part, it appears residents understand that protecting this water supply means a slight increase in their water bill. Out of 1.3 million people Denver Water serves, Kennedy says he only got one call from a customer. And he was just asking for more information regarding the costs. “We’ve been actively informing our customers about our relationship with the USFS and the work that we’ve been doing,” Kennedy says.

Payments for Ecosystem Services

This type of targeted spending is typical of Payment for Ecosystem Services (PES) programs, which aim to finance the preservation of nature by recognizing the economic value of nature’s services, and then convincing beneficiaries of those services to pay those who deliver them. Such mechanisms offer more transparency and accountability than do normal governmental structures – a key selling point in any economic climate.

In this case, the ecosystems are the watersheds being protected, and the ecosystem service is the provision of water. More specifically, Denver Water’s program is an investments in watershed services (IWS) scheme or investments in nature-based solutions.

The city of New York runs one of the best-knows IWS programs, which involves payments to rural landowners in the Catskill Mountains. This program has saved the city an estimated $10 billion since its inception in the 1990s.

Opportunity for Rural Poor

Water utilities in developing-world cities like Dar es Salaam, Tanzania, have investigated the use of IWS schemes to preserve their water flow, while Latin American cities like Heredia in Costa Rica and Saltillo in Mexico have implemented successful programs that pay small-scale farmers to maintain the watershed. The result is clean, reliable water at a fraction of what it would cost to develop modern filtration facilities.

Embracing the Natural Way

In 2010, when the From Forests to Faucets partnership was launching, Ecosystem Marketplace published a report documenting nearly 300 of these types of programs occurring all over the world that amounted to $10 billion in transactions in 2008 alone. Three years later, investments in nature-based solutions such as the From Forests to Faucets program has amounted to over $12 billion globally.

Spreading the Word

These programs have attracted interest from other places struggling with similar water challenges. The From Forests to Faucets program has influenced several other such partnerships with the USFS in Colorado. These include a program with Aurora Water – a major provider in Colorado’s Front Range region – and one for the Big Thompson reservoir that encompasses not only forest and watershed health but also maintaining hydropower facilities.

The From Forests to Faucet program’s reach has even extended outside the state. Kennedy mentioned other municipalities within the US West have reached out to him. Santa Ana, the densely populated California city, consulted with Kennedy and is seriously considering a partnership with the USFS along the same line as Denver’s. Kennedy also met with representatives from the Salt River Project, Phoenix’s water and electric power utility. The entity has since launched a partnership with the National Forest Foundation-the nonprofit arm of the USFS-that funds watershed-restoration activities through donations from water users.

Kennedy says the Forests to Faucets IWS model is adaptable to regions outside of the US as well although differences in ecosystems would, of course, have to be factored in.

Making IWS Work

For IWS schemes to work anywhere, buyers have to understand what they’re paying for, and sellers have to understand what they’re delivering. That’s not always easy when the area being protected – whether a forest or a wetland – is hundreds of miles away from the city receiving the water.

“The concept of a ‘protection forest’ is nothing new, really,” says University of Massachusetts Professor Paul Barten. “The first written record of a community establishing something like this dates from 1342 in Switzerland, but back then the source of the water was closer to the users, so you didn’t need these kind of financing schemes.”

Both the Mexican and Costa Rican programs employed clever marketing to raise awareness, and Denver is no different. The name “From Forests to Faucets” borrows the name of a joint USFS/University of Massachusetts research project that Barten helped spearhead in the Northeast a decade ago.

“We came up with the name to make the connection,” says Barten. “We found that the larger the municipality, the more distant the supply of water – and the greater the tendency for it to remain out of sight and out of mind.”

And that lack of awareness cannot continue – especially in light of current demographics.

“We have twice as much forest in the Northeast as we did when the Forest Service was founded,” he says. “But we have three times as many people – and they consume ten times as much water.”

Another Five Years?

As for the From Forests to Faucets Partnership, there is no end in sight. While its future-in terms of finance-lies in the hands of Denver Water’s board, Kennedy thinks the program will continue to have funding because it makes sense. There’s still much to be done; primary objectives for the next few years include addressing the zones of concern that are at high risk of catastrophic wildfire and assessing more USFS land that may be beneficial to Denver Water.

And there’s always maintenance. “It’s like mowing your lawn,” Kennedy says. “You mow the lawn and then you have to trim bushes and so on. You’re never really done.” The thinning treatments and restoration work are effective for a period but they need to be followed-up on and maintained.

So it will always be something of a work in progress. But Kennedy is more than pleased with the program’s first five years. “It’s exciting because it’s almost all been really positive,” he says. “How often can you say that?”

The four-year-old government of Myanmar came in with a big promise to boost the economy, in part by ramping up agricultural production. But so far, all it’s ramped up is deforestation – destroying some of the most biodiverse land in the world, and then not even planting the farms it had planned to develop.

20 March 2015 | When Myanmar President U Thein Sein took office in March 2011, he had big plans for economic reforms. In particular, the new government wanted to promote industrial agricultural development to attract both domestic and foreign investment and to help boost the country’s economy.

Between 2010 and 2013, the land areas awarded for agriculture purposes increased at an unprecedented rate – 170 percent – and this number is likely a conservative one, as it includes only areas allocated by the central government, and not those “provincial, military, and/or non-state authorities” might have given away. To most, it seemed like the old story of short-term economic gain trumping long-term environmental – and economic – stability.

Recent research by Ecosystem Marketplace publisher Forest Trends, however, casts doubt on the efficacy of these efforts. A new report, Commercial Agricultural Expansion in Myanmar, released last week, is the first of its kind to investigate the various ramifications of these shifts in land use in the country. As it turns out, they are backfiring – on more than one level – and it is local forests and the people that live in them and depend on them that are being hit the hardest.

