This Week in Forest Carbon, and Top 10 Themes of 2010

Along with the latest news from the New Year, this weeks Forest Carbon news is taking a last look at 2010.  Ecosystem Marketplace’s team distilled website traffic over the past year, bringing the top 10 themes emerging from forest carbon news.  2010 proved to be a year of major milestones for the world of forest carbon – here is a reminder of the biggest ones.

Along with the latest news from the New Year, this weeks Forest Carbon news is taking a last look at 2010.   Ecosystem Marketplace’s team distilled website traffic over the past year, bringing the top 10 themes emerging from forest carbon news.   2010 proved to be a year of major milestones for the world of forest carbon – here is a reminder of the biggest ones.

NOTE: This article has been reprinted from Ecosystem Marketplace’s Forest Carbon newsletter. You can receive this summary of global news and views from the world of Forest Carbon automatically in your inbox by clicking here.

12 January 2011 | Back from a restful holiday break following the frenzied pace set by the climate negotiations in early December, the Ecosystem Marketplace team sat down and distilled our website traffic over the past year into the top 10 themes that emerged in forest carbon news over 2010 and to keep your eye on in 2011.   Beginning with our first State of the Forest Carbon Markets report in January, 2010 which dramatically revealed a growing forest carbon sector even amidst the exploding financial crisis and global recession, Ecosystem Marketplace was convinced 2010 would be a year for major milestones in the world of forest carbon, and we were not disappointed.

1.   The US Cap-and-Trade Meltdown
The collapse of cap-and-trade in the Senate has left the EPA to move forward with GHG regulations, but will Republicans stand idly by and will anything the EPA puts together be as favorable to forest carbon as the earlier bills were?
 
2.   REDD+’s Time to Shine at the UN
From the climate convention to the biodiversity convention, building from the momentum of an explicit place in the Copenhagen Accord, negotiators meeting around the world laid down the framework for how REDD+ may operate in the future, although many questions remain to be answered.

3.   California Stays in Front of the Pack
California gave the final blessing a landmark cap-and-trade program and the final compliance adoption of the Climate Action Reserve’s forest protocols.   Governors of California, Chiapas, Mexico, and Acre, Brazil took the first step forward to operationalizing the first regime to welcome international REDD offsets.

4.   Standards Set the Mark
From the first forest methodologies for VCS, to the first steps beyond the buffer pool by the American Carbon Registry, the stage is set for a major standardization across the market.   While the sun began to set for the Chicago Climate Exchange, the sun rose in the east with the emergence of China’s Panda Standard.

5.   An Explosion in Project Development
2010 saw a dramatic growth in the number of projects popping up all over the globe.   The Forest Carbon Portal’s Project Inventory tripled over the course of 2010, and multi-million dollar deals between investors, buyers, and project developers were becoming more common.

6.   Emerging National Conservation Strategies
Countries around the world developed innovative new policies to value the services provided by forests and other ecosystems.   From Vietnam to Brazil, and Colombia to Zambia, expect 2011 to be the time where most of these new policies will begin to exert their first meaningful impacts.

7.   Public Pledges Outpace Private Purse for REDD+
As major multi-lateral REDD+ initiatives began to roll with billions in pledges beginning in Copenhagen, the prospect that public-financing for REDD will eclipse private investment for the near future is now old news.   How these funds perform as they begin to disburse the bulk of fast-start finance and how they begin to interact with markets will be major trends to watch over the next year.

8.   Beyond Project Scale Intervention
The calls for national-level accounting, monitoring, and performance for forest-based emissions reductions are now resounding.   In the interim, the concept of “nesting” projects within provincial and other jurisdictional levels for accounting is receiving significant attention and interest.

9.   Growing Pains for the REDD+ Partnership
The 71-country REDD+ Partnership was eventually able to shed its “Interim” moniker, but is still struggling to find confident footing.   Looking forward to 2011, the future is wide open for the Partnership, but will the relatively new organization be able to rise to the challenge?

10.   Growing the Money for US Forest Conservation
A handful of innovative conservation finance programs emerged across the US this year, and Ecosystem Marketplace dug in deep for the details.   From a watershed restoration program in Denver to a health-care connection in Oregon, creative conservationists were busy finding money around the country.

