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

More And More People Are Suing To Slow Climate Change. Will Companies Finally Recognize The Cost Of Their Emissions?

20 July 2015 | High in the Andes of Peru, the glaciers that feed Lake Pallqaqucha are melting. Down below, the lake itself is swelling; and if it bursts its banks, Saul Luciano Lliuya’s farm will flood, as will his village of Huaraz and much of the surrounding countryside. So Lliuya is proactively suing a German energy company for 1% of the damages, because the carbon majorsreport showed that the company was responsible for 1% of the world’s greenhouse gas emissions. Meanwhile, a nonprofit organization in Belgium is preparing to sue the Belgium government into taking more climate action after a court in the neighboring Netherlands ruled that its own government had violated human rights by not doing enough to combat climate change.

These are just a handful of several pending cases that test the ability of our legal system to address climate change, and attorney Carroll Muffett says they stem partly from the failure of international climate negotiators to deliver results.

“A lot of the energy and progress around fixing climate change is going to go to litigation,” says Muffett, who is President and CEO of the Center for Environmental Law, an advocacy organization.

Most of the lawsuits are against governments, but the risk for companies are increasing as well, says David Hunter, Director of the Program on International and Comparative Environmental Law at American University’s Washington College of Law.

“We’re at the point where the tide of litigation on climate change is only going to grow, and at this point, the major producers and emitters will be compelled to treat this issue more seriously,” Muffett says.

If these lawsuits are successful, it could transfer climate risk from victims to emitters – hopefully bolstering the business case for reducing emissions, and possibly providing support for carbon markets as an interim solution for companies that can’t reduce internally yet.

Climate Court

The ruling in the Dutch case perhaps made it the most famous of these climate court cases, but there are many others in different stages of development. Along with the aforementioned cases in Belgium and Peru, a coalition of NGOs, citizens and academics successfully sued the Indonesian government over the impacts coal mining has on the environment and people. But in that case there were specific companies causing specific damage locally – on the ground, in the water, and in the air. Climate change is more diffuse and more of a challenge, but six South Pacific nations announced last month their intent to sue fossil fuel companies for their contribution to climate change.

Meanwhile, in the US, a Northwestern nonprofit called Our Children’s Youth is organizing youth-led lawsuits for climate justice – and winning. In one such case, a Supreme Court judge ordered the state of Washington to consider statewide emission reductions.

All of these cases would have seemed improbable at best just a few short years ago, when the island city of Kivalina, Alaska sued multiple energy companies for the damages climate change has already caused them as they sink into the sea. They lost their case after a federal court ruled it was a political – rather than a legal – issue, placing the onus on governments rather than companies.

“Early cases failed because the law wasn’t ready to deal with this, and the science wasn’t there,” says Muffett.

Science Changes the Game

But times have changed. And the needed science to back climate change impact cases is increasingly available.

“What we’re seeing as the science gets better and better are plaintiffs who can point to very compelling and often government-endorsed scientific information saying this is the harm specific to me and I can trace it to climate change,” says Muffett.

The science – or, more accurately, the general public’s understanding of science and accountability – improved on a number of levels, thanks to efforts like the carbon majors report, which traces the majority of emissions released into the atmosphere over the last 150 years to 90 entities. It essentially exposes them to the risks of accountability, and indeed it forms the basis of Saul Luciano Lliuya’s lawsuit against RWE, the German energy provider.

That’s important because a huge challenge regarding climate lawsuits is proving the personal harm done that allows a plaintiff to sue a defendant, says Sladye Hawkins Dappen, an environmental attorney and former council to Ecosystem Marketplace publisher Forest Trends.

“In US law, it’s hard to show concretely that someone has been harmed by any one particular company’s action because often the company contributes a small fraction to the harm,” she says.

An Offsetting Connection?

As already evident, responses will vary with some companies accepting responsibilities and making necessary alterations, while others won’t, Muffett says.

Hunter says he could see a role for offsetting but is unsure of how it might play out. The most likely scenario he sees is one where companies pledge to use offsetting as a way of addressing climate risk in the future. Offsetting won’t necessarily impact an existing court case because the harm has already happened, Hunter explained. But the practice could be one component of a settlement agreement and as a way to move forward and prevent future impacts.

Businesses that have already been offsetting can use it as a line of defense against potential lawsuits.

“It will help determine a company’s level of negligence. The company can say it was investing in carbon offsets instead of denying science,” Hunter says.

Companies being able to distance themselves from climate denial could come in handy. A new Union of Concerned Scientists report,The Climate Deception Dossiers, unearths a deliberate campaign by the fossil fuel industry to mislead the public on the risks and impacts of climate change.

The Offsets Option

On a national scale, there is also potential for an increase in offsetting. Governments may choose to meet required ramped up emission reductions targets through the carbon markets, says Sarah Deblock, the EU Policy Director at the International Emissions Trading Association. Countries could turn to other options as well though, such as a tax or increased efficiency standards.

“For the Dutch to meet their obligation as a country, they may have to enter into the offset market more significantly,” says Hunter, using the Netherlands as an example. The country hasn’t yet announced how it will meet the additional targets. Deblock along with several others following the case believe the Dutch government will contest the decision.

Not a Sure Thing

The ruling in the Netherlands doesn’t necessarily signal a new normal regarding climate legal action, says Dappen. Laws are different depending on the place. For instance, the precautionary principle, which requires precautionary actions for activities causing potential harm to the public, is stronger in Europe than in the US.

But legal and political differences won’t curb litigation, just increase the variety, Muffett says. “The litigation that we’re moving into is going to be as diverse as the impacts of climate change itself,” he says.

And while legal action isn’t a sure thing, it’s proved itself in the past. Dappen notes the legal action against coal plants as a successful example-although other factors such as the price of natural gas factor in.

Muffett and Hunter both note the wave of tobacco litigation eventually shifted in the plaintiff’s favor.

“If I was in the fossil fuel industry, I would be looking at the tobacco model with a substantial amount of concern,” says Muffett.

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.”

 

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.

 

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

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

8 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.

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.”

 

Additional resources

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.”

 

Additional resources

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).

 

Additional resources

Climate And Sustainability Experts Release New Multi-Language Guide To INDCs

To help interpret the well-known complexities of countries’ Intended Nationally Determined Contributions (INDCs), the Climate Development and Knowledge Network have released an updated version of their popular Guide to INDCs. This new edition continues to focus on Least Developed Countries with new material on Small Island Developing States.


2 June 2015 |
The Ricardo-AEA, a sustainability consultancy, have revised their popular Guide to INDCs, which helps countries to prepare their Intended Nationally Determined Contributions (INDCs) for the UNFCCC (United Nations Framework Convention on Climate Change). This new edition of May 2015 has been revised following discussions with stakeholders and includes new material and specific examples for Small Island Developing States (SIDS) – in addition to its original focus on Least Developed Countries (LDCs). In response to strong demand, the two entities provide this revised edition in French: Guide de Préparation des INDC and in Spanish: Guí­a para las INDCs.