For one, the land that has to be made available for agricultural development is not coming from nowhere. It is coming from the clearing of forest lands – of which each year the country is now losing about 1.15 million acres. And not just any type of forest, but “some of Southeast Asia’s last remaining High Conservation Value Forests.” These are forests that are home to house a large variety of fauna and flora – things on which it is hard to put a dollar value – as opposed to the logged timber on which you certainly can, as trade statistics show: timber exports increased from 2.7 to over 3.3 million m3 in just two years (between 2011 and 2013) and the value of these exports rose from $US 1 billion to $US 1.6 billion.

Whether or not the agriculture sector is growing at the same rate as timber exports is unclear – and actually doubtful. As it turns out, of all the land the government is allocating for industrial agriculture, only a quarter was actually planted with agricultural crops. The Forest Trends report takes a particularly close look at two areas, Kachin State and Tanintharyi region, where plantings are especially low (12 and 19 percent respectively), to investigate the underlying dynamics of this phenomenon.

In Tanintharyi region, large swaths of land were designated for the planting of rubber and for oil palm development, partly to meet the domestic demand, partly for export. However, of the 1.9 million acres allocated for oil palm development, only 360,000 have been actually used for it, while it’s unclear how much rubber was actually planted.

In Kachin state on the China-Myanmar border, which has long been a focal point in the news as a result of its precarious geographic position, Chinese – and not domestic – business interests are dominating the situation and Chinese demand for agricultural commodities is the main driving factor for the increased area of land being used for commercial agricultural development. In Kachin, 1.4 million acres were designated for commercial agricultural development – but so far less than 175,000 acres have been actually planted.

The processes by which these land areas are being allocated for agricultural development are, according to the report, “rife with legal loopholes, special permits, and/or exemptions.” Restrictions that the laws may impose can easily be overridden by government authorities. As a result, while timber being harvested from these lands can indeed be considered legal, the ways in which the land areas are being allocated for agricultural development – and the consequential logging of timber – are coming more and more under scrutiny.

An important reason for this is that these processes do not have any social safeguards in place, i.e., they do not provide any way to lessen the consequences these changes in land use have for local communities that live in and depend on these forested areas. It therefore probably comes as no surprise that conflicts around land rights have increased hand in hand with the growing allocation of land areas for industrial agriculture development. Communities lose their land and have not legal recourse for claiming it – and with it the base for their subsistence – back.

If the promised and hoped-for economic growth is supposed to happen and hold up, the obvious tension between commercial agricultural development and sustainable management of Myanmar’s forests has to be resolved. For starters, the agencies that oversee both, the Ministry of Environmental Conservation and the Ministry of Agriculture and Irrigation Policy, the report argues, need to have clarified priorities and roles.

In addition, with the logging of these precious trees largely driven by the desire to export, international standards and processes – such as forest certification or the emerging Forest Law, Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA) – might be able to influence change by trying to address murky/grey areas such as the trade of timber that may have been felled as a result of dubious logging permits.

Anne Thiel is the Communications Manager at Forest Trends. She can be reached at [email protected].

Additional resources

For the first time ever, India is including forest cover in its tax allocation formula earmarking $6 billion for results-based forest conservation-more than any other nation in the world. This means the portion of tax revenue state governments receive is partially dependent on how much forestland they maintain.

This article was originally published in the Forest Carbon newsletter. Click here to read the original.

20 March 2015 | Here at the office we are gearing up for March Madness, ready with our brackets, hoping for Cinderella stories to make it to the final four. Over in India, the central government has geared up its own form of a bracket, allocating $6 billion a year in tax revenue for results-based forest conservation within individual states. This announcement comes after the Narendra Modi government realized its pledge to treat states as partners in long-term development, and will transfer 42% of taxes collected by the Central government to states.

The formula for tax allocation to states will, for the first time ever, include forest cover.

India’s 14th Finance Commission, which is appointed every five years to define the financial relations between India’s central government and states, recommended adding forest cover to the formula because: “In our view, forests, a global public good, should not be seen as a handicap but as a national resource to be preserved and expanded to full potential, including afforestation in degraded forests or forests with low density cover. Maintaining a green cover, and adding to it, would also enable the nation to meet its international obligations on environment-related measures.”

Within the tax formula, forest cover has been given a weight of 7.5% within the overall formula, accompanying population in 1971 (17.5%), population in 2011 (10 %), fiscal capacity  (50%) and land area (15%).  This means that the share of tax revenue that each state receives will depend in part on how much forest they have maintained, as monitored by India’s 2013 Forest Survey.

To put the tax transfer in context, $6 billion is “more results-based finance for forest conservation than any other country in the world, including the current biggest spender Norway,” notes Jonah Busch, Research Fellow at the Center for Global Development, in a recent analysis. Since 2008, Norway has offered around $3 billion for reducing emissions from deforestation (REDD+) through bilateral agreements with Brazil, Indonesia, Guyana, and others.

India reports that its re-growing forests remove more than 200 million tonnes of carbon dioxide (CO2) from the atmosphere every year, which offsets about 15% of its greenhouse gas emissions. Additionally, the tax transfer works out to about $120 per hectare per year, which is a larger payment than many other payments-for-ecosystem services programs provide. For example, carbon finance from offset sales flowing to REDD projects averaged $5.2 per hectare globally in 2013, according to Ecosystem Markplace data.

More stories from the forest carbon market are summarized below, so keep reading.

