Bright REDD Spot in Otherwise Dismal Copenhagen Accord

“We recognize the crucial role of reducing emission from deforestation and forest degradation and the need to enhance removals of greenhouse gas emission by forests and agree on the need to provide positive incentives to such actions through the immediate establishment of a mechanism including REDD-plus, to enable the mobilization of financial resources from developed countries.”

19 December   2009 | COPENHAGEN | That’s the good news on REDD from the otherwise disappointing Copenhagen Accord, which was recognized in the wee hours of Saturday morning by delegates to COP 15 in Copenhagen after being put forward by the US, China, India and South Africa and supported by the Coalition of Rainforest Nations but shunned by many island states and African nations.

US President Barack Obama framed the deal as a step towards building a bridge between the developed and developing worlds, and EU President José Barroso complained that the G-77 was placing too much emphasis on money and not enough on mitigation results.   At one point, he said that the EU had offered to reduce emissions by 80% by 2050 if the developing world came on board, but the offer was shot down.

The Accord does not carry the weight of a Protocol, but rather hopes to act as a stepping stone to a meeting next year in Mexico City, Mexico.

The specific REDD policy text has not yet been posted in electronic form, but the methodological text has been posted and looks to be final.

Negotiators on the policy side say they’ve come close to resolving the debate over national vs. sub-national accounting – specifically, in the relevant text, they have removed the brackets around “national” accounting but kept them around “sub-national”, and have removed the “s” from references to national emissions levels in the paragraph on accounting.

The most recent text I saw, which was around 2am Saturday morning and probably pretty close to being done, failed to include two provisions that other sources had told me would be included – namely, a specific reference to deforestation targets, and a specific reference to private-sector financing mechanisms – although the latter is between the lines throughout the text.

The US apparently managed to have the word “development” inserted into the section on technology transfer, so it now reads “technology development and transfer”.  

If a big agreement is reached in Mexico, the REDD text will suddenly burst to life within that.  

 

 

 

Carbon Offsetting: the Frequently Asked Questions

This story has been adapted and condensed from a piece we originally ran in 2017.

8 October 2019 | So, Greta Thunberg got to you, and you’ve decided to reduce your carbon footprint by going vegan and riding your bike as much as possible. Good for you! But what about those emissions you can’t eliminate? Maybe you have to drive to work, or maybe you have to fly to meetings.

You can offset your emissions by purchasing carbon credits, which are generated by reducing emissions elsewhere – by, say, planting trees or saving endangered forest, or building giant wind farms in developing countries. All legitimate offsets conform to one carbon standard or another, and all follow the same basic rules of carbon accounting, which have evolved over decades of trial, error, and adjustment. Here are some of the most commonly-asked questions about carbon accounting.

It’s very much a work in progress, and I’ll make changes to it as people suggest them. So, if you’re an expert who sees errors, e-mail me at szwick@forest-trends.org. If you’re a novice who finds parts of this confusing, do the same. For now, here it is:

How do I Calculate my Carbon Footprint?

You can use scores of sites to calculate your greenhouse gas emissions, and all are self-explanatory. I recommend CarbonFootprint.com because it’s not trying to sell anything. As far as I know, all footprint calculators use the same formulas.

Where do I Buy Carbon Offsets?

I’ve found a few platforms that provide multiple ways to buy offsets, and am listing them at the end of this piece because I wanted to explain a few things first. Feel free to scroll to the Buyer’s Guide at the end. You can always scroll back up if something isn’t clear.

What are Greenhouse Gasses?

We all know the basics: greenhouse gasses float around in the air and cause the atmosphere to act like a “hothouse”, as Swedish scientist Svante Arrhenius called it when he identified the phenomenon back in the 1800s. (Yes, it’s been that long, and Spencer Weart’s 2003 book “The Discover of Global Warming” told the tale quite well 15 years ago.)

Greenhouse gasses work by reflecting some of the sun’s heat back out into space but trapping more of it down here with us, along with heat coming from the Earth’s core. We need greenhouse gasses to prevent Earth from turning into an ice ball, but too much greenhouse gas will cook us.

Some greenhouse gasses – like carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) – existed before we came along, but our activities are increasing them. Others – like the perfluorocarbons (PFCs), the hydrofluorocarbons (HFCs), and sulphur hexafluoride (SF6) – are our own contribution to the mess.

If There are so Many GHGs, why do we Talk of a “Carbon” Footprint?

Mostly because carbon dioxide is the greenhouse gas that we humans generate the most of, thanks to the fossil fuels we burn and the forests we chop. It’s also a benchmark for the other greenhouse gasses, but not a perfect one.

Remember your high-school biology? Living forests breathe in both carbon dioxide and nitrous oxide, and they breathe out oxygen, while keeping most of the carbon for themselves and injecting most of the nitrogen into the soil, where it acts as fertilizer. Carbon, therefore, concentrates in plants and animals, and it becomes the main ingredient of fossil fuels like coal and oil after those beings die and ferment.

We release carbon dioxide by burning fossil fuels, and we release methane and nitrous oxide by draining peat bogs, raising cows, and spreading nitrogen-based fertilizer, among other activities.

What do you Mean by “a Benchmark for the Other Greenhouse Gasses”?

Each of these greenhouse gasses behaves a little differently. Methane, for example, traps about 100-times more heat than carbon dioxide does, but it also disintegrates more quickly. Over a period of 100 years, methane is “only” 25-times as bad as carbon dioxide, but over 20 years, it’s 72-times as bad. On top of that, rising temperatures will force our natural systems to release more and more methane – so a little warming now could mean a lot more later.

Scientists managed to simplify the mess – albeit imperfectly – by coming up with something called “CO2e”, which stands for “Carbon Dioxide Equivalent” and acts as a standardized measurement of greenhouse gases. It works by first determining how many times worse than carbon dioxide a given greenhouse gas is over the next century, and using that as the multiplier.

Because methane is 25-times worse than carbon dioxide over 100 years, for example, its multiplier is 25; but many environmentalists argue it should be 72, because the next 20 years are so critical. For carbon accounting purposes, that means you have to buy 25 metric tons of carbon offsets, each representing one metric ton of CO2e, to generate enough emission-reductions to offset one ton of methane emissions. You can also triple that and buy 72 carbon offsets, and some companies are, in fact, doing so. As an individual, however, methane is hard to calculate, which is one reason we need companies to reduce their emissions – preferably by fixing their processes, but also by offsetting those emissions they can’t reduce themselves.

Nitrous oxide’s multiplier, by the way, is 298, and Sulphur hexafluoride’s is a staggering 22,800. Between them are a wide range, which you’ll find here.

Is “Carbon Price” the Same as “Social Cost of Carbon”?

No. The “social cost of carbon” is the theoretical cost to society of every tC2Oe emitted, and most people peg it around $100 per ton.

The “price” is what people pay for a one-ton emission reduction, and they can do so either voluntarily, or, if they are a regulated company, under a cap-and-trade program like California’s. Be aware that compliance programs are a bit more complex, because some prices are set as taxes, while other prices are determined through bidding for allowances, which are issued by the government, and still others are determined through buying and selling offsets. Most cap-and-trade programs are a hybrid of all three.

Why are Prices so Different?

Now we’re getting into the meat of this issue. At Ecosystem Marketplace, we track voluntary prices, and we’ve found them from lower than a penny per ton of C2Oe (often abbreviated as “tC2Oe”) for offsets from the now-defunct Chicago Climate Exchange to higher than $120 per ton for Japan’s “J-VER” credits.

Some of the cheapest offsets are no longer being produced because buyers rejected them. One type, for example, worked by reducing man-made industrial gasses, which is good, but did so by going into developing countries and simply adding catalyzers that burned away the gas – a practice that was mandatory in developed countries, and that arguably rewarded bad actors who simply stopped being horrible. (For details, see this EU press release).

Other project types, like those generated by building hydropower plants, are cheap because buyers don’t like the fact that hydropower plants often force poor people to move (and, it turns out, may be emitting more methane than previously believed because of the plants that rot in the reservoirs).

On the flip side, people in developed countries like Japan and the United States often prefer buying offsets generated closer to home, and they’re more expensive to generate than those in developing countries.

For the most part, the actual emission-reductions are uniform across standards, because they use the same basic science. They differ in the way they treat “co-benefits” – or how they impact indigenous people and biodiversity – as you can see by reading the 2012 article “Carbon Offset Prices Vary Widely By Standard And Project Type”.

How do Standards Work?

They work by creating frameworks within which carbon offsets can be developed and then overseeing the process through which the offsets are created, tracked, and sold.

The Ecosystem Marketplace State of Voluntary Carbon Markets reports track almost 20 standards, but they’ve each evolved similar modus operandi: first, someone (usually a project developer or environmental NGO) has to create a “methodology” for a certain type of offset, such as ones generated by saving peat forests. A methodology is a process for generating offsets that are real, measurable, verifiable, and additional. While most of those terms are self-explanatory, “additional” means that the payment actually caused the emission-reduction to take place, or that the project would not be economically viable without the carbon payments. A company that saves a ton of money by becoming more energy-efficient will, therefore, not be able to earn carbon offsets unless it can prove the offsets made the project possible, and even they would only earn offsets for a small percentage of their overall reductions. Once a company creates a methodology, it runs it through a gauntlet of scientists and carbon accountants who try to shoot holes in it. Only after the methodology survives this process is it recognized under a given standard, but there is some debate over the additionality of certain project types.

But it’s not over yet: once a methodology exists, a project developer has to design a project within the methodology’s guidelines, and this specific project design also goes through a rigorous process of peer review. If approved, the project is “validated”. Then, to sell offsets, it’s “verified” by outside auditors who make sure it’s doing what it’s supposed to do.

Any offsets that are verified are then deposited in a registry, which is like a clearinghouse tracks offsets so the same one doesn’t get sold twice. When you buy an offset, it’s “retired”, meaning it can never be sold again.

Almost 90 percent of all offsets are certified under one standard or another, according to our most recent “State of the Voluntary Carbon Markets” report.

One standard that’s not listed on the Rainforest Alliance site is the Clean Development Mechanism, which was launched by the United Nations to help companies meet their obligations under the Kyoto Protocol. Though created for companies under cap-and-trade, the offsets are available for anyone who buys them.

What are “Project Types”?

Project “type” refers to the technology that reduces emissions: are you paying to build wind-farms? Or are you paying to plant trees?

Where Can I Buy?

There are plenty of places to buy, and I certainly haven’t seen them all. Having said that, I wanted to start with two that I know and trust, as well as one that offers left over credits from the Kyoto Protocol’s Clean Development Mechanism. I also encourage people to send in recommendations, and we’ll review them and expand this list.CoolEffect

Cool Effect launched last year, and we’ll be profiling them soon. They focus on projects that reduce emissions by helping farmers recycle their methane (turning “poo into power“, as one project description puts it) or switch to clean-burning stoves. All projects are certified to the highest standards, and the group also adds their own filters. What’s more, they provide detailed project descriptions in clear language, as well as monthly updates on project developments, and 90 percent of all the money goes to the project developers. This is the most user-friendly and educational site I’ve seen so far.

StandforTreesLogo

When I offset my own emissions, I use a site called Stand for Trees, which has aggregated offsets from several projects I’ve written about over the years. I can’t say they’re better than others, but it just happens that several projects I’ve written about ended up on the site. Offsets go for $10 per ton, and the project developers get $7 of that.

CarbonNeutralNow

Another option is to buy offsets from a portal that the United Nations created to sell CDM offsets. It’s called “Go Climate Neutral Now”, and it categorizes projects by type, which are pretty self-explanatory. All projects are certified under the Kyoto Protocol’s Clean Development Mechanism, but one of them – specifically #5461 (the Fatima N20 Abatement Project) is an industrial gas project that did legitimately reduce emissions, but did so by just installing a catalyzer that breaks the gas into inert substances, an action that is mandatory in most parts of the world.

What’s Wrong with Cheap Offsets?

I’ll close on a personal opinion of mine, but want to first acknowledge that there is an argument for buying the cheapest offsets: if everybody on the planet decided to go carbon-neutral, the demand will go through the roof. The cheap ones will get bough up, driving money into the most efficient emission-reductions. Then the price will rise, driving money into more expensive technologies.

On the other hand, right now most project developers are hurting. They took a lot of risk to generate these emission-reductions, and I believe that should be rewarded. Plus, if enough of us buy more expensive offsets, we send a price signal to other project developers.

I’ve got friends who buy the cheap offsets, but they buy multiples of what they need to offset their emissions.

In the end, offsetting is just one tool among many, and we ultimately have to reduce our own emissions. Ecosystem Marketplace has found, however, that offsetting is a kind of “gateway strategy” for more sophisticated strategies, and the act of offsetting forces us all to become more aware of our emissions.

Green Goal: Soccer Enters the Carbon Markets

Organizers of the World Cup Soccer tournament are looking to a voluntary 100,000-ton carbon offset agreement to help them achieve their "Green Goal" for the world's most-watched sporting event. The Ecosystem Marketplace gets the details. Martin Cames says he wasn't exactly panicking on the eve of the United Nations Climate Change Conference last November, but he wasn't toasting the return of Eden, either. "We needed to find a Gold Standard project in South Africa to offset 65,000 tons of carbon," he recalls, "and we needed it fast." Cames' employer, a German non-governmental organization (NGO) called the Ökoinstitut (Ecology Institute), had persuaded both the German Soccer Federation (DSF) and soccer's world governing body, the Federation Internationale de Football Association (FIFA), to adopt an ambitious plan to make Germany's 2006 World Cup the most environment-friendly prolonged sporting event in modern history. They had a war chest fortified with backing from the DSF, the German government, the German Environment Foundation (Bundesstiftung Umwelt), and some of the blue ribbon companies that had signed on as official World Cup sponsors; but the lion's share was coming from FIFA itself. They also had a catchy name: the "Green Goal", a play on soccer's sudden-death overtime "golden goal". All they lacked was a way to achieve one of their most important objectives – namely, offsetting an estimated 100,000 tons of additional carbon emissions generated by shuffling millions of soccer fans around the country. Although official figures are a closely-guarded secret, the budget for carbon neutrality is estimated at one million euros, half of which was raised at a charity soccer match for victims of the 2004 South East Asian Tsunami. That comes to an average price of ten euros per ton of carbon offset – roughly 1/3 the going rate for allowances on the European Union's Emissions Trading Scheme (EU-ETS), but well within striking distance of the $15 per ton carbon regularly traded in the European voluntary carbon markets.

Going for Gold

Climate neutrality is important to the "Green Goal" organizers because it was one of the key selling points of the initiative to sponsors, organizers, and even other NGOs – many of which are skeptical of market-based solutions to environmental problems. That meant that whatever the Green Goal did on climate, it had to be well above the stench of greenwash. "We felt we were launching a project that would set the standard for all World Cups to come," says Christian Hochfeld, the Ökoinstitut project manager who spearheaded the Green Goal initiative. "We decided to look for projects in the developing world, and we wanted them to meet the highest standards out there – the CDM Gold Standard." The Gold Standard was developed by WWF and is administered by the Basel Agency for Sustainable Energy (BASE). It sets an independently-audited, globally applicable best practice methodology for carbon offset projects. The criteria are detailed, stringent, and difficult to achieve. "I was against it," laughs Sascha Lafeld, managing director of Dresdner Allianz spin-off 3C Climate Change Consulting GmbH in Frankfurt. He'd contacted Ökoinstitut three years ago, after first hearing of the project. "They gave me this list of criteria that I figured would be too difficult – not to mention expensive – to implement." Despite these misgivings, he took on the task of certifying that Ökoinstitut's projects reduce global carbon emissions by an amount equal to the increase generated by added traffic in Germany. As the tournament nears, he's acting as an agent for FIFA, buying the emission reduction certificates on their behalf. The first project came easy. "We had set our sights on implementing one project in a region impacted by the tsunami," Hochfeld says. "Coincidentally, a women's organization in Tamil Nadu, India – in the tsunami region – had gone to BASE looking for financing on a project to renovate houses and villages destroyed in the tsunami. BASE sent the women to us." Although the emissions reduction purchase agreement (ERPA) has yet to be finalized, the shape of the project is clear. "We will buy small biogas plants – either 850 or, if the scaling effect proves worthwhile, 1000," says Lafeld. "Either way, the project will, at the very least, provide cooking for 1,000 houses, offsetting roughly 35,000 tons of carbon emissions over the next 30 years." And at 500,000 euros, its cost fits the amount budgeted for tsunami aid. Unfortunately, the project achieves just 35% of their targeted reduction, with a price per ton estimated at between 13 and 14 euros. Still, Lafeld says it's worth it: "One reason is that the carbon component covers 100% of the cost of technology, which means the entire project is financed through the certificates. T hat's a huge benefit, because certificates usually cover just five to 15% of a project's cost." "This project met Gold Standard criteria for transparency, accountability, and additionality – which is a project's ability to keep on giving," says Hochfeld. "A baseline analysis showed that implementing the project would generate quantifiable environmental benefits, because diesel, kerosene, and wood-burning stoves would be replaced by climate-neutral biomass power." And the project is also stimulating the local economy. "These aren't high-tech gizmos imported from Germany," says Hochfeld. "They're the simplest type of device, manufactured locally." "Approximately half of the payment is up front and the rest is upon delivery," explains Lafeld. "We define delivery as presenting a verification report that the intended reduction has been realized." In addition to auditing the projects and negotiating on FIFA's behalf, 3C adds value by reducing risks. "In the ERPA, we add an article that states that if the project developer cannot deliver, he guarantees that he delivers the same amount of comparable credits from another project," Lafeld says. "But in this case, because the up-front that we are paying in is so high, we are also negotiating with an insurer for an upfront payment insurance in case the project blows up. This adds between 6% and 10% to the reduction credit price, but at least we're covered." While the India project was progressing better than planned, however, the other leg was floundering. "We'd set our sights on South Africa, because the next World Cup is slated to take place there in 2010," Hochfeld says. "But there was a problem."

A Hot Commodity

"All the South African projects were sold out," Cames recalls. The Group of Eight Industrialized Nations (G8) had just wrapped up a carbon-neutral summit in Gleneagles, Scotland, and the summit achieved carbon emission neutrality by buying up all certificates on the first-ever CDM Gold Standard project near Cape Town, South Africa, as part of Tony Blair's pledge of support to the continent. The Ökoinstitut had ruled out buying carbon allowance credits on the EU-ETS, which would have enabled them to pay for their pollution by purchasing allowances out of the national caps allotted to European Union countries under the terms of the Kyoto Protocol. "There were several reasons for not going that route," says Lafeld. "First, carbon credit allowances on the EEX [one of the markets trading EU carbon allowances, EUAs] are currently trading at 27 euros per ton, which would have cost nearly three million euros to offset." Another reason: you don't want to make enemies. "The allowances trading on EEX exist to enable companies to come into compliance with statutory limits," says Lafeld. "If we bought them to comply with a voluntary reduction program, we'd be adding to the scarcity and driving up prices." And a third reason: marketing. "It's more attractive to have a real emissions reduction project you can point to, like building biomass generators in India, than it is to buy credits on some exchange," he says. So, why not fund forestry projects? After all, trees have been touted as ideal carbon-capturing machines – so-called "carbon sinks" – and who doesn't love trees? "I have no problem with trees, but planting them as carbon sinks doesn't get at the root of the problem, if you'll forgive the pun," says Renat Heuberger, a broker for MyClimate, a Switzerland-base NGO and environmental services provider. "We argue in favor of reduction credits, which come in the form of certificates that prove you have cut off emissions before they got into the air, as opposed to allowance credits, which say it's OK to make a problem as long as you also make allowances for correcting it later." Then, there's the so-called "scientific" argument: "By planting trees, you don't offset carbon emissions," he says. "You just store them, and as soon as the tree is harvested, the co2 is out in the atmosphere again – unless you can prove it went into a building or something, in which case it's there until the building is removed." And that brings up the third problem: accounting. "If we implement a wind farm, then every second it runs, you are offsetting co2," says Heuberger. "But you can't really account for forestry – and you aren't really given CERs (Certified Emission Reduction credits), but rather temporary CERs – so-called t-CERs [one of the official structures established by the Kyoto Protocol's Clean Development Mechanism (CDM) to deal with forestry carbon]." Lafeld agrees – to a point. "Using forestry to offset carbon emissions is an idea whose time isn't here yet," he says, "but it will definitely come – both in voluntary programs and in the international climate policy negotiations." And that brings up the biggest negative of all: forestry projects are not recognized by Gold Standard. By late November, however, with no South African Gold Standard projects in sight, forestry didn't seem like such a bad idea. "We were drawing blanks on the eve of Montreal," recalls Cames, referring to the November-December United Nations Climate Change Conference in the Canadian city. He'd e-mailed perhaps one hundred other participants before hitting the event, and arranged to meet scores of people at side events there. One of those people was MyClimate's Heuberger, who presented a portfolio of South Africa projects. "We're a non-profit foundation with a for-profit section," Heuberger explains. "I work for the for-profit section, and my job, in part, is to buy projects as cheaply as I can and sell them as high as I can." The section makes money for the foundation by acting both as brokers, traders, and project managers of Gold Standard endeavors. "As brokers, we find projects that have fixed prices and then go out and find buyers; while as traders, we try to buy projects low and sell them high." As project managers, they provide audits and quality assurance. Cames came back from Montreal with six projects, two of which the committee dropped because baseline analyses indicated the world wouldn't lose much in the way of environmental functionality if the projects weren't implemented. Another was dropped because certain numbers just didn't add up. "Some of these groups are trying to sell the same project three or four times," says Hochfeld. They've now whittled it down to three projects, two of which had been presented by Heuberger, who is haggling on behalf of the projects, while Lafeld is haggling on behalf of FIFA. Two of the projects are renewable energy efforts similar to Tamil Nadu, and the third is a wind project. Beyond that, details will remain scarce until the deal is hammered out. "We're not sure which we'll ultimately end up doing, or if we're doing a combination of them," says Hochfeld. Even sponsors are laying low. Of course, you can guess at who will be tacking their name to Green Goal, since only companies recognized as official World Cup sponsors can do so, but the plan is to go public with a coordinated PR blitz once the details are all pinned down – probably in early March. The only company to openly tout its participation so far is Deutsche Telekom. Hochfeld says the city of Vancouver is monitoring the project, in the hope of finding a template for the 2012 Olympics. He's also gotten strong interest from several major sporting organizations, including the Union of European Football Associations (UEFA), which sponsors European Champion's League soccer. Clearly, Germany's "Green Goal" will set carbon neutrality precedents for dozens of sporting events to come, so Hochfeld and Cames want to make sure they get things right. They are keenly aware that their work needs to "score" on all fronts: economic, environmental, and social. Additionally, any and all deals that are signed as part of the initiative are likely to be closely scrutinized, not just by skeptical environmentalists and the climate change community, but also by potential sponsors of future events, as well as potential sellers of future projects. But this does not bother Hochfeld and Cames; indeed, it is what they want. They want to both set a high bar for 2010 World Cup in South Africa, at the same time that they provide the organizers of that event with the tools they need to meet – and perhaps even surpass – any and all precedents set this year. So, while they may not be panicking, neither are they totally stress-free. Perhaps they will rest once the last game of this carbon-neutral World Cup draws to a close later this summer… Perhaps. Steve Zwick is a free-lance journalist and Editor-at-Large of Futures Magazine. He can be reached at Steve.Zwick@gmail.com. First published: February 16, 2006

Documents Back Nature Conservancy Over BC Auditor General On Darkwoods

12 April 2013 | Christian Schadendorf says he was taken aback when he read “An Audit of Carbon-Neutral Government”, the provincial Auditor General‘s (AG) much-ballyhooed take-down of the Pacific Carbon Trust (PCT), a state-owned enterprise that buys carbon offsets in support of the province’s Carbon Neutral Government program.

Especially surprising was the report’s assessment of the Nature Conservancy of Canada’s (NCC) Darkwoods Forest Carbon Project, a massive conservation effort funded in part by carbon credits that NCC generated by saving trees from “liquidation logging”, a term NCC had created to describe the practice of harvesting all mature timber on a property as quickly as the market can absorb it.

“(W)e found limited support for a ‘liquidation logger’ scenario,” the AG’s report said. “No such companies bid on the property, and it was widely reported at the time of sale that the owner’s preference was to sell to a buyer who would appreciate or maintain the area’s forest and wildlife values.”

The owner was Duke Carl von Wuerttemberg, and Schadendorf was the Duke’s right-hand man in that sale. Contrary to what the report said, Schadendorf had received formal letters of interest from several bidders whose practices would have qualified as liquidation logging, but NCC swooped in with a contract at the asking price before the others could be finalized (a process we will explore in detail later in this series).

“I was surprised to read that assessment in the AG’s report,” he says. “We had calls from several timberland buyers who would qualify as ‘liquidation loggers’, but NCC got there first.”

He wondered why the AG had relied on the news media to characterize the terms of sale even though one of its auditors had interviewed him personally, and he suspected the reference to “widely reported” knowledge meant items like this:

The duke laid down a tough list of conditions for the sale. “No speculators, developers or timber cutters needed to apply,” said Schadendorf. “We wanted someone who could appreciate and maintain the unique beauty of the forest and its wildlife riches.”

Schadendorf doesn’t dispute his own quote, but says the first sentence, which is not part of the quote, overstated things a bit – an error that seemed harmless enough at the time.

“Yes, we preferred a buyer who would maintain the unique beauty of the forest,” he says. “But there was no restriction on who would be eligible to bid or not, and we wanted full fair market value.”

That reality was also “widely reported”, albeit not “at the time of sale” in Canadian Geographic (a publication with a long lead time and the ability to double-check stories without the pressure of a daily deadline):

The Duke sought a buyer who would treat the land with respect, but he also wanted fair market value for a property valued at around $100 million. The usual suspects were interested: forestry companies and land developers that would inevitably strip the timber value, then subdivide the hell out of the place.

Schadendorf says he’d have gladly clarified the point for auditors, too, if they had asked him – but they didn’t. And he’s not the only person with intimate knowledge of the transaction or expertise in the timber business whose evidence was ignored by auditors over the course of their 18-month investigation. In just the two weeks since the report came out, I’ve contacted nearly two dozen easily-identifiable sources – from respected timber economists and carbon practitioners to investors who bid on the property – and only a handful say they heard from the auditors, while so far none who’ve commented say they were taken seriously.

Rather than seek out new information, the auditors seem to have fixated on anything that supported their “findings” – be it a stray paraphrase, a sentence in a newsletter, an outlier transaction, or a very narrow definition of a word with wider meaning – and ignored the vast body of evidence in front of them.

Take, for example, their assertion that NCC didn’t consider carbon finance until after purchasing the property.

“For the NCC, offsets were not a critical factor in the decision to acquire the Darkwoods property,” they wrote. “A carbon offsets feasibility study was not completed until January 2009. The NCC did not approach the Pacific Carbon Trust about offsets until late 2009.”

The last two sentences are correct, but they don’t in any way support the first – as lead auditor Morris Sydor himself conceded during our interviews – because the question isn’t when NCC conducted their formal study or approached the potential buyer, but whether they factored carbon offsetting into their finance plan before buying the property.

“The technical requirement is that you’re looking at legal documents, board minutes, etc,” said Sydor. “If you go back to that period when they purchased the property, there’s nothing publicly available that (indicates) they were going to need offsets to go ahead with this.”

Well, yes, there was nothing “publicly available”, but there was plenty of evidence that NCC was “going to need offsets to go ahead with this.” In fact, NCC’s Director of Land Securement, Tom Swann, sent me two internal memos and one external letter that clearly showed the Conservancy was not only considering carbon credits but actively looking for partners to buy them, and this was more than a year before the purchase (see “The Additionality Paper Trail”, below). I then asked Sydor – a cordial man with an almost encyclopedic knowledge of the facts related to Darkwoods – if he had reviewed these documents.

“They had referred to these documents during our meeting,” he said, “but I was not provided copies.”

Did NCC withhold them? No. The auditors simply didn’t ask.

