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From the Editors

Companies and governments that put a value on the carbon stored in the world’s remaining forests are ramping up results-based finance for those assets, according to Ecosystem Marketplace’s State of Forest Carbon Finance 2015 report, launched last week. 2014 marked a breakout year for forest carbon markets, with buyers paying a record-high $257 million for 34.4 million offsets.

Voluntary demand increased 18% over 2013’s volumes, to 23.7 million tonnes, and voluntary prices recovered to an average of $5.4/tonne. Meanwhile, compliance demand jumped over 200% as buyers in California and Australia collectively purchased 10.6 million tonnes in land-use offsets to meet regulatory obligations, with compliance prices coming in just beneath the going allowance price or set carbon tax.

Offsets from REDD+ (Reducing Emissions from Deforestation and Forest Degradation) were the most commonly transacted project type last year, with voluntary market actors purchasing 16.1 million tonnes from project-level activities. More than 100 forest carbon projects are located in states, provinces, or countries engaged in larger-scale avoided deforestation programs, and many are grappling with how to “nest” into these jurisdictional efforts as more international finance may soon be targeted towards regional-level programs. In climate plans submitted to the United Nations Framework Convention on Climate Change (UNFCCC), 29 developing countries specifically mention that they plan to implement a national REDD+ policy or sell REDD+ offsets – with a portion of their emissions reductions target hinging on this possibility.

“Tropical forest countries are poised to make huge contributions to climate change mitigation by pursuing development pathways that treat standing forests as their greatest asset,” said Forest Trends President and CEO Michael Jenkins. “But they need a strong signal that companies and developed country governments are ready to pay for those assets.”

In additional to the market numbers, the report tracked $219 million committed to forest protection in 2014 in the form of non-market, bilateral payments from the Norwegian and German governments to help reduce tropical deforestation in Brazil and Guyana. At least $1.2 billion in new results-based finance is “on the table” for tropical forest countries in the near future through similar bilateral deals.

The report is available for download here.

The research was made possible by donors: Good Energies Foundation, JPMorgan Chase & Co, and the John D. and Catherine T. MacArthur Foundation; sponsor New Forests; and supporters: Code REDD, the Kinship Foundation, and South Pole Group. Thank you.

There are two upcoming opportunities to learn more about the report findings.

For those based in the Washington, D.C. region,  join us at the World Bank on Wednesday Wednesday November 18th at 3 p.m. for “From Readiness to Performance: Opportunities and Challenges in Financing Forest Protection,” an afternoon of discussion about forest carbon finance, followed by a reception. Presenters from Forest Trends include Ecosystem Marketplace Senior Associate Allie Goldstein and REDDX Senior Associate Brian Schaap, with panelists from the US State Department and the World Bank’s Forest Carbon Partnership (additional panelists TBC). Please email us for more information and to register for the event.

For those not based in the Washington, D.C. region – or who want a deeper dive – join us for an informal webinar presentation on Monday November 16th at noon EST. Report author Allie Goldstein will walk through the major findings of State of Forest Carbon Finance 2015 and respond to questions about the data. This webinar will be geared towards carbon market actors and provide insights into supply and demand dynamics. Register here.

 
   

HERE’S THE DEAL

Riot act

American rock bank Pearl Jam has spent nearly $500,000 on carbon offsets since it began tracking its tour emissions in 2003. Its most recent investments are in REDD+ projects: Conservation International’s Alto Mayo project in Peru and Carbonfund.org’s Valparaiso Amazon Rainforest project in Brazil. Pearl Jam’s investments in these two project will offset emissions from the band’s upcoming Latin America tour this November. Past offset purchases have focused in on the band’s home state of Washington, with a $210,000 payment for 7,000 offsets from an urban forestry project in the Puget Sound. 

Fan mail

Through its GoGreen service, Deutsche Post DHL customers have mailed more than 11 billion items “carbon neutral”, resulting in 650,000 tonnes offset. The company purchases offsets from nine different carbon projects, including a water purification project in Cambodia, an efficient cookstoves project in Lesotho, a wind power project in Nicaragua, and a reforestation project in Panama. In a new pilot initiative in the Ruhr region of Germany, DHL is reinvesting earnings from its GoGreen products into electric vehicles, with a goal of deploying 30 vehicles in Duisburg and Essen over the next few months. The company hopes the “local” component will engage its German customers. 