INDCs are contributions by the Parties to the UNFCCC towards achieving the ultimate objective of the Convention: to prevent dangerous human interference with the Earth’s climate. The UNFCCC has invited all Parties to communicate to the secretariat their INDCs well in advance of COP 21 and it will prepare by 1 November 2015 a synthesis report on the aggregate effect of the INDCs that have been submitted before 1 October.

LDCs and SIDS have contributed less to current global emissions than other countries; so the burden of cutting emissions will rest with major economies. However to avoid dangerous levels of global warming, all countries will have to play a role. The UN has communicated that contributions towards a global agreement should reflect the ‘special circumstances’ of these low-emitting countries.

Many LDC and SIDS governments are preparing INDCs and see the advantages in doing so:

  • demonstrating that their plans for economic growth are compatible with low-carbon, climate-resilient development;
  • highlighting how climate mitigation actions can be planned in ways that enhance climate adaptation, and deliver other immediate benefits to society, such as poverty reduction, improved public health, energy access and energy security;
  • capturing the potential for reducing or avoiding greenhouse gas emissions in climate adaptation plans and programmes;
  • encouraging other countries to take equivalent action, and so increasing global ambition and reducing climate impacts; and
  • attracting financial, capacity-building, technology transfer and other types of international support.

This guide seeks to address the broad range of approaches being considered by LDCs and SIDS in preparing their INDCs, including the challenges they face and different national circumstances and levels of capacity, preparedness and ambition. The Guide to INDCs provides a practical example of how an INDC could be structured, with examples to illustrate a narrative and sources of background information.

The Guide to INDCs is not an official publication of the UNFCCC, nor is it endorsed by the UNFCCC. However, it was developed in consultation with a range of stakeholders, including authors of existing INDC guidance, representatives from LDCs, and organisations working with CDKN to support INDC preparations. It draws from the INDCs which have already been submitted, and a range of referenced literature.

 

Additional resources

On The Road To Paris. Next Stop: Bonn, June 2015

Mid-year climate talks begin this week in Bonn, Germany – a critical but largely overlooked pit-stop on the way to year-end talks in Paris. Gustavo Silva-Chavez of Forest Trends points out that land-use issues still account for 24% of all greenhouse gas emissions, and will play a central role in whatever solution emerges in Paris.

 

1 June 2015 | Visas have been secured, travel arrangements have been made, and the international climate policy community including the Forest Trends COP team, is arriving in Germany for the latest round of UN climate change meetings. They will take place 1-11 June in Bonn, Germany and there is added urgency to make significant progress and set the stage for a successful global deal in Paris later this year. Normally, the June UN sessions focus on scientific and technical issues but this year, additional meetings specifically on the draft overall global deal have been added to the agenda.

Starting at last year’s UN meeting in Lima (or COP which stands for Conference of the Parties), countries started to add their preferred options on some of the key issues, including the overall temperature goal, the legal framework, transparency issues, mitigation, finance and REDD+. As a result, when 196 countries start adding their options, we now have a bloated text that has every option possible. Comprehensive? Yes. Ready for an actual negotiation? No.

Why does Bonn Matter?

The negotiations for an overall comprehensive agreement will take place under the current version of the negotiation text that is currently almost 100 pages. The more difficult process of elimination, where specific options are deleted, will wait until the text is shortened and more manageable. It is hard to say what success looks like. 60 pages? 50 pages? There is no exact page number that Forest Trends can point to as a successful outcome but progress has to be made. Otherwise, we will not have time to get down to something that can be negotiated by Ministers and Heads of State in Paris.

Other Issues on the Agenda

REDD+ in SBSTA–Every year, the June negotiations in Bonn focus primarily on scientific and technical issues. These take place under the Subsidiary Body for Scientific and Technological Advice, or SBSTA for short. This is the agenda:

  1. Whether there is a need for further guidance on issues relating to safeguards
  2. Developing methodological guidance on non-market-based approaches
  3. Methodological issues related to non-carbon benefits
Forest Trends believes that the current guidance on safeguards is sufficient for now and that countries must implement and respect these safeguards. Countries should think of the UN safeguards as a “floor” and should aim to strengthen them over time with technical assistance and financing, if needed. We also think that countries are free to decide if they want to access carbon markets or not, but that efforts to dismiss carbon markets are not helpful. Forest Trends has been tracking REDD+ finance flows in 14 countries as part of our REDDX project, and our findings clearly indicate that current financing of REDD+, which is primarily from donor countries and not carbon markets, is insufficient to reduce global deforestation at the scale needed to avoid dangerous climate change. And finally, non-carbon benefits can mean a lot of things but a lack of agreement should not prevent REDD+ from going forward and be a fundamental pillar of mitigation in the Paris agreement.

Land use–The agreement at COP 21 in Paris needs to address all sources of emissions. Although most people think of climate change as a fossil fuel problem, agriculture, forestry, land use change, and other land uses, (the “land sector”), account for about 24% of global greenhouse gas emission. This sector must be part of the Paris agreement and together with NGO partners, Forest Trends will be working to make sure that land use is included in the text out of Bonn.

Forest Trends on the ground

Forest Trends staff will be on the ground covering these meetings, with a focus on the ADP negotiations, as well as mitigation, finance, land use and REDD+ issues. Stay tuned for further updates and follow us on Twitter and Facebook.
Gustavo Silva-Chavez is the Program Manager of Forest Trends’ Forest Trade and Finance program. He can be reached at gsilva@forest-trends.org.

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.

 

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— 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.

WRI Report Outlines US Carbon Pricing Alternatives

The World Resources Institute (WRI) officially joined a growing consensus around the need for a price on carbon pollution through its recent release of a report intended to serve as a reference guide for policymakers on carbon pricing. Here, an environmental writer outlines WRI’s descriptive report, which presents a range of ideas on decarbonization and pricing greenhouse gas emissions.

This article was originally published in Clean Technica. Read the original here.

 

22 May 2015 | This May, the World Resources Institute, a global research organization spanning over 50 countries, released Putting a Price on Carbon: A Handbook for U.S. Policymakers, an important reference guide that addresses decarbonization and its interaction with many other policy priorities.

WRI envisions the working paper—and the detailed briefings to come—as playing “a helpful role in the coming national conversation on these issues.” The organization hopes it will lead to a proven, market-based solution that can reduce the US contribution to climate change and raise revenues that will enable communities to better adapt to its impacts. In doing so, WRI authors note, carbon pricing will also help meet other pressing national priorities.