Then there’s the issue of “regulatory surplus”, which basically says you can’t earn carbon credits just for doing something that the law already requires. The auditors point out – rightly – that NCC used an “Ecological Gift” as part of its financing mix to purchase the property. Once NCC accepted that gift, they were obligated to preserve the land. The report alludes to the gift several times, implying that the gift means that the property was already protected when NCC bought it, when in fact the property became protected because NCC purchased it.

“We also found that the NCC’s potential harvesting activities are significantly constrained by a legal obligation to conserve the land, thereby limiting the baseline options available to the NCC,” the report states – a clear implication that the gift meant the property failed the regulatory surplus test. But when I asked Sydor why he said the report didn’t meet the regulatory surplus test, he silenced me by saying, “We don’t have anything like that in our report.”

I went back and read it again, and he was right – nowhere does the report explicitly say that Darkwoods fails the regulatory surplus test, but it certainly implies it. Page 24 has a sidebar explaining the Ecological Gifts Program, and a sentence – in bold letters – stating, “The Nature Conservancy of Canada had a legal obligation to conserve the property.” They even created an elaborate and misleading timeline that showed when when NCC carried out the property appraisal for the Ecological Gifts Program (August 2007) but makes no reference to earlier efforts to secure carbon finance.

It goes on and on about the program and the obligations that NCC assumes for using the gift to fund its purchase, but nowhere does it explicitly state that there was a pre-existing law – just as nowhere does it really explain the gift’s role in the financing package.

Who Are the Sources?

Then there is the question of sourcing. The document cites only one academic source – an agricultural economist named G Cornelis van Kooten, whose self-described mission includes supporting an effort “to refute the results of computer models that attribute anthropogenic emissions of CO2 to be the leading factor in causing catastrophic global warming.” He’d written a paper critical of the Darkwoods deal – albeit one that was neither published nor peer-reviewed – so it certainly makes sense to contact him. But to make him (or anyone for that matter) the only cited source in the whole paper?

A project like this normally brings in paid consultants who are eager to get their names on the final product, but this one is radioactive. None of the paid consultants seem to want their names on it, and the only two I know by name say they quit. The most recent is Canadian engineering consultancy Stantec, which was retained last April.

“We were not provided with the opportunity to, and we did not, review or provide any comments on the draft or final OAG Report and as such, resigned from our role as an expert advisor,” said Daniel Hegg, the Discipline Lead for Stantec Climate Services, in an e-mail.

That sounds a lot like Stewart Elgie, the associate director of the University of Ottawa’s Institute of the Environment who also resigned after being frozen out of the process.

“I will simply say that I have not been shown or reviewed any of the BCAG’s draft reports for the past 7 months,” he wrote on March 23, 2013, in a letter to PCT. “Before that time, the materials I did review indicated that the audit findings were heading in a direction that was inconsistent with the expert advice I provided in several major areas, particularly concerning the Darkwoods project.”

I urge anyone who did advise them to contact me.

The Baseline Brouhaha (Again)

Then there’s the auditor’s critique of the project baseline, which is the foundation on which all carbon projects are constructed. It represents the consensus agreement on what would probably have happened to the property if NCC hadn’t stepped in to purchase it – a question that we can only answer by looking at other potential bidders and their expected rate of return (See BC And The Baseline Brouhaha: Dissecting The Darkwoods Documents for a more detailed introduction). Sydor and NCC offered widely differing views on this, but NCC backed their views up with reams of data and scores of experts. Sydor offered nothing.

In my interviews with timberland consultants – both those referred by NCC and those I found randomly on the internet – it quickly became apparent that Sydor was basing his analysis on a different expected rate of return than the one that timber analysts I kept running into were using. This matters, as we’ll see in our next installment, because it shows what a commercial buyer would do with the land. Sydor insisted that his data came from several unnamed experts – but he refused to connect me with any of them.

Keep in mind, these are experts who earn a living providing their professional opinions, and not whistleblowers with inside information of wrong-doing. To have one or two off-the-record sources is understandable, but to have none on the record – especially for a report like this – is unheard of.

Finally, after much prodding, Sydor offered an article from 2007 entitled “Rates of Return for Investments in Timberlands – How Low Can You Go?”. It had been written by a team of analysts at Cortex Consultants, but wasn’t an overview of market behavior. Instead, it was a warning to customers that tough times may lay ahead. Indeed, while it asked the question of how low rates could go, it never really answered it. When I e-mailed Cortex, the authors of that report seemed horrified to learn that this letter might have been used to support a major audit.

“This little paper was definitely not meant as an (even pseudo-) academic paper on the issue,” said one, speaking on condition of anonymity.

Of course, Sydor never actually says he used the paper as one of his sources.

“I’ve provided one of the articles that passed our way during the audit,” he said in the e-mail accompanying the link.   “It shows that timber returns were high in the 1990s but had dropped so much that returns of 5% to 6% were not unrealistic at the time of the Darkwoods sale.” (We will explore this in more detail later in the series.)

It just passed his way? What does that mean? Did he dig any further? Did he contact the authors? Who knows? And why didn’t he talk to other people who showed an interest in the property?

Schadendorf won’t name the bidders, but I have found two through other channels. One is Jack Julseth of Three Point Properties Ltd. He says he sent a formal letter of interest to Schadendorf, only to learn that NCC had the property “under contract”.

“My group was definitely interested in pursuing the opportunity and at the time had the capacity to do so,” he wrote in an e-mail to NCC. “If my group had been the successful bidder and followed through with a purchase, our intentions at the time were to create a managed forest, to initiate an appropriate and sustainable logging operation, and to subdivide and develop the land – as appropriate – to realize its highest and best use.”

When I asked him what that highest and best use might be, he said that he would have been looking to develop cottages and vacation homes – a scenario that NCC dismissed as being too aggressive to even consider.

To be fair, Julseth also said that NCC entered its bid before he could perform due diligence on the property, so he can’t say for sure what sort of development he’d have done; and Alec Orr-Ewing, who provided the initial timber evaluation that von Württemberg used to set his asking price, says the real-estate potential was quite limited.

“If you look at a contour map of the area, and also at its minimal water frontage, the chances of real estate are minimal, from my point of view,” he wrote in an e-mail. “The lake frontage is west-facing, behind a steep mountain ridge, also there is no legal access to all of the properties.”

Schadendorf says there is legal access, but by boat. Either way, my point isn’t that this was a done deal, but it was a legitimate inquiry, and it’s one of two that I have independently verified. When I asked Sydor if he knew of Julseth’s inquiry, he simply pointed out that “real estate companies are not eligible for this type of project.”

“When you look at the protocol, it says the only scenarios that should be considered are ones where forests remain forest,” he said – meaning that if von Württemberg had sold to a real estate developer, then the Verified Carbon Standard would not have recognized it as a carbon project, which doesn’ really have anything to do with whether there were competing bids or not.

“Now, in the real world, I guess the question is: Did the vendor actually consider Three Point Properties’ bid?” Sydor added.

That is, indeed, the question, and Schadendorf says he did consider it, but NCC moved too fast. He also says Three Points Properties weren’t the only ones who approached him, but they were the only ones he would acknowledge by name, and that because Julseth had already come forward.

“We had calls from several timberland buyers who were known for liquidation logging,” he says. “And we had some industrial timberland buyers look at the property – companies that are in the business of managing timberland sustainably – but they basically concluded that they would have to liquidate it in order to meet their investment objectives because they have investors to answer to.”

So, does this mean that the baseline the auditors advocated – one based on very low harvests in the near-term – wouldn’t have been economically viable?

“They said, ‘If we manage this sustainably, our expected rate of return will not be met, so this property doesn’t work for us,’” Schadendorf answered.

So, if these other bids existed, why didn’t Schadendorf tell the auditors about them?

“They never asked those types of questions,” he says.

The Additionality Paper Trail

There seem to be plenty of questions they didn’t ask, as I learned when I asked NCC’s Tom Swann if there was a paper trail to demonstrate additionality. Without hesitation, he provided three documents that showed what Sydor said couldn’t be shown. One of them was a letter to Patty Richards, Shell Canada’s Manager, Community Investment. It was dated March 5, 2007 (See “Shell Letter”, right) and makes it clear that carbon offsets were, indeed, a very critical factor in NCC’s decision to acquire the Darkwoods property, despite the auditor’s contention to the contrary. Here is an excerpt:

NCC has entered into a conditional purchase agreement to buy the company that owns the property and we are now actively seeking the resources to complete the sale and ensure that future management of the forest contributes to the survival of the mountain caribou and other species.
It is our understanding that Shell Canada and Shell International are involved in projects at various places around the world to realize goals that combine biodiversity conservation and carbon sequestration. We would be very interested in exploring the possibility of Shell Canada or Shell International working with NCC to achieve these goals at Darkwoods.
As you know, standards for calculating carbon increase and resultant CO2 equivalent sequestration are evolving, but I enclose for your information a draft calculation that projects 114,504 volume tonnes of CO2 equivalent sequestered annually in the standing timber alone at the Darkwoods property, which is largely treed with conifers.

Another of those documents was an internal memo (See “Carbon Calculation”, right) from Bill Freedman, a professor of biology at Dalhousie University in Halifax, Nova Scotia, and the Chair of NCC’s National Board of Directors. This is dated March 2, 2007, and it offers a calculation of the carbon potential that NCC had been using to make the deal happen.

And a third (See “Issues Analysis”, right) offers an updated analysis of carbon markets in general.

Also, in a notarized affidavit dated February 5, 2013, NCC CEO John Lounds said that “NCC considered the potential value of carbon credits on the Darkwoods property from as early as September 2006, when carbon sequestration was discussed by NCC fundraising contractors as a potential source of stewardship revenue at Darkwoods.” He says formal inquiries began in December, and that his staff met with Corinne Boone, Managing Director of carbon project developer CO2e, to explore its options.

Finally, there’s a paper co-authored by Freedman (See “Carbon Credits and Biodiversity”, right) and submitted to the Environmental Review on August 27, 2008 – shortly after the property was purchased. The paper clearly shows his thinking on how carbon credits could be used to save biodiversity-rich forests like Darkwoods, and it was just a Google search away.

 

Additional resources

Preserving Prairie Potholes

28 June 2008 | Adolph Feyereisen thought he knew all the ways to farm his 1040 acres in Emmons County, North Dakota. He’d taken over a dairy operation from his father in the 1960s, ran that until 1975, and then raised beef for a decade before dropping that to become a crop adjuster. Now that he’s semi-retired, he’s back to beef, along with small grains like barley and wheat.

But his latest cash crop is novel to the agricultural economy of the plains: sequestered carbon.

Last January, conservation group Ducks Unlimited purchased both a perpetual easement on Feyereisen’s native grassland and the rights to the carbon stored under that 272 acres. DU then passed the easement along to the Fish & Wildlife Service, but is bundling Feyereisen’s carbon with the carbon from scores of other North Dakota landholders and selling it on the open market, perhaps to a corporation in search of a significant carbon offset.

The short-term plan is to invest the proceeds from the carbon market in new habitat protection in the plains states. Then, if that works out, DU could take its 11.5-million-acre track record of habitat restoration and turn it into a revenue-generating portfolio to accelerate its conservation work.

For some of the most important and threatened waterfowl habitat in North America, the plan comes just in time.

 

The Brokers

“These are some of the best credits I’ve ever seen or been a part of,” says Radha Kuppalli of New Forests, a Sydney-based company helping to broker the deal.

Better known for forest management, New Forests is working with Equator Environmental, LLC to package the DU carbon for the voluntary carbon market. Equator provides financing to help fund carbon purchases, and will sell the credits to investors looking to downsize their carbon footprint. Equator and New Forests will work together to ensure that the credits meet high standards.

“Every single element that you can think of in a carbon project — additionality, quantification protocols, leakage, permanence — everything that you need to address is here,” says Kuppalli. “There is such an enormous biodiversity component.”

 

To Farm or Not to Farm

That’s precisely DU’s interest. Feyereisen’s 272 acres is native prairie, never tilled because it’s quite rocky and hilly. It’s also pocked with glacial potholes — shallow, watery depressions left by the glaciers. He’s never planned to plow it, but that doesn’t mean it can’t be done.

“They just have to rip the rock out,” says Feyereisen. “The equipment they’ve got now, it doesn’t take much. To say land can’t be farmed in this day and age, the way technology is going, that’s probably a pretty far-fetched statement.”

 

Abundance of Birds

Before the advent of European settlers, the Prairie Pothole Region in the Dakotas was at the heart of the world’s largest grassland, the Great Plains of North America. Feyereisen’s potholes are just a few of the millions of glacial potholes that cover some 100,000 square miles, harboring rich stores of aquatic plants and animals. Pintails, mallards, gadwall, blue-winged teal, shovelers, canvasbacks—each spring millions of ducks nest in the grasslands adjoining the potholes. Many other birds—lesser scaup, wigeon, green-winged teal, Canada geese and snow geese—use the area as a staging ground in their migration to the boreal north.

These fowl riches brought DU to the region almost at its inception, beginning habitat restoration in the adjacent Canadian portion as early as 1938. Since then, the organization has done restoration work on 11.5 million acres throughout much of the United States. But the potholes remain a priority: DU considers the area the most important and threatened waterfowl habitat in North America. Agriculture has already destroyed or altered more than half of the potholes. And climate change is the new threat on the horizon; the Wildlife Society projects a loss of as much as 90% of U.S. wetlands by 2080.

 

Competing Interests

Meanwhile, agricultural pressures are building. Ironically, climate concern has helped heat up the biofuels sector, putting further pressure on food prices that were already being ratcheted up by rising petroleum prices and natural disasters. Vagaries in federal agricultural policy are also having an impact. The Conservation Reserve Program (CRP), which rewards farmers for converting highly erodible cropland to grass, has been unable to compete with the hot ag land market as the 10 to 15 year contracts have expired. Almost 420,000 acres of North Dakota CRP land — more than 12 percent of the state’s total — were lost back to cropland in 2007 alone.

Federal ability to do conservation work in North Dakota is abridged as well; a political backlash against federal lands resulted in legislative veto power over the expenditure of federal duck stamp money to purchase habitat in the state. That leaves the private sector.

“Wildlife belongs to the public, yet private property – and therefore private landowners – really have all the habitat, so you have to work with them,” explains Jim Ringelman, DU’s Director of Conservation Programs for the Dakotas and Montana. DU has been working with private landowners for decades, developing tools and credibility.

 

Underground Carbon

Its carbon work began a couple of years ago, as the voluntary carbon market was beginning to solidify. While the carbon storage potential of forests rises in plain site, grasslands hide their carbon underground. Prairie plants sink deep roots five to nine feet into the plains, stockpiling carbon away from the oxidizing forces that would release it into the atmosphere. The Agricultural Research Service already had some local data on sequestration potential. With support from the Plains CO2 Reduction (PCOR) Partnership, DU worked with soil scientist Larry Cihacek of North Dakota State University to measure carbon stores under native prairies and restored grasslands.

It was an ideal research situation: Grasslands restored under the conservation reserve program range in age from a couple of years to 20 years.

“We could sample in one or two years a huge range of vintages,” explains Ringelman.

DU research shows that the north plains grassland sequester an average of 1.485 tons* of CO2 equivalent per acre per year. And while forest types in DU’s restoration portfolio can put away three to six times that, the acreage of the grassland resource is large enough to make it a potentially major player.

 

Adding Above and Below

Enter the US Fish & Wildlife Service, whose Grassland Easement program operates in the Prairie Pothole Region with a short budget and a backlog of interested participants. DU’s plan is to buy perpetual grassland easements and carbon credits at the same time. The easements are passed on to the FWS, and the carbon credits are bundled and resold to finance more conservation.

“It keeps the land in the private landowners’ hands,” explains Tammy Fairbanks of the FWS. “It doesn’t change their use on the property. They can still graze it, hay it, and get an income off it, and they pay taxes on it. The government does not have an operation and maintenance cost on that property. So we have the habitat protection, but we don’t have the cost of managing it.”

The DU assistance also cuts down on the FWS backlog, protecting habitat in imminent danger—the pothole counties of North Dakota alone have lost 88,000 acres of native prairie since 2002.

 

Meager Resources

“We need resources in the order of many tens of millions if not hundreds of millions to do what we need to get done,” adds Ringelman. “We have no hope of getting that through the traditional sources – the duck stamp money. This is big potential for us to accelerate our work. It’s revenue of the order of magnitude that we think is necessary to really make the kind of conservation footprint that we need to have to save the critical habitats. And it comes at an ideal time because current crop prices are putting a whole new set of pressures on grasslands.”

 

All the Ingredients

A number of elements make the DU plan exciting, beginning with the federal foundation.

“Having a perpetual easement held and monitored and enforced by the US Fish and Wildlife Service is extremely valuable,” says Kuppalli. “You’ve got the federal government backing your product. It’s really enabling. If you’re investing in carbon, or you’re a carbon buyer, you have to choose between a perpetual easement helped by a lands trust versus one held by the federal government?”

But while a federal program enables the project, Kuppalli is also quick to point out that federal programs and subsidies for corn and other commodities create countervailing forces.

The private element is important too, argues Dick Kempka, who spent years developing GIS technology for DU before jumping recently to Equator as vice president of sales.

“Seventy percent of the opportunity in the ecological asset market will be on private land,” he says. “If you can’t work on private land, you’re probably not going to be a big player in this arena.”

Incorporating grassland into the voluntary carbon market is another coup.

“Whatever business you’re in, you want to have a diversified portfolio,” he says. “There is a lot of benefit to restoring grassland and having tonnage be available right away, in a market where most feel there will be an annualized accounting.”

Then there is the Ducks Unlimited brand.

“That’s the big selling point,” he argues. “The social benefits associated with offsets are much better than any type of geologic sequestration, or methane capture. The bottom line is if I’m a pre-compliant utility, or a carbon-neutral socially responsible type of investor, these types of offsets very much fit the bill because they’re going to get other benefits from it – whether they’re explicit or implicit.”

 

Rethinking Agricultural Value

Ringelman hopes to change the very definition of agricultural value in the plains.

“There is a notion here that we have to pump up the economy of the state, and that grassland – particularly native prairie – is just a land cover that’s waiting for a higher and better use to come along,” he says. “Now we have a chance through this carbon work to show them that look, there’s more to this land. It’s more than just cutting hay and running cows on it. You’re also sequestering carbon. You’re doing a lot of things that people are going to start paying for, so let’s hold on to this here and take another look at it.”

DU plans to keep pushing the ecosystem services envelope, looking at water quality and possibly biodiversity offsets as well.

 

Exploring Biodiversity Offsets

“What we do with restoring wetlands has big water quality benefits. I think that’s not very far off,” says Ringelman. “Biodiversity is a little bit funkier.”

Funky, but not far-fetched. Birds traverse North America from key breeding areas like the prairie pothole to wintering areas. And populations are often limited by what happens on the breeding grounds. The Henslow’s sparrow, for example, breeds in the plains grasslands, but winters to the south, often in populated coastal areas.

“Maybe the time’s not far off that when someone does a project that’s affecting wintering habitat and sparrows down there, they’ll be coming to us (because) we can really have a population affect working with on this end of the flyway,” says Ringelman.

Feyereisen thinks a little more down to earth.

“My kids are willing to leave it like it is, and I would hope it would be like it is,” he says. “If I want to be selfish about it, this is one way to make sure it is.”

 



Erik Ness writes about science and the environment from Madison, Wisconsin. You can reach him through his website, www.erikness.com.

Please see our Reprint Guidelines for details on republishing our articles.

* The initial posting of this story misstated the figure as 1.485 million tons. We regret the error.

Additional resources

From Icebox To Offset: Destroying Ozone Depleting Substances, With The Help Of The Carbon Markets

13 July 2015 I That old refrigerator you had out in the garage cooling your beer on the Fourth of July? It could be leaking R-12 – more commonly known as Freon – and probably should be taken out of commission. In fact, many ancient refrigerators using the gas are being dismantled, with the help of the California carbon market.

These old refrigerators often end up at Appliance Recycling Centers of America’s (ARCA) Compton, California facility, where a small group of attendees of the Navigating the American Carbon World conference in May donned safety glasses and ear plugs to watch them being sliced into pieces on a guided tour led by Jeff Woloz, Vice President and General Manager of ARCA’s California operation.

The Compton facility is the base of the company’s appliance recycling and energy efficiency contracts with major utilities such as Southern California Edison, for which the facility has recycled more than one million refrigerators over 21 years, as well as Los Angeles Department of Water and Power and San Diego Gas and Electric. When customers of these utilities call to take advantage of recycling or appliance exchange incentive programs offered by the utilities, it’s ARCA staff that actually travel to their homes to retrieve these old appliances and transport them to Compton.

 Where refrigerators go to die
Where refrigerators go to die.

The facility has a funky collection of antique refrigerators in pinks, blues, greens and other colors that look like they came straight out of a 1950s television sitcom. But what’s most interesting is watching these refrigerators taken apart piece by piece. Everything is stripped: their electrical cords, the plastic components that once held fruits and veggies, the icebox parts, everything. But this crowd is most intrigued by the removal of the ozone-threatening gases.

A Brief History of Ozone and Carbon

The Montreal Protocol is an international treaty designed to protect the ozone layer by phasing out the production of numerous substances responsible for ozone depletion. The protocol was agreed to on September 1987 and entered into force in January 1989. At that time, there was a hole in the ozone layer larger than the continental United States – and it was growing. The ozone layer in the Earth’s stratosphere absorbs solar radiation, protecting people from skin cancer and ecosystems from unknown degradation.

R-12, a colorless gas chlorofluorocarbon (CFC) targeted by the protocol, was used in most refrigeration and vehicle air conditioning appliances prior to 1994. Although the amounts of CFCs in the atmosphere are small, they make an outsized contribution to global warming because of their heat-trapping capabilities. While its manufacture was banned globally in 1996, there was still an inventory of appliances containing the material sold into the markets in the 1994-1995 timeframe, Woloz said.

“We’re seeing a sunset,” he said. “But we haven’t run out yet. There are a lot of old [appliances] that still work. They were built like battleships.”

 Jeff Woloz prepares ARCA Recycling, Inc.'s west region transportation, processing and recycling operations
Jeff Woloz prepares ARCA Recycling, Inc.’s west region transportation, processing and recycling operations.

As the supply of these old machines dwindles down, so does the source of ozone-depleting substances (ODS) materials. However, destruction of ODS is one of five carbon offset project types eligible for California’s cap-and-trade program.

The ODS protocol allows for the collection and destruction of eight refrigerants and foam-blowing agents, including dichlorodifluoromethane (R-12), originating in the United States that would have otherwise been released into the atmosphere.

The California Air Resources Board’s (ARB) issued nearly 9.3 million offsets to ODS projects as of June 24, a little more than a million fewer than the number of offsets issued to forestry projects – the largest recipient of offsets from the ARB.

Ecosystem Marketplace research shows that ODS projects comprised nearly 60% of the compliance offset transactions in North America that reported a project type in 2014, with an average price of $9.7/tCO2e.

ARCA’s Compton facility specifically is responsible for the creation of about 25,000 carbon offsets per year, said Derek Six, Chief Executive Officer of project developer Environmental Credit Corp (ECC), which works with materials sourced from ARCA to generate carbon offsets. R-12 from appliances stripped in Compton is shipped to Philadelphia, Pennsylvania where it is aggregated with R-12 from other ARCA recycling facilities across the United States, he said. The materials are then cleaned, tested, and weighed before being sent for destruction at an ARB-approved destruction facility in Bowling Green, Ohio, Six said.

A Financial Return

Sourcing ODS for carbon offset projects for California’s program has benefitted ARCA’s bottom line. The company received $700,000 from the sale of carbon offsets in the fourth quarter of 2013 and netted $600,000 in the first quarter of 2014 before this revenue streamwas interrupted by the lengthy investigation into ODS offsets generated at the Clean Harbors Incineration Facility in El Dorado, Arkansas. The inquiry began in late May 2014 and did not reach a final conclusion until mid-November. The ARB ultimately invalidated 88,955 ODS offsets generated by a project from developer EOS Climate because the facility was out of compliance with its federal operating permit.

The ARB also originally proposed invalidating 142,199 offsets generated by ECC’s project activities at the El Dorado facility before ultimately concluding that the destruction activities related to these activities occurred outside of the timeframe when the Clean Harbors facility was purportedly out of compliance with its federal permit

“They changed the regulations on them and [Clean Harbors] didn’t quite catch up and they got hit with that,” Woloz said, adding that although his company’s offsets were initially caught up in the investigation, ARCA eventually did receive the offsets for materials destroyed at the facility.

Carbon offset revenue created by the destruction of ozone-depleting refrigerants acquired through recycling programs is one of the company’s five identified revenue streams. Mark Eisenschenk, ARCA’s President and Chief Executive Officer, observed that the carbon offset markets that had been frozen for a large part of 2014 due to the investigation freed up, opening the door for the company to receive an estimated $450,000 to $650,000 for carbon offsets by late April 2015, according to a March 2015 earnings report.

“We have been an active participant in California’s developing carbon offset market and anticipate increased involvement as the program expands,” the company said in its most recent annual report – a reference to the expansion of California’s program to include transportation fuels and other industries beyond the power sector earlier this year.

That carbon offset revenue generation begins in facilities such as the one in Compton – sometimes with an old pink fridge.

China’s Big Plans For Forests And Climate Change

1 July 2015 | China will increase its forest stock by 4.5 billion cubic meters by 2030 if the country meets its proposed climate plan, released this week to the United Nations Framework Convention on Climate Change. The plan, known in climate negotiator speak as an Intended Nationally Determined Contribution or “INDC”, lays out the country’s intention to peak its greenhouse gas emissions no later than 2030 while making “best efforts to peak early.”

China’s commitment sets a year – 2030 – by which the country’s annual emissions must end their upward creep, but it doesn’t specify the altitude of this emissions summit – though multiple projections suggest it will likely be around 10 billion tonnes of carbon dioxide equivalent (tCO2e). In a “business as usual” scenario, researchers predict that China’s emissions would peak sometime between 2030 and 2040, between 12 billion and 14 billion tonnes, according to the World Resources Institute.

The emissions reductions goal was no surprise, since China’s INDC mirrored its half of the historic agreement it struck with the United States in November. But the target of lowering carbon dioxide emissions per unit of GDP by 60% to 65% under 2005 levels was new, as was the specific target on forests.

China’s INDC states that the country aims to “vigorously enhance afforestation, promoting voluntary tree planting by all citizens” while reducing “deforestation-related” emissions.

Forest and land use experts were tentatively excited about the inclusion of land-use in China’s INDC, though they’re still trying to parse out what exactly the tree-planting goal means.

“I was happy to see the INDC mention reducing the impacts of natural disturbances and improving their measurement methodologies over time,” said Pipa Elias, Senior Policy Advisor at The Nature Conservancy.

Under the Copenhagen Accord in 2009, China set a goal of lowering carbon emissions per unit of GDP by 40% to 45% from 2005 levels, in part by bumping up the country’s forested area by 40 million hectares and increasing the forest stock volume by 1.3 billion cubic meters. According to its climate plan, as of 2014 China was well on its way to meeting this land-use goal, with 21.6 million hectares reforested.

However, the INDC does not specify the hectare equivalence of the new 4.5-billion-cubic-meters target, and presumably some of this increase would occur in a “business as usual” scenario as the forests that have already been planted grow. Scientists are still doing the math on additionality, but the sense so far is that the commitment does indeed go beyond the Copenhagen Accord – the question is by how much.

China’s land-use sector is already a net carbon sink domestically, but its consumers’ demand for agricultural commodities is putting pressure on tropical forests in Brazil, Indonesia, Myanmar, and many other countries. China purchases 60% of the soy and 34% of the leather produced by tropical forest countries, according to the Forest 500, a project that ranks governments and companies on ‘forest-risk’ commodities. These Chinese imports are often produced at the expense of forests elsewhere.

Doug Boucher, Director of the Tropical Forest and Climate Initiative at the Union of Concerned Scientists, says the presence of land-sector actions in China’s INDC is a good thing, but the country could and should also pay more attention to its domestic agricultural sector.