In addition to the latest roundup of the breaking forest carbon news and events from around the world, read more below about these major themes from 2010 and see Ecosystem Marketplace’s coverage devoted across the spectrum in this, the latest issue of Ecosystem Marketplace’s Forest Carbon Newsletter.
 
—The Ecosystem Marketplace Team

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

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News

                                                                     

                                                                             

                                                                                     

                                                                                             

                                                                                             

                                                                                             

Top 10 in 2010

                                                                                             

1.       Cutting Down US Cap-and-Trade

                                                                                             

Back in Copenhagen, President Obama promised some substantial emissions reductions, but was really hoping the US Senate would pick up where the House of Representatives left off after narrowly passing a cap-and-trade bill back in the summer of 2009.   There were clearly some forest-minded folks involved in the writing the Senate version of the climate bill that emerged in 2010, and we were eager to dissect the forest ins and outs, including a couple key new concepts introduced regarding insurance of forest credits.   Alas, it was not meant to be.   The ripple effect from the collapse of federal climate legislation was dramatic, gutting much of the investment fueling the voluntary carbon markets, particularly a significant speculative “pre-compliance” segment, and leaving polluters with a gray cloud hanging over their head as to when and how greenhouse gas controls will be brought about.   The EPA is working its way through regulating GHG emissions, but it’s still way too early to tell what that whole program will eventually look like, or if the new Republican gains in the House and Senate will be willing to accommodate the EPA’s mandate.   And in quite a twisted turn of fate, we were surprised to find a major US ad campaign for including REDD+ in the Senate climate bill was also being used in Brazil as ammunition by national legislators intent on weakening some provisions the country’s progressive Forest Code.   In the end, US federal cap-and-trade met its demise in the Senate.
                                                                                             
                                                                                              Read Trees Fare Well in Latest US Climate Bill
                                                                                              Read Forest Carbon is in the Climate Bill, but How do we Insure it? With Trees!
                                                                                              Read US Senate Leaves Massive Body of Legislation–and Countless Landowners–in the Lurch with Climate Cop-Out
                                                                                              Read Will Brazil Change its Forest Code — and Kill the Amazon?
                                                                                               

                                                                                             

2.       REDD+ Progress in the UN Negotiations

                                                                                             

Back in 2009 the conclusion of the Copenhagen Climate Summit produced little more than a “noted” Copenhagen Accord.   But in terms of forest carbon, the Accord also set the stage for what turned out to be a fairly productive year for REDD+ in the UN Framework Convention on Climate Change.   What’s more,   REDD+ popped up through several meetings of the UN Convention on Biological Diversity, and many negotiators are still trying to figure out ways of hitching together the climate and biodiversity conventions for a new REDD Mechanism.   As climate talks resumed in Mexico at the end of 2010, we found a new call from a wide spectrum of conservationists to recognize the value of mangrove ecosystems, including new text for incorporating them into the UNFCCC REDD+ agreement.   What eventually came out of Cancíºn was a bit of a mixed bag, however.   Negotiators made major progress on REDD+, producing an agreement that lays out a basic framework and commitment to reducing deforestation, but leaving many of the contentious details such as deforestation rate goals, whether markets would play a major role, and how exactly the monitoring, reporting, and verification rules for both carbon and other social and environmental issues get enforced.   All in all, we expect the REDD+ momentum to keep up, and maybe by the time negotiators meet in South Africa in December 2011 we’ll have another round of REDD+ milestones.
                                                                                             
                                                                                              Read What Does Copenhagen Mean for the Private Sector in REDD+?
                                                                                              Read Biodiversity Boosters Hope to Leverage REDD Momentum
                                                                                              Read Conservationists Endorse Plan to Fold Mangroves into REDD+ Talks
                                                                                              Read REDD+ Progresses, LULUCF Regresses in Cancíºn Agreements
                                                                                               

                                                                                             

3.       California Full Speed Ahead

                                                                                             