Ecosystem Marketplace is closely tracking developments in the forest carbon markets for our brand-new North America report, as well as our annual State of the Voluntary Carbon Market reports. But publication of these reports is contingent on receiving sufficient support so contact Gloria Gonzalez if you are interested in sponsoring one or both of these reports.

Sponsors benefit from exposure – logo placement on reports that are downloaded tens of thousands of times and shout-outs in this news brief – as well as further insight into our findings through tailored briefings. And that’s not to mention influence: Ecosystem Marketplace’s reports have been cited in the development of emerging carbon pricing programs from South Africa to South Korea, and supporting our research is a good opportunity to influence these discussions.

—The Ecosystem Marketplace Team

If you have comments or would like to submit news stories, write to us at [email protected].

Additional resources

Governments have long promoted the use of biofuels like ethanol derived from corn as a relatively clean-burning alternative to coal, but biofuels have gone from hero to zero as people started chopping forests to plant fuel crops. Many environmentalists today are calling for an end to pro-biofuel policies, but Emily McGlynn of The Earth Partners LP says we simply need to use land more efficiently.

19 March 2015 | It’s gospel for some in the environmental community that if we keep converting crops to biofuels, we’ll gobble up farms and forests, leading to food shortages and accelerating climate change. The World Resources Institute recently went so far as to say we should “phase out” a decade of global bioenergy policy.

This would be a mistake, because bioenergy, done well, can and must play an important role in restoring degraded land, supporting food production, and enhancing CO₂ sequestration.

To begin with, it’s indispensable in nearly all scenarios for adequately addressing climate change: in its Fifth Assessment Report, the Intergovernmental Panel on Climate Change indicates that failing to deploy the needed amounts of bioenergy would increase the costs of addressing climate change by 60%, more than any other renewable energy technology, including solar and wind.

What’s more, bioenergy is one of the only technologies that can help us bring emissions back down after they’ve reached dangerous levels, which is very likely to happen, especially when combined with carbon capture and storage technology.

The key for bioenergy, however, is “done well.” What does that mean? Let’s look at three simple examples of how bioenergy production can slow climate change at significant scale by reducing fossil fuels without gobbling farms and forests.

The first involves integrating sorghum, an energy grass, and rice production. The UN Food and Agricultural Organization tells us that rice paddies take up 163 million hectares globally, an area about the size of Alaska. Rice farmers generally leave their paddies fallow, or resting, one year out of three. If we used this fallow time to plant sorghum, we’d get 7 dry tons of biomass per acre, or 938 million tons total each year, enough to offset half of annual U.S. gasoline consumption.

Closer to home, we can look at active pastureland. Ranchers can rotate their herds so that, in summer, pastures can be used to grow perennial energy grasses, like switchgrass, and in winter cattle can graze on cold-season grasses, like ryegrass. If this approach were implemented on half of America’s 587 million acres of pastureland, we could produce 91.5 billion gallons of ethanol, or 60 percent of current U.S. gasoline consumption.

A third example is removing invasive woody brush found extensively throughout native grassland in the south and western United States. In Texas alone, we can sustainably recover several million tons of biomass annually, while increasing pasture productivity, restoring native grasses, and increasing the amount of carbon that gets sponged up by healthy soil.

Obviously, these approaches won’t work everywhere, and to see them implemented on any significant scale we’d have to see dramatic changes in the energy and agricultural sectors – but that can be achieved with strong market signals, policy support, and landowner engagement.

The same math applies to degraded land, of which there’s too much, according to the UN Convention on Combating Desertification. More than 7 billion acres, or three times the size of the United States, are degraded. This costs the global community $40 billion annually in lost productivity, and it threatens food production and rural livelihoods. The objective of food and energy policy should be intensely focused on bringing these lands back into productivity. Rather than abandoning bioenergy, smart policy would encourage growing biomass as a way to build soil carbon, retain and increase soil moisture and nutrients, and create new value for rural communities. Well-designed food security policy would use biomass crops as one tool to improve landscapes and, ideally, allow them to be rotated back into food production.

Critiques of bioenergy and biofuels indicate we shouldn’t use marginal land incapable of food production for biomass crops, but instead let it revert back to natural forests or other high-carbon landscapes to maximize carbon sequestration. Fair enough, but why not do both where possible?

The simple fact is that you usually need human management to successfully restore abandoned or marginal landscapes, because you have to reintroduce native species and natural cycles. Smart restoration can allow for both additional carbon sequestration and biomass recovery.

For example, when reestablishing native grass communities on degraded prairies, the reintroduced grasses can be harvested periodically to replicate the kinds of fires that always happened naturally, providing a source of bioenergy, keeping invasive species at bay, and maintaining diminishing grassland habitat. Because restored prairies store most of their carbon in their extensive root systems, they often increase carbon stocks, even if aboveground biomass is harvested periodically.

Another interesting example is the restoration of pine savannah ecosystems in the U.S. southeast, considered critical to the survival of 40 rare and threatened species. Characterized by widely-spaced pines and periodic fires that promote grasses, pine savannahs can be some of the most biodiverse landscapes outside of tropical rainforests. Restoring this ecosystem often requires removing trees and underbrush to allow sunlight to reach the ground-level grasses. Regular “thinning” like this can keep pine savannahs healthy while also generating biomass.

To sum up, it is useful to highlight potential trade-offs among bioenergy, food production, and carbon sequestration. But rather than concluding that bioenergy should be abandoned, policy makers, rural communities, and the private sector need to work together to implement bioenergy approaches that can generate win-win-wins for food, climate, and ecosystem restoration.

Emily McGlynn is Manager for Business Development and Policy at The Earth Partners LP. She can be reached at [email protected].

