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This Week In V-Carbon: An Important Step Forward for REDD+ at the Climate Negotiations

After a roller coaster two weeks, a Reducing Emissions from Deforestation and Degradation of forests (REDD+) package made it through the negotiations at the international climate conference in Warsaw. Other news included the first issuance of forest carbon offsets in California, the nixing of British Columbia’s Pacific Carbon Trust, and two new provincial carbon markets in China.

After a roller coaster two weeks, a Reducing Emissions from Deforestation and Degradation of forests (REDD+) package made it through the negotiations at the international climate conference in Warsaw. Other news included the first issuance of forest carbon offsets in California, the nixing of British Columbia’s Pacific Carbon Trust, and two new provincial carbon markets in China.

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

26 November 2013 | After a roller coaster two weeks, a Reducing Emissions from Deforestation and Degradation of forests (REDD+) package made it through the negotiations at the international climate conference in Warsaw. Seven long years after it was placed on the agenda of the United Nations Framework Convention on Climate Change (UNFCCC), the Conference of the Parties (COP) last Friday officially approved REDD+ text that includes agreed-on rules for establishing reference levels, ensuring safeguards and creating performance-based financing mechanisms.  

 

Together, the rules provide clear guidance on how countries can harvest available scientific data to create reliable snapshots of their forests over time and use them to create deforestation reference levels that will be recognized by the UNFCCC. Cumulatively dubbed the “REDD Rulebook”, the decisions are built on the same Intergovernmental Panel on Climate Change (IPCC) principles that that also provide a foundation for the voluntary carbon markets, and may help bring voluntary markets into better synch with emerging compliance ones.

 

A recent study by the Center for International Forestry Research (CIFOR) indicates that the Rulebook is coming at a time when many REDD pilot projects and subnational initiatives are at a crossroads: “We are in desperate need of a fix for the REDD financial situation,” said William Sunderlin of CIFOR’s Global Comparative Study on REDD+. “Implicit in the negotiations has been that this ultimately needs to be a compliance market, and yet we are years away from that.”
   

We have much more COP coverage and analysis to come over the next week, so keep reading the news at www.ecosystemmarketplace.com. Other stories from the voluntary carbon marketplace are summarized below, so keep reading!

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—The Editors

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V-Carbon News

Voluntary Carbon

RIP, Pacific Carbon Trust

British Columbia’s Pacific Carbon Trust (PCT), the body tasked with making the provincial government carbon neutral, was nixed last week in favor of folding its responsibilities into the Climate Action Secretariat within the Environment Ministry. The PCT has been skirting the chopping block since a May report by the Auditor General’s office called into question the additionality of offsets purchased from two projects: Eneca’s reduced gas-flaring project and the Darkwoods forest carbon project. Government agencies, schools and hospitals were required to purchase offsets from PCT at $25 per tonne. By the summer of 2013, the Trust had accumulated a surplus of $30 million. While the change represents a significant downsizing, provincial officials say British Columbia remains committed to carbon neutrality.

Read more in the Vancouver Sun
Read more in the Prince George Citizen


Mangroves as speed bumps

Could mangroves have slowed the murderous path of Haiyan? Some believe that a mangrove regeneration project in Northern Samar, about 100 miles north of the worst-hit Filipino city of Tacloban, may have been spared some of the typhoon’s wrath because mangroves’ twisted roots absorb storm surge and provide a buffer against high winds and water. Since mangroves also sequester carbon, their protection has in other places been incentivized by carbon finance: companies Danone and Credit Agricole spent $4 million on offsets from mangrove reforestation projects on Indonesia’s Sumatra island after a 2004 tsunami. A similar approach could be tried for the Philippines, but the clock is ticking: the country’s mangroves are currently being lost at a rate of 1% per year.

Read more


Stamping out emissions

The Universal Postal Union last week set up a new carbon offsetting program, with 10 postal services including La Poste, Swiss Post and Thai Post acting as founding members. The world’s postal services generated 60 million tonnes of greenhouse gases (GHGs) in 2012, 92% of them from mail in developed countries. The offset program will therefore represent a transfer of wealth, as the program targets purchases from carbon-reducing projects in the developing world. Postal services have already made efforts to reduce emissions: the 24-member International Post Corporation achieved a 435,000-tonne cut in emissions in 2012 by switching out vehicles and energy sources and is close to meeting its 20% reduction by 2020 goal.

Read more


Climate North America

Getting real

The California Air Resources Board took a major step forward in the development of its offset program last week by issuing the first forest carbon offsets eligible for compliance with the state’s cap-and-trade market. The offsets come from two improved forest management (IFM) projects developed by Finite Carbon: the Willits Woods project in northern California and the Farm Cove project in Maine. “Yes, the compliance carbon market is real, and yes, so is the revenue,” Finite Carbon’s President Sean Carney said of the issuance. The project developer plans to bring 10 more IFM projects online in the coming months.

Read more in Ecosystem Marketplace
Read more from Finite Carbon


Once and for all?

The Sacramento Superior Court on November 16 upheld California’s cap-and-trade program, ruling that though the carbon auction could raise as much as $12 billion to $70 billion in revenues for the state, it is not a tax. The decision was based on a finding that allowance buyers receive something valuable in exchange for their dollars: a license to emit that is a tradable commodity in the marketplace. Previous rulings in the state have determined that industry has no inherent right to pollute, so there is no reason to believe that allowances should be free. Plaintiffs – including oil, trucking, and food packaging companies – have already vowed to appeal the decision, though legal experts believe the ruling will stand.