The report echoes statements made by numerous prominent individuals–from triple Cabinet Secretary George P. Schulz to Jerry Taylor, formerly of the libertarian Cato Institute, to Pope Francis, and organizations like the World Bank, the International Monetary Fund, and the World Economic Forum–that the time for taxing carbon is now. Andrew Steer, president and CEO of WRI, states it succinctly: “It’s abundantly clear that putting a price on carbon is the right choice to deliver multiple benefits, including driving innovation, boosting economic growth and reducing emissions.”

“We cannot continue to use the atmosphere as a dumping ground for carbon pollution. It surely makes no sense to tax productive activities like labor, income, and profits, while giving a free ride to carbon emissions that degrade the environment and imperil public health.”

The working paper is not prescriptive, however. It’s descriptive. It presents a range of ideas for pricing GHG emissions throughout the economy rather than promoting a choice. Thus it should greatly help in the definition and prenegotiation stages of decisionmaking on all sides of a thorny issue.

The handbook describes fundamental choices policymakers have in putting an actual price on carbon emissions. It includes a very complete list and description of precedents, all the way from Sweden’s carbon tax of nearly 25 years ago to working schemes in the recent past (see map below). About 40 countries (nearly 25% of world governments) and numerous subnational jurisdictions already have carbon taxes or cap-and-trade policies in place, and the number of important regional pacts is also on the upswing.

It is also realistic in recognition of the critical roles of compromise and of incorporating political goals beyond emissions reductions. Here are the factors the paper suggests might have the best chance of minimizing political barriers and attaining a comprehensive carbon-pricing policy:

  • Bipartisan support for federal tax reform,
  • Stated goals for deeper reductions in GHG emissions,
  • Desire for alternative climate policies,
  • Bipartisan support for deficit reduction,
  • Experience at the state level, and
  • Increased awareness of climate-related impacts

While none of these alone will likely move Congress to put a price on carbon in the coming years, the authors suggest that “their confluence suggests a gradual mounting of pressure that could turn the tide.”

I’ll describe WRI’s cited alternatives from goal-stating, bipartisanship (a somewhat hackneyed and increasingly difficult effort), desire for complementary fiscal and environmental policy, state (and local, regional, and special-interest) actions, and the looming position of climate change itself.

WRI notes that President Obama (with his Cabinet, and many members of Congress) has followed experts in articulating known climate risks. The administration has in place an initial plan for near- and medium-term emissions reduction and limiting the largest emitting sectors in the years beyond.

While these actions clearly represent progress, WRI makes the point that its own analysis shows these administrative actions to be insufficient to meet the long-term US emissions target of roughly 83% below 2005 levels by 2050. The consultants say we will need an economy-wide climate policy to achieve the level of reductions developed nations must contribute to mitigate and adapt to climate change.

The authors present an illuminating matrix of policy goals and revenue options (above). It reveals two important aspects of our possible choices: first, addressing climate head-on can achieve numerous American goals in other areas; and second, none of the climate options exists in a vacuum.

Nearly everyone involved views the federal tax code as onerous, complicated, and full of unfair loopholes. WRI finds it encouraging that both Republican and Democratic members of the Senate Finance Committee have discussed replacing most or all energy subsidies and tax credits with a carbon tax or cap-and-dividend program.

Likewise, reducing the national long-term debt resonates with almost all lawmakers, as well as with the general public. A national carbon tax that has the potential to raise hundreds of billions of dollars could be very helpful in the fiscal long run. It might also be useful in the face of current budget stresses.

Too, WRI notes, the revenue could contribute to tax cuts, refunds, and rebates—much as ample petroleum receipts set Alaskans free from taxes decades ago—and/or it could finance innovation and forward-looking infrastructure and help the nation transition from using harmfully carbon-intensive goods and services.

A price on carbon is both a fiscal and an environmental policy. In addition to using revenues to “pay for” reductions in other taxes, as discussed above, some proponents advocate an economy-wide carbon price as an approach that is preferable to imposing sectoral emission standards. Others view such standards as important tools in their own right or as potentially complementary climate policies.

I would suggest that experience at the state level will prove to be one of the most useful strategies here. WRI points out that “in the absence of a national, economy-wide policy to reduce GHG emissions, some states have moved forward with their own carbon-pricing mechanisms.”

Nine of our northeastern states operate a regional utility sector cap-and-trade program that has saved consumers more than $2 billion in consumer savings. Massachusetts, Oregon, Vermont, Washington, and others have strong stakeholders advocating for a carbon tax to raise revenue for items like key transportation infrastructure. Also, in 2012 California initiated an economy-wide program, which it now shares with Quebec and Ontario. The most spectacular North American example is British Columbia’s successful 2008 carbon tax, which has created new revenue, lowered other tax rates, and will lower emissions to a third of 2007 levels by 2020.

This brings up a very important point: we are seeing carbon pricing work on regional, local, and international levels as well. Successful implementation of carbon pricing by other political units could lessen resistance at the US federal level.

The other factor I see as swiftly moving the debate to a decision point is the weather—not just a conversation-mover as usual, but in the way it may relate to climate impacts and personal priorities. Public opinion has already become more vocal on the need for action. Carbon pricing only makes sense in view of redirecting fiscal responsibility from the consumer/taxpayer to the generators who profit from selling emission-laden products.

Despite fierce and moneyed opposition, Congress has acknowledged the force of climate change, investors are leaving coal behind, we now have an inclusive clean power plan, and polls indicate that people are recognizing the challenge. Too, business and localities have started decarbonization projects on their own and have formed regional and international compacts to implement solutions to climate change issues.

The conservative faction ultimately frames its case in the simplistic argument that changes in energy options constitute redistribution of wealth. It expresses incredulity that Americans would take up such a socialist, if not “communistic,” cause. Loaded rhetoric cannot disguise the feebleness of this position. It’s like advertising that “you deserve” a better insurance plan, or that you have somehow “earned” it. Leaders of all stripes acknowledge that a worldwide climate response goes hand in hand with sustainable development, which will also improve the lot of disadvantaged parts of the world, and swiftly.

Those looking for confirmation of widespread American approval of a carbon tax need only look clearly at the numbers. These include the recent January 2015 Stanford University and Resources for the Future poll. This instrument showed 60% of US respondents in favor of charging a fee to those who emit pollution. The majority went up to two-thirds (67%) if the revenues from the fee were directed back to consumers.

Americans are beginning to see heavy climate impacts, not just the economic hits of typhoons leveling less developed countries or deplorable flooding in “civilized” Europe, but right here. Nothing will change the US perspective better than more runaway wildfires up and down the Rockies, droughts forcing choices between water and fuel in California and Texas, the palpable sinking of Florida, or the prospect of Hurricane Sandies ravaging the coasts on a more frequent basis.

This handbook has the potential to demystify a critical issue of our time. It offers liberals solid, constructive economics and policy, and it hands hard-liners appropriate alternatives to deliberate ignorance and unproductive chatter. Access the guide on WRI’s website.