17 March 2015 | Quick! What do Italian jackets, British beef, and French chickens have in common?

Answer: they’re overwhelmingly dependent on imports of illegally-harvested products driving deforestation across the developing world, according to a new report called Stolen Goods: the EU’s Complicity in Illegal Tropical Deforestation, released today by the environmental NGO Fern.

The group found that leather from cattle raised on illegally-deforested land tends to end up in Italy, while the beef ends up in the United Kingdom, and the soy ends up in France-mostly to feed the country’s chickens and pigs. The Netherlands and Germany are the largest importers of deforestation-linked palm oil, which goes into a variety of consumer products including cosmetics and food products.

The findings dovetail with those of Ecosystem Marketplace publisher Forest Trends, which found last year that agriculture is driving deforestation around the world, and almost half of global deforestation takes place illegally.

The report highlights the global forces driving deforestation and – ultimately – climate change, and it comes as governments and companies around the world pledge to slow or eliminate practices that drive deforestation. Next week, Ecosystem Marketplace, together with WWF and CDP, will launch a new site called Supply-Change.org to help people track the actions companies are taking to reduce deforestation.

What Constitutes “Illegal”?

Illegality is defined according to producer country laws. In some country that means converting forests to land for commercial agriculture without the right to clear the land, or using permits that were illegally issued or obtained to convert land. In some cases, even when companies have the right to convert land, they have been found to clear more forest than permitted, or to neglect agreed‐to payments to local communities or the government.

Gateway Netherlands

Globally, Fern says, the European Union imports 25% of all soy and 18% of all palm oil harvested on illegally-deforested land, 15% of all such beef and 31% of all such leather.

The Netherlands is the point of entry for one-third of all these products entering the EU, but much of that flows on to other countries. Still, combined, the Netherlands, Italy, Germany, France and the UK imported 75% and consumed 63% of the forest-risk products imported into the EU.

Indonesia and Brazil: Leaders in Illegality

The study says that more than half of the forest-risk products originate in Brazil, where it is estimated that some 90% of deforestation is illegal, while a quarter comes from Indonesia, where some 80% of deforestation is estimated to be illegal. Malaysia and Paraguay are among a number of other important source countries.

“EU consumption does more than devastate the environment and contribute to climate change,” said Sam Lawson, author of the report. “The illegal nature of the deforestation means it is also driving corruption, and leading to lost revenues, violence and human rights abuses. Those seeking to halt the illegal deforestation have been threatened, attacked or even killed.”

What to Do?

The report recommends that the EU ramp up its Forest Law Enforcement, Governance and Trade program (EU-FLEGT), which is designed to combat illegal deforestation.

“Demand for forest‐risk commodities is being driven by a number of different EU policies, such as agriculture, trade and energy policy,” says FERN co-founder Saskia Ozinga. “We urgently need an Action Plan to make these different policies coherent, reduce EU consumption and ensure we only import legal and sustainably produced commodities.”

16 March 2015 | The US Environmental Protection Agency’s (EPA) proposed Clean Power Plan, the agency’s attempt to regulate existing sources of greenhouse gases (GHGs) in the electricity-generating sector under its Clean Air Act authority, may be the most controversial rule proposed by the agency. Weighing in at around 670 pages (with a 750-page technical support document,) it is certainly one of the most complex regulations ever attempted by the agency.

It should also be interpreted as offering the states maximum flexibility in how states handle their emission reductions, as we can see by zeroing in on just two sections of the Clean Air Act: Section 110 and Section 111.

Section 110 governs the State Implementation Plans (SIPs), which are the way in which ambient levels of criteria pollutants (like ozone), are to be enforced. Section 110 allows states to meet these goals in any way they wish as long as they do not interfere with another state’s compliance. Section 111, on the other hand, purportedly deals with reductions from source categories (such as electricity generating units).

Here, we’ll be looking at just two sub-sections of Section 111: Section 111 (b), which deals with new or recently upgraded sources of pollution; and Section 111 (d), which deals with older or existing sources of pollution not regulated by states under Section 110 (or as a hazardous air pollutant) . Since greenhouse gases are the only pollutants that exist in this category, and they have yet to be regulated, section 111(d) is as yet untested. The Clean Power Plan is the EPA’s attempt to do so.

Section 111(d) says the EPA may establish guidelines for how states meet reductions required, and it also says that the procedure governing approval of these state systems should be a “procedure similar to that provided by section 7410[Section 110].”

And guess what? Section 110 clearly leaves room for offsetting, as well as any measure that would reach the target required.

How Does the Clean Power Plan Work?

The Clean Power Plan sets individual targets for GHG emissions rates for each state through a formula the EPA developed, examining how various GHG reduction strategies could be implemented given each state’s own unique circumstances. In determining the state’s targets, the EPA critically made a decision that the Best System of Emissions Reduction (BSER) referenced by the Clean Air Act authority under its Section 111(d) provisions could include reductions in GHG emissions from end-user efficiency gains, electricity dispatch decisions, and new non- or low-carbon sources.

Because these reductions would not technically be from a regulated plant itself, they are characterized as “beyond the fenceline” reductions. It is this decision that is responsible for much of the rule’s complexity as well as the ability of the EPA to propose a more aggressive reduction target than could be achieved by changes at the electricity generating plant itself. This approach, the EPA says, allows the states maximum flexibility in meeting ion targets.

Unfortunately, the EPA has shied away from allowing states maximum flexibility for reductions by refusing to endorse (at this time) the use of GHG offsets, (such as biological offsets or reductions from other unregulated sources) even though the use of offsets is generally recognized as a more efficient way to reach tighter GHG reductions targets.