Costs less than a coffee

Alberta, Canada-based hotel company MasterBUILT recently added a seventh hotel to the EcoStay program, which helps hotels across North America neutralize the carbon emissions of guests through energy efficiency measures and carbon offset purchases. To date, EcoStay has offset more than eight million hotel stays, purchasing 230,000 tonnes in offsets through retailer LivClean. Their portfolio includes an urban forestry project in Montreal, a landfill gas project in New York, and an energy efficiency project at the University of Alberta, among others. Hotel guests pay an extra $2 per night to opt-in to the carbon neutral program. 

PROJECT DEVELOPMENT

The myth of Sun Cocoa

Yaw Kwakye, head of Ghana’s national REDD+ Secretariat, says chocolate farmers in his country often believe – incorrectly – that new hybrids of cocoa thrive better in the sun. As a result, farmers are cutting deeper and deeper into the country’s forests to expand areas of cocoa cultivation. The government created a Climate-Smart Cocoa Working Group that last year submitted an emissions reductions plan to the World Bank’s Forest Carbon Partnership Facility (FCPF). Over 20 years, the REDD+ Secretariat aims to work with 800,000 small farmers as well as the country’s 25 major cocoa buyers to avoid deforestation across 5.9 million hectares. If an official agreement is signed with FCPF’s Carbon Fund, Ghana could earn roughly $50 million for the effort. 

Do it for the bushbabies

The MJUMITA Community Forest REDD+ Project in Tanzania achieved third-party verification for 1,350,000 carbon offsets (over the 30-year life of project) under the Verified Carbon Standard and the Climate Community and Biodiversity (CCB) Standards, according to a press release by auditor SCS Global Services. Almost 10,000 people in eight villages have received REDD+ payments worth a collective 200 million Tanzanian shillings (about USD$93,000). The project was the first to achieve verification under the third edition of the CCB, a revision that aims to facilitate smallholders’ access to carbon finance. Biodiversity benefits include the protection of the endangered Rondo dwarf galago, a species of bushbaby, as well as three endangered plant species.

Finishing touches

California market regulators have issued more than one million tonnes to project developers over the past two weeks ahead of November 2’s end-date for the first compliance period. The bulk of the offsets went to five early action forest projects, while 25% went to ozone depleting substance projects. This brings the total number of offsets issued by the state to 30.4 million to date. Meanwhile, Quebec granted the approval of 11,205 offsets to a landfill gas project, marking the second issuance of offsets in the Canadian province.

POLICY WATCH

Inconvenient math

The United Nations says that if implemented, the climate pledges attributed to all NDMCs (Nationally Determined Mitigation Contributions/Commitments/Components – the newest acronym, replacing “INDCs”) submitted before October 1 represent four gigatonnes in emissions reductions. That’s enough to keep global temperature rise to 2.7 degrees Celsius – an improvement over the 4-5 degree Celsius business-as-usual scenario but less than the 2-degree target of the climate convention. Remarking on this projection, Christiana Figueres, the head of the UNFCCC, said “it is a remarkable step, but it is not enough.” A total of 158 countries representing 90% of global emissions have now submitted NDMCs.

Trees back in, markets maybe

Last month’s newsletter covered the reinsertion of REDD+ into the UNFCCC negotiating text, meaning forest carbon finance is officially part of the discussions in Paris. However, negotiators never got to talking about whether REDD+ finance can flow through market mechanisms, which Bolivia opposes and Brazil has been strategically silent on. Experts have been trying to figure out how much that matters. “It’s not a deal-breaker if markets aren’t explicitly mentioned, because most of the finance will be direct transfers from A to B instead of via a marketplace,” said Fred Stolle of the World Resources Institute (WRI). But Gustavo Silva-Chávez of Forest Trends said that private finance is more likely to flow if the final text is more supportive of markets. 

Setting the stage

China’s National Development and Reform Commission released a draft law of its national emissions trading program set to begin in 2017. Key takeaways from the draft include: the final Emissions Trading System will use free allocation as well as auctioned credits; emitters will be allowed to use domestic offsets (called CCERs), although for what percentage of their compliance obligation is unspecified; and market regulators will establish a price stability reserve to avoid oversupply. South Africa also released its draft carbon tax bill last week, which says its Department of Energy is working on the administrative aspects of its offset program.