 

Sandy Dechert covers environmental, health, renewable and conventional energy, and climate change news.

Early Action: Not So Fast In California Offsets Program

California’s offset market was the source of about nine million compliance offset transactions in 2014, according to an Ecosystem Marketplace analysis. However, that number could have been even higher if the evaluation of early action carbon offset projects by California regulators had not moved at a snail’s pace, according to stakeholders.

19 May 2015 | When California regulators announced they would give certain voluntary carbon offset projects an opportunity to transition into their compliance market, it was seen as a potential reward to the innovators and risk takers who invested in these projects early on before a clear compliance signal was sent. In reality, those actors are now being penalized because their projects are being sent to the back of the line, stakeholders said.

Ecosystem Marketplace tracked nine million compliance offsets specifically transacted for the California program in 2014 – a volume that would have been higher had it not been for the slow issuance of offsets to early action carbon projects, according to project developers and investors speaking at the Climate Action Reserve’s (CAR) Navigating the American Carbon World conference in Los Angeles last month.

To date, the California Air Resources Board (ARB) has issued about 19.5 million offsets from 120 projects. Forestry projects account for the largest volume by project type at more than 9.6 million offsets issued to 17 forestry projects – 10 of which were early action projects.

“Early action projects, particularly forestry, have been very slow to transition,” said Roger Williams, President of Blue Source, which develops forestry projects. “We have situations where we have projects that have been kind of stuck in the queue for over a year. That certainly has been frustrating for us because these are projects that have been reviewed by verifiers, by registries, by a second verifier, prior to landing on ARB’s desk. We really need that to accelerate because there are deadlines coming up after which these projects can’t transition.”

The Backstory

Early action offset projects are voluntary projects that have been issued offsets by approved voluntary registries for emissions reductions that occurred between January 1, 2005 and December 31, 2014. Projects developed under five approved ARB compliance protocols are eligible to transition to the compliance regime.

The first step in the process, according to the CAR web site, is to list the early action project with the ARB, which has approved the listing of 109 early action projects to date. They must then undergo regulatory verification, including an assessment of conflict of interest and a desk review to confirm the validity of the initial verification. After that, developers may request that ARB issue offsets to the project, which triggers a full review by the ARB of all project documents.

To transition, these projects had to be successfully listed under a compliance protocol with an Offset Project Registry (OPR) by February 28, 2015. The projects have to complete the early action conversion process by an August 31, 2016 deadline or they will lose the ability to receive ARB offsets under this pathway. However, there are no mandated deadlines for the ARB to complete its evaluation of early action projects.

“The challenge is that for the early action projects, many of which were done a long time ago, there’s no clock,” said Greg Arnold, Managing Partner of CE2 Capital Partners. “Trying to make sure those get expedited in some meaningful fashion is really the challenge of creating the offset supply.”

In contrast, there is a 45-day deadline for the evaluation of offset projects undertaking the ARB’s compliance pathway – meaning the project was developed under a compliance offset protocol established by the ARB – although the process can be extended if ARB staffers require more information.

In practice, this has resulted in developers who took an early risk on voluntary projects that may or may not have been allowed to transition into the compliance regime being forced to sit on the sidelines and wait for their projects to be evaluated. But these pioneers should be rewarded for their willingness to take risks early in the process so it should be high on the ARB’s priority list to get those projects through the approval process rather than subjecting them to a discouraging slow conversion process that could fail to result in the issuance of offsets, said Julian Richardson, CEO of Parhelion Underwriting.

“I think speed is a huge challenge for the market,” he said.

“We understand the concern, but expect to complete our review of all early action projects prior to any deadlines in the regulation,” an ARB spokesman said.

Moving at a Snail’s Pace

The slow regulatory approval of early action projects, combined with the invalidation risk that continues to plague the market (see “Invalidation Risk Still Shadows California Offsets Market”), is a primary area of needed improvement, Williams said. And there is a solution – namely for the ARB to rely on the work done by verifiers and registry officials during a verification process that has been in place for years, he said. In trying to re-verify the work already done, the ARB is unnecessarily increasing the risk and uncertainty for landowners – already subject to 100-year permanence requirements under the ARB’s forestry protocols, forestry stakeholders said.

“We feel like there is a little bit of a duplication of efforts in this overall process to getting credits issued,” Williams said. “I think it’s our hope in this next phase that will pull back a little bit.”

“Otherwise, in our minds, why are we paying $50,000 for verification if that’s going to be done over again at the level of ARB,” he added.

Stakeholders do not doubt that ARB staffers are working incredibly hard to evaluate these early action projects, but the number of employees focusing specifically on the offsets program is small. And that small team is charged with working on amendments related to the offset program, such as the planned inclusion of Alaska-based forestry projects into the program, evaluating and developing new protocols, and issuing offsets to compliance and early action projects.

“They are working hard and need more help,” Arnold said.

However, Williams believes the staffing challenge could be resolved by directing a portion of the allowance auction revenues or adding an issuance fee of about 10 cents per offset that developers would happily pay to hire staff and speed up the process. The agency is always open to input, but commenting on these suggestions would be premature, the spokesman said.

Sharing the Load

Outside of staffing up, the ARB could also enlist the voluntary registries to perform more functions to quicken the evaluation process. Standards that have been designated as OPRs – the American Carbon Registry, the Climate Action Reserve and the Verified Carbon Standard – already perform such tasks as conducting the conflict of interest evaluation of verifiers and reviewing verification reports for projects on the compliance pathway. But the OPRs have almost no role in processing early action projects even though they originally issued the offsets on the voluntary side, meaning that it is “solidly on the ARB’s plate to move those projects forward,” said Rachel Tornek, CAR’s Vice President of Programs.

“I think it’s probably difficult for ARB to allow an outside body to administer part of their program,” she said. “I think there is a reasonable level of hesitancy. Any manager knows it’s difficult to delegate, but it’s something you have to do.”

With the passing of the end of the listing deadline, there is a new sense of urgency to get these early action projects through the pipeline before they lose the opportunity to convert these projects, because if they don’t make that August deadline, they won’t be able to convert and be issued offsets under the early action pathway.

“We really do need to get moving to get those credits to market,” Tornek said. “And I think there will be opportunity for us to streamline the processes with ARB and a little more willingness to allow the work of the OPRs work to stand on its own.”

This Week In Biodiversity: A Race To The Bottom?

The annual National Mitigation and Ecosystem Banking Conference happened this month with the incoming National Mitigation Banking Association (NMBA) president citing low standards and a lack of equivalency in mitigation products as the fundamental challenges facing the industry today. Meanwhile, outside of the US, researchers explore integrating biodiversity into REDD+ in Indonesia.