Lying at the heart of this decision, according to the EPA, is “legal uncertainty.” Because of the controversy in the United States surrounding any regulation of GHGs, the regulations are being, and will continue to be, challenged in court. One of these challenges suggests that in setting up the guidelines for the states, that the EPA (and presumably the states) cannot do any “outside of the fenceline” regulation, asserting that this differs from prior regulation of electricity generating units under other pollutants.

In response, the EPA correctly reasons that its authority under section 111(d) is different from its authority to regulate criteria pollutants under 111(b), and that the BSER can include the “outside the fenceline” reductions suggested, as well as emissions trading between sources. I believe the agency is absolutely correct in this interpretation, but this reasoning would suggest that offsets would also be legally allowed under Section 111(d).

To see why, we have to return to the relationship between Sections 110 and 111(d) that I alluded to at the start – namely, that Section 111(d) specifies that the Best System of Emissions Reduction adopted by a state be modeled on Section 110, which governs the State Implementation Plans . While the EPA has not had cause to consider the full meaning and implications of this statutory phrase before, I believe that it means that 111(d) provides that the “system” of emissions reduction can be anything that meets the target required by the EPA. Section 110 allows the states such autonomy in constructing how they will meet the ambient air quality standards for criteria pollutants. In Union Electric Co. v. EPA, 427 U.S. 246, 96 S.Ct. 2518, 49 L/Ed/ 2d 474 (1976), the Supreme Court upheld the EPA’s position that if a state proposes a strategy that is effective in meeting the ambient air quality standards, the EPA must approve that SIP. This follows statutory language in Section 110(a) and also supports the cooperative federalism at the heart of the Clean Air Act.

Though the EPA seems to distinguish between the reductions itproposes in the Clean Power Plan rulemaking and the use of offsets, if “outside the fenceline” reductions are allowed at all if the states so choose, which I believe they are because of the reference to Section 110, then they can be allowed in other arenas such as offsetting.

What it boils down to is this: Unless the EPA is willing to grant the same sort of flexibility to the states under Section 111(d) that it does under section 110, it reads the reference to section 110 out of the statute, which was not the intent of the drafters.

The EPA seems to be afraid that the use of offsets might be a step too far, and other commentators have suggested that the agency’s power under Section 111(d) becomes more precarious the further it moves from the fenceline. But the applicable law suggests otherwise. While the EPA may be trying to paint a smaller target for legal challenge or simply avoid the politics of proposing something that looks very much like a cap-and-trade system, these distinctions are not based on the law. As such, the EPA should clarify that the states could choose to keep or utilize verifiable offset emissions reductions and be compliant with the Clean Power Plan.

Because some of the states, such as California and the Northeastern states participating in the Regional Greenhouse Gas Initiative already have carbon trading programs allowing for GHG reductions from sources such as verified GHG offsets or other industries (such as the petroleum industry), this clarification would allow these states to keep or utilize such reductions and be compliant with the BSER rulemaking. Additionally, clarifying the allowance of verified offsets and reductions from other industrial sectors (if proposed by a state or states) would facilitate the creation of a GHG trading market, which the agency has correctly determined would allow for more reductions at lower costs.

Victor B. Flatt is the Taft Distinguished Professor of Environmental Law at UNC Chapel Hill School of Law.

In the two years since the implementation of California’s carbon market, the state’s Gross Domestic Product grew 2% while emissions in capped sectors dropped 3.8%. Across the pond, China has taken note. The nation is working closely with the Golden State through a number of partnerships-perhaps the most prominent being between the Air Resources Board and its Chinese counterpart known as the National Development and Reform Commission (NDRC).

This article was originally posted in the V-Carbon newsletter. Click here to read the original.

13 March 2015 | All eyes have been on the West Coast of the United States, with the recent completion of California’s second joint auction with trading partner Québec and the launch of two reports about the state’s cap-and-trade program.

The latest auction sold out its 73.6 million allowances, at an average $12.2 per allowance, for more than $1 billion total. However, another aspect of the cap-and-trade program – carbon offsets – have so far been underutilized. Under California’s AB 32, the state law mandating greenhouse gas (GHG) emissions reductions, regulated companies may purchase up to 8% of their compliance obligations through offsets. As of last November, companies turned in only 1.7 million offsets out of a theoretical 11.6 million that could have been purchased.

Sales from the allowances will be reinvested in alternative energy sources, public transportation and other carbon-lowering activities through the state’s Greenhouse Gas Reduction Fund. Additionally, 25% of the fund’s money will be spent on reducing pollution in disadvantaged communities that are disproportionately affected by bad air quality.

Aside from the lackluster offsetting, a recent assessment of California’s carbon market regarded the system as a tentative success. In the two years since implementation, the state’s Gross Domestic Product grew 2% while emissions in capped sectors dropped 3.8%.

Across the (other) pond, China has taken note. According to the recent Asia Society report, A Vital Partnership, China is working closely with the Golden State through a number of partnerships. Perhaps the most prominent exists between the California Air Resources Board (ARB) and its Chinese counterpart known as the National Development and Reform Commission (NDRC).

Before signing the agreement, California Governor Jerry Brown said: “I see the partnership between China, between provinces in China, and the state of California as a catalyst and as a lever to change policies in the United States and ultimately change policies throughout the world.”

Additional pilot projects have occurred at Chinese jurisdictional or province levels with U.S. civil society organizations like The Energy Foundation and The Environmental Defense Fund (EDF). EDF’s Mobile Source Emissions Trading System Integration project is a five-year project launched last year with the Shenzhen Low Carbon Development Foundation that will focus on reducing air pollution from “mobile” transportation sources such as cars and buses. Currently, such sources account for nearly 30% of the city’s total emissions.