“Despite China’s progress with land sector emissions, its agricultural emissions are the largest in the world,” he said in a statement. “There is ample scope for China to curb agricultural emissions, particularly nitrous oxide from excessive fertilizer use and methane from rice production.”

China’s INDC does aim for “zero growth” in fertilizer and pesticide use by 2020.

“It is critical for countries like China to increase the efficiency of their agricultural systems to reduce the climate impact of growing food, but do so in a way that generates positive environmental and social outcomes,” said Elias.

China currently has seven jurisdictional carbon markets and plans to launch a national cap-and-trade program in 2016 that would be second in size only to the European Union Emissions Trading Scheme. Offsets from non-regulated sectors, known as Chinese Certified Emissions Reductions, are used to cover 5-10% of compliance entities’ emissions obligations in the pilot programs – a mechanism that will likely be carried over to the national program. Four new CCER methodologies target emissions from forestry and land use.

This Week In Water: A Brazil Matrix And Supply Chain Risk

This month, Ecosystem Marketplace publisher Forest Trends launched an interactive map and database tracking and categorizing over 2,000 payments for ecosystem services in Brazil called the Brazilian Matrix of Ecosystem Services. In other news, a diverse national water quality trading network released a program-building guide.

This article was originally published in the Water Log newsletter. Click here to read the original.

29 June 2015 | Greetings! Brazil holds more than 12% of the world’s freshwater, but citizens in some parts of the country – most notably Sí£o Paulo – have been suffering unprecedented drought this year, in part because of past failure to appreciate the linkages between forests and water supplies. In some quarters, however, the drought has led to a second look at the interlocking services Brazil’s vast natural resources provide: the carbon that its forests keep locked up as they regulate water and the thousands of species of plants and hundreds of species of birds and freshwater fish in its Canada-sized Cerrado, among others.


Brazil’s incredible natural heritage is the
raison d’íªtre for a boom in innovative market-based mechanisms to preserve the country’s natural capital.
We’re excited to announce a new initiative launching this month from Ecosystem Marketplace publisher Forest Trends with the support of Brazilian non-profit organization Fundo Vale and the Good Energies Foundation: the Brazilian Matrix of Ecosystem Services (Matriz Brasileira de Serviços Ecossistíªmicos), an interactive map and database of more than 2,000 payments for ecosystem services programs across Brazil categorized by type: water, carbon, biodiversity, sustainable agriculture, livestock, and bundled projects.

 

The Matrix, which has been more than three years in the making, can act as an information and decision-support tool for Brazilian market-makers: “It’s essential for us to understand that all ecosystem services are interconnected if we’re to develop a new and innovative market,” said Mauricio Moura Costa, Executive Director of Bolsa Verde do Rio, an Brazilian organization promoting market mechanisms for environmental compliance.

 

In other news this month, leaders continue to connect the dots between agriculture, water risk, and supply chains. Start with a look at a new report from Ceres that examines the blind spots between corporations and the farmers in their supply chains. South African Breweries is chipping away at the problem with a new sustainable barley program; meanwhile a new initiative in Gujarat, India, will pay farmers to install solar-powered irrigation pumps in an effort to lessen pressure on groundwater.


Speaking of supply chains, we’re hiring! Ecosystem Marketplace’s Supply Change initiative is seeking a research assistant to help us track corporate commitments to reduce ecological impacts in supply chains.

 

Finally, water quality trading in the United States got a boost this month with a new publication from the National Network on Water Quality Trading for stakeholders wondering whether and how to build a trading program. The guide breaks down key decision points and design options, bringing much-welcomed clarity to a technical and complicated process. Learn more and get a copy here.

 

— The Ecosystem Marketplace Team

For questions or comments, please contact newsletter@ecosystemmarketplace.com

GENERAL

Brazilian Ecosystem Services Matrix Brings Transparency To Environmental Finance

Brazil is not only a hotbed of ecosystem services, it’s also testing grounds for the market-like payments for ecosystem services approach to conserve and manage these natural services. And now, a new initiative launching this month provides a comprehensive way to track, understand and scale these programs using an interactive mapping and database system.

Learn more here.

Mixed Initial Responses To Final US Clean Water Rule

The US Environmental Protection Agency and the US Army Corps of Engineers finalized their Clean Water Rule in late May. First impressions of the rule, meant to clarify which wetlands and streams are covered under the Clean Water Act, are mixed.

Keep reading at EM.

POLICY UPDATES

Murray-Darling Buybacks Funding Sinks Under New Government

Late last month, Australia’s Liberal Party made good on its campaign promise to cap federal spending on buybacks in the Murray Darling Basin. Buybacks, under which the government buys and effective retires water rights to keep water instream in the beleagured river system, will be capped at 1.5 billion cubic meters (m3) out of a total target of 2.75 billion m3. Funds will be redirected to infrastructure improvements – which critics have pointed out cost three times as much per drop of water restored.

Circle of Blue has the full story.

Resistance to New Clean Water Rule Floods Capitol Hill

Earlier this month, the Senate Environment and Public Works Committee approved the Federal Water Quality Protection Act, which would force the Environmental Protection Agency and the Army Corps of Engineers to rewrite their recently finalized Clean Water Rule. The Federal Water Quality Protection Act now goes to the Senate floor.

Learn more from EP Newswire.

California Learns Water Conservation from the Masters

Residents of Tucson, Arizona are rooted in a thrifty water culture, with water cops, water-harvesting systems, natural desert vegetation, and more expensive rates for higher users. Now, nearby states like California, still grappling with the region’s dry conditions, are starting to pay attention.

Al Jazeera America has coverage.

Plans to Make the Great Lakes Region a Vision of Water Sustainability

A Great Lakes interstate agency, the Credit Valley Conservation Authority, is attempting to re-design water management in the region so it captures the efficiencies and benefits of natural water systems. Starting with several pilot projects and leveraging private finance to fund stormwater management, the Authority intends to implement green infrastructure measures, which will build resiliency and sustainability both ecologically and economically, the agency says.

 

Learn more.

Grenada Rebuilds the Reefs

Grenada’s government in partnership with the United Nations Environment Programme (UNEP) is embarking on an ambitious initiative to restore coral reefs surrounding the island country. Kerricia Hobson of Grenada’s Ministry of Agriculture, Lands, Forestry, Fisheries and the Environment noted to the Inter Press Service the multiple benefits of reefs, including supporting the tourism and fisheries industry and coastline protection.

Keep reading here.

GLOBAL MARKETS

They Just Wrote the Book on Water Quality Trading

The National Network on Water Quality Trading, a water quality trading-focused coalition of government agencies and environmental and industry organizations, released a reference document meant to promote the effective development of trading programs. It builds on 11 key design components complete with examples and pros and cons of each approach.

Learn more.
Read about it on the USDA blog.
Download the document (pdf).

‘Til the Well Runs Dry

More water was removed than replaced in 21 of the world’s largest 37 aquifers in the last decade, signaling alarming rates of groundwater depletion, a new study using NASA satellite data finds. Researchers hope the study leads to improved groundwater management, but demand for this resource is only increasing as the California drought lingers and densely-populated regions lack alternative water sources.

Read it at the Washington Post.

New Government Web Platform Puts Environmental Markets on Display

The US Department of Agriculture made public a new online platform that showcases its work supporting the growth of environmental markets. The site is full of success stories, the department says, and will continue to be updated with new tools and news on the subject.

Check out the new platform.

A Sunny Solution to Groundwater Depletion and Poverty in India

The International Water Management Institute of Sri Lanka hatched a new scheme that incentivizes Indian farmers to conserve groundwater. Farmers using solar-powered irrigation pumps can sell excess electricity back to the state, an innovative mechanism that reduces groundwater depletion while aiding the rural poor.

Learn more at National Geographic.

Growing a Connected System Of Farmers and Buyers

Few global food companies are assessing water risk in their agricultural supply chains, according to Ceres’ new report, which identifies a lack of good data on water use in farming operations as a major obstacle. The nonprofit recommends a shift away from fragmented supply chains to integrated systems, which it says will help streamline data collection and make collaboration and communication between corporate food buyers and growers easier.

Get coverage at National Geographic.
Download the report.

Canadian Insurance Sector Bullish on Natural Infrastructure

Despite recent high-profile flood disasters in Calgary and Southern Albert, most Canadians can’t get overland flood insurance (a fact that makes Canada unique among G8 countries). Private insurers say they can’t cover costs or even accurately price risk, since the country’s floodplain maps are unreliable and the natural infrastructure that can absorb or redirect flooding isn’t up to the challenge posed by climate change. Now, the insurance sector is helping support the development of a natural infrastructure adaptation program focused on wetlands.

Learn more.

New Mexico Ramps Up Watershed Investment Portion of Infrastructure Package

New Mexico Governor Susana Martinez announced an additional $3.5 million in funding for watershed restoration in priority areas on public lands. The funds supplement $6.2 million allocated last year as part of an $89 million capital infrastructure spending law.

KWRG has coverage.

Ecosystem Services: The Secret to Low-Cost Farming?

New research finds that enhancing ecosystem services, like natural pest control and soil health maintenance, in reduce farming costs for agricultural operations. Payments for ecosystem services schemes can play a role in making a shift to sustainable agriculture and then help farmers to maintain these systems.

Read it at Huffington Post.

Water Market Believers Continue to Pitch its Potential in California

Advocates of thriving water markets in California point to Australia’s successful use of the mechanism to survive ten years of drought as a prime example of its potential. Supporters say the drought-prone state already has the necessary infrastructure to move water around which, at the least, supports market-oriented policy if not the massive system the Aussies have implemented.

Keep reading here.

A Difference of Opinion Over the Meaning of Conservation Funds in Florida

Three environmental organizations have sued the Florida legislature over what they say is misuse of funds slated for water protection and land purchases for conservation, claiming lawmakers spent millions of dollars on activities unrelated or loosely related to conservation. The group is seeking a court declaration preventing conservation funds from being used as general revenue.

Reuters covers the suit.

SAB Builds a Better Brew with Sustainable Barley

South African Breweries (SAB) recently kicked off a sustainable agriculture program in the South African city of Taung. The initiative is part of SAB’s Better Barley Better Beer, aimed at supporting green economic development and SAB’s own supply chain management efforts.

Read a press release.

JOB LISTINGS

 

Research Assistant – Supply Change

Forest Trends’ Ecosystem Marketplace – Washington DC, USA

As companies commit to reduce the ecological impacts of their commodity supply chains, Supply Change provides transparency to their progress – and tracks commitments that count. The Supply Change project is a transformational resource for businesses, investors, governments, and the civil society organizations that support and hold them accountable; providing real-time information on the extent and value of commitment-driven commodity production and demand.

Learn more here.

Climate Scientist, Climate & Energy Program

Union of Concerned Scientists – Washington DC, USA

The Washington, DC based Climate Scientist will carry out research and analysis, outreach, and media activities in support of the Climate and Energy Program. In particular, this position will serve as a resource to the UCS media team by providing robust, timely, accessible, and policy-relevant information on climate science with an emphasis on impacts and adaptation.

Learn more here.

Program Manager – Climate Change and Sustainability

Environmental Science Associates – Northern CA, USA

ESA’s Sustainable Communities Group helps clients navigate the increasingly complex and interconnected needs of business, environment, and society, as climate change and other stressors increase the need for informed decision making and effective stakeholder communication. We serve public and private sector clients, offering planning, technical assistance, and policy expertise in climate change, energy, water, transportation, solid waste, and resource conservation. ESA is seeking an experienced and creative Planner/Program Manager to work under our Sustainable Communities Program Director assist with business development, manage projects, provide technical direction, and forge internal (cross-practice) and external partnerships that will lead to successful outcomes for a diverse range of projects.

Learn more here.

EVENTS

6th SER World Conference on Ecological Restoration

SER (Society for Ecological Restoration) 2015 in Manchester aims to be the major restoration event of the year. Building on recent successful world congresses and regional meetings such as SER Europe 2013 in Finland, we hope to attract a large number of academics and practitioners who will share good practice and network successfully in one of the homes of the industrial revolution. The title: “Towards resilient ecosystems: restoring the urban, the rural and the wild” should provide something for everyone, whether working in highly urbanised, ex-agricultural, or natural wild environments. We mean this conference to be as inclusive as possible and are keen to showcase not only the important scientific developments, issues and solutions, but also the cultural, educational and artistic aspects of restoration ecology. We are hosting a wide range of different types of events during the conference period, with pre-conference training workshops, conference symposia posters, workshops, and oral presentations, as well as half day field trips to see landscapes at first hand. 23-27 August 2015. Manchester, United Kingdom.

Learn more here.

EPA-USDA National Workshop on Water Quality Markets

USDA and EPA are cosponsoring a National Workshop on Water Quality Markets. This event is hosted by the Robert B. Daugherty Water for Food Institute at the University of Nebraska and coordinated by The Conservation Fund. The Workshop will highlight recent progress in water quality trading across the country with an emphasis on policy, resources, and tool development. The Workshop will provide EPA and USDA with an opportunity to lay out their vision for the role of water quality markets in advancing conservation and water quality goals, and provide you with the tools to engage in water quality markets. 15-17 September 2015. Lincoln NE, USA.

Learn more here.

SOCAP 15

We are a network of heart-centered investors, entrepreneurs, and social impact leaders who believe in an inclusive and socially responsible economy to address the world’s toughest challenges. Since 2008, SOCAP has created a platform where social impact leaders can connect and present their ideas to a global audience. Our annual flagship event in San Francisco is the largest conference for impact investors and social entrepreneurs and has drawn more than 10,000 people. 6-9 October 2015. San Francisco CA, USA.

Learn more here.

8th ESP World Conference: Ecosystem Services for Nature, People and Prosperity

The 8th World ESP conference’s central theme is ‘Ecosystem Services for Nature, People and Prosperity’. The conference will pay special attention to the public and private sector dialogue on how the ecosystem services concept can be used to support conservation, improve livelihoods and engage the business community. We especially encourage delegates from businesses to attend the ESP conference in order to discuss challenges and opportunities in using the concept of ecosystem services to achieve conservation and sustainable use of our ‘natural capital’ within a market-context. The conference will provide an excellent platform to engage with experts who can generate solutions to these challenges and start making a difference in practice. 9-13 November 2015. Stellenbosch, South Africa.

Learn more here.

FLARE Network Conference

IFRI is developing a Community of Practice, Forests & Livelihoods: Assessment, Research, and Engagement (FLARE) network which aims to advance the state of knowledge regarding forest-based livelihoods. By bringing together representatives of key stakeholders – donor organizations, environmental and social NGOs, development agencies, and research organizations – we will build on and leverage existing expertise and efforts to share and advance cutting edge knowledge and conversations on forest-based livelihoods. Ultimately, the goals of FLARE are to generate usable information and methodologies for collecting it; develop, promote and share the findings of the group; and implement such tools, knowledge, and methods to improve monitoring efforts and, ultimately, the efficacy of forest-dependent livelihood interventions around the world. 27-30 November 2015. Paris, France.

Learn more here.

CONTRIBUTING TO ECOSYSTEM MARKETPLACE

Ecosystem Marketplace is a project of Forest Trends a tax-exempt corporation under Section 501(c)(3).The non-profit evaluator Charity Navigator has given Forest Trends its highest rating (4 out of 4 stars) recognizing excellence in our financial management and organizational efficiency.


Additional resources

New Conservation Bank Aims
To Save The Roaming Sage-Grouse

29 June 2015 | Wyoming is a land of wide skies and open fields – of country-sized ranches, ugly energy pits, and massive wind farms. It’s also one of 11 US states and 2 Canadian provinces where the humble (and going-extinct) greater sage-grouse resides.

Like the people of Wyoming, the sage-grouse likes its space – it needs 230 square miles to thrive – and that’s the problem. While the sage grouse can live alongside cattle and other grazing animals, it perishes in the fragmented habitat left by farming, energy development, and urban expansion, according to the US Fish and Wildlife Service (FWS). These threats, combined with other perils like invasive plants and wildfires, are driving the sage grouse toward extinction.

The FWS listed the sage-grouse as a candidate species under the Endangered Species Act (ESA) with plans to announce a listing decision in September. Because an ESA listing intends to bring a species back from the brink of extinction, the regulations are rigid. Western developers worry an ESA listing on a species with such a wide range will severely deter economic growth, said Theo Stein, a Public Affairs Specialist for sage-grouse at the FWS.

In an effort to proactively conserve and restore the sage-grouse to healthy populations without ESA regulations, the Sweetwater River Conservancy (SRC) opened the first conservation bank for the greater sage-grouse in March. Although it contains just 55,000 acres of prime sagebrush, the Conservancy owns 700,000 acres, a land mass the size of Rhode Island that spans three mountain ranges. The bank has plenty of space to expand should demand for sage-grouse credits require it.

The greater sage grouse’s requirement of large amounts of contiguous prairie also makes the SRC’s bank the largest in the US. Aside from the relatively new conservation banks for another grouse – the lesser prairie chicken – species banking is typically done on smaller scales involving animals that don’t require as much space.

It’s important to conserve on the proper scale, said Brian Kelley, a wildlife biologist at the Conservancy. “Instead of an acre here and 50 acres there, this sage-grouse conservation bank could signal a paradigm shift in the way conservation is done,” he said.

Three Decades of Decline

“Greater sage-grouse is a species that doesn’t like change,” said Stein. Nevertheless, the bird has struggled with an altered landscape for over a century as its historic range has been cut by over half, according to the Bureau of Land Management (BLM). Once numbering in the millions, the Department of Interior population estimates vary from 200,000 to 500,000, which is roughly a 30% decline since 1985. The only reason the bird wasn’t listed in 2010 was because the FWS said it lacked capacity to implement the listing status.

Western interests saw this as an opportunity to thwart a listing. They launched a massive proactive conservation movement that spanned energy companies, federal and state agencies and ranching and farming operations. Wyoming was one of the leaders, Stein said. It set up a state-wide conservation strategy that includes prime habitat spots preserved for conservation known as core areas.

Building a Bank

In this pro-sage-grouse political climate, Jeff Meyer, SRC’s co-founder and Managing Partner, purchased thousands of acres in central Wyoming with the intention of building a wind farm. He was correct in thinking the region has vast potential for wind power, Stein said. But what he didn’t realize was the spot was also right in the middle of a core area for sage-grouse conservation. And renewable energy is part of the energy development that harms the bird, according to the FWS.

SRC then switched to establishing a conservation bank. Initially, the company had performed intensive high-tech data-collection on the property to determine its wind power potential and found the land had great potential to generate mitigation credits.

Also, this region of Wyoming is home to a number of historic cattle ranches. SRC soon realized that pastureland, if managed sustainably, could operate in harmony with sage-grouse populations.

“The nature of the ranch landscape really leant itself to what this species needs: big, open and un-fragmented land,” said Kelly.

This means the bank requires grazing management plans that incorporate both livestock production and sage-grouse goals with activities such as vegetation monitoring factored in. Keeping the ranches in operation is an important part of the bank’s success because it incorporates local interests, Kelly said.

“Open spaces are important to Wyoming residents but maintaining their economic base is important also. A bank fits into this nicely because it allows for open space and for economic development through mitigation,” he said.

A Market requires Demand

The sage-grouse bank is opening up for business with roughly 32,000 credits to sell. “The next step is attracting clients,” said Stein.

The question of demand for these credits is a major one. A candidate species listing drives some demand, but an ESA listing drives most of it, said Mark Sattelberg, the FWS Wyoming Field Office Supervisor. However, new incentives are springing up.

Wyoming’s sage-grouse conservation strategy follows the mitigation hierarchy, according to its summary document, where development is encouraged outside core areas and requires mitigation for all projects that must occur within habitat strongholds.

On top of the state-wide mandate, the BLM and the Forest Service recently released an updated version of its sage-grouse conservation efforts. Included in it is a mitigation component requiring developers follow the mitigation hierarchy and compensate for unavoidable impacts. This is significant because together the agencies manage two-thirds of sagebrush lands. And last year, the DOI launched a new mitigation strategy referencing the hierarchy and calling for landscape-level activity.

Environmental NGO The Nature Conservancy’s announcement to establish a sage-grouse conservation bank in Nevada in partnership with gold mining company, Barrick Gold, is further evidence of a blossoming market for sage-grouse credits.

The Environmental Defense Fund’s-another environmental NGO- habitat exchanges are also in the works in Colorado, Wyoming and Nevada. These ventures focus on land management incentives to ranchers in exchange for sage-grouse conservation.

Sattleberg said he knows of three ranchers looking into conservation banking. “They’re looking into what it would take and it takes quite a bit upfront,” he said, noting interest from some ranchers will remain as interest and nothing more.

Quality Products?

At the core of all these conservation measures must be quality and they must deliver a net-benefit for the species, said Deborah Mead, the National Conservation Banking Coordinator with the FWS.

“If these initiatives aren’t established to compensatory mitigation standards, then you have to ask if the species still warrants a listing,” she said. And while this will surely frustrate those involved in the voluntary proactive activities, the interest of the species must be put first, she said.

It’s an important point to make with the various versions of conservation offered. If the FWS decides the sage-grouse does require a listing status, the current conservation activities will be assessed or re-assessed through an ESA lens, Mead said. “It’s good that people are getting out in front and taking voluntary actions on the landscape, but it should be clear whether these actions meet regulatory standards or not,” she said.

At any rate, Eric Holst, Senior Director of Working Lands at EDF, said the momentum for conserving the sage-grouse is a positive thing. “I see this as an opportunity to assemble the federal and state agencies, energy interests and other private-sector parties together to grow sage-grouse populations,” he said.

Kelly said: “It’s a different way of thinking about conservation and a new way of applying the tools we have.”

 

Indigenous People Build Fund For Direct Access To Climate Finance, Push For More Active Role In Proceedings

24 June 2015 | BONN/BARCELONA | Indigenous leader Juan Carlos Jintiach says he was ecstatic when governments around the world pledged $1 billion to end deforestation at last year’s climate summit in New York. He especially liked Norway’s pledge of $20 million per year to help indigenous people secure their rights. But he also knew what would happen next, as NGOs around the world quickly submitted proposals, and Norway issued a short-list of 53 finalists.

“In the end, only five indigenous organizations were invited to present final proposals,” says Jintiach, who at the time had just stepped down as Director for Economic Development of pan-Amazonian indigenous federation COICA.

“That’s how it always is,” he says. “We’ll be talking to governments directly, and asking them why they always have these bilateral government-to-government discussions, and then we’ll see $100 million change hands, and we’ll say, ‘What’s that for?’, and they’ll say, ‘That’s for indigenous people.'”

 

Left-to-Right: Juan-Carlos Jintiach (COICA), Jorge Furagaro Kuetgaje (COICA), Josien Tokoe (COICA), and Estebancio Castro Diaz (International Alliance of Indigenous and Tribal Peoples of Tropical Forests) at climate talks in Bonn.

Chris Meyer of the Environmental Defense Fund (EDF) says that at least $50 million in funding linked to reduced deforestation or “REDD+ finance” has already been allocated for indigenous people, but it’s in limbo, scattered among the Forest Carbon Partnership Facility, the UN-REDD Program, and the Forest Investment Program – and that’s after he deducts 20% for administration and overhead.

“It’s not that the programs are doing anything nefarious,” he says. “It’s just that they’re bureaucratic and need to see a lot of things happen before they can release money.”

“I understand their reasoning,” says Jintiach. “They can’t just dump a bunch of money on us – I understand the need for accountability – but I think we can deliver that accountability.”

The Birth of the Indigenous Amazon Fund

In the last few years of his tenure, Jintiach had a front-row seat at the “grant games”, as COICA teamed up with NGOs like EDF, Woods Hole Research Center, and even Ecosystem Marketplace publisher Forest Trends to secure direct funding from large donors like the United States Agency for International Development (USAID), which is supporting COICA and a consortium of NGOs (including Forest Trends) under a program called AIME, which among other things helps indigenous people position themselves for REDD+ finance.

Current COICA director Edwin Ví¡squez Campos has been working to ready the organization and its members for REDD+ finance, and at mid-year climate talks in Bonn, COICA’s head of Environment, Climate Change and Biodiversity, Jorge Furagaro Kuetgaje, announced the creation of an Indigenous Amazon Fund, which is the brainchild of COICA consultant Roberto Espinoza and is designed to act as a kind of central bank for indigenous people across the Amazon.

Two weeks later, Campos announced that COICA would also seek to establish a more forceful presence in multilateral organizations like the Governors’ Climate and Forests (GCF) Task Force, which is a network of subnational governments and governors working to address climate-change multilaterally.

At the GCF annual meeting in Barcelona, COICA was joined by Central America’s AMPB, the Mesoamerican Alliance of Peoples and Forests.

“We’re at the Table”

“We believe we share many common characteristics and core beliefs with the jurisdictions represented in the GCF,” the AMPB declaration stated. “We actively participate in the region´s REDD+ processes, emphasizing the importance of community forest rights, and offering our experiences as key lessons and cornerstones for addressing deforestation in our jurisdictions.”

COICA’s statement was more prescriptive and called for active indigenous participation in the development of national climate action plans, or INDCs (Intended Nationally-Determined Contributions), and asked for a signed agreement with the GCF recognizing COICA participation in strategic planning and implementation.

The Evolution of the Amazon Indigenous Fund

Jintiach, who now is an analyst in COICA’s Economic Development Cooperation, says the Indigenous Amazon Fund is being created based on feedback from donor nations and with support from EDF and other NGOs.

“Juan Carlos raised this issue with us last year, when we were working with him on the indigenous mapping project [which was announced at climate talks in Lima],” says EDF’s Meyer. “He’s been working with us ever since to see how we implement it, and also talking to donors to get a better feel for what they look for.”

The fund proposal will be refined at a series of COICA meetings, beginning in August, but Jintiach and Meyer both say some basic ground-rules have already been established.

“One thing is clear: COICA won’t be running it,” says Jintiach. “We’re spearheading it, but we’re not a bank, and we don’t want to become one, and donors won’t want that, either.”

 

The Indigenous Amazon Fund is designed to be an independent entity answerable to an outside board of directors.

Based on donor feedback, COICA and others are now suggesting the creation of a non-profit entity, with an independent board of directors as well as an advisory board, says Meyer.

“This is still nebulous and to be determined, but there is this window in the next six months for indigenous leaders to consult among themselves and figure out what they want,” he says. “With COICA, we need to help to build a lot of capacity to understand how these administrative mechanism funds work, based on existing intermediary funds like Funbio (the Brazilian Biodiversity Fund), and we can then help them create a proposal that’s hopefully good enough for Norway to say, ‘OK, we’re going to put whatever is left [of the $100 million pledged] directly into this indigenous fund, and hopefully get other countries to contribute to it as well.'”

“Once the fund exists, if donors want to give to indigenous peoples, we can say, ‘Here is a fund for indigenous peoples,'” says Jintiach. “If they need to see transparency, we can say, ‘Here are the books.'”

Beyond REDD+

Although REDD+ finance was the impetus for creating the fund, it’s ultimately designed to handle banking, loans, and other financing operations.

“Something like Canopy Bridge, which is a platform for indigenous producers to market their products, could be supported through the fund,” says Meyer.

“Exactly,” adds Jintiach. “In Ecuador, we developed an indigenous cacao cooperative, but the benefits go to intermediaries, because the banks, they ask for lots of requirements that we as indigenous people find difficult.”

He says an Indigenous Amazon Fund would better be able to assess indigenous programs for their viability because it would be run by people who understand indigenous business practices.

“We need a financial institution that understands how our economies work on the ground,” he says. “Our people need to develop their own economies.”

Jintiach expects to have a formal proposal by the end of August, and Meyer estimates the start-up costs at less than $1 million.

“This is really for the next generation,” says Jintiach. “For my generation, this kind of finance was all new to us, but kids today understand its importance. They’re the ones who will move this forward.”

Additional Resources

Read COICA’s statement (Spanish) to the GCF here.

Dutch Court Says Country Violates Human Rights By Not Meeting Global Norms In Slashing Emissions

24 June 2015 | A Dutch court today ruled that the country’s government failed to protect human rights by not implementing policies that would reduce greenhouse-gas emissions by at least 25% by 2020.