While cap-and-trade at the US federal level was given the kiss of death, California breathed new life into its embattled climate change program passed into law back in 2006.   In November, a ballot initiative to suspend the landmark cap-and-trade bill, also known as AB32, received an overwhelming rejection by the state’s citizens.   California (still the eighth largest economy in the world) is now set to be the first state in the US to adopt a comprehensive GHG cap-and-trade program, and forest carbon is poised to play a major role.   In a major deal-signing in November, the Governors of California, Chiapas, Mexico, and Acre, Brazil agreed to move forward on a working plan for generating REDD credits that could eventually find their way into the California cap-and-trade scheme.   Closing out the year in December, regulators from the state’s Air Resources Board inked the final architecture for the state’s cap-and-trade plan, including the final compliance-grade seal of approval for forestry protocols from the Climate Action Reserve.
                                                                                             
                                                                                              Read Governors Move on Climate While Presidents Pother
                                                                                              Read New Life for REDD in California Compliance Market
                                                                                              Read On the Blog: California Sees REDD in AB32 Future
                                                                                               

                                                                                             

4.       Milestones for Carbon Standards

                                                                                             

Back in Ecosystem Marketplace’s State of the Voluntary Carbon Markets 2008 report, we donned 2007 as “the year of the standard.”   Witnessing a flourishing of demand for rigorous and broadly applicable standards, the market swung towards supporting a growing set of new offset standards organizations.   In terms of forest carbon, 2010 has surely been the most productive year from all the standards organizations.     Intense interest in “pre-compliance” speculation prior to the collapse of climate legislation in the Senate fueled busy work across US-based standards.   The major milestones we saw this year in the standards arena include:
                                                                                              •       The Voluntary Carbon Standard finally unveiled its first new methodologies for forest carbon projects, putting out five new methodologies by year’s end, and touting the issuance of the first VCS credits to a project in Tanzania.  
                                                                                              •       In California, the Climate Action Reserve forest protocols suffered a formal setback earlier in the year when the Air Resources Board charged with developing the statewide cap-and-trade program withdrew its endorsement of the CAR forestry protocols, but closed out by the end of 2010 with the long-awaited compliance-grade seal of approval when the Board came back around and published new Compliance Protocols adopting the CAR text with minimal revisions in December.  
                                                                                              •       For the Climate Action Reserve, the American Carbon Registry, and CarbonFix, 2010 was also the year for updating existing forestry protocols, with all three organizations rolling out new versions of their forest standards.
                                                                                              •       Although the Chicago Climate Exchange had pioneered the strategy of aggregating small projects to achieve economies of scale years ago, the concept gained widespread acceptance this year across other major standards as well, with guidelines from ACR, CAR, and VCS coming out on the subject.
                                                                                              •       Following a year when the price of its credits hit the floor, the Chicago Climate Exchange finally announced it would be shuttering the doors of its pioneering cap-and-trade program next year.   The offset programs will continue to run, but the continued demand for CCX credits remains shaky.
                                                                                              •       The American Carbon Registry and project developers Finite Carbon announced the launch of a new “risk mitigation product” which takes the first major step towards private insurance schemes to take the place of buffer pools for forest projects.
                                                                                              •       After being launched in Copenhagen in 2009, China’s Panda Standard for voluntary offsets offered new progress, producing guidelines for forestry and other land-use projects, and signing an MOU for it’s first forest project using bamboo reforestation.
                                                                                             
                                                                                              Read VCS Unveils its First Methodology for Generating Carbon Credits by Saving Trees
                                                                                              Read New Methodology Sets Building Blocks for REDD
                                                                                              Read California Moves Carbon Offset Goalposts
                                                                                              Read Moving Beyond the Buffer Pool
                                                                                              Read Chicago Climate Exchange Program Update
                                                                                              Read CarbonFix Outlines Modifications to its Forest Protocol
                                                                                              Read China Poised for Panda Standard Pilot and Sectoral Progress
                                                                                               

                                                                                             

5.       Project Development Boom

                                                                                             

Back in the State of the Forest Carbon Markets 2009 report, we captured just over 200 projects, of which ~70 agreed to having public profiles created in the Forest Carbon Portal Project Inventory.   Over the course of 2010, the Ecosystem Marketplace forest carbon team’s relentless digging has unearthed details of an additional 150 projects around the world.   That’s a tripling of publicly-available project data in the course of one year.   In the news, we also saw major market deals over the year. BNP Paribas, a banking and investment group, signed a US$50 million deal with Wildlife Works to develop a portfolio of REDD projects globally, but with specific purchasing rights from the Kasigau Corridor REDD project in Kenya. German energy provider HEAG Sí¼dhessische Energie AG took a 30% stake in Canadian project developer ERA Carbon Offsets, investing US$3.9 million in a deal that will provide offsets to the German company. On the supply-side, we interviewed Eduard Merger who completed a survey of more than 100 Afforestation/Reforestation project developers which dramatically suggested a sharp dropoff in project development post-2012 if no strong international climate policy emerges. In Brazil, we continued to track the pioneering Suruí­ indigenous who continue pioneering the community-based REDD+ model in the Amazon, also launching the first indigenous carbon fund by year’s end.