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

18 May 2015 | This month hundreds came to Orlando for the National Mitigation and Ecosystem Banking Conference. The conference is always an opportunity to reflect on the state of the industry: the past year’s successes, key regulatory developments, and new opportunities.

Outgoing NMBA President Wayne White chatted with Ecosystem Marketplace about his tenure, citing work with Department of Interior agencies on implementing Interior’s new, more ambitious mitigation strategy as a significant achievement this year by the NMBA. Another success was a new approach to supporting NMBA members in local efforts to push for full enforcement of the 2008 Final Compensatory Wetland Mitigation Rule.

 

Incoming NMBA president Mike Sprague says he’ll focus on opportunities for new growth and continued outreach: “There is a different tone this year and one that is much more cooperative than in the past,” he tells EM. He’ll also push for continued high standards for mitigation. “Banking sells a high quality product. So the risk to our industry is what I call the race to the bottom.” It’s the risk that the cheapest, lowest quality mitigation solution becomes the preferred mitigation alternative. Unfortunately, you can see that risk in some of the programs and offsets today in the US: a lack of standards or poor quality standards combined with a lack of equivalency for mitigation methods.”

 

High standards are also the subject of a new framework of ecological restoration principles that aim to set a global standard. We’ve also got stories on how to integrate biodiversity into REDD+ in Indonesia and biodiversity tipping points in the Amazon. And in the United States, recent decisions – on declining to list a greater sage grouse sub-population and on judicial review of Clean Water Act jurisdiction assertions by the Corps – may signal which way the wind will blow as these issues play out at a bigger scale in the coming months.

 

Read on,

—The Ecosystem Marketplace Team

 

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

 

New NMBA President Discusses Challenges, Possibilities For Mitigation Banking

Michael Sprague was officially named the new President of the National Mitigation Banking Association this month at the annual National Mitigation and Ecosystem Banking Conference. During a conversation with Ecosystem Marketplace, Sprague noted his key objectives for the coming year, which include a ramp up of activities that influence policy, as well as problems that continue to plague banking.

Read it here.

 

Outgoing NMBA President Reflects on Old and New Goals for Banking in 2015

Wayne White, outgoing President of the National Mitigation Banking Association recently gave Ecosystem Marketplace a brief rundown on highlights of the past year and what to expect from this year’s National Mitigation and Ecosystem Banking conference, which should again see a focus on Interior’s landscape-level mitigation strategy. White named implementation of this plan as the most significant point of 2014. He also chatted with EM on progress pushing the Corps on enforcement of the 2008 Rule with a new local approach, and why the voluntary-versus-regulated conservation debate isn’t going away anytime soon.

Learn more 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.

Keep reading.

 

Equivalency, Streamlining and Stacking: Hot Topics Of This Year’s Mitigation Banking Conference

The 18th National Mitigation and Ecosystem Banking Conference saw a refreshing mix of attendees and sessions along with healthy debate regarding key issues in today’s banking industry. Lauren Hutchison, a PhD student in the wetland mitigation field at Texas A&M University-Corpus Christie provides highlights and a brief summary of the annual event, where hot topics included equivalent standards, credit stacking, streamlining the permitting process, and NRDAR (the Natural Resource Damage Assessment and Restoration Program).

Read it at Ecosystem Marketplace.

Are Sage Grouse a Security Issue?

The Armed Services Committee within the US House of Representatives has likened greater sage-grouse conservation to an “extreme environmental agenda,” saying the birds’ protection measures on federal lands are costing the Department of Defense millions. Late last month, the Committee issued the National Defense Authorization Act, which would prevent the Fish and Wildlife Service from listing the sage-grouse under the Endangered Species Act and restrict federal conservation plans. Environmental groups point out that the Defense Department has never requested such a provision despite the impacts claimed.

Lexology has analysis from Nossaman LLP.

 

Amazon Rainforest Teeters On Point of No Return

There is a species loss threshold in the Amazon rainforest where, once crossed, biodiversity loss will rapidly accelerate along with attendant damages. According to a recent study, the Brazilian Amazon is either dangerously close to passing this threshold or has already done so in some areas. The study maps the impact that deforestation has on entire regions of the Amazon, finding that habitat fragmentation is a key reason for the rapid species decline that happens with widespread forest loss. When forest cover descends to 43%, biodiversity loss quickens to between two and eight major species for every 10% of forest that is further lost. Report authors recommend landscape level management that encompasses private land to stem this loss, as opposed to the farm-by-farm approach to protecting biodiversity that is currently being used.

Read more at Mongabay.

 

NMBA Brings on its First Executive Director

The National Mitigation Banking Association have chosen an individual well-versed in national conservation policy and familiar to Washington D.C.’s inner circles to serve as the organization’s first Executive Director. “Barton James brings a wealth of experience to our membership through his work on and off Capitol Hill, within the Federal government, and at leading conservation organizations,” said then NMBA President Wayne White. The Executive Director is intended to fulfill needed day-to-day operations while acting as the NMBA’s official spokesperson and overseeing membership-related activities.

Read a press release here.

 

What the Mono Basin Sage-Grouse Listing Decision tells us about ESA Listings

Much to the dismay of some conservation organizations, the US Interior Secretary announced late last month the Fish and Wildlife Service will not recommend an Endangered Species Act (ESA) listing status for the Mono Basin sage-grouse, a unique bi-state population living along the Nevada-California border. The decision to withdraw the listing comes largely because of a furious push to conserve the bird by federal agencies, scientists, landowners and conservation organizations.

 

Environmental groups like WildEarth Guardians and the Center for Biological Diversity blasted the decision arguing that serious threats to the bi-state sage-grouse (which have an estimated population of 1800-7400 birds) remain unaddressed, leaving the species vulnerable to the threat of extinction.

 

On a broader level, the decision not to list the Mono Basin sage-grouse may foreshadow Interior’s decision on the much more consequential listing of the related greater sage-grouse, a bird numbering in the hundreds of thousands and ranging over eleven states heavily invested in oil and gas drilling, mining and renewable energy.

E&E has the story.

 

Aprí¨s le Déluge, The Money?

A federal court is still determining just how much oil company BP should be charged for the Deepwater Horizon catastrophe that killed 11 people and spilled 5 million barrels into the Gulf in 2010. Communities in the five states that saw their seafood and tourism industries decimated by the spill continue to be affected as they wait on the fine money to fund restoration projects like sea grass protection, dune restoration and stormwater improvements. When the money does eventually flow to the states, it will largely be because of the bipartisan RESTORE (Resources and Ecosystems Sustainability, Tourism Opportunities and Revived Economies) Act, passed by Congress. Whereas the Treasury usually receives fine money, the Act requires 80% of it – estimated to be as much as $13B – to go to the impacted states.

Read more at USA Today.