“Based on the State’s current policy, the Netherlands will achieve a reduction of 17% at most in 2020, which is below the norm of 25% to 40% for developed countries deemed necessary in climate science and international climate policy,” the court said in the official English translation of its decision, available online here.

In a test of human rights tort law, the three-judge panel sided with the Urgenda Foundation, which filed the lawsuit on behalf of 866 citizens who accused the government of negligence for “knowingly contributing” to policies that would send global temperatures spiraling upward and flood the low-lying country. Urgenda had argued that the country was obligated to meet minimum requirements to protect its citizens, and it had the support of several signatories to the Oslo Principles, which were formulated in March by legal experts and high-court justices from around the world – including the Netherlands and the United States.

In April, Jaap Spier, Advocate-General to the Dutch Supreme Court, told the Dutch daily newspaper Trouw that, because of the Oslo Principles, “Courts can force countries to adopt effective climate policies.” He added, “Court cases are perhaps the only way to break through the political apathy about climate change.”

A similar case is underway in neighboring Belgium.

This Week In Biodiversity: Greater Sage-Grouse Conservation Teeters Between Cooperation And Conflict

Greater sage-grouses living in the US West received good news with Colorado announcing new voluntary conservation measures and the Bureau of Land Management rolling out landscape-level protection strategies. However, a new funding bill in the Senate aims to block a listing decison for another year. And on a separate note, Brazil passed a law granting easier access to Amazonia’s natural resources.

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

22 June 2015 | Greetings! On the US plains, the spring mating season for the Greater Sage-Grouse is winding down. Meanwhile, the humans sharing turf with the grouse can’t decide whether to make love or war over the bird.

An order by Colorado governor John Hickenlooper to establish a sage-grouse habitat exchange represents hope that cooperation will be enough to keep the bird off the Endangered Species List. Members of Congress are being a little more bellicose, with a proposed military bill that would block listing of the bird on national security grounds and a rider in the Senate Appropriations Committee’s new funding bill for the Department of the Interior and Environmental Protection Agency that blocks a decision on sage-grouse listing (currently scheduled for September) for another year.

 

Meanwhile, ten Western states have developed resource management plans (RMPs), creating high quality, science-based conservation in sagebrush ecosystems. In late May, the Bureau of Land Management (BLM) in partnership with the US Forest Service (USFS) rolled out their amendments. Following a three-month review process, the finalized plans will serve as governing guides for sagebrush ecosystems that fall on BLM and USFS lands.


“The RMPs require mitigation, which is a key piece of developing the market demand needed for conservation banking,” Theo Stein of the US Fish and Wildlife Service (FWS) tells Ecosystem Marketplace. Conservation banks for the greater sage-grouse are already starting to appear in Wyoming and Nevada, a sign that the ‘cooperation’ camp may be winning. As summer heats up, may the cooler heads (and workable solutions) prevail.

 

Last month also saw passage of a controversial law in Brazil allowing businesses easier access to Amazonia’s natural resources, even in indigenous areas, and cancelling $70 million in “bio-piracy” violations for a state-owned agriculture research firm. The government’s brushed off worries about fair compensation for indigenous people. India, meanwhile, has a law on the books requiring companies making use of biological resources for pharmaceuticals and other products to pay a biodiversity fee. But as the Hindu reports, the law is largely ignored.

 

We’re hiring! Ecosystem Marketplace’s Supply Change project, which tracks corporate commitments to reduce ecological impacts in commodity supply chains, needs a research assistant. Click the link to learn more and apply.

 

Cheers,

—The Ecosystem Marketplace Team

 

If you have comments or would like to submit news stories, write to us at mitmail@ecosystemmarketplace.com.

 

Mixed Initial Responses To Final US Clean Water Rule

The US Environmental Protection Agency and the US Army Corps of Engineers finalized their Clean Water Rule in late May. First impressions of the rule, meant to protect US waterways from various sources of pollution through clearer definitions of which wetlands and streams are covered under the Clean Water Act, are mixed.

EM has coverage.

 

Market-Based Species Conservation Gets Boost From US Gov Land Management Plans

The US Bureau of Land Management late last month released its final environmental reviews of land-use plans containing greater sage-grouse habitat. As the plans make use of compensatory mitigation, those in the mitigation space are viewing the strategy as a potential driver to increase demand for market mechanisms like habitat exchanges and conservation banks.

Keep reading here.

 

Opinion: Rivaling Gold – Ecological Assets Outperform Traditional Commodities

After completing a price trend comparison between environmental products and traditional commodities, a long-time analyst of ecosystem markets says compensatory credits for wetland and species conservation are outperforming commodities like corn and farmland and even gold – giving a more literal meaning to the term ‘green gold.’

Read it here.

 

Brazilian Ecosystem Services Matrix Brings Transparency To Environmental Finance

Brazil is not only a hotbed of ecosystem services, it’s also testing grounds for the market-like payments for ecosystem services approach to conserve and manage these natural services. And now, a new initiative launching this month provides a comprehensive way to track, understand and scale these programs using an interactive mapping and database system.

Learn more here.

 

REDD+ And Green Supply Chains: The Yin And Yang Of Saving Forests

Companies worth more than $4 trillion have promised to reduce their impact on the world’s forests, and more than one-third of the new pledges came just last year, which more than doubled 2013’s total. Now comes the hard part: keeping those promises honest, and helping smaller suppliers adjust to the new demand. Here’s how public finance for forest protection can help.

Get the full story from Ecosystem Marketplace.

Queensland’s Offset Program: Waste of Time or Valuable Mitigation?

Australia’s Department of Environment and Heritage Protection in Queensland is promoting an environmental offsets program that would generate a revenue stream for landowners willing to conserve parcels of land on their property, which will serve as mitigation for development impacts. However, the offset has to deliver a net-benefit to the environment – and ranchers remain skeptical the program will amount to anything.

ABC News has coverage.

 

US Nearing Peak Sage-Grouse Mania

Last month Colorado governor John Hickenlooper ordered the state to establish a habitat exchange to buy and sell conservation credits for the Greater Sage-Grouse, a move designed to stave off federal intervention to protect the bird through an Endangered Species Act (ESA) listing.

 

Meanwhile in Washington, an alternative strategy to keep the Greater Sage-Grouse off the ESA – a $612 billion military bill that would block listing of the bird on national security grounds – has given Congress something new to fight over.

Read more from the Pueblo Chieftain about Colorado’s habitat exchange.
The New York Times has coverage of the sage-grouse fight in Washington.

 

Wolfensohn and Eko Asset Announce Merger

Wolfensohn Fund Management, a private equity fund focusing on developing-world finance and clean energy founded by former World Bank president James Wolfensohn, recently announced a merger with environmental markets investment management and advisory firm Eko Asset Management Partners. The new firm, dubbed Encourage Capital, aims to make the most of growing interest among high-net worth individuals in impact investment. Adam Wolfensohn and Jason Scott will serve as co-managing partners and Ricardo Bayon as chief impact and innovation officer.

Bloomberg has the story.

 

A Permitting System to Keep the Land and Sky Safer for Birds

After a year of consideration, the US Fish and Wildlife Service released a notice of intent to create a permitting system for unintentional bird kills related to development. As birds are often killed when they collide with power lines or land in oil and gas operations, the FWS says a permitting system could create a regulatory mechanism that delivers meaningful compensatory mitigation after impacts have been avoided or minimized.

Read more at E&E News.

 

EU Designs Biodiversity Offset System for Continental Use

Biodiversity offsetting is considered a necessary part of the European Union’s biodiversity strategy and recently, the International Conservation Fund, in association with experts and another conservation organization, published a report highlighting proper design and implementation measures for offsets. The study noted flexibility as key while identifying the maintenance of long-term benefits as critical.

Learn more here.

 

Can Biodiversity and Mining Co-Exist in Namibia?

Because the central portion of the Namib Desert in Namibia is rich in both uranium and biodiversity, several stakeholders collaborated to form the Strategic Environmental Management Plan, a public-private initiative aimed at coexistence between the development and conservation needs of the region.

All Africa has coverage.

 

New Law Opens Brazilian Amazon… to What?

Brazil’s president passed a controversial bill into law allowing businesses easier access to Amazonia’s natural resources, even in indigenous areas, and cancelling $70 million in “bio-piracy” violations for a state-owned agriculture research firm. The government, however, claims the law simply intends to promote development and indigenous people will be compensated fairly.

The Latin American Herald-Tribune has the story.

 

Biodiversity Fees Go Unpaid in India

Few companies are complying with national Biodiversity Act requirements that companies or individuals pay a fee for use of biological resources, according to the Hindu. The state-level Telangana State Biodiversity Board has issued more than a thousand notices but signed only two agreements with companies agreeing to pay biodiversity fees. The Gujarat Board has had slightly better luck, with 47 agreements signed.

Learn more at the Hindu.

 

Asking for the Right Kind of Biodiversity Offset in Britain

Two papers out of Britain note the key role biodiversity offsets could play in reconciling natural resource development with conservation, but also emphasize the absolute necessity that they are implemented correctly in a transparent process grounded in science. One study highlights potential risks of an offsets program lacking in these qualities.

Read the papers here.

 

US Wildlife Experiences Connectivity Issues

Large public lands designated for conservation like national parks are an important part of conserving biodiversity but they aren’t enough, according to two recent studies. Current conditions are too small and fragmented, report authors say, while what is needed are large conservation corridors that link ecosystems together allowing wildlife to flourish.

Get details here.

 

Ecosystem Services: The Secret to Low-Cost Farming?

New research found enhancing ecosystem services, like natural pest control and soil health maintenance, in agriculture operations can reduce farming costs with payments for ecosystem services schemes playing a role in making this shift to sustainable agriculture systems and enabling farmers to maintain such systems.

Learn more at the Huffington Post.

 

Scaling Up Fisheries Certification

A new report from the International Institute for Environment and Development (IIED) examines barriers to scaling up Marine Stewardship Council certification in the developing world. It’s a significant challenge: only 8% of currently certified fisheries are in developing countries, and an even smaller share of small-scale fisheries are certified.

Learn more and download the report here.

 

JOBS

 

 

Supply Change Research Assistant

Forest Trends’ Ecosystem Marketplace – Washington DC, USA

Forest Trends is an international not-for-profit environmental conservation organization based in Washington, D.C. that works to achieve sustainable forest management and conservation by capturing the value for ecosystem services, and expanding the value of forests and other natural ecosystems to society. The Ecosystem Marketplace is an initiative of Forest Trends that works to link practitioners and decision-makers and advises companies, governments and other NGOs on voluntary carbon/forest carbon market developments, transparency, social and environmental co-benefits and other mechanisms.

 

We are seeking a research assistant for the Supply Change project. As companies commit to reduce the ecological impacts of their commodity supply chains, Supply Change provides transparency to their progress – and tracks commitments that count. The Supply Change project is a transformational resource for businesses, investors, governments, and the civil society organizations that support and hold them accountable; providing real-time information on the extent and value of commitment-driven commodity production and demand.

 

Initially, the work will span a 3-month period, with potential for extension for an additional three months. This is a temporary full-time assignment.

Learn more here.

 

Sustainable Investing Associate

World Resources Institute – Washington DC, USA

The Associate II will lead development of a sustainable investment research agenda for WRI and partner with WRI’s CFO to implement the WRI endowment sustainable investment strategy. While the position is a short-term position, the ambition is that the Associate will have created a robust strategy with an associated fundraising plan that would enable conversion to a full-time permanent position. WRI’s Sustainable Finance Center works with public and private financing institutions, investors, governments, civil society, businesses, and project developers to increase the volume of capital flowing to sustainable activities in developing countries by redirecting investments away from unsustainable activities. To achieve this vision both public and private actors will need to leverage each other’s capital and competencies and, more importantly, find common ground that results in financial flows moving towards sustainable activities and away from environmentally and socially harmful activities.

Learn more here.

 

Blue Carbon Intern

Massachusetts Executive Office of Energy and Environmental Affairs – Massachusetts, USA

The Massachusetts Bays National Estuary Program (MassBays) seeks an intern with strong organizational, research, and writing skills to contribute to a joint project to quantify carbon sequestration potential of eelgrass in Massachusetts near-shore habitats. The project is led by MassBays; partners include the Office of Coastal Zone Management, U.S. Environmental Protection Agency – Region 1, Massachusetts Institute of Technology’s SeaGrant Program, and the Massachusetts Division of Marine Fisheries. The intern will have the following responsibilities:

 

  • Complete a literature review on blue carbon/carbon sequestration and seagrass. This review will include the identification and compilation of peer-reviewed literature on the topic matter.
  • Complete a review of historical records of eelgrass distribution in Massachusetts Bay and Cape Cod Bay. Sources of information include nautical charts, peer-reviewed literature, gray literature, state shellfish reports, aerial photographs, local knowledge, and other sources as available and relevant.
  • Assist in field collection of samples and site visits for sea level rise analysis. Intern will visit one or more sites in Gloucester, Nahant, Cohasset, and Sandwich.

Learn more here.

 

EVENTS

 

 

ICCB-ECCB 2015

The Society for Conservation Biology (SCB) is proud to team up for the first time with Agropolis international and the French Foundation for Research on Biodiversity (FRB) to host the 27th International Congress for Conservation Biology (ICCB) and the 4th European Congress for Conservation Biology (ECCB). The joint meeting brings together our international community of conservation professionals to address conservation challenges and present new findings, initiatives, methods, tools and opportunities in conservation science and practice. It’s also a marvelous opportunity to welcome scientists and conservationists from around the world to Europe. Scientists, students, managers, decision-makers, writers, and other conservation professionals across the globe are invited to participate in this event. 2-6 August 2015. Montpellier, France.

Learn more here.

 

6th SER World Conference on Ecological Restoration

SER 2015 in Manchester aims to be the major restoration event of the year. Building on recent successful world congresses and regional meetings such as SER Europe 2013 in Finland, we hope to attract a large number of academics and practitioners who will share good practice and network successfully in one of the homes of the industrial revolution. The title: “Towards resilient ecosystems: restoring the urban, the rural and the wild” should provide something for everyone, whether working in highly urbanised, ex-agricultural, or natural wild environments. We mean this conference to be as inclusive as possible and are keen to showcase not only the important scientific developments, issues and solutions, but also the cultural, educational and artistic aspects of restoration ecology. We are hosting a wide range of different types of events during the conference period, with pre-conference training workshops, conference symposia posters, workshops, and oral presentations, as well as half day field trips to see landscapes at first hand. 23-27 August 2015. Manchester, United Kingdom.

Learn more here.

 

SOCAP 15

We are a network of heart-centered investors, entrepreneurs, and social impact leaders who believe in an inclusive and socially responsible economy to address the world’s toughest challenges. Since 2008, SOCAP has created a platform where social impact leaders can connect and present their ideas to a global audience. Our annual flagship event in San Francisco is the largest conference for impact investors and social entrepreneurs and has drawn more than 10,000 people. 6-9 October 2015. San Francisco CA, USA.

Learn more here.

 

8th ESP World Conference

The Ecosystem Services Partnership (ESP) is a worldwide network, founded in 2008, to enhance the science and practical application of ecosystem services. To facilitate the needed dialogue between scientists, policy makers and practitioners ESP organises an annual international conference in different parts of the world. The central theme is ‘Ecosystem Services for Nature, People and Prosperity’. The conference will pay special attention to the public and private sector dialogue on how the ecosystem services concept can be used to support conservation, improve livelihoods and engage the business community. 9-13 November 2015. Stellenbosch, South Africa.

Learn more here.

Additional resources

New Conservation Bank Aims To Save The Roaming Sage-Grouse

29 June 2015 | Wyoming is a land of wide skies and open fields – of country-sized ranches, ugly energy pits, and massive wind farms. It’s also one of 11 US states and 2 Canadian provinces where the humble (and going-extinct) greater sage-grouse resides.

Like the people of Wyoming, the sage-grouse likes its space – it needs 230 square miles to thrive – and that’s the problem. While the sage grouse can live alongside cattle and other grazing animals, it perishes in the fragmented habitat left by farming, energy development, and urban expansion, according to the US Fish and Wildlife Service (FWS). These threats, combined with other perils like invasive plants and wildfires, are driving the sage grouse toward extinction.

The FWS listed the sage-grouse as a candidate species under the Endangered Species Act (ESA) with plans to announce a listing decision in September. Because an ESA listing intends to bring a species back from the brink of extinction, the regulations are rigid. Western developers worry an ESA listing on a species with such a wide range will severely deter economic growth, said Theo Stein, a Public Affairs Specialist for sage-grouse at the FWS.

In an effort to proactively conserve and restore the sage-grouse to healthy populations without ESA regulations, the Sweetwater River Conservancy (SRC) opened the first conservation bank for the greater sage-grouse in March. Although it contains just 55,000 acres of prime sagebrush, the Conservancy owns 700,000 acres, a land mass the size of Rhode Island that spans three mountain ranges. The bank has plenty of space to expand should demand for sage-grouse credits require it.

The greater sage grouse’s requirement of large amounts of contiguous prairie also makes the SRC’s bank the largest in the US. Aside from the relatively new conservation banks for another grouse – the lesser prairie chicken – species banking is typically done on smaller scales involving animals that don’t require as much space.

It’s important to conserve on the proper scale, said Brian Kelley, a wildlife biologist at the Conservancy. “Instead of an acre here and 50 acres there, this sage-grouse conservation bank could signal a paradigm shift in the way conservation is done,” he said.

Three Decades of Decline

“Greater sage-grouse is a species that doesn’t like change,” said Stein. Nevertheless, the bird has struggled with an altered landscape for over a century as its historic range has been cut by over half, according to the Bureau of Land Management (BLM). Once numbering in the millions, the Department of Interior population estimates vary from 200,000 to 500,000, which is roughly a 30% decline since 1985. The only reason the bird wasn’t listed in 2010 was because the FWS said it lacked capacity to implement the listing status.

Western interests saw this as an opportunity to thwart a listing. They launched a massive proactive conservation movement that spanned energy companies, federal and state agencies and ranching and farming operations. Wyoming was one of the leaders, Stein said. It set up a state-wide conservation strategy that includes prime habitat spots preserved for conservation known as core areas.

Building a Bank

In this pro-sage-grouse political climate, Jeff Meyer, SRC’s co-founder and Managing Partner, purchased thousands of acres in central Wyoming with the intention of building a wind farm. He was correct in thinking the region has vast potential for wind power, Stein said. But what he didn’t realize was the spot was also right in the middle of a core area for sage-grouse conservation. And renewable energy is part of the energy development that harms the bird, according to the FWS.

SRC then switched to establishing a conservation bank. Initially, the company had performed intensive high-tech data-collection on the property to determine its wind power potential and found the land had great potential to generate mitigation credits.

Also, this region of Wyoming is home to a number of historic cattle ranches. SRC soon realized that pastureland, if managed sustainably, could operate in harmony with sage-grouse populations.

“The nature of the ranch landscape really leant itself to what this species needs: big, open and un-fragmented land,” said Kelly.

This means the bank requires grazing management plans that incorporate both livestock production and sage-grouse goals with activities such as vegetation monitoring factored in. Keeping the ranches in operation is an important part of the bank’s success because it incorporates local interests, Kelly said.

“Open spaces are important to Wyoming residents but maintaining their economic base is important also. A bank fits into this nicely because it allows for open space and for economic development through mitigation,” he said.

A Market requires Demand

The sage-grouse bank is opening up for business with roughly 32,000 credits to sell. “The next step is attracting clients,” said Stein.

The question of demand for these credits is a major one. A candidate species listing drives some demand, but an ESA listing drives most of it, said Mark Sattelberg, the FWS Wyoming Field Office Supervisor. However, new incentives are springing up.

Wyoming’s sage-grouse conservation strategy follows the mitigation hierarchy, according to its summary document, where development is encouraged outside core areas and requires mitigation for all projects that must occur within habitat strongholds.

On top of the state-wide mandate, the BLM and the Forest Service recently released an updated version of its sage-grouse conservation efforts. Included in it is a mitigation component requiring developers follow the mitigation hierarchy and compensate for unavoidable impacts. This is significant because together the agencies manage two-thirds of sagebrush lands. And last year, the DOI launched a new mitigation strategy referencing the hierarchy and calling for landscape-level activity.

Environmental NGO The Nature Conservancy’s announcement to establish a sage-grouse conservation bank in Nevada in partnership with gold mining company, Barrick Gold, is further evidence of a blossoming market for sage-grouse credits.

The Environmental Defense Fund’s-another environmental NGO- habitat exchanges are also in the works in Colorado, Wyoming and Nevada. These ventures focus on land management incentives to ranchers in exchange for sage-grouse conservation.

Sattleberg said he knows of three ranchers looking into conservation banking. “They’re looking into what it would take and it takes quite a bit upfront,” he said, noting interest from some ranchers will remain as interest and nothing more.

Quality Products?

At the core of all these conservation measures must be quality and they must deliver a net-benefit for the species, said Deborah Mead, the National Conservation Banking Coordinator with the FWS.

“If these initiatives aren’t established to compensatory mitigation standards, then you have to ask if the species still warrants a listing,” she said. And while this will surely frustrate those involved in the voluntary proactive activities, the interest of the species must be put first, she said.

It’s an important point to make with the various versions of conservation offered. If the FWS decides the sage-grouse does require a listing status, the current conservation activities will be assessed or re-assessed through an ESA lens, Mead said. “It’s good that people are getting out in front and taking voluntary actions on the landscape, but it should be clear whether these actions meet regulatory standards or not,” she said.

At any rate, Eric Holst, Senior Director of Working Lands at EDF, said the momentum for conserving the sage-grouse is a positive thing. “I see this as an opportunity to assemble the federal and state agencies, energy interests and other private-sector parties together to grow sage-grouse populations,” he said.

Kelly said: “It’s a different way of thinking about conservation and a new way of applying the tools we have.”

 

Norway Supports The Governors’ Task Force To The Tune Of $25 Million

Norway broke new ground in supporting the Governors’ Climate and Forests Task Force this week when the country announced $25 million in financing to the initiative over a 4-year period. While the funds have potential to plug significant funding gaps, they could also encourage other countries to follow Norway’s example.

18 June 2015 | BARCELONA | During this week’s annual Governors’ Climate and Forests Task Force (GCF) meeting here, Hanne Bjurstrom emphasized the importance of markets as well as on-the-ground activities that require subnational support.

“Last year we saw the importance of subnational leadership in driving the international agenda,” said Bjurstorm, Norway’s special envoy on climate change. She also cited subnational commitments such as the Rio Branco Declaration, an agreement among 13 rainforest nation governors to slash deforestation by 2020, during her speech at the GCF event.

These comments were perhaps expected as the GCF is a collaboration of states and provinces from seven countries with the shared goal of reducing emissions from deforestation and forest degradation (REDD) using jurisdictional approaches.

A more surprising comment was what Bjurstrom announced shortly afterward: 200 million Norwegian krone (roughly USD $25 million) in financial support to the GCF fund. The money flows through the Norwegian Agency for Development Cooperation (NORAD) and will be distributed over a 4-year period, Bjurstrom said.

“We realized the important work being done at the subnational level and wanted to support it,” said Bjurstrom. “This is the right moment to act.”

It’s the most significant amount of finance the fund has received to date, Bjurstrom said. It is also noteworthy because the funds flow directly to GCF member states and provinces. The ability of the GCF member states and provinces to directly access funds is key, she said.

“This money is specifically for the GCF Fund with no strings attached,” Bjurstrom said.

The direct access to funds makes Norway’s contribution special, agreed Danae Azuara, a Project Manager in Mexico with environmental NGO the Environmental Defense Fund,. “It is recognition to the subnational action that is incentivizing innovative solutions.”

More details on this announcement are expected but Bjurstrom said she hopes Norway’s action will encourage other countries to step up and do the same.

In terms of allocation, typically, 80% of all funds flow to capacity building (technical assistance and training, institutional structure and policy framework among other activities) said Ben Ayade, the Governor of Nigeria’s Cross River State, a GCF member. However, he stressed the importance of on-the-ground activity.

“Capacity building is great, but not more important than planting trees. Success in forests can only be measured by forest cover,” Ayade said.

Bjurstrom noted this point as well in highlighting on-the-ground progress and her support of subnational approaches to deliver deforestation reductions. During her GCF speech, she cited jurisdictions as having the potential to improve agriculture’s sustainability and productivity while at the same time protecting and restoring remaining tropical forests.

 

Things White People Like – As Told By A Hadza Tribesman

17 June 2015 | “Those are things of your white people,” says Richard Baalow when I ask him how he plans to sell his carbon offsets to corporate leaders.

Baalow is a member of a hunter-gatherer group called the Hadza, known as the “last of the first” – the approximately 1600 remaining members of the first known people to live in what is now Tanzania. He’s traveled from his homeland, the Yaeda Valley, to Arusha to speak to me via Skype.

“Us Africans know that our side of the world is clean,” he says. “Meanwhile, you white people know that your side of the world is spoiled, because you’re destroying the environment. That’s why you bring the carbon market to us. That’s why we say, ‘Welcome, Carbon Tanzania, and bring money!’ That’s the long and short of it.”

But the long story is worth telling, too.

Yaeda Valley Under Pressure

Even before Baalow met Marc Baker and Jo Anderson of the Arusha-based non-profit organization Carbon Tanzania, he had heard about REDD through the Dutch’s government’s presence in Tanzania. The acronym stands for “reduced emissions from deforestation and degradation” of forests, and it’s applied to a broad range of activities that cut greenhouse gas emissions by saving endangered rainforest. Communities like his can earn money for the carbon they keep locked in trees, and Baalow was eager to learn how the Hadza could participate.

The Hadza, whose culture can be traced back 40,000 years, have lost about 90% of their traditional homelands. As a non-aggressive hunter-gatherer group, “their response has always been to move. Just get out of the way,” explained Baker. The Hadza moved out of the way 3,000 years ago during the Bantu expansion throughout West Africa. They moved out of the way again about 300 years ago, for the Maasai.

Yaeda valley
The Yaeda Valley. | Photo courtesy of Carbon Tanzania.

Today, pressure is coming from Sakuma farmers and Datooga pastoralists, or herders. Habitat for the mammals that the Hadza hunt with bows and arrows – everything from giraffe to zebra to baboons to bats – is dwindling. The Hadza needed a plan, and getting paid to conserve the natural resource base they live off of sounded like a good one.

“There is a new food for the world, and it’s called REDD,” Baalow said.

Land Rights for a 40,000-Year-Old Culture

Before the Hadza could earn money for the carbon stored in the Yaeda Valley, they had to prove that they owned the land they had been living off of for millennia – and establishing that ownership could provide benefits well beyond the carbon income.

“Before this project, nobody had any rights,” Baalow said.

Richard Baalow
Richard Baalow works on a map of the Hadza territory. | Photo courtesy of Carbon Tanzania.

Land reforms of the 1990s led the Hadza to formalize two “villages” so that they could secure communal land rights under the Ministry of Lands. But by 2009, so many outsiders had moved into the villages that the majority of the representatives on the Village Council were non-Hadza. Baalow began working alongside legal advisor Edward Lakita at the Ujaama Community Resource Team on a different solution.

They decided to try a legal instrument called the Certificate of Customary Rights of Occupancy (CCRO) that had previously been used in Tanzania to formalize land rights for individuals. The Nature Conservancy (TNC), another partner in the project, paid for lawyers and meetings. It took years, but the Hadza eventually convinced the Tanzanian government to issue a CCRO to an entire community. In 2011, the Ministry of Lands issued the first-ever group CCRO, and the Hadza’s ownership of 20,000 hectares was finally on the books.

“Without that security of land tenure and resource tenure, you couldn’t begin to think about a 20-year carbon project, because at the current rate we’d have pastoralists moving all through this system,” said Matt Brown, TNC’s Africa Director. “The Hadza basically would have lost a lot more of their homeland, so securing the land legally through these CCROs is just absolutely critical.”

Baalow has traveled to several international indigenous peoples forums to speak about the process, and the Ujaama Community Resource Team has since worked with about 20 communities in Northern Tanzania to secure community land rights in the same way. Several of those CCROs went to the Sakuma and the Datooga – the neighboring groups who themselves were being pushed into Hadza territory partly because of insecure land rights.