                                                                                             

 

                                                                                             

Visit the Forest Carbon Portal Project Inventory.

                                                                                             

Read BNP Paribas and Wildlife Works Ink $50 million REDD Deal

                                                                                             

Read Optimism on Forestry Demand Sparked German Stake in Canadian Developer

                                                                                             

Read Indigenous Leaders Taking REDD Into Their Own Hands

                                                                                             

Read Brazil’s Suruí­ Establish First Indigenous Carbon Fund

                                                                                             

 

                                                                                             

6.       Emerging National Conservation Strategies

                                                                                             

Around the world, some countries were making significant policy shifts regarding forest conservation and capacity-building for carbon markets.   In the state of Acre in the western Amazon, a groundbreaking statewide Payment for Ecosystem Services program was signed into law by Acre’s Governor in November. In Vietnam, the Prime Minister announced the start of the Forest Protection and Development Fund, which will collect funds from the beneficiaries of healthy forests and distribute it among households that are stewards of those forests.   In Colombia, a group of banks, non-profits, and the Ministry of Environment formed a plan to boost Colombia’s presence in the carbon market.   In Zambia, an African Carbon Credit Exchange was being developed in the hopes that it will drive the development of capacity and climate-friendly investment. Meanwhile, countries like Zambia, Kenya, and Tanzania were also racing to develop the continent’s first carbon exchanges.
                                                                                             
                                                                                              Read Brazilian State Lays Foundation for Nature-Based Economy
                                                                                              Read Vietnam Implementing Nationwide Payments for Forest Ecosystem Services
                                                                                              Read New voluntary carbon platform rooted in Colombian forests
                                                                                              Read Zambians Building Carbon Exchange from the Ground up
                                                                                               

                                                                                             

7.       Evolving Markets meet Public Finance

                                                                                             

Many eager onlookers and market observers will be wondering whether the strong performance of the forest carbon sector we observed in the first State of the Forest Carbon Markets report” type=”plain” track=”true” name=”mylink”>State of the Forest Carbon Markets report amidst the crumbling US financial system and ensuing recession back in 2009 will continue.   Beginning in Copenhagen, however, the pledges of what now amounts to more than $4.5B and as much as $10B by some counts for “fast-start” REDD+ financing destined for disbursement within 2-3 years may be the bigger player in the evolving market for REDD+.   The emergence of several bi- and multi-lateral REDD+ initiatives have stepped in to provide upfront funding for capacity building for REDD+ readiness, with pledges dwarfing the flow of private forest carbon finance to date, but the role that markets and other performance-based measures will play remains to be seen.   Will the markets be overshadowed by these public flows of money? Or will these public pledges pave the way for bigger forest carbon markets?

                                                                                             

 

                                                                                             

Ecosystem Marketplace is also now in the final days of preparing for the next round of surveying for the State of the Forest Carbon Markets report covering through the end of 2010, so stay tuned and check your inboxes in the coming month to take your chance to contribute to these groundbreaking reports.
                                                                                             
                                                                                              Read Forest Carbon Markets Likely Grew in 2009 Despite Recession
                                                                                              Read Feeding     the REDD Hydra… with Cash
                                                                                               

                                                                                             

8.       Project Nesting and Jurisdictional REDD+ Accounting

                                                                                             