 

Judicial Review Case Portends a Pushback on Clean Water Act Jurisdiction Assertions

Last month the US Court of Appeals for the Eighth Circuit handed down a decision that Clean Water Act (CWA) jurisdiction assertions are subject to judicial review. The case has potential ramifications for a forthcoming final rule clarifying “waters of the US” that fall under CWA jurisdiction. The rule could mean a bigger, clearer playing field for the mitigation industry, but has proven controversial in other quarters.

 

In Hawkes v. US Army Corps of Engr’s, the court sided with the Hawkes Company’s contention that lacking an opportunity for judicial review, appellants are forced to “incur substantial compliance costs (the permitting process), forego what they assert is lawful use of their property, or risk substantial enforcement penalties” without other adequate alternative remedies.

Get analysis from Hunton Williams via Lexology.

 

A Blue Carbon Market Grows for Louisiana’s Deltaic Wetlands

Between storm protection, fisheries, tourism, wildlife habitat and the oil industry, the ecosystem services of Louisiana’s coastal wetlands are too great to be ignored. And since the 2010 Deepwater Horizon Oil spill, the region has been a hub of innovation seeking ways to protect quickly-eroding but critically valuable deltaic wetlands. One local wetland restoration company, Tierra Resources, is harnessing the blue carbon market to finance conservation work. The region’s main electricity provider, Entergy, has come out as a big supporter, funding Tierra Resources’ initial activity and now participating in a project. “We are married to our service area,” said Entergy’s Corporate Social Responsibility Director. “And with the loss of the wetlands, it has taken away one of the barriers that protects us and our customers from storm casualty loss.”

Forbes has the story.

 

Mitigation Roundup

 

 

Getting the Ball Rolling on Global Standards for Ecological Restoration

Ecological restoration is often ambiguously defined. Now, an assorted group of professionals from the fields of ecology, economics, law, geography, philosophy and political science have developed a framework outlining four principles to follow to deliver best results when implementing restoration projects. The principles are; ecological integrity, long-term sustainability, accounting for past and future variables, and engaging society. Comparing it to the New York Declaration on Forests, authors feel the framework could serve as a binding and robust international structure that – because of the diverse background of its creators – is applicable across a multitude of contexts.

Learn more here.

 

A Key Component of Biodiversity Conservation? Biodiversity

New research urges REDD+ (Reducing Emissions from Deforestation and Forest Degradation) project developers to take into account carbon-rich regions of Indonesia’s vast forestland are not necessarily biodiversity-rich. The study addresses the claim that REDD, as a rule, offers big benefits for biodiversity. But to capture those benefits, researchers say, biodiversity-specific management will need to be integrated into project planning and design. This is already happening in REDD projects in other parts of the world like Tanzania and Brazil where there is a focus on high-biodiversity areas. Researchers recommend incorporating Indonesia’s lowland forests that have high biodiversity value into REDD+ projects despite their containing below-average carbon content.

Learn more at Mongabay.

 

JOB LISTINGS

 

Conservation Manager

WWF – Antananarivo, Madagascar

Based in Madagascar, the Conservation Manager heads the Conservation Division and provides leadership, strategic direction and technical support for the development, implementation and monitoring and evaluation of WWF’s conservation strategy and programme in the Madagascar & West Indian Ocean Region, in compliance with WWF’s priorities, policies and standards and under the guidance of the Country Director. The Conservation Manager provides advice to the Country Director on pertinent conservation issues in the region.

Learn more here.

 

Fundraising and Partnership Manager

WWF – Antananarivo, Madagascar

The Fundraising and Partnership Manager is responsible for i) overall fundraising management activities of the organization, including the development and implementation of a 3 – 5 year fundraising strategy to financially support and strategically advance MWIOPO’s Madagascar and WIO’s environmental conservation activities; ii) development and maintenance of effective partnerships that are relevant to the WWF Madagascar conservation strategy. This senior position reports directly to the Country Director, is a member of the senior management team.

Learn more here.

 

EVENTS

 

2015 Conservation Finance Boot Camp

The Conservation Finance Network at Island Press is pleased to announce the 2015 Conservation Finance Boot Camp training course being held at the Yale School of Forestry and Environmental Studies in partnership with the Yale Center for Business and the Environment. Now in its ninth year, this intensive week-long course aims to help professionals utilize innovative and effective financing strategies for land resource conservation, restoration, and stewardship. The course will offer in-depth information on trends and opportunities in public funding, private investment capital, bridge financing and loans, gifts and grants, income from the land, and monetized ecosystem services. There will be a strong emphasis on practical, hands-on tools and lessons from relevant case studies. Attendees will have an opportunity to consult with conservation finance experts on projects or problems from their work. The course will also serve to convene a peer network of committed conservation professionals working on similar issues across the nation. Past attendees have included U.S. and international conservationists, foundation leaders, land trust board members, executive directors, private investors, business executives, and academics. Opportunities for networking will be built in throughout the week in order to foster long-term professional relationships and support networks among attendees and presenters. 1-5 June 2015. New Haven CT, 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

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.

 


Additional resources

Invalidation Risk Still Shadows California Offsets Market

The decision by California regulators to invalidate carbon offsets generated at an incineration facility in Arkansas last year continues to cast a dark cloud over the North American carbon markets. The invalidation risk for offsets bound for the U.S. state’s program remains a barrier in completing deals, with more invalidations potentially on the horizon, as stakeholders made clear at the Climate Action Reserve’s carbon markets conference.

18 May 2015 | Invalidation. It was a word that was mentioned early and often, almost always in a negative context, during the Climate Action Reserve’s (CAR) Navigating the American Carbon World (NACW) conference in Los Angeles last month.

The California Air Resources Board’s (ARB) review and subsequent invalidation of 88,955 ozone-depleting substances (ODS) offsets generated at the Clean Harbors Incineration Facility in El Dorado, Arkansas was for many NACW attendees the major source of disruption in the state’s offset program in 2014. After a lengthy inquiry that began in late May, the ARB proceeded in November with the invalidation of these offsets generated by a project from developer EOS Climate because the facility was out of compliance with its federal operating permit.

The invalidation inquiry was “one of the lowlights” in the California offsets program last year, said Julian Richardson, CEO of Parhelion Underwriting, which provides an insurance product that covers the invalidation risk in the California program.

“What we do know is that there will be further invalidations, but we don’t know when they will be and we don’t know which projects,” he said.

The ARB’s decision to invoke the so-called buyers’ liability provisions was blamed for a lack of liquidity in the offsets market. However, Ecosystem Marketplace research shows that ODS projects, despite the cloud cast by the inquiry, still comprised nearly 60% of the compliance offset transactions that reported a project type in 2014, with an average price of $9.7/tCO2e.

Still, project developers and financiers say the lingering uncertainty caused by the invalidation risk is scaring potential participants away from participating in California’s cap-and-trade program, which will ultimately throw the supply of offsets out of balance. The maximum offset demand during the program’s second compliance period (2015-2017) is nearly 92 million offsets – well above the roughly 19.5 million offsets issued by the ARB to date.