“There’s this chain reaction,” said Brown.

REDD as Land-Use Planning

The CCRO serves as the first-ever land-use plan for the Hadza.

“As I see it, the CCRO has designated rights for different community user groups – the hunters, the farmers, and the pastoralists,” Baalow explained.

Group shot
“REDD is the distinction between plan and no plan,” says Marc Baker. | Photo courtesy of Carbon Tanzania.

The various land-use rights are based on practical considerations. Flat areas with higher organic soil content and less exposure to easterly winds are designated for agriculture. Wooded areas around important water sources are designated as protected. And so on. These “zones” do not impose on the Hadza’s way of life – they are still no fences, no permanent settlements – but they do guide decision-making around land-use within the Yaeda Valley, and they give the village governments parameters when granting farming areas to outsiders.

“REDD is the distinction between plan and no plan,” Baker said. “It’s about getting land use planning in place so when the wave of agriculture or charcoal hits, people have got rights, they’ve got value, and they’ve got an understanding of how the law works so you can actually plan where the deforestation is going to happen.”

The REDD-based land-use plan now covers more than 27,000 hectares. It would take a few days to walk across the project area.

Carbon Counting 

Now that the Hadza had secured their land rights, the next step was quantifying the carbon in the Yaeda Valley landscape. This was where TNC offered the most technical assistance – and where things get a little geeky.

Looking at map
Carbon Tanzania worked with the Hadza to measure the carbon content of their woodlands. | Photo courtesy of Carbon Tanzania.

The TNC team started with Landsat aerial imagery of the valley available through the U.S. Geological Survey, which captures the landscape at 30-meter resolution. For some areas, they used Google Earth to fill in gaps. TNC then sent out a team to take photographs at 100 different sites on the ground and manually classify them as different types of land uses: woodlands, agriculture, etcetera. They used the photographs to “train” a computer program to classify the entire map.

“We did that for 2013 and then we used the same points and looked at the 2000 imagery and basically were able to figure out what areas had gone from natural grassland or natural forest into some degraded state,” said Brown.

The verdict? The rate of forest loss in the Hadza territory was about on par with forest degradation in Tanzania as a whole – about 1% per year. This is the baseline for the “business-as-usual” scenario.

The Carbon Tanzania team followed up this work with a carbon stock assessment that involved going out into the field and measuring trees to figure out the amount of carbon stored in the African savannah woodland forest. It hadn’t been done before, so the team developed a new statistical program to determine the carbon stored in different tree species. The Hadza helped with the physical tree measurements and with identifying plants.

At the end of the study, they estimated that, at the current degradation rate, the landscape would release more than 15,000 tonnes of carbon dioxide (CO2) into the atmosphere annually. The majority of the aboveground carbon in the Yaeda Valley is stored in these acacia trees, according to Baker, so the fact that land-use planning protects and maps these trees can result in “a massive carbon saving.” Through REDD, the Hadza could earn sellable “offsets” for preventing that loss.

Offsets for Sale

The Yaeda Valley Carbon Tanzania project is developed under the Plan Vivo carbon standard, which focuses on community-led projects benefitting smallholders. To date, the project has earned 48,033 Plan Vivo certificates, each representing one tonne of CO2.

Buyers include National Geographic Travel and Abercrombie & Kent, as well as local tourism companies such as Dorobo, Map’s Edge, and Nature Discovery that do safaris or adventure treks in the region. Carbon Tanzania also works with international carbon offset retailers, including U.S.-based Native Energy and Sustainable Travel International and Sweden-based ZeroMission. The not-for-profit is in the process of hiring a business development manager who will focus full-time on sales now that the project is up and running.

“For the vast majority of projects, like ours, the sales element is critical,” Baker said. “If we can’t make payments, then of course the model starts to disintegrate.”

Under the Plan Vivo standard, at least 60% of revenues from the carbon sales go directly to the community. The remaining 40% is split between project monitoring and overhead. REDD payments reach the Hadza through M-PESA, a mobile phone money transfer system used widely in Tanzania. The most recent revenue of 21,550,000 Tanzania shillings (about $10,200 USD) from carbon offset sales between May and October of 2014 was split evenly between the two villages in the project area – Domanga and Mongo wa Mono. Going forward, Carbon Tanzania expects to generate $60,000 for the communities annually.

The Hadza use the money to pay the wages of 20 scouts that patrol the protected area, gathering data and documenting any illegal poaching or land incursions, as well as two village coordinators. Between 2013 and 2014, these scouts dealt with nine instances of cattle incursion and seven instances of poaching – though poaching instances involving guns have been reduced to zero. Aside from the scout salaries, the communities meet every six months to decide how to collectively spend the remainder from the carbon payments – usually on maize meal and school fees. They’ve also set up a medical fund that acts as community insurance, covering medical expenses for first-time mothers.

“The biggest benefit to come from Carbon Tanzania is that the communities have seen the value of environmental conservation and are able to earn money by conserving nature,” said Baalow.

The Future

Now that the project is in its fourth year, the Hadza have gained confidence that REDD payments actually will flow – and that monetizing carbon has led to many other outcomes that have non-monetary values such as land security, biodiversity protection, and a reduction of conflict between farmers and pastoralists, according to Baker.

“The money has value to the Hadza in terms of reducing stress on the culture,” he said, comparing it to a pension fund in Western terms. “They feel secure.”

Carbon Tanzania is in the process of expanding the Yaeda Valley project to cover more land area and is also working on a new REDD project in the Makame Wildlife Management Area, with the Maasai.

“We are not sitting around waiting for some global agreement to emerge,” he said, referring to the international climate talks coming up in Paris this December. “It’s far too important to wait for governments to do anything.”

 

Tabitha Muriuki contributed to this story.

Amazon Governors, NGOs Slam Brazil Feds And Demand More Active, Participatory Role In Developing REDD+

11 June 2015 | BONN | Germany | Even before climate negotiators here signed off on the last stubborn bits of text needed to complete the REDD+ package under the United Nations Framework Convention on Climate Change (UNFCCC), governors of the states comprising Brazil’s portion of the Amazon warned that economic pressures and poor governance were endangering the country’s stunning 70% reduction in greenhouse gas (GHG) emissions. It’s an argument they’ve made before, but this time they have the backing of more than 30 environmental non-governmental organizations (NGOs).

The governors made their case on May 29, on the eve of mid-year climate talks began in Bonn, when the nine-member Forum of Governors of the Legal Amazon (Fórum de Governadores da Amazônia Legal) issued the “Cuiabá Letter,” which will be delivered to President Dilma Rousseff this month.

The letter calls for direct state access to international funds for REDD+, recognition of the stock-flux approach for sharing REDD+ benefits in Brazil, and more state participation in the construction of the National REDD+ Strategy, which has been in limbo since 2010.

Then, on June 10, the penultimate day of the Bonn talks, the Brazilian Climate Observatory (Observatório do Clima / OC) – a coalition of 30 NGOs – threw its support behind the governors and issued a scathing attack on Brazil’s REDD+ strategy. The OC’s statement – headlined “Brazil, a Role Model for Redd+… Not!” – was broader in scope than the governors’ letter, but it also warned that the country’s stunning reduction in deforestation was in danger of backsliding if its approach to REDD+ isn’t overhauled.

Both documents praise Brazil’s 70% reduction in emissions from deforestation, which the documents attribute in part to participation in and anticipation of early-start, voluntary REDD+ programs funneled through the Amazon Fund.

“The Brazilian leadership on REDD+, as well as the fate of its accomplishments in the Amazon, is in jeopardy, for a number of reasons,” said the OC release. “President Dilma Rousseff’s administration is doing a poor job on safeguarding forests, on protecting the rights of indigenous peoples and traditional communities, on allowing cash flows to subnational governments and on ensuring transparency and accountability in REDD+ rules.”

We’ve Done Our Part, Now Show us the Money!

The Cuiabí¡ Letter is subtitled “Pact For The Valuation of the Forest and Reduction of Emissions from Deforestation (REDD+) in the Brazilian Legal Amazon,” and it was signed by representatives from nine states: six governors – Tií£o Viana of Acre, Pedro Taques of Mato Grosso, Waldez Gí³es of Amapí¡, José Melo de Oliveira of Amazonas, Marcelo de Carvalho Miranda of Tocantins and Maria Suely Silva Campos of Roraima – and three deputy governors: Carlos Brandí£o of Maranhí£o, Daniel Pereira of Rondí´nia and José da Cruz Marinho of Parí¡.

It echoes the 2009 Cuiabí¡ Declaration, which preceded the Copenhagen climate talks that enshrined REDD+ in the UNFCCC. That Declaration was also signed by all the governors of the Amazon states, and it also called for a more decentralized approach to REDD+ governance. But REDD+ did not yet exist under the UNFCCC at the time.

Much of the letter focused on Fundo Amazí´nia (the Amazon Fund), to which the government of Norway has already committed US$1 billion this year, with additional money coming from the German Government and Petrobras. Of the Norwegian money, US$882 million has already been disbursed to finance emission reductions, using a default value of US$5 per tonne, or roughly 206 million tons of carbon dioxide (CO2), which the letter said is the equivalent of just 4.9% of total REDD+ generated in the Amazon.

The Missing REDD+ Strategy

Both the governors and the OC said the federal government was blocking participation in the creation of a national REDD+ Strategy.

“It has been promised three times by the government since 2010, and the last draft of such strategy was leaked to civil society in December 2012,” the OC’s statement said. “Since then it has not seen the light. The government plans to launch it as a Federal Decree without any previous public consultation.

Without the national strategy (dubbed “ENREDD+”), the summary of information on safeguards becomes little more than a piece of paper, with low technical consistency according to UNFCCC rules, it continued. “Without ENREDD+, public officers can pick and choose among actions to be evaluated on REDD+ safeguards. Government programs that cause deforestation, such as road and dam building in the Amazon, can be comfortably left outside scrutiny. How’s that for a safeguard?”

On to Manaus, By Way of Barcelona

This was the first time the Forum of Governors has met since 2009, but several of the governors will also be attending a meeting of the Governors’ Climate & Forests (GCF) Task Force in Barcelona next week. The GCF is a global association of states in larger nations that have committed to reducing GHG emissions, largely by saving forests. The governors also agreed to reconvene later this month in Manaus, but a date has not been set.

The governors’ meeting was preceded by a morning meeting of the state secretaries of environment. During that meeting, Secretary Ana Luiza ívila Peterlini set the tone by reiterating both the accomplishments and the cost of these efforts.

“The Brazilian Amazon has made a significant contribution to the reduction of deforestation in their forests,” she said. “But we have not obtained financial compensation equivalent to our efforts.”

Mariano Cenamo, director of environmental NGO organization IDESAM (Institute for the Conservation and Sustainable Development of Amazonas/Instituto de Conservaçí£o e Desenvolvimento Sustentavel do Amazonas), speaking on behalf of GCF, said REDD+ finance for Brazil could reach R$135 billion.

“The country has been a global player in REDD+,” he said. “It reduced emissions by more than 4.2 billion tons of CO2 in eight years (2006-2013), but these efforts were not rewarded as the Amazon Fund raised only 5% of the potential generated by REDD+ – somewhere around R$3 billion.”

The letter points out that those 4.2 billion tonnes of CO2 are locked in 8.7 million hectares of forest that the states protected from development – in accordance with a federal decree, and in anticipation of REDD+ funding.

“This [emission-reduction] mark surpasses the reduction of any country – developed or developing, with or without binding targets,” the letter said. “Achieving these reductions is expensive, and currently these costs are being paid almost exclusively with public funds from local, state and federal governments, as well as individual efforts of farmers, traditional communities and indigenous peoples of our Amazon region.

“However, we have reached the ceiling in our budget investment capacity, particularly in the current Brazilian economy,” the letter continued. “The logic of creating the Amazon Fund was to raise funds through the REDD + mechanism to compensate positive results in emission reductions by developing countries.”

The Math

The letter states that, based on emission reductions already received, the country should be receiving roughly R$61 billion (US$20 billion) already, and more to come.

“Basically, they generated 4 billion tons and could sell only 200 million to Norwegians,” said Cenamo. “We still have potential of 95% of the whole amount, and the states want to find a way to sell it or get compensated for it. So if we’re not getting better performance with the Fundo Amazonia, they want to find ways to reach donors.

“If we can achieve the goal of reducing deforestation by 80% in the Amazon by 2020, we should generate additional emission reductions of 5 billion tons, totaling roughly R$135 billion by 2020,” the letter said. “We understand that the raising of funds to achieve this potential should come from a joint effort between individual states and the federal government, to maximize our chances of success and new partnerships and means of receiving financial rewards for our efforts.”

Members of the Brazilian delegation to Bonn said they were not authorized to comment on either letter.

Specific Demands

Here is a list of the specific demands featured in the governors’ letter:

  1. Adopt the stock-flow methodology to allocate the reductions of avoided deforestation among the Amazon states and the federal government, proposed by the Forum of Environment Secretaries of the Brazilian Legal Amazon, in the context of the National REDD+ Strategy discussion, delivered to the Civil House of the Presidency and the Ministry of Environment at a meeting held at the Presidential Palace on 19/09/2012,
  2. Define, urgently, the National REDD+ Strategy together with the Amazon States, as this process has been stalled since 2012;
  3. Support the fundraising of external resources by the Amazon states to reduce deforestation and to protect the forest;
  4. Promote the modification of art. 1 of the Decree 6.527/2008 authorizing the BNDES to operate the Amazon Fund, replacing the word Amazon Biome with “Legal Amazon”, since the mobilization of financial resources from the Amazon Fund is supported by the reduction of deforestation monitored by PRODES/INPE, which are produced in the Legal Amazon and not in the Amazon Biome;
  5. Develop support programs and economic, fiscal and financial incentives for consolidation and maintenance of protected areas in the Amazon states;
  6. Create mechanisms to compensate the Amazon States that have more than 50% of its territory under protected areas and indigenous lands.

This article has been updated with exact translations from Portugues to English of text from the Governors’ letter.

 

Additional resources

Merging Of Indonesia’s Forestry And Environment Ministries Continues With Inauguration Event

This article was originally posted on Mongabay.

10 June 2015 | “I think the transition period of the last six months has been quite heavy,” the minister, Siti Nurbaya, said at the inauguration event in Jakarta on Friday. “We persevered through a difficult time,” she added.

Notable appointments include Climate Change Oversight Director-General Nur Masripatin, Environmental and Forestry Spatial Planning Director-General San Afri Awang and Social Forestry and Environmental Partnerships Director-General Hadi Daryanto, all of whom have held various Forestry Ministry positions before Jokowi combined it with the Environment Ministry upon taking office last year.

The Climate Change Oversight Directorate-General will take the reins of Indonesia’s climate change agenda in place of the now-defunct REDD+ Task Force (BP REDD+) and National Council on Climate Change (DNPI).

Earlier this year, Jokowi dissolved BP REDD+ to streamline the government, though some activists and officials have criticized the move, fearing Indonesia’s conservation agenda will languish under the weight of the ministry’s bureaucracy.

BP REDD+ was the world’s first cabinet-level institution dedicated to implementing REDD+, which refers to the global Reducing Emissions from Deforestation and Forest Degradation mechanism.

Nur’s appointment “effectively confirms that the entire climate change agenda will be managed by the Directorate-General of Climate Change Oversight,” Siti said at the inauguration.

The new department will handle climate change adaptation and mitigation; measuring, reporting and verification of progress; and forest fire control, according to the minister.

To preserve the institutional independence and objectivity of Indonesia’s cooperation with Norway, under which BP REDD+ was established in 2013, the ministry will establish a Steering Committee on Climate Change, led by Sarwono Kusumaatmadja, an environment minister during Suharto’s New Order regime. The committee will also include NGO representatives, other senior bureaucrats and foreign technical experts.

As head of the Social Forestry and Environmental Partnerships Directorate-General, Daryanto is in charge of realizing Jokowi’s promise to allocate 12.5 hectares to “social forestry” or “community-based forestry” schemes, which put land management in indigenous and local communities’ hands through community logging, village forest and other arrangements.

The new director-generals line up at their inauguration last week. Photo: Sapariah Saturi

Greenpeace forest campaigner Bustar Mitar noted that most of the appointees were old faces from the Forestry Ministry, and he urged them not to operate in the “old style.” In 2012, Indonesia’s Corruption Eradication Commission (KPK) named the Forestry Ministry one of the country’s most corrupt institutions.

Agrarian studies expert Noer Fauzi Rachman also expressed reservations about holdovers from the previous administration, including Awang and Daryanto.

“This is not a sign of change,” Noer said.

“If the attitude is still toward centralized and elitist decisionmaking that is not open to the people’s participation, these changes won’t mean anything,” he added.

The director-generals are all echelon I officials. The ministry now has to name echelon II, III, and IV officials. There will be 18 echelon I as well as 86 echelon II, 316 echelon III and 769 echelon IV officials.

The newly inaugurated officials:

1. Bambang Hendroyono, ministry secretary-general
2. San Afri Awang, environmental and forestry spatial planning director-general
3. Tachrir Fathoni, ecosystem and natural resources conservation director-general
4. Hilman Nugroho, watershed and protected forests director-general
5. Ida Bagus Putera, sustainable production forest management director-general
6. M.R. Karliansyah, pollution and environmental damage control director-general
7. Tuti Hendrawati, toxic waste materials management director-general
8. Nur Masripatin, environmental and forestry spatial planning director-general
9. Hadi Daryanto, social forestry and environmental partnerships director-general
10. Rasio Ridho Sani, environmental and forestry law enforcement director-general
11. Iman Hendargo Abu Ismoyo, ministry inspector-general
12. Bambang Soepijanto, head of the ministry’s Natural Resources Development Agency
13. Henry Bastaman, head of the ministry’s Research, Development and Innovation Agency

 

Additional resources

The Sustainability Strategy That No One Talked About

15 June 2015 | When Sean Kinghorn started his new job as a senior sustainability manager at the software company Intuit, he wasted little time in proposing an ramped-up emissions reductions goal to the company’s executives.

His plan involved cutting emissions 20% under a 2012 baseline by 2020 and targeting both direct and indirect emissions, categorized as scope 1, 2 and 3 emissions. He also suggested using offsets to deepen the impact beyond this 20% reduction.

“Since I was two months into the honeymoon phase, I kind of put my neck out there and said, ‘I do not believe in us investing in offsets unless we’re going to set a science-based goal and be incredibly aggressive for all of our scopes.’ And they said yes,” Kinghorn said, speaking during a panel discussion at the Sustainable Brands conference in San Diego last week.

Since then, the maker of TurboTax and QuickBooks has purchased enough offsets to make the company carbon neutral across all three scopes. It buys from avoided deforestation projects in Borneo and Madagascar, a biomass project in Brazil, and wind, cookstoves, and biomass projects in India – as well as two projects in the United States.

Volcom, the lifestyle brand that markets apparel to surfers, skateboarders, and snowboarders, also practices “offset-inclusive carbon management,” purchasing tonnes from Wildlife Works’ Kasigau REDD+ project that protects 200,000 hectares of dryland forest in Kenya.The brand uses offsets to neutralize the emissions of its sporting events while parent company Kering offsets all scope 1 and 2 emissions on the business side. In addition, Kering has set a target of directly slashing carbon emissions 25% by 2016 across all of its brands, using 2012 as a baseline.

“Our carbon mentors came from within,” said Derek Sabori, Volcom’s VP of Global Sustainability. “For us, the idea of carbon offsets was introduced to us thanks to our parent company Kering.”

Quiet Leadership

Intuit and Volcom are in good company. Fourteen percent of corporations reporting emissions data to CDP engage in carbon-inclusive carbon management, according to recent Ecosystem Marketplace research. Far from “greenwashing,” these offset buyers – which include major consumer-facing brands such as Coca-Cola, Toyota, Delta Air Lines, Clorox, Sony, and many others – invest in direct emissions reductions activities such as energy efficiency and low-carbon product design at a higher rate than companies that don’t offset. Offset-buyers spent a collective $41 billion on these carbon-cutting activities in 2013 and were five times more likely to use an internal price on carbon.

 

CDP data reveals that a higher proportion of offset-buying companies engage in direct emissions reduction activities compared to companies that don’t offset, according to Ecosystem Marketplace analysis. | Figure design by Eszter Bodnar.

However, both Kinghorn and Sabori admit that they haven’t yet done much marketing around their companies’ offsetting programs – or even sustainability in general – something that Kinghorn sees as a big miss.

“We’ve built up a good inventory of sustainability stories,” added Sabori. “Now we have to figure out how to tell those.”

Tell it From the Treetops

Recent social media attuned initiatives such as Stand for Trees and NatureBank are beginning to bridge the communication gap around carbon offsetting.

Since its launch in February, Code REDD’s Stand for Trees initiative has facilitated 35,000 tonnes worth of carbon offset sales from a dozen avoided deforestation projects across Brazil, Cambodia, Colombia, the Democratic Republic of the Congo (DRC), Indonesia, Kenya, Madagascar, Peru, Zambia, and Zimbabwe. The Stand for Trees website mimics an online shopping experience and allows individuals to purchase offsets in tonne or half-tonne increments, for $10 or $5, respectively – and then share the purchase on social media channels.

“What we really wanted to do is take this wonky, technical REDD mechanism and this crazy acronym and translate it into something that made sense for people on a human level, on a personal level,” said Gina Angiolillo, Communications Director at Code REDD.

 

A screenshot from Stand for Trees, which makes purchasing REDD offsets as easy as online shopping.

NatureBank, an online platform being developed by British Columbia-based carbon offset originator Offsetters, also aims to use technology and social media to make carbon offsetting more accessible. Offsetters CEO James Tansey describes the platform as akin to Facebook or eBay for nature. Users will be able to earn “nature coins” by clicking through different forest carbon projects, pick a line on a map and watch footage from a drone as it flies through a rainforest, and buy “digital rights” to certain hectares of land conserved through a carbon investment.

“What people get emotionally connected to and excited about is the idea of conserving some of the almost priceless assets in terms of forest natural capital,” said Tansey. “People don’t get excited about something as abstract as carbon offsets.”

NatureBank will be operational next month, with the goal of mobilizing $1 billion in conservation carbon finance by 2018.

Going Viral

As part of the ongoing Stand for Trees campaign, Code REDD reached out to the Saint Louis-born rap artist and activist Prince Ea to see if he’d be interested in getting involved. Prince Ea visited the Kasigau Corridor REDD project in Kenya and the Mai Ndombe REDD project in the DRC. The result was the provocative video “Sorry” in which the rapper apologizes to future generations for destroying the planet – then flips a switch on his message halfway through to say it’s not too late. The video was released on Earth Day of this year and was viewed 12 million times in the first 12 hours. It has since reached more than 66 million views on Facebook.

“How do you get people to care? Well, you have to care,” Prince Ea, whose real name is Richard Williams, said during a plenary session at Sustainable Brands, where he got a standing ovation.

 

In the epilogue to his “Sorry” video, Prince Ea questions the idea of destroying forests for money.

Stand for Trees is early proof that corporate offsetting programs have brand value, Angiolillo said. “We can talk to companies and say, we know that consumers get it – we had 20,000 of them purchase a tonne on our site,” she said.

The “gaming” aspect of NatureBank also aims to make the concept of offsetting more approachable – even fun.

“The inspiration here is that if you can get millions of people to buy FarmVille and Angry Birds, then surely you can do something on the gamification front with conservation,” Tansey said.

Ramping up Demand

Demand for carbon offsets on the voluntary market grew 14% last year to 87 million offsets, according to Ecosystem Marketplace’s Ahead of the Curve: State of the Voluntary Carbon Markets 2015 report, released last week. However, average prices fell to an all-time low of $3.8/tonne as offset suppliers faced a buyer’s market. Suppliers such as Offsetters and Code REDD’s Stand for Trees remain hopeful that the percentage of companies that engage in offsetting will grow.

“Any lightbulbs that needed to be changed should have been changed by now,” said Angiolillo, referring to the increasing sophistication of companies’ sustainability efforts. “So I think now that we’ve moved along far enough in this space, we are opening up a whole new potential set of offsetters who have done the things they need to do on their own side first, and now they have no more excuses.”

Indeed, scope 3 emissions accounted for three-quarters of offset buyers’ emissions, according to Ecosystem Marketplace’s analysis of public CDP disclosures – the elephant in the room in terms of companies’ true climate impact. Since these emissions occur upstream in a company’s supply chain (e.g. land-use change associated with the procurement of raw materials) or downstream in customer’s use products (e.g. the energy used when a consumer plugs in a company’s phone or refrigerates their food products), they are difficult to tackle in the short-term. Offsetting is one way to address these indirect emissions immediately.

 

More than 70% of companies’ reported scope 3 emissions come from customer’s use of their products, according to Ecosystem Marketplace research. | Graphic design by Eszter Bodnar.

Intuit’s measures to cut emissions include upgrading equipment to enhance energy efficiency in the company’s data centers, installing solar panels on its California buildings, increasing video conferencing capabilities to cut down on employee travel, and innovating towards “digital distribution” of all of its products to avoid packaging and shipping emissions. But all of these things take time.

“We need to invest in offsets now because I believe the planet can’t wait,” said Kinghorn.

Climate Negotiators Deliver Win For Forests With Breakthrough In Bonn

9 June 2015 | BONN | Germany | Maybe it’s the new digs here in the airy glass atrium that served as the German Bundestag before the capital moved to Berlin in 1999. Or maybe it’s a new spirit of cooperation, driven by a sense of urgency, heralding a new era of change and progress. Or maybe – as one negotiator said five years ago – it’s just that they all got really sick and tired of sitting across from the same people saying the same thing year after year.

Whatever drove them, climate negotiators here celebrated the inauguration of their headquarters in the repurposed “World Conference Center Bonn” with a draft agreement on how to slow climate change by reducing deforestation in developing countries. The agreement (available to the right) resolves all of the outstanding technical issues on how to Reduce Emissions from Deforestation and Degradation of forests (called “REDD+” within the UNFCCC), and it provides a clear set of standardized rules for developing REDD finance, but it also leaves the larger policy issues of how finance will flow to these activities open until year-end climate talks in Paris.

“Today’s breakthrough was unexpected, and countries should be praised for their hard work over the last decade,” wrote Gustavo Silva-Chí¡vez, who manages the Forest Trends REDDX tracking initiative, in the Forest Trends blog. “While REDD+ is finished on paper, the Paris global deal must provide the policy certainty to implement REDD+ on the ground.”



The Nitty-Gritty

The new draft was finalized last night by the Subsidiary Body for Scientific and Technical Advice (SBSTA) and approved by the REDD+ Working Group this morning. It provides clarity on how safeguards and non-carbon benefits are addressed, as well as on how non-market approaches are implemented. These were the three issues that SBSTA was charged with addressing at this session, and they complement the “REDD Rulebook” that was adopted at year-end talks in Warsaw.

The new draft won’t officially be enshrined in the UNFCCC until it’s approved by high-level negotiators at year-end talks in Paris, just as the Rulebook was approved at the end of 2013 in Paris. The two-year-old Rulebook covers issues related to carbon accounting, such as how to monitor national forests, how to address the drivers of deforestation and forest degradation, and how to measure, report and verify activities designed to slow deforestation. The issues resolved today were considered stickier than those enshrined in the Rulebook, and many had expected them to be punted to the Paris talks – largely because even pro-REDD countries were perceived to be holding the mechanisms as bargaining chips.

“I think this will increase the confidence of everybody – both donors and the forest countries – that REDD can be done in a transparent and inclusive way with environmental credibility,” said Duncan Marsh, Director of International Climate Policy at The Nature Conservancy. “The fact that countries in these REDD negotiations were able to get to an agreement here two days before the conference ended is a great signal for Paris.”

What Happens Now?

With REDD+ completed, countries can more aggressively incorporate it into their national climate action plans, or “Intended Nationally-Determined Contributions” (INDCs), although they won’t know until Paris how such inclusion will be recognized.

 

REDD+ Negotiators celebrate Tuesday’s historic agreement with a group photo. After ten long and often tempestuous years, they never have to see each other again.