Read more in Ecosystem Marketplace


Going, going, sold

California’s cap-and-trade program raised $297 million in its fifth auction, held last week. Two groups of allowances sold: 16.6 million allowances that can be used immediately sold at $11.48 each while another 9.56 million allowances that cannot be used until 2016 sold at $11.10 each. These prices are above the $10.71-per-tonne price floor set by the state, but in line with expectations. All the permits up for auction sold, and the state received 1.82 bids per tonne. Chevron, JPMorgan Chase, Morgan Stanley and PG&E were among the eligible buyers.

Read more in Bloomberg
Read more in The Sacramento Bee


Listening in

The US Environmental Protection Agency (EPA) was all ears over the last two months as regulators held listening sessions on the carbon regulations for new power plants in 10 states. Panelists on a recent webinar by CaliforniaCarbon.info discussed how states that have already implemented a price on carbon – California and the 10 northeast states that are part of the Regional Greenhouse Gas Initiative (RGGI) – have most dramatically decreased the average emissions intensity of their electricity generation, and phased out coal. A system-based approach to the federal regulation could potentially include these market-based mechanisms, while a source-based approach would not.

Read more in Ecosystem Marketplace


RGGI losing some steam?

RGGI allowance prices fell 11% to an average of $3.03/tCO2e during the third quarter of 2013, compared to the previous quarter, according to the latest report on secondary market activity by RGGI market monitor Potomac Economics. The volume of allowance transfers between unaffiliated firms was four million, a significant decrease from the 9.8 million allowances traded in the second quarter. Despite the third-quarter slowdown, secondary market activity has remained at elevated levels since February 2013, when the RGGI states announced plans for a comprehensive revamp of the program, including a 45% reduction of the 2014 emissions cap, the report noted.

Read more


Kyoto & Beyond

Powering down

The Clean Development Mechanism (CDM) Executive Board has rejected the Bonyic Hydroelectric Project in Panama due to human rights concerns. The project to construct a 31.8-megawatt hydroelectric power plant on the Bonyic River is within Naso territory. The Naso are an indigenous people numbering around 3,500 people who face serious threats to their cultural survival in part because their traditional land rights are often not legally recognized. The project originally received a positive recommendation by a validator and is currently under construction. Its recent rejection by the Board demonstrates the Board’s power to stop projects that fail to meet CDM requirements but also highlights the need for more upfront safeguard requirements, according to Carbon Market Watch.

Read the press release


A silver lining?

Despite recently cutting back its 2020 commitment targets, Japan announced last week that it has met its Kyoto Protocol requirements. Combined, the global financial crisis, tree planting and purchases of international carbon offsets helped Japan achieve an 8.2% GHG reduction between 1997 and 2012 – well under the 6% reduction target for the Protocol. However, Japan’s emissions have increased since 2011, when most nuclear plants went offline after the Tōhoku earthquake and the tsunami-induced meltdown at the Fukushima nuclear facility. Japan has not agreed to a second commitment period of the Kyoto Protocol, saying it is following the lead of the U.S. and China – a move that WWF Japan says represents a “race to the bottom.”

Read more in the Japan Daily Press


Back it up

EU diplomats last Wednesday approved the ‘backloading’ provision that will remove up to 900 million allowances from the EU Emissions Trading Scheme – addressing at least a portion of the oversupply issue. The deal will be made official next month. Though passing it took so long that its effect is diluted, the backloading provision may lay the groundwork for future reforms: the European Commission in January is expected to create an adjustment mechanism that would automatically cut permits in the event of oversupply.

Read more


Global Policy Update

No time to waste

It’s a big week for China’s fledgling carbon markets: Shanghai is expected to begin carbon trading today and Beijing’s market will launch on Thursday. Shenzhen’s carbon market launched in June and has already seen 120,000 tonnes exchanged, with prices now stabilizing around 80 yuan (US$13.13) per tCO2e. As China prepares for a national carbon market, its government has had the opportunity to learn from compliance markets in California and the EU about how to avoid oversupply, namely by withholding allowances and creating reserves. Matthew Rodriguez at the California EPA says that China’s carbon market development has been speedy: “What took California six years to get started, it has taken the Chinese provinces and governments six months….”

Read more about the Shanghai and Beijing markets
Read more about how China is learning from California


Walking out the door

Thirteen NGOs walked away from the Warsaw climate negotiations in protest last Thursday, claiming that “our governments cannot be trusted to do what the world needs.” Their statement cites the hypocrisy of the corporate sponsorships of the conference and the “Coal & Climate Summit” being held in conjunction. After Japan and Canada reneged on previous commitments on emissions reductions and Australia was “utterly unwilling to take the UN climate process seriously,” the NGOs said enough was enough. The 13 ‘walkers’ included World Wildlife Fund, Friends of the Earth (Europe), Greenpeace, Oxfam International, LDC Watch, and the Peoples’ Movement on Climate Change (Philippines), among others. They’ve promised to return in greater force with “the voice of the people” in 2014.

Read more in Ecosystem Marketplace


Carbon Finance

$280 Million Comin’ Atcha

Norway, the United States and the United Kingdom last week announced the Initiative for Sustainable Forest Landscapes (BioC ISFL), a new financing initiative that directs $280 million to REDD+ jurisdictional efforts to promote ‘climate-safe’ agriculture. Though most of the money had already been committed, the BioC ISFL is a key step in actually getting funds dispersed. The idea is to funnel between $30 and $50 million to four to six jurisdictions. The first – Ethiopia’s Oromia state – has already been selected. The BioC ISFL falls under the World Bank’s Forest Carbon Partnership Facility’s BioCarbon Fund, the main body that funds REDD+ readiness.

Read more about the $280 million in Ecosystem Marketplace
Read an EM-exclusive roundtable on REDD

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