As major international negotiations on climate change proceed, the issue of what geographic extent is the most appropriate for accounting for, monitoring, and achieving REDD+ emerged as a key new challenge.   International negotiators and government officials often seem keen to move towards national-level accounting schemes, permitting some other forms of “sub-national” or “jurisdictional” as an interim step in that direction.   This concept is now emerging as a critical paradigm for the future of REDD, and the fate of individual forest carbon projects remains uncertain from country to country.   The idea of “nesting” individual projects within province-level or national-level programs remains broadly discussed, but few examples yet exist for where the rubber meets the road.   Over the course of 2010, we covered the nesting plans the Brazilian state of Acre was going through in designing its new statewide PES scheme, and found that Peru was also thinking of moving towards a nested REDD approach, while REDD projects continued starting up on the ground.   The major movements coming from the Governor’s Climate and Forests Taskforce (see California discussion above) will no doubt play a strong role in determining the architecture for nesting in the future.   But the voluntary carbon market is also not planning on sitting this one out.   Both the Climate Action Reserve and the Voluntary Carbon Standard have their sights set on developing a new accounting framework for carbon offset activities using wider jurisdictional boundaries and baselines.   We think this will be a critical discussion to follow over the course of 2011 and beyond.
                                                                                             
                                                                                              Read Setting up Nest: Acre, Brazil, and the Future of REDD
                                                                                              Read Peruvians Hope Nested Approach Today Will Halt Deforestation Tomorrow
                                                                                               

                                                                                             

9.       The REDD+ Partnership

                                                                                             

Although the Copenhagen climate talks set in motion key momentum for launching a REDD+ mechanism, dozens of countries around the world perceived a need to start moving quickly on REDD+ outside the slow-moving UN negotiation tracks.   And so, intending to set-up UN-type REDD+ payments without UN-type bureaucracy, in late May 2010 the creation of a new coalition of what has now grown to 71 countries known as the REDD+ Partnership was announced in Norway.   The first year of life for the fledgling partnership has been far from smooth however, dogged by recurring accusations that stakeholders were not being adequately engaged, and that the Partnership’s own operations were not transparent or organized enough to facilitate a legitimate REDD discussions and consensus.   Coverage on Ecosystem Marketplace and the Forest Carbon Portal followed the Partnership over the course of the year with an open mind, airing voices from all sides of the roiling debates which culminated in Cancíºn.   Following on the meltdown of talks in China in October, the Partnership’s movement towards a Work Program for 2011-2012 proved a contentious undertaking, with the role of monitoring and enforcement of safeguard provisions for social and environmental issues taking center stage.   As the official UN text coming out of Cancíºn still left many open questions, it remains to be seen whether the REDD+ Partnership will successfully be able to fill the gap in 2011.
                                                                                             
                                                                                              Read REDD+ Partnership Co-Chair Responds to Ecosystem Marketplace Coverage
                                                                                              Read Insiders say REDD+ Work Plan was Edited at Last Minute
                                                                                              Read Key Redactions on Safeguards in New Draft of REDD+ Partnership Workplan
                                                                                              Read REDD+ Partnership Talks Stall in Blur of Finger-Pointing
                                                                                              Read Multilateral Interim REDD+ Partnership Established in Oslo
                                                                                               

                                                                                             

10.         Conservation Finance Innovation around the US

                                                                                             

Forest conservation financing has never been this interesting. In 2010 we wrote about a few innovative financing mechanisms proposed all over the U.S. In Denver, Colorado, the city’s water utility, Denver Water, proposed teaming up with the U.S. Forest Service and using water fees to restore and proactively manage 38,000 acres of forest crucial to health of the city’s watershed.   Up in Oregon, we found citizens from the small town of Vernonia reacting positively to a proposal by Regents Blue Cross/Blue Shield and the non-profit Pinchot Institute for Conservation to link the health of forests and forest owners.   According to the proposal forest owners would have access to a health care fund that would be paid into by those seeking to purchase carbon credits. And in California, we covered the innovative case of the Cuyamaca Rancho State Park, the first public lands offset project under the Climate Action Reserve that entered the carbon market to bankroll post-fire restoration work in the face of widespread state budget cuts.   With looming wildfire risks throughout the US West, we think the Cuyamaca model will likely become more prominent as governments continue the rounds of budgetary belt-tightening and are faced with greater expanses of burned land.
                                                                                             
                                                                                              Read Why Denver Spends Water Fees on Trees
                                                                                              Read Does Healthcare Cash Grow on Trees?
                                                                                              Read Emerging from the Ashes: Carbon Finance and Public Forest Restoration

                                                                                             

 