So far, only eight countries have submitted INDCs, and none of the industrial emitters have included the use of REDD+ to meet their reduction targets; but Pipa Elias, also of TNC, points out that Mexico has offered to use REDD+ internally to reduce emissions and seems to be floating the idea of attracting REDD finance to beat them.

In its INDC, the country already said it would unconditionally reduce its emissions to a level 25% below the business-as-usual scenario by 2030, but it said it would set a more ambitious target of 40% if it received financial resources and technology – possibly through REDD finance.

“They’ve basically said, ‘We’re going to implement REDD+ internally to help us meet our domestic pledge, but we can also reduce more emissions if we get the money for this,” says Elias. “So, REDD+ also could be put forward – maybe by a middle-income or lower-income country – to say, ‘This is something we can do, but it needs to be financed.’”

She points out that the UNFCCC Secretariat is creating a REDD+ Info Hub for countries to begin listing their reference levels and other technical criteria as determined under the Rulebook, but the new agreement makes it possible for them to list their safeguards and non-carbon benefits as well – activities that could speed the flow of finance.

What Were the Sticking Points?

The breakthrough on all three outstanding issues came swiftly, and involved compromises that had been in the air for years, leaving veteran observers pleasantly perplexed.

“Maybe they really did just get tired of looking at each other,” says Silva-Chí¡vez, without a hint of sarcasm. “After all, they’ve been at it for ten years.”

Then he turned to the glass wall separating the outer lobby from the old Bundestag, which now serves as the mail plenary. Through the glass, you could see the core text being reworked in track-changes mode on giant screens.

“You also have to realize that they’ve got about 90 more pages of core text to work through in there,” he says. “I can just hear the bosses saying, ‘REDD+ is 98 percent done, let’s just close it out so we can move on to this other stuff.’”

Of the three outstanding issues, the easiest to resolve involved non-market payments, where just one country, Bolivia, had been holding out for inclusion of its “Joint Mitigation and Adaptation Mechanism”. The JMA welcomed REDD+ payments, but not through market mechanisms, and it prevented other market mechanisms from being implemented. The final text leaves the door open to both market and non-market approaches, with countries free to choose which they prefer.

The second issue* involved payments for non-carbon benefits (NCBs), such as protection of watersheds and biodiversity. In low-deforestation jurisdictions like Acre, Brazil, such additional benefits have been handled ad hoc – making them difficult to quantify and also difficult to communicate. African countries wanted to create a more standardized environment with detailed “methodological guidance” for NCBs, in part because their historic deforestation type is not the “frontier ” deforestation common in Latin America, but rather “mosaic” deforestation that’s less aggressive and therefore less lucrative from a carbon finance perspective.

“In Ghana, where I come from, we don’t talk about carbon anymore, at least not when talking to farmers,” says Yaw Osafo, who negotiated on behalf of the African Group.

“Farmers know that if they clear the forest they can grow crops, but they also know it will effect the rivers and streams,” he says. “So if you provide them with something that will allow them to keep most of the trees and still support a living, they’ll get behind it – and we wanted to be able to clearly communicate that.”

The compromise agreement provides “guidance”, but not “methodological guidance”, which Osafo says gets the job done.

On the issue of safeguards, donor countries – and NGOs within them – had been demanding clear minimum mandatory requirements, which some rainforest nations derided as unnecessary and prohibitively expensive. In the compromise agreement, safeguards have to be clearly communicated, with higher financing tied to higher rates of protection.

CORRECTIONS and CLARIFICATIONS

*This story initially reported that the African Group wanted to make NDB reporting mandatory for all countries.

Full Circle: REDD and Indigenous People Past, Present, and Future

8 June 2015 | BONN | Germany | By now, most of us know that REDD stands for “Reducing Emissions from Deforestation and Degradation”, and that it generally uses carbon finance to save endangered forests.

But how does it work, and where did it come from – and what is the new “Indigenous REDD” initiative being spearheaded by the Latin American indigenous federation COICA (Coordinadora de las Organizaciones Ind­genas de la Cuenca Amaz³nica)?

To answer these questions, we’re rolling out a series of easy-to-read articles focused on “Indigenous REDD”. Written in plain English for a general audience, these stories should bring you far enough into the weeds to understand the issues without getting in over your head – and they’ll provide a solid foundation for understanding our coverage as it unfolds between now and the year-end climate talks in Paris.

If you’d like to keep up on this series as it unfolds, please subscribe to the Ecosystem Marketplace eNewsletter by following this link. Subscribe to the Marketplace eNewsletter to receive a monthly summary of all Ecosystem Marketplace original content, or to the Forest Carbon Newsletter to receive our forest-related contentent, as well as content aggregated from other sources.

If you only want to receive the stories relevant to our Indigenous REDD series, send an e-mail to Steve Zwick at SZwick@ecosystemmarketplace.com.

Here, meanwhile, are the stories we’ve published so far. Scroll down to the bottom for the booklet.

REDD Dawn: The Birth of Forest Carbon looks back at the genesis of REDD, which was conceived in 1988 by the World Resources Institute. It offers a brief introduction to the science of carbon accounting and an overview of REDD within the climate talks.

Indigenous People Explore Many Shades of REDD looks at how REDD has evolved on indigenous territories to-date, and how indigenous leaders believe it must change to truly deliver on its potential.

Choc³-Dari©n: What Projects Can – and Cannot – Achieve offers a deep dive into a project developed by the Afro-Colombian Tolo River People – and a primer on how REDD plays out on the ground.

Indigenous Life Plans and Carbon Finance: Two Sides of the Same Coin? examines the symbiotic relationship between indigenous “Life Plans” and REDD.

The Surui Forest Carbon Project: Lifeline For A Life Plan offers a detailed glimpse inside a pioneering indigenous project built on an indigenous Life Plan. Initially posted in 2013, it’s a bit dated, but still a good read.

Jurisdictional REDD: Long Deferred, Soon Delivered examines the state of “jurisdictional” REDD programs – government-to-government programs that are designed to reduce deforestation across an entire state or country.

REDD+ And Green Supply Chains: The Yin And Yang Of Saving Forests examines role that REDD finance can play in helping to purge deforestation from corporate supply-chains.

Click here to download Full Circle: REDD and Indigenous People – Past, Present, and Future, which is a PDF containing several of these stories.

 

New Analysis Offers Pathways For Scaling Up Climate Finance To $100 Billion Mark

Meeting the objective of $100 billion in climate finance by 2020 can be achieved, according to a new World Resources Institute (WRI) study. The NGO released the study, which lays out multiple methods that harnesses public and private sources to meet the target, at climate talks this week in Bonn.

This article was originally a WRI press release.

 

5 June 2015 | New analysis from World Resources Institute finds countries can achieve the goal of mobilizing $100 billion per year in international climate funding by 2020. The new paper finds the goal can be reached through multiple pathways and will require bringing in funding from various sources, including the public and private sectors.

Getting to $100 Billion: Climate Finance Scenarios and Projections to 2020 is one of the first quantitative analyses of funding scenarios to achieve the $100 billion goal. WRI’s paper finds greater clarity and stronger commitments will be necessary to reach the funding target, but if all considered sources are included, climate finance could total $109 to $155 billion in 2020 under projections of low/medium growth and leverage.

“An international climate agreement at COP21, including agreement on finance, depends on developed countries providing a credible pathway to honor their commitments with strong provisions for predictable and adequate climate finance,” said Athena Ballesteros, director, sustainable finance initiative, World Resources Institute. “While $100 billion is not sufficient on its own to create a low-carbon transformation, it is an important political goal to signal developed countries’ are committed to scaling up climate finance.”

Four public and private financing sources that might count toward the $100 billion goal are grouped into potential funding scenarios and projected forward from 2012 to 2020, using various growth rates and assumptions about how much private investment could be leveraged by public dollars. All four potential pathways require steady increases in public finance and inclusion of new funding sources to reach the $100 billion by 2020 goal:

  • Scenario one, which includes developed country climate finance alone, will not reach $100 billion by 2020, unless it grows at an annual rate of 25 percent.
  • Scenario two, which adds the private sector finance leveraged by developed country climate finance, could meet the target only under a high growth/high leverage projection.
  • Scenario three, which includes developed country climate finance and MDB climate finance and private sector investment leveraged by both these sources could meet the $100 billion target under a medium growth/medium leverage projection.
  • Scenario four, which combines developed country climate finance and MDB climate finance and private sector leverage and climate-related ODA, could reach the $100 billion under a low growth rate/low leverage projection.

“Forging an agreement on the path to $100 billion is essential to build trust and bring countries together ahead of the Paris climate conference in December,” said Michael Westphal, senior associate, WRI and the paper’s lead author. “We urge negotiators to use the report’s recommendations as a political middle ground to move the world toward the $100 billion goal.”

Getting to $100 Billion outlines three key recommendations to achieve a credible and politically feasible path forward:

  • Developed nations should commit to increasing all public funding flows above current levels to 2020 – as of 2012 climate-specific finance totaled $17 billion.
  • Developed countries should consider using new and innovative sources of finance including redirection of fossil fuel subsidies, carbon market revenue, financial transaction taxes, export credits, and debt relief – many of which have so far been underutilized to mobilize climate finance.
  • Parties should clarify the definition of climate finance and development of methodologies, including those for calculating and attributing leveraged private sector investment, to improve accounting and reporting

“As stated by President Hollande, we can’t secure an agreement in Paris without an agreement on finance,” said Pascal Canfin, senior advisor for international climate affairs, WRI. “Therefore, showing a credible and balanced pathway towards the $100 billion goal is an issue of strategic importance for the upcoming G7 summit.”

 

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Brazilian Ecosystem Services Matrix Brings Transparency To Environmental Finance

5 June 2015 | Brazil holds more than 12 % of the world’s freshwater, but citizens in some parts of the country – most notably Sí£o Paulo – have been suffering unprecedented drought this year – in part because of a failure to appreciate the linkages between forests and water supplies. That failure, however, has led to a renewed appreciation of the interlocking services its vast natural resources provide: the carbon that its forests keep locked up as they regulate water and the thousands of species of plants and hundreds of species of birds and freshwater fish in its Canada-sized Cerrado, among others.

 

The Brazil Ecosystem Services Matrix lets users track ecosystem service programs across all of Brazil..

The country is also home to thousands of programs that use payments for ecosystem services (PES) to fund conservation by recognizing the value of those services. In Brazil, the best-known form of PES is REDD – an acronym for programs that conserve endangered forest by harnessing carbon finance to “Reduce Emissions from Deforestation and Degradation”, but the most advanced programs cover water – often by restoring forests that regulate rivers.

For such programs to deliver on their potential, decision-makers have to know what works and what doesn’t – but until recently, that information was scattered in isolated pockets across the country. It changed last week when Ecosystem Marketplace publisher Forest Trends unveiled the Brazilian Matrix of Ecosystem Services (Matriz Brasileira de Serviços Ecossistíªmicos), with the support of Brazilian non-profit organization Fundo Vale and the Good Energies Foundation. The Matrix is a database of more than 2,000 PES programs across Brazil categorized by type: water, carbon, biodiversity, sustainable agriculture, livestock, and “multiple”. The “multiple” category refers to those that bundle several ecosystem services into one payment plan or embed the service cost into a product price such as certified timber.

“The most visible aspect of the Matrix is the interactive map, which we call the ‘visualizer,’” says Beto Borges, who spearheaded the effort within Forest Trends. “We also summarized the key findings in a booklet called ‘Economic Incentives for Ecosystem Services in Brazil’ (Incentivos Econí´micos para Serviços Ecossistíªmicos no Brasil), and we made them available on a poster, which you can find if you go to the Matrix home page and click on ‘documentos’, but it’s really huge.”

“It’s essential for us to understand that all ecosystem services are interconnected if we’re to develop a new and innovative market,” said Mauricio Moura Costa, Executive Director of Bolsa Verde do Rio, an Brazilian organization promoting market mechanisms for environmental compliance, speaking at the event. “The concept of the Matrix is what distinguishes the work that’s been developed by Forest Trends.”

Makings of the Matrix

Fundo Vale first approached Forest Trends after seeing Ecosystem Marketplace’s Global Matrix, a similar database of ecosystem markets, but on a worldwide scale. The two organizations developed the Brazilian Matrix jointly over more than three years, with support from the Good Energies Foundation.

 

Beto Borges (left) introduces the Brazil Matrix of Ecosystem Services in Sí£o Paulo.

Developers plan a second phase, which will include work with the Brazilian Biodiversity Fund, a non-profit organization, and possibly government ministries as well.

Although designed as a decision-making tool for use within the country, the Matrix can also provide an opportunity for people outside the country to understand the country’s rich blend of programs – and not just the isolated few that have received international attention, says Borges.

Acre is not the only thing happening on PES, and the Surui REDD project isn’t the only carbon project,” he says. “Water is actually more developed than carbon.”

Fulfilling a Need

The Matrix was primarily created to fill the knowledge gaps and gain a deeper understanding of ecosystem services and the payment mechanisms meant to protect them. Developers of the tool intend to address issues such as social benefits, scale, effectiveness, challenges and opportunities.

And with Brazil’s vast ecological assets combined with the country’s heavy involvement in innovative compensation programs, potential for PES is huge.  In an early proposal document, Borges said these practices – PES – can drive significant investments for a true green economy that alters the existing paradigm which promotes development at the cost of the environment.

As the landscape of ecosystem markets is constantly changing, an ultimate objective of the Matrix is establishing a roadmap for stakeholder engagement, according to the 2012 proposal document – which also describes the tool as a ‘living’ database that evolves with the market but its inclusive analysis can provide stability and guidance. The matrix creates a simple and direct way to visualize and follow global and regional trends of environmental markets in Brazil, the web page reads.

A Joint Public Private Effort

Cristina Maria do Amaral Azevedo, Deputy Secretary of Environment for the State of Sí£o Paulo, said the initiative could reduce transaction costs and draw in the private sector.

“With government resources alone, it will not be possible to make viable any PES public policy” she said. “Dialogue and cooperation among the private sector, civil society and governments will provide the answer for how to advance with PES in Brazil at scale.”

The information the Matrix provides offers a bridge between the public and private sectors. PES can harness private dollars for conservation in a sustainable way and fill the funding gap that exists currently as conservation activities are largely publicly funded. The Matrix allows for a healthy progression and incorporation of compensation schemes into land-use strategies and regulatory development, the booklet reads.

The accompanying report was authored by environmental researchers Carlos Eduardo Frickmann Young and Leonardo Barcellos de Bakker, who note that PES doesn’t let government off the hook. Instead, they say, it requires strong environmental policy that supports sustainable development. Government must still enforce protection on protected areas as well as other environmental regulation, they say. The Matrix simply makes everyone’s role more visible and transparent.

“The Matrix developed by Forest Trends allows not only the acceleration of the decision-making process, but also provides an opportunity for convergence between the private sector, the public sector and civil society,” said Walter Lazzarini,  President of the Environmental Council at FIESP (Federation of Industries of Sí£o Paulo/ Federaçí£o das Indíºstrias do Estado de Sí£o Paulo).

Impact on Legislation

The matrix identifies strengths and weaknesses of existing PES projects while also analyzing synergies among the various entities and best approaches for them to work together. Comments streaming in regarding the Matrix note the growing belief that the tool could influence a more comprehensive national PES law in Brazil. The nation has an existing law that defines ecosystem services and mentions PES.

“The discussion of payments for environmental services has not yet led to a consensus in Brazil,” said Francisco Gaetani, Executive Secretary of the Ministry of the Environment. “The Brazilian Matrix developed by FT can contribute to the drafting of a law that’s denser, more robust, and more likely to succeed, because it reflects the reality of more than 2,000 field initiatives.”

 

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Voluntary Buyers Spend Nearly $4.5 Billion on Offsets Over Last Decade

The voluntary carbon markets have served as the testing ground for compliance programs all over the world, even moving forward when efforts to implement mandatory cap-and-trade programs stalled. This has led to the voluntary markets having an influence that extends well beyond the nearly one billion offsets transacted over the last decade, according to Ecosystem Marketplace’s latest State of the Voluntary Carbon Markets report.

3 June 2015 | Washington, D.C. | When the international negotiations take center stage in Paris this December in the hopes of reaching an agreement to rein in climate change beginning in 2020, negotiators will be able to draw on the lessons learned in the voluntary carbon markets, according to a new report from Forest Trends’ Ecosystem Marketplace.

Companies, governments, and individuals voluntarily spent just under $4.5 billion to purchase nearly one billion carbon offsets from projects that halt deforestation, install renewable energy, promote energy efficiency, distribute cleaner-burning cookstoves and more, according to Ecosystem Marketplace’s Ahead of the Curve: State of the Voluntary Carbon Markets 2015 report.

National and subnational government officials have leaned on the experiences of the voluntary markets in building their compliance programs, meaning the voluntary markets have influence that goes beyond their relatively small size. For example, the offset component of California’s cap-and-trade program was largely built on project methodologies initially tested in the voluntary markets, which paved the way for pre-compliance offsets to flow into the regulatory program despite a year-long postponement to the program’s launch. And South Africa’s carbon tax, currently scheduled to begin in 2016 after also being delayed, will welcome domestically-sourced carbon offsets generated under the Gold Standard and the Verified Carbon Standard (VCS) – stalwarts of the voluntary markets.

“However, while compliance markets have turned to the voluntary markets for inspiration on project types, standards and more over the years, this relationship is a two-way street in that the voluntary markets take demand cues from developing compliance markets and proposed legislation and regulation,” said Kelley Hamrick, Carbon Program Associate at Ecosystem Marketplace and Lead Author of the report.

This is most clearly reflected in the pricing of voluntary carbon offsets, which has experienced peaks and valleys driven by policy signals (or lack thereof). The global average price peaked at $7.3/tonne in 2008 as momentum appeared to be building toward the United States implementing a national cap-and-trade system to reduce these emissions. But prices began to decline in subsequent years as carbon trading legislation faltered in the U.S. Senate. The global average price has consistently fallen since 2011, when it became clear that nations would fail to ratify another phase of the Kyoto Protocol, to reach an all-time low of $3.8/tonne. Historically, the average price of voluntary offsets is $5.8/tonne over the decade Ecosystem Marketplace has tracked these projects.

“With few positive policy signals in the carbon markets in 2014, the year witnessed the voluntary market’s lowest average price per tonne on record – sending a clear signal to policymakers in the lead-up to the Paris talks,” Hamrick said.

An evolving market

From year to year, the project type most in demand has evolved, driven by policy signals and supply-demand fundamentals, according to the report. In 2009, landfill methane projects experienced the highest transaction volumes as U.S. buyers bet on these projects becoming eligible for the national cap-and-trade market being debated at the time or in California’s developing cap-and-trade market – a gamble that failed to pay off on both counts and created a major oversupply of these offsets. In 2011-2012, wind projects topped the charts due to their relative cost-effectiveness compared to other project types – the price differential being critical to European buyers, the primary purchasers of voluntary offsets, who were trapped in a major economic crisis at the time.

In recent years, however, REDD (Reduced Emissions from Deforestation and Forest Degradation) offsets have overtaken wind as the dominant project type, trading at an all-time high of 25 million tonnes in 2014, in large part due to funding from public sector entities in Germany and Norway committed to avoiding deforestation in tropical countries. Through the “REDD Early Movers” program, these European governments are funding avoided deforestation in Brazil’s Acre state and nationally in Ecuador and Colombia. These “payments for performance” are not offsets, meaning countries cannot deduct the reductions from their own emissions, but they rely on traditional carbon market infrastructure, and represent the kind of government-to-government deals that may become increasingly common. These agreements contributed $90 million to 2013-2014 market value.

“I think that (public-sector involvement) is something that is going to continue, which is good,” said Agustin Silvani, Managing Director of Carbon Finance for NGO Conservation International. “But what worries me is that many of these initiatives say they want to attract the private sector and they want to work with the private sector, but there is no mechanism for the private sector to engage, which is frustrating for the project developers. It’s worrying because if not designed correctly it could crowd out whatever private finance is there instead of seeking ways to leverage it.”

Deforestation contributes up to one-fifth of global emissions annually, and hundreds of companies are committing to purge deforestation from their supply chains. As international climate negotiators debate the potential inclusion of REDD offsets in a potential agreement emerging from the Paris talks, it is noteworthy that REDD offsets now have a slight edge on the list of most transacted voluntary project types with 84.5 million tonnes compared to the 84.3 million offsets transacted from wind projects over the last decade, according to the report.

“Whatever comes out of Paris will most likely not be super robust in terms of a globally legally binding agreement,” Silvani said. “It’s going to be a series of pledges and contributions, but nothing top-down like Kyoto. How does REDD form part of that? I think that remains to be seen, but it will be a big part of some countries’ national contributions and everything is positive for REDD to continue.”

2014 in the spotlight

In 2014, the volume of offset transactions rose 14% from the previous year to reach 87 million tonnes, from the 76 million tonnes tracked by Ecosystem Marketplace the previous year. However, the overall value only rose 4% to $395 million, according to the report, as a result of the average price shrinking to $3.8 per tonne from $4.9 per tonne in 2013. Offsets from household devices (cookstoves and water filtration) retained the highest average price by project type at $6.4 per tonne – although the price of these offsets also declined from the previous year’s $8.7 per tonne average.

Avoided deforestation offsets led the pack in 2014, guided by the $50 million to reduce deforestation in Ecuador through the REDD Early Movers program. Renewable energy projects were also in demand with nearly 14 million offsets transacted last year, according to the report.

The road to Paris

Countries that will play critical roles in the Paris talks have received notable shares of the voluntary financing pie for carbon offset projects. Over the last decade, the United States took the gold in terms of voluntary offset transactions, with the largest volume at the highest prices of any country (136 million tonnes of offsets valued at nearly $700 million), owing partially to the preference that domestic buyers such as automaker General Motors have for U.S.-based projects. Brazil, which will play a key role in the discussions on REDD, takes the silver (40 million tonnes valued at $233 million) due in part to the commitment of the government of Germany – another major player in the Paris talks – to pay the state of Acre to avoid deforestation in its jurisdiction. Turkey – not expected to be a major player in the international talks – takes the bronze (32 million tonnes at $207 million) as home to most of the renewable energy offsets supplied to European buyers – the largest regional purchaser of voluntary offsets over the last decade.

Several least developed countries have also benefitted from voluntary carbon finance, including Cambodia (4.3 million tonnes valued at $40 million) – home to Terra Global Capital’s Oddar Meanchey forestry project, which has received financing courtesy of software giant Microsoft’s internal carbon fee program. The Democratic Republic of Congo – home to the second-most forested area in the world after Brazil – has also benefitted from voluntary carbon finance (4.6 million tonnes worth nearly $21 million).

 

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REDD Dawn: The Birth Of Forest Carbon

 3 June 2015 | By all accounts, REDD was born in 1988 – not so much to save the planet as to help poor farmers in Guatemala manage their land more sustainably. It’s germination, however, began three decades earlier, in 1958, at the Mauna Loa Observatory in Hawaii. That’s where the late American scientist Charles Keeling started measuring the amount of carbon dioxide in the atmosphere – an exercise that eventually yielded the “Keeling Curve”: a diagonal line that zigzags upwards as CO2 levels increase year-to-year.
KeelingCurve

2. Source: Global Warming Art Project 

The Keeling Curve: This is your planet on CO2. Source: Global Warming Art Project.

The upward slant continues to this day, while the zigzags reflect the rhythm of farms and forests in the Northern Hemisphere coming alive in summer, when they sponge up CO2, and falling dormant in the winter. If this natural rythm had such a pronounced effect on the atmosphere, scientists began to wonder, what impact does rampant deforestation have? How much of our greenhouse gasses come from industrial emissions, and how much form chopping trees?

Scientists had known about the greenhouse effect since the early 1900s, when Swedish scientist Svante August Arrhenius dubbed it the “hot-house” effect, but Keeling’s curve showed that CO2 levels were rising faster than most believed. As the curve continued to climb over the ensuing decades, so did interest in climate change.

Trees and Climate Change: An Early Defense

By the early 1970s, scientists were beginning to see climate change as a very real but distant threat – one that would eventually force us to completely restructure our industrial economy. Physicist Freeman Dyson was one of those who decided to get ahead of the challenge by looking for workable solutions.

“Suppose that, with the rising level of CO2, we run into an acute ecological disaster,” he wrote in a 1977 article entitled “Can We Control the Carbon Dioxide in the Atmosphere?“, published in the journal Energy. “Would it then be possible for us to halt or reverse the rise in CO2 within a few years by means less drastic than the shutdown of industrial civilization?”

His conclusion: yes, it would be possible to slow climate change by planting trees – but not as a permanent solution. Instead, he saw trees as a short-term, stopgap measure that would slow the process long enough for technology to catch up.

“The long-term response, if such a catastrophe becomes imminent, must be to stop burning fossil fuels and convert our industry to renewable photosynthetic fuels, nuclear fuels, geothermal heat and direct solar-energy conversion,” he continued. “But a world-wide shift from fossil to non-fossil fuels could not be carried out in a few years… An emergency plant-growing program would provide the necessary short-term response to hold the CO2 at bay while the shift away from fossil fuels is being implemented.”

Trees and Sustainable Agriculture

Meanwhile, in 1974, humanitarian organization CARE had launched a program called Mi Cuenca (My Watershed) to help Guatemalan farmers save their topsoil – in part by planting rows of trees on steep farmland to capture runoff and create natural terraces. The project soon became an unqualified success, and farmers across the region were clamoring to join, but by 1988 CARE was running out of money, and the project was on its last leg.

That same year, the United Nations launched the Intergovernmental Panel on Climate Change (IPCC) to explore the science of global warming, while an energy executive named Roger Sant started looking to expand his company’s output – preferably by building wind farms. A proponent of green energy in the Carter Administration, Sant had co-founded a company called Applied Energy Services (AES), in part with the objective of making green energy work.

Rural Development and Reduced Greenhouse Gas Emissions

Wind-farm technology, however, wasn’t what it is today, so Sant asked the World Resources Institute (WRI) if there was a way to offset his emissions by reducing them somewhere else – a radical concept at the time. WRI picked up Dyson’s idea – which other scientists had since moved forward – and suggested he plant trees across the United States. That quest found its way to Paul Faeth, an agricultural engineer with the International Institute for Environment and Development (IIED), which was in the process of merging into WRI.

Faeth knew of Mi Cuenca’s plight, and he proposed killing two birds with one stone: by planting trees in Guatemala, he said, AES could help both the environment and the rural poor.

Intrigued, AES began working with WRI to explore the science of carbon accounting – science that had, ironically, been perfected by timber companies to estimate the amount of wood in a forest. It was a simple but labor-intensive process that involved measuring trees at chest-height and then applying “allometric equations” based on the trees’ species and circumference to see how much wood they contained. From there, it was simple math to extrapolate the amount of carbon: basically, divide the wood by two.

But there was more to it than just the carbon in the newly-planted trees.

Deforestation and Climate Change

Researchers at the time were estimating that deforestation contributed about 20% of global greenhouse gas emissions – estimates that have since been confirmed by the IPCC. That meant you could reduce greenhouse gas emissions faster by saving endangered forests than by planting new trees, which would need decades to get big enough to matter. Plus, living forests provide habitat for endangered species and deliver “ecosystem services” such as water filtration and climate control. On top of that, saving forests seemed inexpensive.

WRI had just hired a policy analyst named Mark Trexler, who pointed out that any trees they planted on the slopes would also save endangered forest further up, because farmers wouldn’t have to keep abandoning their land for greener pastures. That, he argued, was more important from a carbon perspective than planting trees – especially if many of the newly-planted trees ended up being cut down to supply farmers’ immediate needs. He proposed focusing their attention on saving the trees

In the end, AES decided to spend $2 million to save and expand Mi Cuenca to offset 2 million tons of its own internal CO2 emissions. CARE re-named the project “Mi Bosque” (My Forest), and today their experiment is considered by some to be the world’s first REDD project. Although a later analysis found it drastically over-estimated the amount of carbon that was kept out of the atmosphere, it sparked the decade of experimentation that led to the creation of today’s rigorous carbon standards.