Read more about those projects here.

Ecosystem Marketplace is closely tracking these and other developments in California in preparation for our brand-new North America carbon markets report. But this latest report is still missing a vital ingredient – your support! The North America and State of the Voluntary Carbon Market reports are contingent on receiving sufficient support.

To sponsor one of these exciting Ecosystem Marketplace products, contact Gloria Gonzalez.

Sponsors benefit from exposure – logo placement on reports that are downloaded tens of thousands of times and shout-outs in this news brief – as well as further insight into our findings through tailored briefings. And that’s not to mention influence: Ecosystem Marketplace’s reports have been cited in the development of emerging carbon pricing programs from South Africa to South Korea, and supporting our research is a good opportunity to influence these discussions.

More news from the voluntary carbon marketplace is summarized below, so keep reading!

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Additional resources

The United States and China made headlines last year with their Climate Pact, but significant collaboration had already occurred at the subnational levels. Both California and several of China’s provinces launched emissions trading systems (ETS) in 2013, and they have been working together ever since. Now, a new report highlights the latest accomplishments and partnerships.

This article was originally posted on The AnthropoZine. Click here to read the original.

March 10, 2015 | When China and the United States announced their Climate Pact to great fanfare last November, the bilateral pledge’s talk of “contributions” shifted the conversation from shared commitments to “common but differentiated responsibilities”: the idea that historical economic differences leads to different responsibilities to tackle climate change today.

Yet, for all its talk of differences, both countries already shared a commitment in the form of subnational emissions trading schemes (ETS).

The California – China Memorandum of Understanding (MOU) was the first formal agreement on climate change issues between a US state and China. The MOU was signed back in 2013, when both the state of California and several Chinese provinces launched their ETS.

Since then, there has been a steady stream of officials and experts crossing the pond to share their experiences and form new collaborations. A new report called A Vital Partnership, launched last week by the Asia Society, examines the latest collaborations and partnerships between the two.

The Lure of California

With an economy that outweighs most countries, it’s no surprise that California’s 2006 Global Warming Solutions Act (AB 32) has attracted attention outside its borders. Its subsequent success has only heighted that interest: since its inception in 2013, Californian capped sectors have lowered emissions by 3.8% while the state has maintained economic and job growth that has outpaced the national average.

As China looks to ramp up its seven pilot ETSs into a consolidated national system, the country hopes to replicate California’s economic and environmental prosperity. This has led to a number of agreements and partnerships across a range of actors.

The report tracked fourteen various partnerships currently in effect, with participants drawn across a host of organizations including civil society (research organizations, foundations and NGOs), businesses, government and public utilities.

Four such agreements focus directly on the emissions trading systems, while the rest address such topics as air pollution control, zero emissions vehicles and low carbon technologies.

Though its difficult to make sweeping generalizations about these various partnerships, the report does note that: “What California and its counterparts in China have come to understand is that mutual benefits can flow from such partnerships, not only in the quest for climate change solutions, but also in catalyzing increased trade and investment in clean technology.”

Bridging the Public/Private Divide

Perhaps the most prominent partnership exists between the California Air Resources Board (ARB) and the Chinese equivalent called the National Development and Reform Commission (NDRC).

Before signing the agreement, California Governor Jerry Brown said, “I see the partnership between China, between provinces in China, and the state of California as a catalyst and as a lever to change policies in the United States and ultimately change policies throughout the world.”

Formalized on September 13, 2013, the MOU lays out cooperation between the two agencies on key issues, including: mitigating carbon emissions, strengthening performance standards to control greenhouse gas emissions, designing and implementing carbon emissions trading systems, sharing information on policies and programs to strengthen low-carbon development, and researching clean and efficient energy technologies.

ARB has since hosted five Chinese delegations and four webinars, the latest of which also included officials from the US Environmental Protection Agency (EPA).

US-based civil society organizations have also helped China get their pilot ETS programs off the ground.

Within civil society, The Energy Foundation has been engaged since 2011 with several of the pilot ETS jurisdictions to get them off the ground. Though the organization collaborated with NDRC, it primarily worked with equivalent local entities (such as the Guangzhou Energy Research Institute and Tsinghua University) to help these Chinese civil society organizations draft the initial ETS regulations and establish harmonized monitoring, reporting and verification rules across the pilots. Now, the organization is supporting Guangdong, Shenzhen and Beijing to carry out qualitative and quantitative evaluations of their pilot ETSs and impacts on emissions, the environment and economy through March 2015.

As that project wraps up, the Environmental Defense Fund’s (EDF) Mobile Source ETS Integration project will be getting off the ground. The five-year project, launched last year between EDF and the Shenzhen Low Carbon Development Foundation will focus on reducing air pollution from “mobile” transportation sources like cars and buses.

Currently, such sources account for nearly 30% of the city’s total emissions and have been increasing at a rate of 15% each year. The research seeks to reduce air pollution from transport through carbon emissions trading and seek to test the feasibly of expanding emissions trading systems to mobile sources. It will start with public transport, but hopes to expand to include private vehicles, freight, railway and marine transport over the course of the 5-year project.

“This partnership will tackle one of the world’s most vexing greenhouse gas emissions challenges – controlling pollution from transportation, an especially fast growing source in China,” said Dan Dudek, EDF’s Vice President and Head of the China Program. “China is the world’s largest auto market, so solving the global climate challenge not only requires China manage its greenhouse gas emissions, it requires China address pollution from mobile sources. China’s experiences could provide valuable lessons for the U.S. in reducing emissions from its transport sector.”