CARBON FINANCE

Market appreciation

Governments around the world are estimated to raise $22 billion through various carbon pricing mechanisms in 2015, up 46% from 2014 levels, a Climate Markets and Investment Association report showed. The bulk of the funds came from the European Union’s Emissions Trading System (EU ETS), where credit prices have gone up 22% in the past year. Domestic programs in Britain, France, Quebec and California accounted for most of the remaining non-EU ETS revenue. “Revenues from carbon pricing appear likely to continue to increase around the world, and continuing debate will be needed about how these funds should be best used,” the report stated. 

HUMAN DIMENSION

With peace comes pressure

The Democratic Republic of Congo’s forests store 24 billion tonnes of carbon, making the country the second largest land-based carbon sink in the world after Brazil – and tied with Indonesia. Now that the region has emerged from civil war, the forests are under threat, with several industrial-scale palm oil plantations in development. Wildlife Works’ 300,000-hectare Mai Ndombe REDD+ project, located on a former logging concession, aims to combat deforestation pressures through carbon finance. At REDD+ Talks in Stockholm last week, project manager Jean-Robert Bwangoy spoke about the transition. “I was taught that if you are a strong man, your value is the number of hectares you can cut down,” he said. Now that people can earn money through forest carbon sales, he’s changed his tune. 

NEW RESEARCH

No contest

Securing land rights for communities in Brazil and Guatemala reaps financial benefits about 200 times the costs, according to research by WRI, released last week. WRI believes it is the first working paper to develop a cost-benefit analysis around community land tenure. Over a 20-year period, investing $19 per hectare in Brazil to secure land rights reaps nearly $1,500 in benefits, while in Guatemala, investing $205 per hectare to secure tenure results in almost $2,000 in benefits. For the carbon mitigation benefits, WRI used the U.S. government’s figure for the social cost of carbon: $41 per tonne. 

 

JobS

Senior Program Associate, Public-Private Finance Initiative – Forest Trends

Based in Washington, D.C., the Senior Program Associate will play a leading role in conducting a conservation investment survey with the Ecosystem Marketplace team and work with the Public-Private Finance Initiative to engage financial institutions and commodity companies. The successful candidate will have five or more years of work experience, with a minimum of two years of experience in financial investment, banking, or financial management consulting.

- Read more about the position here

Senior Programme Officer, Forests & Natural Resource Governance – International Union for Conservation of Nature (IUCN)

Based in Kampala, Uganda, the Senior Programme Officer will be responsible for both the administrative and technical management of the Forests and Natural Resources Governance portfolio for IUCN’s Uganda office. The successful candidate will have at least eight years of work experience managing and coordinating projects within the forestry and climate change sector; a master’s degree in natural resource management; and familiarity with the national REDD+ process and associated policies and laws.

- Read more about the position here

Technical Advisor – Gola Rainforest Programme

Based in Sierra Leone, the Technical Advisor will provide the technical and operational support to deliver the objectives of the REDD+ project, including budgeting, implementing work plans, and monitoring and evaluation. The successful candidate will have a strong background in development and natural resource management, be practically minded and passionate about conservation.

- Read more about the position here 

Project Director, Alliance for Sustainable Palm Oil – Winrock International

Based in Jakarta, Indonesia, the Project Director will lead a partnership to reduce Indonesia’s greenhouse gas emissions from oil palm production while improving livelihoods in palm oil producing areas. The successful candidate will have at least 15 years of relevant experience working with stakeholders, including relevant ministries, NGOs, and the private sector, as well as a strong understanding of Indonesian political practices.

- Read more about the position here

Certification Officer – The Gold Standard

Based in Africa or India, the Certification Officer will help manage a portfolio of Gold Standard projects by performing detailed technical reviews of energy and waste projects; providing and coordinating feedback between the Gold Standard Secretariat and project developers; and contributing to the improvement of certification procedures. The successful candidate should have a minimum of five years of experience in a project review or certification role; a bachelor’s degree in an environmental field; and a passion for sustainable development.

- Read more about the position here 

   
   

ABOUT THE ECOSYSTEM MARKETPLACE

Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact info@ecosystemmarketplace.com. 

ABOUT FOREST TRENDS

Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact info@ecosystemmarketplace.com. 

 
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