Climate Talks Begin

The project caught the eye of The Nature Conservancy, and pilot projects started proliferating across Latin America. The term “REDD” wouldn’t enter the vernacular for another 15 years, but NGOs began developing structured, methodological approaches to “Avoided Deforestation” (AD), which became a hot topic at the Rio Earth Summit in 1992, as well as at the First Conference of the Parties (COP 1) to the United Nations Framework Convention on Climate Change (UNFCCC) in Berlin in 1995.

As climate talks progressed, analysts like Trexler and ecologists like Tia Nelson of The Nature Conservancy argued for the inclusion of REDD in the UNFCCC framework as a critical means of immediately dampening the rise in greenhouse gases.

On the REDD front, proposals ranged from “project-based” frameworks like Mi Bosque to “national baseline frameworks” using a country’s historic rate of deforestation as a performance baseline and then offering payments for beating it.

Politics and Science: the Great Divide

The proposals, unfortunately, found little traction – for a variety of reasons. To begin with, few climate negotiators had a forestry background, so the science was lost on them. Furthermore, “offsetting” had become equated with “incentivizing industrial reductions”, and most environmental organizations were horrified by the idea of cheap offsets, which they feared would flood the market and remove the incentive to change industrial practices. Finally, developing countries – still mindful of their recent colonial past – feared that REDD would cost them control of their forests. On top of all that, no one really agreed on how best to determine which forest was in danger and which was not.

As a result, 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 at the pilot scale under real-world conditions.

Voluntary Carbon Markets

Over the next 15 years, standard-setting bodies like the Verified Carbon Standard and the American Carbon Registry emerged to provide ways of determining which forest was endangered and which procedures can be used to save it. At the same time, the Climate, Community & Biodiversity Alliance emerged to ensure indigenous rights, and forest communities that embraced REDD found themselves able to earn income from their stewardship of the land.

Within the UNFCCC, however, REDD remained on ice until 2005. That’s when Papua New Guinea wrangled it back onto the agenda at Climate Talks in Montreal (COP 11). In 2010, REDD was the sole bright spot in the otherwise dismal Copenhagen Accord. By 2011, governments around the world were harvesting the lessons of voluntary REDD pilot project developers and offset buyers to launch larger-scale regional REDD programs that accounted for avoided deforestation at the “jurisdictional” scale but still allowed early pilot projects to generate emissions reductions and earn offsets and revenue (i.e. “nest”) within their borders. The UNFCCC and World Bank, however, steered clear of anything involving offsets and drifted toward purely jurisdictional approaches that left individual projects in limbo. (If that seems like a lot to swallow, keep reading the articles that follow.)

Then, at the 2013 climate talks in Warsaw, the UNFCCC finally agreed on a REDD Rulebookfor jurisdictional REDD. Technically, it’s not a book, but a collection of seven decisions that provide guidance on how countries can harvest available data to earn REDD income. The Rulebook’s provisions for program development are significantly less rigorous than the standards imposed on voluntary projects, but the payments into jurisdictional programs aren’t offsets – meaning countries can’t claim to have reduced their own carbon footprint. Instead, jurisdictional programs are increasingly seen as “payments for performance” that could slow deforestation by supporting sustainable agriculture – while at the same time creating a framework within which more rigorous individual projects can address specific local challenges.

 

Choco Darien: What Forest Carbon Can (And Cannot) Achieve

1 June 2015 | Five young men are cutting their way through dense rainforest in the northernmost part of Colombia, each wearing a sweat-drenched t-shirt colorfully emblazoned with the word “COCOMASUR” – an acronym distilled from “Consejo Comunitario de Comunidades Negras de la Cuenca del Rí­o Tolo y Zona Costera Sur, which means “Council of the Black Communities of the Tolo River and Southern Coast” in Spanish.

At the head of the line is Frazier Guisao, a young Afro-Colombian whose ancestors settled along the Tolo River after the abolition of slavery in 1851. His brother Eusebio follows a few steps behind, along with three other community members – all of whom spent their youths in exile after fleeing in the late 1990s, when mercenaries hired by rich land owners ruled the region through torture and murder.

Today, police and army soldiers patrol both the streets and the countryside, but former mercenaries still live in town. Yet the Tolo River crew is not afraid to perform the forest patrols. They go for their daily perimeter checks, armed only with cameras and GPS-enabled cell phones, looking for evidence of illegal logging. When they find what they’re looking for – a recently-cleared patch of forest, or logging tracks – Ferney Caicedo photographs it and records the coordinates. The slender 21-year-old recently completed a professional forestry course, and aims to make this his life’s work.

sitting at the edge of the community forest.” src=” http://anthropozine.com/wp-content/uploads/2014/07/Frazier1-300×226.jpg ” />

Frazier Guisao, member of the Tolo River forest patrol sitting at the edge of the community forest.

“This wood is worth around three million pesos ($1,500 USD),” says Frazier, gesturing toward a smaller tree in front of him and applying the knowledge he learned when he first came home – when he was forced to earn his living chopping the forest he now protects.

All of these men could easily make more money as loggers, but they’ve chosen to protect the forest instead – a choice made possible by the Chocí³-Darién Forest Conservation Project, a trailblazing REDD project that began coalescing in 2005, when community leader Aureliano Cí³rdoba took advantage of a critical provision in the 1991 Constitution that allowed indigenous and Afro-Colombian forest communities to claim their ancestral lands. By securing collective title to the land for his people, Cí³rdoba was able to begin rekindling the attachment to the forest that many of his people lost while in exile.

“I used to be afraid,” says Cí³rdoba. “But no more. I have 1,500 people behind me now. If something happened to me, the entire community would stand to defend me.”

“Our only defense is that we are organized and determined enough to seek our rights,” says Eusebio.

The Downside of the Peace Dividend

With civil war hostilities waning and his people in clear possession of title to their land, Cí³rdoba began to look for ways to create jobs as his community recovered. He initially explored logging, but soon found that his people weren’t the only ones flooding into the territory after the danger subsided – outside loggers were coming for trees, and cattlemen along the perimeter were quietly expanding their ranches illegally.

Instead of just harvesting the forest, Cí³rdoba realized, he should be saving it if his people were going to maintain their quality of life – but how? His own people needed to make a living, and many were either logging or working on cattle ranches, which were owned by wealthy and well-connected businessmen.

To address the challenge, he developed – and won support for – a long-term sustainability strategy that would help his own people meet their needs by harvesting non-timber forest products and working at peripheral ranchers, but he also needed to keep the outside ranchers and loggers at bay.

The Genesis of REDD

In 2008, Cí³rdoba met an anthropologist from Stanford University named Brodie Ferguson, who was studying the civil war’s impact on indigenous people and Afro-Colombian communities. Both Cí³rdoba and Ferguson had heard about REDD, which at the time functioned only in voluntary carbon markets but was gaining traction in global climate talks as something to be used on a wider scale. Ferguson had asked members of the indigenous Arhuaco for their opinion, and got a surprising answer.

“Do we want to be paying the youth of our community to conserve the forest?” asked Danilo Villafaí±e, an Arhuaco chief. “Shouldn’t they be doing this anyway out of appreciation for the forest and the community traditions … just because it’s the right thing to do?”

It was a question that went to the heart of Ferguson’s PhD research, which showed that forest people, whether indigenous or immigrant, don’t want to chop the forest beyond what they needed to survive – but in the face of displacement and armed struggle, they often find themselves losing their connection to the forest. At the same time, for many of them, paying people to conserve is akin to buying a child’s affection: it turns a profoundly spiritual experience into a financial transaction.

The Economics of REDD

But Ferguson had looked into the economics of REDD, and he knew that income from selling carbon offsets couldn’t compare to any of the alternative ways to use their land: cattle ranching, cacao plantations, and gold mines. A recent study estimated that only a price above around $30 USD per ton of carbon dioxide could make a forest more valuable standing than cleared, and even then, only in some circumstances. From Ferguson’s perspective, REDD wasn’t an incentive to save forests; it was an enabling mechanism that, when done right, could bring in enough money to jump-start new activities that could take the pressure off the forest for the long term.

“It should be spent on things like education, creating environmental awareness, improving healthcare, empowering women,” he says. “Even if 100 percent of the profits go to the community – the best- case scenario – if they are not spent the right way, we are not achieving what we should be.”

Cí³rdoba realized that, in Ferguson, he had a kindred spirit.

“We don’t want the money so we can get rich,” Cí³rdoba says. “We want to develop organizationally. That way we can protect our territory, maintain peace, and improve our lives.”

Illegal Deforestation and the Myth of the Carbon Cowboy

Both men had heard horror stories of ruthless “carbon cowboys” scouring the planet in search of forests to commandeer, but most of those stories revolved around one man: a serial swindler named David Nilsson, who tried to con indigenous people in Peru by masquerading as a project developer. Most of the indigenous people he targeted, however, wouldn’t sign with him; and the contracts he did sign were declared invalid. He was roundly ignored by everyone who knew anything about conservation-based climate solutions, and he’s been rightly barred from ever entering Peru again, according to media reports.

But the mythic hordes of speculators decending on the region to gobble up forest for their carbon content turned out to be just that: myths, and for a variety of reasons.

 

Men from a nearby town transporting locally logged timber for construction. (Photograph: Tanya Dimitrova).

To begin with, there were the lessons of early pilot programs, which underlined the importance of involving indigenous people in a successful REDD program. Then there were the emerging carbon standards, which required the “Free, Prior, and Informed Consent” (pronounced “F-Pic”) of indigenous people before a program could proceed. And, finally, there were the economics: anyone ruthless enough to commandeer a forest wouldn’t settle for the little bit of money he could earn by saving it; he’d chop it up – as, in fact, loggers and cattlemen were already doing across the Amazon – in part because it was so cheap and easy to do so.

In countries where land is expensive and property rights are enforced, ranchers keep cows in relatively small spaces and feed them “silage” – fermented fodder produced from grass and maize – which lets them raise up to three animals per hectare, according to the Food and Agriculture Organization.

But in Colombia, ranchers average just one cow per hectare of land. That means the cows always have waist-high grass on which to graze, but only because ranchers illegally clear and fence off small plots near the edge of the forest. Global demand for commodities like palm oil, soybeans, and cattle is driving deforestation all around the world – and nearly half of that deforestation is illegal, according to a 2014 Forest Trends report called Consumer Goods and Deforestation: An Analysis of the Extent and Nature of Illegality in Forest Conversion for Agriculture and Timber Plantations.

Cí³rdoba was leery of antagonizing the cattlemen who provided jobs for so many of his people, but he also knew the ranchers could easily double their production without gobbling up more forest. He ultimately concluded that the ranchers needed workers as much as the workers needed ranchers.

REDD, he concluded, could provide a bulwark against illegal deforestation by providing money for forest patrols, with any profit going into a general fund for education and health care.

The two men then agreed to build a REDD project together.

Carbon Standards

First, they had to decide which carbon standard they wanted to use. Standards dictate everything from how you measure the carbon captured in trees to how you determine which parts of the forest are truly in danger to how you treat the people living there.

They chose the Verified Carbon Standard (VCS), which was then called the Voluntary Carbon Standard, and the CCB Standard, intended for carbon projects with exceptional benefits for wildlife and communities.

To get the ball rolling, Ferguson sold his condo and created a company called Anthrotect to act as project developer.

Free, Prior, and Informed Consent

FPIC requires disclosure, discussion and agreement – a process involving far more than just a few meetings between community leaders and a project developer.

FPIC means that project developers must offer information to the community, ensure they understand it through a feedback loop, allow them time for private discussions, hold meetings to answer questions, and organize focus groups to gather women’s or youth’s perspectives. It is an expensive process, involving sociologists or anthropologists, and it can take years.

Although new research from the World Resources Institute and the Rights and Resources Initiative indicates that REDD programs tend to strengthen the rights of forest people, that is not a foregone conclusion, and many forest peoples lack the legal protection that the Tolo River community enjoys. In many other countries, forest dwellers do not own the land or the forest they have lived in for centuries.

 

Jorge Vergara milking a cow with the help of a local boy. (Photograph: Tanya Dimitrova).

From the beginning, Cí³rdoba aimed to exceed even the stringent requirements of FPIC and to involve the whole community in the design of the project — an approach that he believed would ultimately strengthen the project by making it more attuned to the needs and desires of his people, and therefore more likely to succeed. In that spirit, he put his neice, Everildys Cí³rdoba, in charge of explaining the process to the community.

“I had to take a complex subject and try to make it simple,” she says. With the remainder of the community now on board, the Tolo River people turned their attention to measuring the carbon stored in their forests.

Measuring the Carbon Content

Ferguson sold his condo and borrowed money to bring in outside consultants like biometrician Kyle Holland of Ecopartners LLC and ílvaro Cogollo from the Medellin Botanical Garden, whose team spent three months in the Tolo River community forest studying the biodiversity and carbon it contains. They selected random plots, identified the tree species within them, and then measured their height and circumference. Using allometric equations, they calculated that one acre of the communal rainforest could contain up to 300 tons of carbon – multiples of the average carbon content in one acre of an Amazonian forest.

Since much of a forest’s carbon is found in the leaf litter and soil, the team also took soil samples and analyzed their carbon content. The samples had to be shipped to the United States, because there were no laboratories in Colombia equipped to carry out the analysis. The team then repeated the process for trees and soil in cattle pastures in order to know how exactly much carbon is left in the landscape after ranchers clear forests for pasture.

The Reference Level

After estimating the carbon stocks in the forest, the team had to ascertain how much carbon would be released if business continued as it was going. First, they looked at the trend in historical rates of deforestation to see how much of their forest would likely be chopped down for pasture if business continued as usual. Then, using satellite imagery, they compared the forest with other unguarded forested areas nearby and concluded about 170 hectares per year (5,000 hectares total) would be lost to cattle ranching, agriculture, and selective logging if defensive actions weren’t taken immediately.

Referring back to the species composition of the forest and the trees’ average height and width, they team pegged the total greenhouse gas emissions from encroachment by ranchers at 2,800,000 tons of carbon dioxide over the next 30 years. This is equal to about 90,000 tons of carbon emissions per year.

The data collection and the analysis took the better part of 2011, and then they wrote up their analysis in a Project Description (PD) and submitted it to the VCS for a rigorous process of peer-review known as “validation” – the phase in which the VCS determines if a project’s design is, in fact, valid.

If they passed that, they’d have to then go through a process of verification – meaning they had to show they were actually taking the steps outlined in their project’s plan.

Verifying the Results

In July 2012, Pablo Reed, an independent third-party auditor, came to the Tolo River community forest to verify the carbon offsets. Reed was working for the international certification firm Det Norske Veritas (DNV), and had special experience in land-use carbon projects such as REDD+.

(Photograph: Tanya Dimitrova)” src=” http://anthropozine.com/wp-content/uploads/2014/07/Resting1-225×300.jpg ” />

Ferney Caicedo (right) and another forest patrol member resting at the buttress roots of a giant almendro tree. (Photograph: Tanya Dimitrova)

Reed recalls that just getting to the GPS-marked forest plots in the Tolo River community was an adventure, involving a charter flight, a boat ride, a motorcycle, a horseback ride — and then finally a trek on foot into the forest following the patrol. Reed observed Caicedo and other trained community members perform the tree measurements and then compared the numbers to what they had measured in the initial inventory.

After a reviewing the project’s documents and visiting the site, Reed and his team concluded that the forest patrols and other project actions had saved more than 500 hectares of at-risk forest. Had the forest been cleared for pasture, it would have released more than 100,000 tons of carbon dioxide into the atmosphere, or the equivalent of 20,000 cars.

Finally, in December 2012, the Verified Carbon Standard authorized the issuance of 104,000 verified emissions reductions (VERs) for listing in the Markit Environmental Registry, which is a global database of carbon projects created to ensure that offsets aren’t counted twice.

Plans for the Money

Revenue from the first tranche of credits was used to cover the cost of setting up the project as well as administrative and operating expenses like the forest patrols.

As in most community projects, the Tolo River People do not receive individual cash payments from the sale of carbon credits. “Giving out money to not cut the forest makes people lazy,” says Frazier Guisao.

Instead, they plan to use future revenue to improve the community healthcare services, send young people to universities, and strengthen the community organization, with some kept in reserve for emergencies. Beyond that, the proposals are endless.

One recent day after a morning patrol through the forest, the crew relaxed under the shade of a sun shelter that Guisao built from palm trees, waiting for the afternoon heat to pass.

“We should fix up the village school and offer professional courses for adults,” suggested one member.

“We should build an aqueduct to pipe down clean water from the hills to the village,” another offered.

Some want to use the money to subsidize struggling farmers, while others want to improve the dirt road to the village, and still others want a cell phone tower to enhance phone service in this remote region. One person mentions start-up funds for a food-delivery service by a women’s collective. Another dreams about building a community center.

In any case, as has been true throughout this particular project’s journey, the entire community is involved in how any profits will be spent.

When Deforestation Moves Down the Street

Isolated REDD projects have been used to rescue endangered patches of forest 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 states or countries.

“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.”

Many indigenous REDD programs are, in fact, built on a jurisdictional model – but more importantly, they are also built on an indigenous model. Like the people of Tolo River, indigenous people across the Amazon have been developing formal plans for their forest. Just as REDD was a means to an end – rather than an end in itself – for the Tolo River people, so is it for indigenous people across the Amazon. Most have spent decades developing long-term development plans called “Life Plans”, and most are finding them difficult to get off the ground. Is REDD the answer?

Tanya Dimitrova holds a masters degree in energy and resources from University of California, Berkeley. She lives in Texas and works as a freelance science and environmental journalist.
For Further Reading

This story has been adapted and condensed from a four-part series by Tanya Dimitrova. You can view the full series here:

Part One: How The Tolo River People Of Colombia Harnessed Carbon Finance To Save Their Rainforest provides an overview of the project.

Part Two: The Forest, The Farms, And The Finance: Why The Tolo River People Turned To Carbon Finance examines the drivers of deforestation in and around the Tolo River Community.

Part Three: The Tolo River Community Project: The Importance of Inclusion follows the development of the project itself – its conception, its implementation, and its challenges.

Part Four: Getting Down To Business: The Tolo River People Shift From Building Their Carbon Project To Selling The Offsets tells the surprisingly challenging story of finding and cultivating offset buyers.

Jurisdictional REDD: Long Deferred, Soon Delivered

1 June 2015 | Roughly 2,500 years ago, people of the Amazon Basin started blending charcoal with pottery to create a thick, rich soil called terra preta (dark earth) – evidence of a now-lost system of sustainable agriculture that enhanced rather than depleted the soil. The practice eventually spread across the continent, and it appears to have sustained indigenous civilizations for centuries.

Terra preta began disappearing shortly after Europeans arrived in the Amazon 500 years ago – an arrival that sparked migration and conflict well beyond their early coastal and river settlements.

Chief José Maria’s knows little of this ancient history, but he knows that by the time his people, the Shawí£dawa, were officially contacted by Brazilian authorities in the 1900s, they’d abandoned their ancient practices in favor of migratory slash-and-burn agriculture. After contact, decimated by war and disease, they became dependent on modern farming methods that kill the forest, deplete the soil, and poison the rivers.

In 2008, Chief José Maria heard that the government of Brazil’s state of Acre wanted to learn his people’s ways and the ways of neighboring people like the Ashaninka and Yawanawa. The government’s goal was to re-create the long-lost practices that worked so well for so long, and to support them through a legal framework called the System of Incentives for Environmental Services (Sistema de Incentivos a Serviços Ambientais / “SISA”).

SISA, he learned, would even pay his people to improve the way the forest functioned – the way it filtered water, captured carbon, and fortified the soil. It would pay them, in other words, to keep Acre’s agricultural system functioning for centuries to come.

In 2011, he began participating in workshops designed to implement SISA and its “Payments for Ecosystem Services” (PES), but by late 2013, he was tired of talking and anxious to get to work.

“When will PES arrive?” he asked wearily. “We’ve held about five different meetings …”

The answer came in early 2014, when the state paid R$3.6 million ($1.6 million) to the Acre Association of Indigenous Agroforestry Agents (Associaçí£o do Movimento dos Agentes Agroflorestais Indí­genas do Acre/AMAAIAC) to reverse decades of degradation caused by the shift from forestry to cattle farming and other practices that destroy the forest.

“PES is difficult to understand, but it is not rocket science,” says Charamaxa Huni Kuin of the Huni Kuin people. “These are the things that indigenous agroforestry agents have been doing, and the work is getting stronger.”

In April of last year, the government put up an additional R$3 million ($1.34 million) to support and implement indigenous Life Plans across the state. Deployment was delayed until later in the year because of anti-corruption laws that prevent big payouts too close to an election, but money is now being doled out in payments ranging from as low as R$50,000 ($22,390) to as high as R$210,000 ($94,000), and it’s being used for a broad range of activities – from strengthening land management to promoting associations and communities to generating income for women.

It’s all part of the world’s first large-scale “jurisdictional REDD” program.

What is “Jurisdictional REDD”?

In some ways, a jurisdictional REDD program is a lot like an individual REDD project, but scaled up to cover an entire jurisdiction – which could be an entire country, or a state within a country, or a region, like Ghana’s cocoa-producing area.

The basic concept is the same as a project: buyer and seller haggle over how much forest would be lost if business continued as usual, and they agree on a “reference level” that represents a business-as-usual scenario. Then the buyer agrees to pay for activities that reduce deforestation below that reference level.

From a carbon-accounting perspective, the biggest challenge is getting enough random samples over a long enough period of time to offer carbon-stock estimates that are 95 percent certain, which is what the Intergovernmental Panel on Climate Change (IPCC) recommends. That can be costly, because, despite all the advances in satellite and even drone technology, it still requires sending teams out into the forest with tape-measures. Then someone in the jurisdiction – usually in the forestry department – has to blend those findings with satellite images going back decades to document the jurisdiction’s land-use change over time – how much forest has been converted to field and then to farm, and sometimes back again.

Once a jurisdiction has this, it’s actually more straightforward to establish a reference level for an entire jurisdiction than it is for a small patch of land – even if that jurisdiction is a hodgepodge of palm trees, maple trees, farmers’ fields, and gulfs and valleys. That’s because things average out over a large scale, so a jurisdiction can use its prevailing rates of deforestation as is reference level – a practice that climate negotiators enshrined in the REDD Rulebook in Warsaw at the end of 2013, after eight years of haggling.

The Indigenous Component

Although the basic concept of payments for reduced emissions is the same the world over, every jurisdiction has its own challenges and its own philosophy about how to combat deforestation – which means that each state has a different philosophy about how to spend the money.

In Acre, the money goes into a fund administered by the state, which has promised to funnel at least 70 percent of it to people it defines as providers of environmental services, including rubber-tappers and indigenous groups.

Like Igarapé Lourdes, most of Acre’s indigenous territories currently have little or no deforestation. But while Igarapé Lourdes sits on the Arc of Deforestation, many of Acre’s territories are so isolated that they’d find it hard to prove they’re endangered under classic REDD carbon mechanisms – despite illegal incursions by loggers that have left several indigenous leaders dead. Here, indigenous impacts can more accurately be measured in terms of habitat conservation and water management, with carbon stocks being a byproduct. SISA, in this case, acts as a conduit between international REDD+ payments and local payments for watershed improvement, riverbank restoration, and scores of other activities.

“International REDD+ payments come into the state denominated in carbon, but the state distributes the money internally via payments for watershed services, payments for habitat restoration, and payments for any number of other actions that are consistent with SISA,” says Rebecca Anzueto, a former Program Manager with the Communities and Markets Initiative at Forest Trends. “As long as the state meets its REDD+ emissions-reduction targets, the REDD+ payments should continue to flow.”

The projects are being selected by the government according to a criteria established by SISA’s Indigenous Working Group (GT-Indí­gena).

“GT-Indí­gena was created to guide the implementation of the indigenous component of SISA, to figure out, for instance, how to distribute funds and other benefits to local indigenous communities – to answer questions like, ‘How will money strengthen land tenure rights? How will this money strengthen the management and governance of territories that have been demarcated?’” says Beto Borges, who heads the Forest Trends Communities and Markets Initiative and sits on the board of GT-Indí­gena.

“We’re talking about 2.4 million hectares of forest being managed by indigenous peoples,” he says. “That’s 15 distinct ethnicities dispersed among 35 indigenous territories. Their traditional territories have been demarcated. They’re official. Now, the new funding from SISA will strengthen the management and conservation of their forests.”

Who Pays?

For Acre, the German government stepped up with R$50 million ($24.2 million) through 2018 in exchange for the state taking actions designed to save xx hectares of forest and reduce carbon dioxide emissions by xx tonnes, but the state has several other options for the future.

The state has Memorandums of Understanding with the cities of Rio de Janeiro and Sí£o Paulo, and it’s a founding member of the Governors’ Climate and Forests Task Force (GCF), which then-California Gov. Arnold Schwarzenegger created in late 2008. The GCF launched with linkages among states in the United States, Brazil, Mexico, and Indonesia in a worldwide, sub-national, emission-reduction network. It’s since expanded to include states in Nigeria, Spain, and Peru.

Last year, GCF members signed the Rio Branco Declaration, formalizing their commitment to reducing deforestation by 80% by 2020 – but reiterated that the commitment is contingent on adequate funding. Such a reduction would prevent four billion tonnes of carbon dioxide emissions (tCO2e) from entering the atmosphere.

“It’s basically saying, ‘Listen, we did what we said we’re going to do … we’ve brought emissions down more than 3 billion tons’ – that’s bigger than any nation has been able to accomplish,” says Dan Nepstad, Executive Director and Senior Scientist at the Earth Innovation Institute. “Hidden in those words is the idea, though, that we can’t sustain this agenda forever unless there’s some recognition and finance flowing into our states and provinces. [The Declaration] has got to be seen as the beginning of a process of negotiation and alignment … we can’t do it alone.”

Members of the Yawanawa People at a SISA
workshop in their territory.
Photo: Laura and Tashka Yawanawa

Through the GCF, individual REDD projects within Acre may one day be able to sell offsets to emitters under California’s cap-and-trade program – and, because they’re embedded in a jurisdictional program, they won’t have the sticky problem of leakage that isolated project face when a tree-chopper just moves down the road.

Members of the Yawanawa People at a SISA workshop in their territory. Photo: Laura and Tashka Yawanawa Members of the Ashaninka People take stock of their natural capital at a workshop in their territory. Photo Credit: Flavia Cunha

Nesting

By embedding individual projects in a jurisdictional program, project developers can avoid the sticky issue of leakage – or what happens when deforestation just moves down the road. To do so, however, they need to carefully document the emission-reductions that their projects create and differentiate them from emission-reductions that would have happened anyway.

Members of the Ashaninka People take stock of their natural capital at a workshop in their territory.
Photo Credit: Flavia Cunha

This is a process called “nesting,” and Acre is piloting VCS’s Jurisdictional Nesting REDD+ (JNR) framework. Released in 2012, the JNR offers the only comprehensive framework for jurisdictional accounting and verification at this point.

As a state, Acre must also nest its reductions in those of Brazil – which has vowed to slash deforestation 80 percent by 2020, and has been tapping the Amazon Fund to do so.

“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 Brazil Advantage

Most developing countries are still struggling to develop carbon inventories, but Brazil’s National Institute for Space Research (Instituto Nacional de Pesquisas Espaciais, “INPE”) has been tracking the Amazon from the sky since the 1970s, and its state forestry departments have measured millions of trees. As a result, Acre can document that it lost an average of 0.30 percent of its forest annually from 2000 to 2013, and it can also convert that to carbon stocks with 95 percent certainty.

For Acre to earn REDD income, it had to come up with a plan to get its deforestation rate below 0.30 percent, then it had to find a buyer who believed in their plan and committed to it, and finally, it had to execute the plan – and prove that it did so.

This is essentially the same sequence that jurisdictions around the world are following, although most jurisdictions aren’t anywhere near as advanced as Brazil. They’ve done no carbon inventory, which means they don’t know how much carbon is in their forests, and they don’t really know the rate at which their forests are being converted to farms and fields.