                                                                                             

 

                                                                                             

National Strategy & Capacity

                                                                                             

Hurry Up and Wait for the Logging Moratorium

                                                                                             

The much-anticipated moratorium on forest-clearing concessions in     Indonesia is working through a couple more hiccups.   Originally set as a     pivotal component to the billion-dollar-plus REDD deal with Norway (and     recently, Australia), the specific wording of the moratorium is     emerging as a contentious debate.   A gap now appears to be widening     between the various agencies and ministries within the government, as     two separate drafts of the Presidential Decree required to initiate the     moratorium have been presented for the President’s signature.   Major     differences between the coverage of the “Suspension of New Permits for     Primary Forest and Peatland Conversion” draft from the Ministry of     Forestry and the “Suspension of Services and Issuance of New Permits for     Primary and Secondary Forests and Peatland in Forest Areas and Other     Uses Areas” from the countries REDD+ task-force are apparent even in the     title.   Read about the competing drafts from the Jakarta Globe here and Reuters here.       What’s more, try to mesh these proposals with the recent news that the     Ministry of Forestry is set to give 500,000 hectares in concessions over     “degraded” forests to agriculture and mining sectors revealed in     coverage by the Jakarta Globe here.

                                                                                             

                                                                                              Borneo province chosen for REDD pilot

                                                                                             

Central Kalimantan, one of Indonesia’s largest and richest provinces, was chosen January 1 as a REDD pilot region as part of the $1 billion climate deal with Norway starting in 2014. Kalimantan was selected for its large expanses of peatlands and rainforest which have suffered from high rates of deforestation; there are also already a number of carbon conservation projects in progress in the region. Part of the deal will impose a 2-year national moratorium on new concessions to clear primary forests and peatlands. Read about the REDD pilot region here and here and here for an article in Indonesias Tribun Kaltim (read the translated version here)

                                                                                             

 

                                                                                             

Workshops in Nigeria boost REDD support

                                                                                             

Cross River State is proving that local communities can and will benefit from REDD. In a week long REDD scoping mission, local and REDD officials engaged in a series of meetings around the country, starting in Cross River state, and were encouraged by the pilot progress there. With coordination between local, state and federal agencies and stakeholders in the drafting of program proposals and implementation, REDD becomes a transparent and participatory process. Read about the scoping visit of the UN-REDD Programme into Nigeria and the progress towards REDD+ readiness in Nigeria’s Daily Independent here.

                                                                                             

 

                                                                                             

When Less is More

                                                                                             

Indonesia, often reported as the world’s third largest emitter of     CO2, may not be the greenhouse gas culprit we all thought. A new report,     the Second National Communication to the UN Framework Convention on     Climate Change by Indonesia’s Environment Ministry estimates emissions     between 2000 and 2005 were 1.38 gigatons of carbon dioxide equivalent     (CO2e), less than half the 3.01 gigatons from a World Bank-sponsored     report from a local environmental consultancy in 2007. The new report     will be submitted to the UNFCCC and will likely set the bench-marks for     future discussions of carbon emission reduction targets.   Read more     about the news numbers in the Jakarta Globe here and the Jakarta Post here.

                                                                                             

 

                                                                                             

 

                                                                                             

Methodology & Standards Watch

                                                                                             

Open Calls for VCS Reviewers

                                                                                             

The Voluntary Carbon Standard Association is still inviting applicants for two review teams.   The first call for peer reviewers on a new project type guidelines for Avoided Conversion of (non-forest) Ecosystems (ACE) is open until Janurary 14, 2011.   Learn how to put your name in the hat for peer reviewing the new project type guidelines here.   The second call, for applicants to an Advisory Committee on developing jurisdictional and nested REDD+ criteria and procedures for VCS is open until January 17, 2011.   See the terms of reference for the new initiative here(PDF).

                                                                                             

 

                                                                                             

ACR to Move Credits onto Carbon Trade Exchange  

                                                                                             

This morning, a new deal between the American Carbon Registry and Carbon Trade Exchange (CTX) was announced.   The CTX trading platform will integrate American Carbon Registry’s carbon credits (Emissions Reduction Tons, or ERTs) for spot trading.   Expect to be able to buy and sell ERTs through CTX by the end of January.   Read the press release from CTX

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