But only a limited number of regulated entities are expected to use the full 8% of offsets they are allowed to use to meet their compliance obligations, due largely to the invalidation risk and a lack of available offsets. For example, regulated entities could have used up to 11.6 million offsets to meet their 2013 compliance obligations by November 2014, but only 1.7 million offsets were actually surrendered.

“We’re seeing that firsthand from landowners who are truly interested and want to participate and are willing to take that long-term commitment, but are really nervous about that liability,” said Roger Williams, President of Blue Source, which develops forestry projects.

Where’s the Risk?

For participants in the California offsets market, the key issue was not the volume of offsets ultimately invalidated by the ARB, which represented a miniscule percentage of the offsets issued by the regulators.

“The invalidation risk in practice to date has really been very, very small,” said Greg Arnold, Managing Partner of CE2 Capital Partners. “The difficulty is with the construct of the buyers’ liability itself. I understand some of the reasoning behind why it’s been done, but it’s probably a market construct that, hopefully as the ARB gets more comfortable, can be relaxed.”

The main cause for concern is the lack of clarity over where the ARB staff will draw the line on what truly constitutes a violation rising to the level of invalidation. The ARB attempted to provide some clarity in a February guidance document, including by defining the scope of the invalidation with regard to each eligible project type. For forestry projects, for example, the ARB specified that the invalidation provisions would come into play if there were any violations of environmental, health and safety requirements associated with activities within the project area that directly affect carbon stocks. The ARB specified that these activities included planting and harvesting, among others, but not external activities such as transportation of logs to mills. However, the document raised many more questions than it answered for some stakeholders.

“We’re supportive of the invalidation rule,” said Brian Shillinglaw, Associate Director, Investments and Operations, Carbon Investments & Policy for developer New Forests. “We think ARB did the right thing. However, there is an extreme lack of clarity as to the scope of that risk.”

Under the ARB’s current guidelines, for example, an entire reporting period worth of offsets can be invalidated due to a violation lasting only a single day. This creates particular challenges for forestry projects as the majority of the value of offsets derived from those offsets could be generated during the first reporting period, putting the entire project in jeopardy, Williams said.

“We think that’s not necessary and a bit of an overreach and should be corrected,” he said.

While not able to address the specific issues raised by Williams and others, the ARB has committed to providing additional clarity in Frequently Asked Questions documents on this topic as warranted, an ARB spokesman said.

“We are not considering any changes to buyer liability,” he said.

Stakeholders cited the length of the invalidation inquiry as another inherent risk in the process. The Clean Harbors investigation began in late May, with a preliminary decision issued in October and a final decision released the following month.

“It was long and drawn out,” Richardson said. “It didn’t necessarily create the certainty that we wanted. We were all looking forward to seeing what an invalidation event would actually look like. And it provided some clarity, but it also created some additional questions.”

The length of the investigation can be blamed partly on the competing priorities of the ARB staff, which is also tasked with reviewing and issuing offsets for submitted projects, a process that can be excruciatingly slow for developers of early action projects (see story).

Managing Invalidation Risk

Multiple contract structures have developed in response to the buyers’ liability provisions featured in California’s program, including Golden California Carbon Offsets (CCOs) in which the seller bears the risk of replacing an offset with an allowance or replacement offset if the original offset is invalidated. Ecosystem Marketplace’s research shows that Golden CCOs generated a premium price 12-13% higher than the other contract structures, albeit in a small sample size of responses.

Another option is to purchase an insurance policy that indemnifies the owner of the offset for the replacement cost of an invalidated offset, a policy first offered by Parhelion in partnership with CAR.

“We’ve had a very good uptake on this, particularly since Clean Harbors,” Richardson said.

The Canadian province of Quebec – California’s partner in the Western Climate Initiative (WCI) cap-and-trade program – has developed its own method of managing the risk of invalidations for the offsets submitted for compliance in its program. The province sets aside 4% of offsets to cover reversals or invalidations.

“It’s effectively a buffer pool that’s been created, which is a perfectly legitimate way to manage that risk,” Richardson said. “What it does is take some liquidity out of the market by having those offsets tied up in a buffer pool. That is an asset the Quebec government is effectively sitting on. It’s fine, but it’s not the most efficient way to go. I don’t think it would actually draw any more players into the California market.”

In contrast, California’s buffer pool only covers the unintentional reversal of offsets generated by forestry projects in limited circumstances where it is clear that the reversal occurred due to no fault of the developer or landowner, for example, in situations where there is a beetle infestation or forest fire.

Causing Friction

The invalidation risk continues to create friction in the development and sales process despite the best efforts to manage it, Arnold said.

“Investing in these projects is a difficult business,” he said. “Those regulatory guidelines give investors pause. It makes it harder to sign up project sponsors. It makes it harder to want to invest because at the end of the day, you really don’t have a clear perception of how many credits you might receive once you’ve made your investment. Until that happens, we’re going to have an offset market that functions like this: it makes progress, but it never fully reaches its potential.”

And there are regulated entities that consider and ultimately reject the opportunity to purchase offsets for compliance due to the invalidation risk, as farming firm JG Boswell decided, because the price differential between Golden CCOs and allowances offered at auction by the ARB is not wide enough to encourage them to take on the invalidation risk.

“We won’t participate in buying offsets until that risk is eliminated,” a company official said at the NACW conference.

“It doesn’t surprise me to hear you say that,” Richardson responded. “We’ve talked to some compliance entities with some pretty substantial obligations and they are saying it’s pretty difficult to get into the offset market.”

As California keeps the door open to additional WCI partners – Ontario recently announced its intention to join California and Quebec’s carbon trading program – stakeholders expressed concern the buyers’ liability provisions could be a barrier to such linkages.

“As other jurisdictions think about joining this program or creating other programs, there’s clearly a point of view that there should be no invalidation risk,” Arnold said. “No buyer liability is really the term and that will help the free flow of capital into the markets and provide more liquidity and really make it easier for this to be a more functional market than it is today.”

Additional resources

Equivalency, Streamlining and Stacking: Hot Topics Of This Year’s Mitigation Banking Conference

The 18th National Mitigation and Ecosystem Banking Conference saw a refreshing mix of attendees and sessions along with healthy debate regarding key issues in today’s banking industry. Lauren Hutchison, a PhD student in the wetland mitigation field at Texas A&M University-Corpus Christie provides highlights and a brief summary of the annual event.

13 May 2015 | Over 400 people from six countries gathered in Orlando, Florida last week for the 2015 National Mitigation and Ecosystem Banking Conference (NMEBC). This uniquely independent conference drew a wide mix of wetland and conservation bankers, bank investors and consultants as well as regulators and bank stakeholders.