“REDD Readiness”

Now that the REDD Rule Book exists, countries interested in using REDD finance know exactly what’s required of them to get ready for REDD. The Norwegian government has spent billions of dollars on REDD readiness round the world, but the World Bank’s Forest Carbon Partnership Facility (FCPF) has created a formal process for doing so. A country that wants to go through this process begins by submitting an Emission Reductions Program Idea Note (ER-PIN) to the FCPF’s Carbon Fund, which gives them the money they need to take stock of their carbon flows and create an Emission Reductions Program Document (ER-PD), which is the equivalent of a PDD in the voluntary carbon world, but much less rigorous. At that point, “readiness” ends, and “performance-based payments” like Germany’s payments to Acre begin. Under the World Bank program, buyer and seller execute an Emissions Reduction Purchase Agreement (ERPA) with the Carbon Fund.

At this point, no countries have gone all the way through the World Bank’s process, but Norway, the United States, and the United Kingdom have launched a financing mechanism for jurisdictional REDD initiatives that support commodity-certification programs at the Warsaw climate talks. This program works by leveraging REDD to link initiatives on the ground with emerging efforts to attack the ultimate drivers of deforestation: us, the global consumers of beef, soy, and palm oil.

This story has been adapted from:

Jurisdictional REDD: Getting to Scale, which appeared in Ecosystem Marketplace on March 24, 2015,
Millions Of Dollars Now Flowing To Indigenous Ecosystem Service Programs In Brazil
, which appeared in Ecosystem Marketplace on May 6, 2014
and
Acre and Goliath: One Brazilian State Struggles To End Deforestation, which appeared in Ecosystem Marketplace on May 5, 2014.

 

This Week In Water: Everybody’s Talking About The Clean Water Rule

Parties with an interest in regulations falling under the Clean Water Act are still sorting out the implications of the recently finalized Clean Water Rule. Meanwhile, green infrastructure scored several victories this month as New York City, Detroit and Xiamen contemplate using the practice to manage stormwater overflows.

This article was originally published in the Water Log newsletter. Click here to read the original.

 

29 May 2015 | After a year of controversy and debate among environmentalists, farming interests, landowners and legislators, the US Environmental Protection Agency and Army Corps of Engineers released a new rule this week which seeks to clarify which wetlands and streams are protected under the Clean Water Act. The rule has likely impacts on a number of regulatory programs – and a high likelihood of meeting future litigation as permittees, environmentalists, and others sort out its implications.

In other stories this month, interest in green infrastructure and low impact development (LID) by cities is picking up rapidly, if the volume of news is any indication. New York City published monitoring results from three demonstration projects showing a better-than-expected 20% cut in stormwater flow to sewers, while cities from Xiamen to Detroit are also getting on board.

It’s about time. As a recent white paper from Veolia and the International Food Policy Research Institute points out, even under the best case scenario, “water quality is still projected to deteriorate dramatically” globally in the coming years, and especially in Asia. Despite the bad news, the paper’s conclusions are noteworthy. The authors call for new infrastructure investment but also soft-path solutions: watershed-scale approaches, better management of rural and upstream areas, and water quality trading.

The search for solutions to water quality challenges is evident in a flurry of recent news on trading mechanisms. Progress is underway on a new trading program in Arkansas, while the city of Santa Rosa, California, will pay $330,000 to a vineyard for nutrient offset credits. Meanwhile, nutrient trading is being floated in basins from the Baltic to India’s Ganga River, as a cost-effective strategy to manage enormous water pollution challenges.

 

As always, you don’t have to wait til next month to get the latest on natural infrastructure finance and trends. Subscribe to us on Twitter, and check out our daily news feed.

— The Ecosystem Marketplace Team

For questions or comments, please contact newsletter@ecosystemmarketplace.com

 

Opinion – Rivaling Gold: Ecological Assets Outperform Traditional Commodities

After completing a price trend comparison between environmental products and traditional commodities, a long-time analyst of ecosystem markets says compensatory credits for wetland and species conservation are outperforming commodities like corn and farmland and even gold – giving a more literal meaning to the term ‘green gold.’

Read it at Ecosystem Marketplace.

 

Is Private Investment And Coastal Management A Good Or Bad Match?

Nicolas Pascal, of the BlueFinance project, a data collection initiative aimed at developing finance mechanisms for marine conservation management, says market mechanisms have potential to fill a big part of a funding gap that exists in marine conservation. But its practical experience in coastal environments is limited: more know-how is needed to spur private investment.

Learn more.

 

POLICY UPDATES

The Stormwater Challenge: China looks for Solutions in Low Impact Development

Following a report that found 81% of China’s coastal waters are polluted with nutrients and other forms of pollution, the government is launching ‘Sponge’ City pilots to take place in 16 cities. Focused on low impact development solutions for stormwater runoff, the pilots will implement certain techniques in order to use 70% of captured rainwater, providing a water source for drought-prone areas and reducing flooding.

Get the full story from WEF’s Stormwater Report.

 

EPA, Corps Release Clean Water Rule into Contentious Atmosphere

After a year of controversy and debate among environmentalists, farming interests, landowners and legislators, the US Environmental Protection Agency and Army Corps of Engineers released a new rule this week which seeks to clarify which wetlands and streams are protected under the Clean Water Act. The rule has likely implications for a number of regulatory programs including the National Pollutant Discharge Elimination System permit program and Section 404 wetlands dredge/fill permitting. The final rule will be published in the federal register in the next few weeks; analysts suggest that litigation over portions of the rule are likely in the future.

Read analysis from Barnes & Thornberg, via Lexology.

 

Work on Arkansas’ New Trading Program Begins in Earnest

Following passage of supporting legislation in the Arkansas state legislature this spring, decision-makers and environmental groups are assembling the pieces of a nutrient trading program in the Beaver Lake watershed. Legislators and the governor will select an advisory panel to regulate trades and guide program design – including whether trading will take the form of an offset system, exchange program, or compliance association. Meanwhile, the Beaver Watershed Alliance is busy identifying potential demand among utilities in the watershed.

The Northwest Arkansas Democrat-Gazette has coverage.

 

Far-flung Countries Bond Over Market Mechanisms and Water Pollution

Given similarities between northern Europe’s Baltic Sea and the Chesapeake Bay in the United States, a consortium of Baltic-area institutions and the US Department of Agriculture joined forces to analyze the two bodies of water and develop best management strategies. One finding: flexible market-based mechanisms like water-quality trading were deemed the best method to achieve cost-effective pollution control.

Learn more at the USDA blog.

 

Farmers Agree to Water Cuts as California Drought Worsens

Drought-stricken California farmers in the Sacramento-San Joaquin River Delta agreed to giving up a quarter of the water they have rights to use, in part because they fear much larger cuts down the road as the state’s historic drought shows no sign of ending. Cuts will come through continuing water conservation – farmers have been keen to remind the state of their ongoing efforts – and letting land lie fallow.

Read it at the New York Times.

 

GLOBAL MARKETS

High Marks for Green Stormwater Projects in NYC

The New York City Department of Environment released a report on progress made on three neighborhood-scale green infrastructure demonstration projects intending to curb the amount of stormwater flowing into the city’s sewer system. Results were good as the initiatives outperformed expectations, cutting flows to sewers by more than 20 percent.

Learn more via WEF’s Stormwater Report.
Read the report.

 

In Philippines, USAID Joins Forces with Coca-Cola and Sustainable Business Group

A new partnership between the United States Agency for International Development (USAID), Coca-Cola Philippines and the Philippine Business for Social Progress group will secure safe drinking water in the Philippines’ Leyte, Iloilo, Maguindanao, Misamis Oriental and Basilan provinces. The partnership focuses on green infrastructure interventions like groundwater infiltration wells, permeable pavers, rainwater harvesting and storage, flood water diversion and storage, and watershed protection and restoration.

Read more at the Manila Times.

 

Accounting for Water Risk? Never Been Easier

A new online tool developed especially for the business community enables companies to assess the true cost of their water use and account for their water impacts. Creators, EcoLab and Trucost, say the Water Risk Monetizer is an adaptable tool that can be used by large and small companies alike.

Learn more.

 

Santa Rosa Inks $330k Nutrient Offset Deal With Vineyard

The City of Santa Rosa, California recently got a regulatory stamp of approval for a nutrient offset to the tune of $330,000. The city will pay Jackson Family Wines and their partner Krasilsa Pacific Farms for phosphorus credits generated through manure removal on a former dairy recently converted to vineyard. The offset represents 23,345 lbs of avoided phosphorus pollution (at around $14 per lb). The city will bank the credits for future compliance needs: thanks to the current drought and a wastewater reuse project, it hasn’t recently made any wastewater discharges that would trigger regulatory fines.

The Press Democrat has the story.

 

Wild Lands Deliver Clean Water to Big Cities

Metropolises struggling to supply their inhabitants with a clean and steady supply of water can look to Boston and New York City. For these cities, watershed investment programs continue to deliver clean water requiring little filtration or pumping to city residents, thanks to conservation activities in surrounding rural areas.

National Geographic has coverage.

 

A Payments for Ecosystem Services Project to Save Sri Lanka’s Surviving Mangroves

Sri Lanka intends to be the first and only nation in the world with a plan to protect all its remaining mangrove forests. The country’s plan revolves around providing microloans to women for business training, and to guard the mangroves against ongoing deforestation pressures.

The Guardian has coverage.

 

A Call for Corporate Water Stewardship in Africa

In order to build proper water infrastructure in Africa and ensure water quality and quantity through resilient ecosystems, water professionals in Tanzania are pushing for public-private partnerships to finance water stewardship efforts. “We must grasp the big picture connected to water and bring together investors, bankers, economic players and public officials to tackle the infrastructure deficit in new and creative ways,” says World Water Council President Benedito Braga.

Read it at All Africa.

 

Ceres Report Helps Businesses Wake Up to Water Risk

Ceres, a nonprofit organization focused on environmental sustainability, analyzed nearly 40 companies regarding their water risk management finding that less than half evaluate risk throughout supply chains while 60% assesses water risk at their own production sites. Coca-Cola and Unilever scored some of the top marks but, overall, Ceres stressed the need for collaborative efforts that build water security and healthy watersheds to ensure sustainable water supplies.

Learn more from National Geographic.

 

Stormwater Management Goes Green in DC – Slowly

Rather than construct underground tunnels to store sewage-rainwater overflow, Washington D.C. will use green infrastructure, which will allow pollution to filter slowly back into the ground through practices like green roofs and porous pavements, to manage its stormwater overflows. The bad news however, is the plan could take up to five years to implement-meaning more raw sewage flowing into D.C. waterways.

Read more at the NRDC Switchboard blog.

 

Will the Motor City Build a Blue Stormwater System?

The US city of Detroit is investigating green infrastructure to ease the stormwater overflows that are currently overwhelming the city’s aging sewage system. Officials are backing a pilot project that would divert stormwater running off impervious surfaces into a nearby constructed wetland. The potential cost-savings associated with green infrastructure, which figures prominently in the Detroit Future City visionary framework, are a major draw for the cash-strapped city.

Learn more from the Detroit Free Press.

 

JOB LISTINGS

 

Policy Associate

The Nature Conservancy – Arlington VA, USA

The Global Affairs Policy Associate supports The Nature Conservancy’s conservation goals by working with multi-disciplinary teams, focal area teams and TNC’s field offices to develop and implement a strategy to advance policies, partnerships and agreements at the global, regional and national levels. She/he will support The Nature Conservancy’s work in providing expert advice on climate finance to the Government of Peru as COP President in the lead up to Paris and as co-chair of the Green Climate Fund’s board. She/he will also work as part of the Global Freshwater Team to advance and implement the policy and financial components of the Conservancy’s strategy around sustainable hydropower development.

Learn more here.

 

Climate Change Adaptation Intern

Conservation International – Virginia, USA

The intern will help with various outreach materials, including peer reviewed publications that need to be completed as part of the IKI EbA solutions project. This exciting project, which aims to improve the understanding and use of the ecosystem-based adaptation in three geographies (South Africa, Philippines and Brazil) is ending soon and we are in the process of combining and summarizing all the information gathered. Work will include the search for references to be included in outreach materials, manuscript editing and formatting and preparation of a brochure that will include the results of the project.

Learn more here.

 

EVENTS

River Basin Management 2015 Conference

River Basin Management 2015 is the 8th Conference in a series of conferences which marks the growing international interest in the planning, design and management of river basin systems. Changes in the landscape, use of the land and climate conditions lead to a continuous revaluation of river basin management objectives. This requires the development of better measuring tools as well as the use of increasingly accurate computer software. The objective of this series of conferences is to bring together practitioners and researchers in academia and industry in the hope that their interaction will foster mutual understanding and lead to better solutions for river basins. 17-19 June 2015. Coruna, Spain.

Learn more here.

 

World Forum on Ecosystem Governance

The World Forum on Ecosystem Governance is modeled after the World Economic Forum, but with a focus on the planet’s natural capital. The Forum will periodically bring together world specialists and leaders to promote more effective governance to respond to ecosystem threats. The first event is the High Level Consultations from 25-27 June 2015 in Guiyang City, Guizhou Province, China, followed by the Young Professionals’ Academy on 27 October 2015 in Beijing, China. The Technical Roundtable Discussions will be held 28-30 October 2015 in Beijing, China and will build around the guidance provided by the High Level Consultations. The World Forum on Ecosystem Governance is a partnership of the International Union for Conservation of Nature (IUCN), the IUCN Commission on Ecosystem Management (CEM), the Chinese State Forestry Administration (SFA), and the Beijing Municipal Government. The 1st World Forum on Ecosystem Governance will serve as a pilot for an expanded Forum in 2017. 25-27 June 2015. Guiyang City, China.

Learn more here.

 

6th SER World Conference on Ecological Restoration

SER (Society for Ecological Restoration) 2015 in Manchester aims to be the major restoration event of the year. Building on recent successful world congresses and regional meetings such as SER Europe 2013 in Finland, we hope to attract a large number of academics and practitioners who will share good practice and network successfully in one of the homes of the industrial revolution. The title: “Towards resilient ecosystems: restoring the urban, the rural and the wild” should provide something for everyone, whether working in highly urbanised, ex-agricultural, or natural wild environments. We mean this conference to be as inclusive as possible and are keen to showcase not only the important scientific developments, issues and solutions, but also the cultural, educational and artistic aspects of restoration ecology. We are hosting a wide range of different types of events during the conference period, with pre-conference training workshops, conference symposia posters, workshops, and oral presentations, as well as half day field trips to see landscapes at first hand. 23-27 August 2015. Manchester, United Kingdom.

Learn more here.

 

8th ESP World Conference: Ecosystem Services for Nature, People and Prosperity

The 8th World ESP conference’s central theme is ‘Ecosystem Services for Nature, People and Prosperity’. The conference will pay special attention to the public and private sector dialogue on how the ecosystem services concept can be used to support conservation, improve livelihoods and engage the business community. We especially encourage delegates from businesses to attend the ESP conference in order to discuss challenges and opportunities in using the concept of ecosystem services to achieve conservation and sustainable use of our ‘natural capital’ within a market-context. The conference will provide an excellent platform to engage with experts who can generate solutions to these challenges and start making a difference in practice. 9-13 November 2015. Stellenbosch, South Africa.

Learn more here.

CONTRIBUTING TO ECOSYSTEM MARKETPLACE

Ecosystem Marketplace is a project of Forest Trends a tax-exempt corporation under Section 501(c)(3).The non-profit evaluator Charity Navigator has given Forest Trends its highest rating (4 out of 4 stars) recognizing excellence in our financial management and organizational efficiency.

 


Additional resources

Mixed Initial Responses To Final US Clean Water Rule

29 May 2015 | Last spring the US Environmental Protection Agency (EPA) and the US Army Corp of Engineers released a proposed rule aimed at clarifying which waters are protected under the Clean Water Act (CWA). What followed was a contentious year with opponents hailing from the legislative, agriculture, energy and property development spaces launching a fierce campaign to prevent the proposal from becoming regulation.

Nevertheless, the two government agencies released a final version of the Clean Water Rule this past Wednesday.

“Protecting our water sources is a critical component of adapting to climate change impacts like drought, sea level rise, stronger storms, and warmer temperatures – which is why EPA and the Army have finalized the Clean Water Rule to protect these important waters, so we can strengthen our economy and provide certainty to American businesses,” said EPA Administrator Gina McCarthy in a statement.

The EPA insists the rule does not expand CWA jurisdiction and will not mandate any additional permitting requirements but precisely defines the wetlands and streams protected under the CWA, which would lead to a faster and more predictable permitting process. The rule is in part a response to ambiguous language in the CWA that has led to US Supreme Court cases that resulted in more questions than answers, according to the agencies.

“By and large, the rule is good,” said Adam Riggsbee, President and co-founder of RiverBank Ecosystems, a Texas-based ecosystem restoration and mitigation banking company. “But anytime you develop a regulatory program, there is risk.”

In the case of this new rule, Riggsbee sees increased potential risk of undermining the act. “Outside of the occasional court case, there wasn’t a whole lot of effort to challenge the CWA before this new rule,” he said. “Now we might see some more legislative zeal.”

The Clean Water Rule, which is grounded in science, is clear on its protections of smaller bodies of water that function as a system and impact downstream waters. This includes parts like shallow wetlands called prairie potholes, coastal prairie wetlands in Texas and western vernal pools in California. Vernal pools are small seasonal wetlands that provide valuable habitat. Also, navigable waterways and their tributaries are protected because of their potential impact downstream.

However, water types like groundwater and ditches not connected to streams aren’t covered. Neither are subsurface flows or tile drains.

Suzy Friedman, the Director of Sustainable Agriculture at NGO Environmental Defense Fund, pointed out the need for much further participation and cooperation-particularly from the private sector-outside of federal regulations to protect and maintain the country’s waters.

“To drive real change, we need the private sector to create strong market demand for clean water,” Friedman said.

For Riggsbee, the big question is how the rule will impact mitigation. In theory, this rule would increase demand as waters with vague regulations receive the full protection the CWA has to offer. However, Riggsbee is skeptical that this will lead to more demand within the marketplace.

“In my experience, when compliance gets more expensive you get fewer players willing to pay the price,” he said.

Developers and farmers will simply bypass the entire process of mitigating their impacts and accept the risk that comes with breaking the rules, Riggsbee said. He believes, then, that this rule will likely come down to compliance enforcement, which varies heavily geographically.

As the rule was just finalized, comments continue to filter out from affected industries and interests. The National Farmers Union, an advocacy organization for farmers and ranchers, has come out in favor of the new rule. While not perfect, a statement said, the finalized version is much improved over last year’s proposed rule and does offer certainty regarding regulation over ditches-a long-time murky issue. “The final rule puts bright-line limits on jurisdiction over neighboring waters, offering farmers increased regulatory certainty and mitigating the risk of enforcement or litigation,” the organization said.

However, a statement from the National Association of Home Builders wasn’t supportive because the organization believes the rule’s clarifying definitions are actually expansions of their traditional meanings. The result is a federal overreach adding more regulatory burdens on the building industry, according to the association. “Regrettably, as a result of these overly broad definitions, this rule will soon wind up in the courts yet again,” it said.

The rule will go into effect 60 days after publication in the Federal Register.

 

Market-Based Species Conservation Receives Boost From US Gov Land Management Plans

The US Bureau of Land Management on Thursday released its final environmental reviews of land-use plans containing greater sage-grouse habitat. As the plans make use of compensatory mitigation, those in the mitigation space are viewing the strategy as a potential driver to increase demand for market mechanisms like habitat exchanges and conservation banks.

29 May 2015 | Conserving the greater sage-grouse is a complex endeavor. The bird’s range spans 11 US Western states covering both public and private land alike with some of the bird’s most prime habitat falling on property slated for energy development. Conserving such a species has led to a multitude of approaches aimed at preserving the bird’s rapidly declining population without stunting energy growth and development in the region.

Several Western states have developed what’s called resource management plans (RMPs), creating high quality, science-based conservation in sagebrush ecosystems. Over the past four years, these plans have been submitted to the Department of Interior’s Bureau of Land Management (BLM), the nation’s largest land manager.

And today, the BLM in partnership with the US Forest Service (USFS) rolled out their amendments of these plans which came from 10 western states. The finalized plans will serve as governing guides for sagebrush ecosystems that fall on BLM and USFS lands.

The plans span a land mass the size of South Dakota; 50 million acres of sage-grouse habitat. “Conserving the greater sage-grouse must be done at a landscape-scale,” said Theo Stein of the US Fish and Wildlife Service (FWS).

The plans address primary threats, such as habitat fragmentation and invasive species, facing the sage-grouse and sagebrush ecosystems. They focus on three approaches to alleviating these threats: minimizing new or additional surface disturbances, improving habitat condition and reducing the threat of rangeland fire.

Included in these plans is a compensatory mitigation component which carries significant implications for conservation banking as well as other versions of market mechanisms for species conservation. Wayne White, the former president of the National Mitigation Banking Association, discussed the time the association spent with the BLM and other federal agencies on shaping a mitigation component of the plans.

“We focused on high standards and equivalency throughout all forms of mitigation,” White said.

The BLM will require and ensure mitigation that provides a net conservation gain to the species by avoiding, minimizing and compensating for unavoidable impacts from development, the document reads.

“The RMPs require mitigation, which is a key piece of developing the market demand needed for conservation banking” Stein said.

Conservation banks for the greater sage-grouse are already starting to appear. The Sweetwater River Conservancy Greater Sage-Grouse in Wyoming, marks the nation’s first. In Nevada, The Nature Conservancy and gold mining company, Barrick Gold, along with the BLM are collaborating on a bank .

The Environmental Defense Fund’s (EDF) Eric Holst sees mitigation in this context as an endorsement of EDF’s market-based habitat exchanges. These exchanges allow development interests to offset their unavoidable impacts by purchasing mitigation credits.

“By requiring mitigation on millions of acres of vital sagebrush habitat, these agencies are unlocking the vast untapped conservation potential of America’s working lands,” Holst, Senior Director of Working Lands, said in a statement.

The plans now enter into a review process lasting over three months.

Outside the BLM’s announcement are ongoing legislative efforts impacting the grouse’s conservation. Late last year, Congress attached a rider onto the 2015 appropriations bill prohibiting FWS funding to be used toward proposing a listing status. There is also a defense policy bill that passed in the House earlier this month, which is attempting to curb sage-grouse conservation by arguing it would put military operations at risk.

While last year’s rider didn’t prevent conservation initiatives from moving forward, Stein says the defense bill could allow governors to overturn these BLM plans.

These congressional tie-ups only result in further habitat loss and fragmentation which increases the possibility the sage-grouse will require a listing status, Stein says. “Kicking the can down the road is only going to make matters worse for this species.”

Additional resources

Standoff Continues In South Korea’s New Carbon Markets

With no trading of allowances since mid-January, businesses regulated by South Korea’s cap-and-trade program have made their dislike of the carbon markets well known. That stand-off will likely end next year, as the first compliance deadline approaches, but analysts warn that a scarce supply of offsets may increase the costs for companies then.

May 28 2015 | The last-minute passage of South Korea’s cap-and-trade bill made headlines back in 2012, when it set the stage for the world’s second largest emissions trading system (ETS).

A year later, as details of the ETS emerged, the program once again made the news – this time for the dubious honor of the world’s most (potentially) expensive carbon market. Under the country’s penalty scheme, non-compliant companies can be fined at three times the average price of allowances for that compliance year, with a cap at KRW 100,000 (USD $90) per tonne.

Since the initial allocation of allowances and launch of the market, there has been growing talk of an allowance shortage. Sungwoo Kim, an official advisor to the government through consulting firm KPMG, gave greater insight during a panel at the Climate Action Reserve’s Navigating the Amiercan Carbon World conference in Los Angeles last month. He estimated there will be a 57 million tonnes of carbon dioxide equivalent (MtCO2e) shortage during the first phase of the ETS (2015-2017) – which could increase the costs for covered entities to meet their requirements.

Despite the expensive consequences, companies have shown little interest in trading allowances since the program’s launch at the beginning of January. Only four allowance trades have occurred (as of May 29) at a volume of 1,380 tonnes. With the last trade registered in mid-January, companies have given no indication that will change soon.

The carbon stakes are high

While the penalty is high for non-compliance, most companies are placing an even bigger bet: that the government will distribute additional allowances.

Several industry associations (including the Korea Nonferrous Metals Association, Korea Petrochemical Industry Association, Korea Cement Association, and Korea Waste Association) and companies have sued the government over the allocation of permits in an effort to increase the total amount of allocations. Emitters allege the government has under-allocated by up to 20%, but so far government officials have remained unmoved.

The largest opponent has been perhaps the Federation of Korean Industries (FKI), an economic organization in Korea for members earning annual sales of 50 billion won or more. FKI recently released its annual economic outlook survey, which found that – behind a drop in domestic demand – the cap-and-trade program remains the next largest concern for businesses.

In reality, though, the program mainly affects the country’s largest corporations, with 10 companies responsible for an estimated 76% of emissions covered under the ETS.

These organizations have the most to lose from penalties. As a result, many companies (or rather the companies’ membership organizations) have taken the fight to the courts over allowance volumes. The grievance specifically revolves around the way allocations were determined because the Korean government averaged entities’ emissions from 2011 to 2013. For organizations that saw a decrease in emissions during those three years, it is likely that they will remain beneath their allocation while the opposite is true for companies with a higher emissions trend.

A continuous battle

This isn’t the first time that South Korea’s industry has pushed back against the carbon market. Though the bill passed with near unanimous support across Korea’s political parties, there was significant resistance from the Ministry of Industry and industry associations.

“The first fight is between the Ministry of Environment and the Ministry of Industry,” said Kim, who explained that the fight occurred over several years. “The Ministry of Industry keeps communicating with the industry people, with the companies, that this system will not go on. So the companies are receiving the wrong signal. They think that they don’t have to prepare for this emissions trading scheme… But the Ministry of Environment won that fight and they started the ETS.”

The government has already compromised on several aspects of the ETS prior to this, including delaying the start of trading from 2013 to 2015. However, the government has held firm against other demands, including another delayed implementation through 2020.

An April article by the news agency Nikkei Asian Review quoted Lee Hyung-sup, senior deputy director of the Environment Ministry’s climate change mitigation division, on the matter: “We believe the amount of permits was appropriately made,” he said. “It is in the nature of the emissions market that the government takes a mandatory top-down approach, as it sets the national target and makes the allocations accordingly.”

Offsetting – a silver lining or insubstantial air?

Barring government action, compliance entities could fill the allocation gap by offsetting up to 10% of their emissions reductions.

While the response to offsets has been better than that of allowances (with five transactions as of May 29, totaling 279,658 tonnes), analysts at research firm Point Carbon warn that offsets, too, are in short supply as the compliance market only allows for the use of domestic offsets. The Ministry of Environment began issuing Korean domestic offset units (KOCs) from pre-existing Certified Emissions Reductions (CER) offsets in April, meaning questions remain about the size and scope of offsets to be issued.

So far, the ministry has converted around 1.9 million CERs. A total of 91 domestic Clean Development Mechanism projects might be converted to provide 42 MtCO2e, according to Kim. But analysts at Point Carbon estimate only 20 million offsets could make the cut (excluding HFC 23 and N20 adipic acid projects, which are offset types that other governments have ruled problematic and excluded from use).

This potential shortage could change in Phase III of the ETS (2021-2025), when up to 50% of total offsets allowed may be international in origin.

In the meantime, Kim predicts that the use of offsets will become more widespread next year after compliance entities have sorted out the allowance issue since offsetting is really the only option for large emitters to meet their targets without sacrificing business growth.

“For now, since we just implemented the emissions trading scheme, big companies are busy fighting to get more allowance-based emissions reductions,” he said. “But they will turn their face to project-based emissions reductions related to the offsets at the end of next year.

Note: This article has been updated as of June 2, 2015 with new information regarding the amount of allowances and offsets transacted in South Korea and the names of industry associations involved in the lawsuit against the government, courtesy of Dong-Ho Lee, Researcher and Ph.D candidate at the Department of Forest Services, Seoul National University.