The partnership stems from US Department of State’s EcoPartnership program, which promotes cooperation between local governments and organizations in the U.S. and China in climate and energy issues relating to the U.S – China Ten Year Framework on Energy and Environment Cooperation or Climate Change Working Group. New 2015 applications are currently accepted through March 20.

Additional resources

Governments have long promoted the use of biofuels like ethanol derived from corn as a relatively clean-burning alternative to coal, but biofuels have gone from hero to zero as people started chopping forests to plant fuel crops. Many environmentalists today are calling for an end to pro-biofuel policies, but Emily McGlynn of The Earth Partners LP says we simply need to use land more efficiently.

19 March 2015 | It’s gospel for some in the environmental community that if we keep converting crops to biofuels, we’ll gobble up farms and forests, leading to food shortages and accelerating climate change. The World Resources Institute recently went so far as to say we should “phase out” a decade of global bioenergy policy.

This would be a mistake, because bioenergy, done well, can and must play an important role in restoring degraded land, supporting food production, and enhancing CO₂ sequestration.

To begin with, it’s indispensable in nearly all scenarios for adequately addressing climate change: in its Fifth Assessment Report, the Intergovernmental Panel on Climate Change indicates that failing to deploy the needed amounts of bioenergy would increase the costs of addressing climate change by 60%, more than any other renewable energy technology, including solar and wind.

What’s more, bioenergy is one of the only technologies that can help us bring emissions back down after they’ve reached dangerous levels, which is very likely to happen, especially when combined with carbon capture and storage technology.

The key for bioenergy, however, is “done well.” What does that mean? Let’s look at three simple examples of how bioenergy production can slow climate change at significant scale by reducing fossil fuels without gobbling farms and forests.

The first involves integrating sorghum, an energy grass, and rice production. The UN Food and Agricultural Organization tells us that rice paddies take up 163 million hectares globally, an area about the size of Alaska. Rice farmers generally leave their paddies fallow, or resting, one year out of three. If we used this fallow time to plant sorghum, we’d get 7 dry tons of biomass per acre, or 938 million tons total each year, enough to offset half of annual U.S. gasoline consumption.

Closer to home, we can look at active pastureland. Ranchers can rotate their herds so that, in summer, pastures can be used to grow perennial energy grasses, like switchgrass, and in winter cattle can graze on cold-season grasses, like ryegrass. If this approach were implemented on half of America’s 587 million acres of pastureland, we could produce 91.5 billion gallons of ethanol, or 60 percent of current U.S. gasoline consumption.

A third example is removing invasive woody brush found extensively throughout native grassland in the south and western United States. In Texas alone, we can sustainably recover several million tons of biomass annually, while increasing pasture productivity, restoring native grasses, and increasing the amount of carbon that gets sponged up by healthy soil.

Obviously, these approaches won’t work everywhere, and to see them implemented on any significant scale we’d have to see dramatic changes in the energy and agricultural sectors – but that can be achieved with strong market signals, policy support, and landowner engagement.

The same math applies to degraded land, of which there’s too much, according to the UN Convention on Combating Desertification. More than 7 billion acres, or three times the size of the United States, are degraded. This costs the global community $40 billion annually in lost productivity, and it threatens food production and rural livelihoods. The objective of food and energy policy should be intensely focused on bringing these lands back into productivity. Rather than abandoning bioenergy, smart policy would encourage growing biomass as a way to build soil carbon, retain and increase soil moisture and nutrients, and create new value for rural communities. Well-designed food security policy would use biomass crops as one tool to improve landscapes and, ideally, allow them to be rotated back into food production.

Critiques of bioenergy and biofuels indicate we shouldn’t use marginal land incapable of food production for biomass crops, but instead let it revert back to natural forests or other high-carbon landscapes to maximize carbon sequestration. Fair enough, but why not do both where possible?

The simple fact is that you usually need human management to successfully restore abandoned or marginal landscapes, because you have to reintroduce native species and natural cycles. Smart restoration can allow for both additional carbon sequestration and biomass recovery.

For example, when reestablishing native grass communities on degraded prairies, the reintroduced grasses can be harvested periodically to replicate the kinds of fires that always happened naturally, providing a source of bioenergy, keeping invasive species at bay, and maintaining diminishing grassland habitat. Because restored prairies store most of their carbon in their extensive root systems, they often increase carbon stocks, even if aboveground biomass is harvested periodically.

Another interesting example is the restoration of pine savannah ecosystems in the U.S. southeast, considered critical to the survival of 40 rare and threatened species. Characterized by widely-spaced pines and periodic fires that promote grasses, pine savannahs can be some of the most biodiverse landscapes outside of tropical rainforests. Restoring this ecosystem often requires removing trees and underbrush to allow sunlight to reach the ground-level grasses. Regular “thinning” like this can keep pine savannahs healthy while also generating biomass.

To sum up, it is useful to highlight potential trade-offs among bioenergy, food production, and carbon sequestration. But rather than concluding that bioenergy should be abandoned, policy makers, rural communities, and the private sector need to work together to implement bioenergy approaches that can generate win-win-wins for food, climate, and ecosystem restoration.

Emily McGlynn is Manager for Business Development and Policy at The Earth Partners LP. She can be reached at [email protected].

16 March 2015 | The US Environmental Protection Agency’s (EPA) proposed Clean Power Plan, the agency’s attempt to regulate existing sources of greenhouse gases (GHGs) in the electricity-generating sector under its Clean Air Act authority, may be the most controversial rule proposed by the agency. Weighing in at around 670 pages (with a 750-page technical support document,) it is certainly one of the most complex regulations ever attempted by the agency.

