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Forest Carbon Portal
The Art of Seizing Opportunities
A Profile of Pedro Moura-Costa
Author: Ricardo Bayon

Pedro Moura-Costa followed a circuitous path to his current position as Managing Director at EcoSecurities, one of the premier environmental finance companies in the world. Starting as a forester in Malaysia, Moura-Costa developed his pioneering approach to combating climate change from first principles and firsthand experience. In the decades since, he has refined his ideas, catalyzed innovative partnerships, influenced policy and built a sophisticated business. The Ecosystem Marketplace looks at how this humble and impressive man did it all, without ever losing sight of the forest...or the trees.

The year was 1991 and not many people were talking about carbon trading, the Kyoto Protocol, or climate change; fewer still were looking at the role that forests might play in sequestering carbon from the atmosphere. But in Sabah, Malaysia, a young Brazilian biologist by the name of Pedro Moura-Costa, an expert in the propagation of tropical trees, was already beginning to put together the world's first forestry-based carbon offset project.

It was an unlikely combination: a Brazilian forester based in Malaysia working with a Dutch foundation made up of electricity generators hoping to battle climate change. But, as so often happens with unlikely combinations, the Innoprise-FACE Rainforest Rehabilitation project worked beautifully. Fourteen years later, the project has replanted native tree species on 25,000 hectares of logged and degraded land in Malaysia, earning itself a reputation for being not only the first, but also one of the best, of its kind.

"I was just in the right place at the right time," says Moura-Costa, with characteristic modesty. "Being one of the few experts in the propagation of tropical dipterocarps [a type of tree], a Malaysian company hired me out of the University to help them plant native trees in Sabah. But to do this, we needed money, and so we set out to find relevant sources of funding. Also, this was just around the time of the Rio Conference on Environment, in 1992 [where the UN Framework Convention on Climate Change was signed] so people were beginning to take an interest in carbon and climate change."

In searching for funding, Moura-Costa became acquainted with the work of the FACE (Forests Absorbing Carbon-dioxide Emissions) Foundation, a group set up in 1990 by the Dutch Electricity Generating Board to explore how the country's generators might offset their carbon emissions. (The group has since gone on to become an independent non-profit working in carbon sequestration through forestry, see At the time, FACE was looking to invest in forests that might offset their carbon emissions, while Moura-Costa and his team were looking for forestry investors. The two groups were a natural fit and FACE invested $15 million in the Malaysian project shortly after Moura-Costa began working with them.

Fresh from this success, Moura-Costa and his colleagues realized that, where there was one interested party, there might be others, so they began looking for other companies interested in sequestering carbon through forestry. A few months later, they met with New England Power, a large US electricity generator that was already investing in a variety of projects designed to minimize and manage their carbon emissions. Moura-Costa and his colleagues then negotiated with the power company a contract to finance a reduced impact logging project in Malaysia to prevent unnecessary damage to the remnant forests and thereby reduce CO2 emissions.

After several years of working on both these projects, Moura-Costa decided to go back to the UK to write-up his experiences with carbon sequestration. "What I found when I got to the UK," he says, "was that a lot of people were talking about carbon, but few had hands-on experience doing carbon projects." So, after writing summaries of his experiences in Malaysia for the Oxford Forestry Institute, Moura-Costa decided to set up his own consulting company. And, since it appeared that people were more interested in carbon sequestration than in the propagation of dipterocarps, he made forestry finance -- and carbon in particular -- the main emphasis of his consulting work.

As a consultant, Moura-Costa worked for companies such as Aracruz Celulose, Coopers and Lybrand, for multilateral organizations such as the World Bank and the Food and Agriculture Organization (FAO), and for the Inter-governmental Panel on Climate Change (IPCC).

"I never intended to create a company," he explains, "I was doing fine as an independent consultant. But then, in early 1996 I took on a large client in the government of Costa Rica." At that time, Costa Rica, following from the Rio conference, was looking for new and innovative ways to derive value from its forests. Carbon sequestration seemed to be one of the country's very promising options. In fact, Costa Ricans were determined to become the first country to bring government-backed carbon credits into the global market. "In order to make the most of their carbon -- they wanted to make sure that whatever they sold was properly certified" recounts Moura-Costa, "and that's when I came in".

"The issue with carbon," he explains, "is that it is an elusive commodity; it is difficult to measure and is therefore highly dependent on a paper trail. So, in order to give Costa Rica that paper trail, to certify their emissions, I sold to SGS [Societe Generale de Surveillance, one the world's leading testing, inspection, and certification companies] a certification system for Costa Rica's carbon. Essentially, I basically convinced SGS on the idea that carbon certification could one day become a business for them. It all worked out because Costa Rica needed certification, SGS needed a carbon client, and the World Bank came in with seed money to do it all."

"With all the work surrounding SGS, Costa Rica, and others" he continues, "I realized that this was too big to deal with as an individual consultant." That is why, at the end of 1996, Moura-Costa teamed up with Marc Stuart, an American economist with extensive experience in finance, energy efficiency and greenhouse gas reduction projects, to create EcoSecurities, the carbon consulting company for which he now serves as Managing Director.

After creating the company, he spent all of 1997 working on various aspects of the Costa Rica project. "Then, Kyoto came on-line and everyone began talking about selling and trading emissions reductions," he explains. "Clearly it provided a big boost for our work." At first the discussions were simply about emissions reductions, but Costa Rica, which had invested heavily in ensuring and certifying its reductions, pushed strongly for others to be held up to the same high standards. "The 'C' in CERs," explains Moura-Costa, "was basically the result of Costa Rica wanting others to adopt the same measures it had adopted." But there are those who go further, who say that the "C" in CERs is actually a direct result of the pioneering work that Moura-Costa and his colleagues did in the late 1990s. The "C", they say, belongs to him.

Building on the work that EcoSecurities did with Costa Rica in 1997, the company was hired by SGS to help it implement its certification process, by Australia to help establish the country's Greenhouse Challenge Office programme, and by a host of other countries, companies, and institutions. It has since grown organically, from two people in 1997, to five in 1998, to ten in 1999. Today, the company employs over 35 people in the UK, Los Angeles, New York, Brazil, Holland, and India, and boasts representatives in Malaysia, Chile, Mexico and, in the very near future, China. "We are", Moura-Costa says proudly, "a very small multi-national."

Compared to large multinational corporations EcoSecurities may be small, but in the now-bustling carbon markets, their impact and reach is significant. EcoSecurities has about 20% market share of Joint Implementation (JI) and CDM projects worldwide, giving them the distinction of being perhaps the most influential player when it comes to the cooperative mechanisms of the Kyoto Protocol.

"I don't know how long this will last," says Moura-Costa, pointing out that, with the advent of the European Union's Emissions Trading Scheme (EU-ETS), many large companies, brokers, and banks are now entering the carbon markets. For the time being, though, EcoSecurities sits comfortably atop a very large and growing market.

This Brazilian forester, it seems, has come a long way since his days of planting trees in Malaysia.

But does he have any regrets?

"Just one," he says. "I regret that forestry is not playing a bigger role in the carbon markets. I wish environmental NGOs had seized the opportunity of using climate change to contribute the maintenance and creation of forests worldwide. Instead NGOs campaigned against the use of forestry in the climate convention and they essentially won. They discarded a major positive opportunity for forests, sacrificing it to some other agenda that I don't fully understand. I believe it was a huge tactical mistake and a major missed opportunity for forests worldwide. As a forester it really, truly saddens me."

He goes on to explain that, in his view, the Biodiversity Convention is orphaned and will not serve forests -- providing funding and attention -- in the way that the carbon markets could have. "The Climate Change convention," he says, "could have been a strong older sister to the Biodiversity convention, but that opportunity is lost." It is lost, he says, because the processes that have been put into place for the inclusion of Land Use, Land Use Change and Forestry (LULUCF) projects within the CDM -- essentially the use of long-term CERs (l-CERS) and temporary CERs (t-CERs)-- are so complex, costly, and burdensome that they will never really be able to compete in terms of price, rapid delivery, and regulatory certainty with straight energy-related emissions reductions.

To back his case, he cites the experience of EcoSecurities with forestry-related carbon projects: "In the beginning, most -- if not all -- of our projects were forestry-related. Then, because the sector became polemic and difficult, we diverted our attention to more energy-related emissions reductions. Today, most of our emissions reductions come from energy and energy-related projects. And last year the entire carbon/forestry sector was basically dormant. This year it is picking up slightly, we are seeing a few consulting contracts on this issue. Similarly, all of the prep work on forestry -- the sort of work that happened on energy three years ago and took that long to come to fruition -- is just starting to happen now. There are 8 new forestry methodologies before the CDM...and this takes time to work out, it is a long difficult process. Because of this, I don't think we will see a forestry project registered before the next 18 months. And this means that the time for these projects to create credits before 2012 is going to be exceedingly short...I am not bullish."

Moura-Costa may despair at the way his pet subject -- forestry -- has been treated within the Kyoto process, but on the overall carbon market he is exceedingly optimistic. "The market this year," he says, "is twice as big as it was last year. It is a lot more real than it was even six months ago. Besides, it has gone from being a buyers market -- with more people wanting to sell credits than there were buyers -- to being a sellers market, one where there are more buyers -- even several carbon funds -- than projects providing credits."

For Moura-Costa, the real sign of a turning point in the carbon market came this year, when the market went from one dominated by government players such as the World Bank, to one essentially driven by private buyers. "The last six months," he explains, "since December [2004] and the launch of the EU-ETS [January, 2005] have made all the difference. Now all we need is for the UN processes, and the CDM Executive Board in particular, to catch up, and I will be happy."

Finally, says Pedro Moura-Costa with a sigh of relief, after nearly 15 years of waiting, the carbon market that he always believed would emerge, is here. Once again, he looks set to be the right person, in the right place, at the right time.

Ricardo Bayon is the Managing Editor of the Ecosystem Marketplace. He can be reached at

First published July 6, 2005