It should also be interpreted as offering the states maximum flexibility in how states handle their emission reductions, as we can see by zeroing in on just two sections of the Clean Air Act: Section 110 and Section 111.

Section 110 governs the State Implementation Plans (SIPs), which are the way in which ambient levels of criteria pollutants (like ozone), are to be enforced. Section 110 allows states to meet these goals in any way they wish as long as they do not interfere with another state’s compliance. Section 111, on the other hand, purportedly deals with reductions from source categories (such as electricity generating units).

Here, we’ll be looking at just two sub-sections of Section 111: Section 111 (b), which deals with new or recently upgraded sources of pollution; and Section 111 (d), which deals with older or existing sources of pollution not regulated by states under Section 110 (or as a hazardous air pollutant) . Since greenhouse gases are the only pollutants that exist in this category, and they have yet to be regulated, section 111(d) is as yet untested. The Clean Power Plan is the EPA’s attempt to do so.

Section 111(d) says the EPA may establish guidelines for how states meet reductions required, and it also says that the procedure governing approval of these state systems should be a “procedure similar to that provided by section 7410[Section 110].”

And guess what? Section 110 clearly leaves room for offsetting, as well as any measure that would reach the target required.

How Does the Clean Power Plan Work?

The Clean Power Plan sets individual targets for GHG emissions rates for each state through a formula the EPA developed, examining how various GHG reduction strategies could be implemented given each state’s own unique circumstances. In determining the state’s targets, the EPA critically made a decision that the Best System of Emissions Reduction (BSER) referenced by the Clean Air Act authority under its Section 111(d) provisions could include reductions in GHG emissions from end-user efficiency gains, electricity dispatch decisions, and new non- or low-carbon sources.

Because these reductions would not technically be from a regulated plant itself, they are characterized as “beyond the fenceline” reductions. It is this decision that is responsible for much of the rule’s complexity as well as the ability of the EPA to propose a more aggressive reduction target than could be achieved by changes at the electricity generating plant itself. This approach, the EPA says, allows the states maximum flexibility in meeting ion targets.

Unfortunately, the EPA has shied away from allowing states maximum flexibility for reductions by refusing to endorse (at this time) the use of GHG offsets, (such as biological offsets or reductions from other unregulated sources) even though the use of offsets is generally recognized as a more efficient way to reach tighter GHG reductions targets.

Lying at the heart of this decision, according to the EPA, is “legal uncertainty.” Because of the controversy in the United States surrounding any regulation of GHGs, the regulations are being, and will continue to be, challenged in court. One of these challenges suggests that in setting up the guidelines for the states, that the EPA (and presumably the states) cannot do any “outside of the fenceline” regulation, asserting that this differs from prior regulation of electricity generating units under other pollutants.

In response, the EPA correctly reasons that its authority under section 111(d) is different from its authority to regulate criteria pollutants under 111(b), and that the BSER can include the “outside the fenceline” reductions suggested, as well as emissions trading between sources. I believe the agency is absolutely correct in this interpretation, but this reasoning would suggest that offsets would also be legally allowed under Section 111(d).

To see why, we have to return to the relationship between Sections 110 and 111(d) that I alluded to at the start – namely, that Section 111(d) specifies that the Best System of Emissions Reduction adopted by a state be modeled on Section 110, which governs the State Implementation Plans . While the EPA has not had cause to consider the full meaning and implications of this statutory phrase before, I believe that it means that 111(d) provides that the “system” of emissions reduction can be anything that meets the target required by the EPA. Section 110 allows the states such autonomy in constructing how they will meet the ambient air quality standards for criteria pollutants. In Union Electric Co. v. EPA, 427 U.S. 246, 96 S.Ct. 2518, 49 L/Ed/ 2d 474 (1976), the Supreme Court upheld the EPA’s position that if a state proposes a strategy that is effective in meeting the ambient air quality standards, the EPA must approve that SIP. This follows statutory language in Section 110(a) and also supports the cooperative federalism at the heart of the Clean Air Act.

Though the EPA seems to distinguish between the reductions itproposes in the Clean Power Plan rulemaking and the use of offsets, if “outside the fenceline” reductions are allowed at all if the states so choose, which I believe they are because of the reference to Section 110, then they can be allowed in other arenas such as offsetting.

What it boils down to is this: Unless the EPA is willing to grant the same sort of flexibility to the states under Section 111(d) that it does under section 110, it reads the reference to section 110 out of the statute, which was not the intent of the drafters.

The EPA seems to be afraid that the use of offsets might be a step too far, and other commentators have suggested that the agency’s power under Section 111(d) becomes more precarious the further it moves from the fenceline. But the applicable law suggests otherwise. While the EPA may be trying to paint a smaller target for legal challenge or simply avoid the politics of proposing something that looks very much like a cap-and-trade system, these distinctions are not based on the law. As such, the EPA should clarify that the states could choose to keep or utilize verifiable offset emissions reductions and be compliant with the Clean Power Plan.

Because some of the states, such as California and the Northeastern states participating in the Regional Greenhouse Gas Initiative already have carbon trading programs allowing for GHG reductions from sources such as verified GHG offsets or other industries (such as the petroleum industry), this clarification would allow these states to keep or utilize such reductions and be compliant with the BSER rulemaking. Additionally, clarifying the allowance of verified offsets and reductions from other industrial sectors (if proposed by a state or states) would facilitate the creation of a GHG trading market, which the agency has correctly determined would allow for more reductions at lower costs.

Victor B. Flatt is the Taft Distinguished Professor of Environmental Law at UNC Chapel Hill School of Law.