Attendees came for a plethora of reasons. The new kids on the block came to learn how to develop mitigation banks and in lieu fee programs, while individuals knee deep in mitigation banking came to catch up with old friends and talk business. Seasoned attendees expressed an interest in innovative solutions for streamlining the permitting process, credit stacking, joint mitigation and developing incentives for private landowners.

“As always, the conference is the best place to find out what is really going on. No national survey of “stacking” (or whatever else) would turn up any of the stories or examples I heard about just by talking with folks”, said Morgan Robertson, Associate Professor, University of Wisconsin-Madison.

Those who arrived early went on field excursions to mitigation and conservation banks in the Orlando area or participated in workshops that provided the history and nuts and bolts of banking and introduced tracking tools of mitigation banking in the U.S. such as RIBITs and Mitigation Analyst.

Informal forums were held to allow regulators, users and bankers to exchange ideas within these groups – allowing those with similar interests to identify each other and follow-up with one another at a later time – and further gave a flavor for the hot topics surrounding mitigation banking.

Those “hot” topics included among others equivalent standards, credit stacking, streamlining the permitting process, NRDAR (Natural Resource Damage Assessment and Restoration program), the need to take a landscape scale approach, and the issues surrounding the differing use of ratios and conditional and functional assessments.

There were sessions designed to meet the demand of a whole range of attendees. The “Long-term Stewardship Workshop,” session outlined how to develop a mitigation bank from scratch. Facilitators provided attendees with handouts and tools to help navigate the three-step process to develop a mitigation bank: develop a long-term management plan, secure endowment funding and create a site protection instrument such as a conservation easement.

“Performance Guidelines,” was comprised mostly of USACE (US Army Corp of Engineers) employees who focus solely on mitigation related issues. This session allowed the attendees to get inside the head of the USACE and better understand the USACE perspective at the local level.

“Analysis of National Mitigation and Conservation Banking Status and Trends,” included talks on the administrative performance of the USACE since the 2008 Mitigation Rule, regional and national trends in mitigation, and an analysis on the state of the national mitigation market. Not only was this session a great overview of the status of mitigation banking, it also stimulated lots of conversation and questions.

Other sessions provided tools and guidance related to the incorporation of science-based decision-making into mitigation, insight into the roles and strategies of various agencies, and effective communication strategies for use throughout the permitting process.

“If an attendee didn’t know the importance of the 2008 Mitigation Rule prior to the conference, they certainly left the conference with an idea of what is included and just how important the rule is in every day decision-making related to mitigation and mitigation banking”, noted a prominent mitigation banker.

There is no doubt this conference is of great value to individuals working in or interested in the mitigation and conservation banking field. The broad range of participation is refreshing and allows for a symbiosis that is necessary if mitigation banking is going to continue to expand its range and grow in effectiveness.

Access to audio and conference materials are available online. And registration for next year’s conference in Fort Worth, Texas is offered on the NMEBC website as well.

 

Lauren Hutchison is a Graduate Research Assistant at the Harte Research Institute for Gulf of Mexico Studies, Texas A&M University, Corpus Christi.  Her dissertation involves linking wetland structure and functions to ecosystem services for enhanced decision-making related to wetland mitigation policy in Texas. She can be reached at Lauren.Hutchison@tamucc.edu.

Subnational Climate Leaders Will Get Their Day In The Paris Sun

11 May, 2015 | Christiana Figueres has made a promise.

Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), has promised officials from the US state of California, the Canadian province of Québec and other subnational jurisdictions that they will not be shunted off to a side event during the upcoming UNFCCC negotiations in Paris in December. Instead, they will have a place on the main agenda – a reflection of the leadership that officials in these subnational jurisdictions have shown in addressing climate change while the international talks have progressed at a snail’s pace.

“Two years ago when we were talking about carbon markets, people were talking about the eventual end of the carbon market,” David Heurtel, Minster of Sustainable Development, Environment and the Fight against Climate Change in Québec, said at the Navigating the American Carbon World conference in Los Angeles last week.

But “the noise that we made [during the Lima climate talks in 2014] was so overwhelmingly heard that now there is absolutely no choice but to hear what we have to say and take into consideration what we’re doing,” he added.

Though subnational, these jurisdictions can have a disproportionally large effect on the global climate: California constitutes the 7th largest economy of the world and the provinces of Québec and Ontario – which recently announced it would join the California-Québec carbon market–collectively cover 62% of Canada’s entire population.

The participation of the provinces is especially noteworthy considering the Canadian federal government’s climate policy. Canada pulled out of the Kyoto Protocol in 2011 after increasing emissions rather than meeting its reduction targets. More recently, the country failed to submit its Intended Nationally Determined Contribution (INDC) ahead of the United Nations’ March 31st deadline.

In light of this inaction by the federal government, the Premiers of Ontario and Québec issued a joint statement on climate change addressed to Canadian Prime Minister Stephen Harper’s government late last month: “We strongly believe that good environmental policy is good economic policy. But so far, almost all of the progress Canada has made on climate change is the result of provincial action. Once Ontario’s new system is implemented, more than 75% of Canada’s population will be covered by carbon pricing.”

The provincial leaders invited the federal government to participate in developing an ambitious contribution from Canada ahead of the Paris talks, with the country’s INDC now expected in June.

Earning a Seat at the Table

Leadership isn’t the only reason for the inclusion of subnationals on the Paris agenda. Central to their visibility has also been the success of their programs. The California and Québec cap-and-trade programs, which have been in place since 2013, have reported both economic gains and emissions reductions through the first two years of compliance.

California’s program, a result of the state’s 2006 Global Warming Solutions Act, came online with a goal of reducing greenhouse gas (GHG) emissions to 1990 levels by 2020. In the two years since the compliance market was implemented, California’s Gross Domestic Product (GDP) grew by 2% while emissions of capped sectors dropped by 3.8%, according to a report by the Environmental Defense Fund. The success spurred California Governor Jerry Brown last week to issue a new executive order to lower the state’s GHG emissions 40% below 1990 levels by 2030.

“We’re demonstrating in California that we can take the steps to reduce carbon emissions while advancing our economy at the same time,” he said. “We know where we have to go and we look to (carbon market participants) to help us get there.”

More than 92% of compliance offset transactions in North America in 2014 were directed toward California’s cap-and-trade market, which allows compliance entities to use carbon offsets from five eligible project types – forestry, urban forestry, livestock methane, coal mine methane and ozone-depleting substances – to satisfy up to 8% of their compliance obligations. The average price of California-compliant offsets was $9/tonnes of carbon dioxide equivalent (tCO2e), making offsetting a cost-effective compliance option compared to California allowances, which cleared at auction at prices in the range of $11.3/tCO2e to $11.9/tCO2e in 2014, according to a recent analysis by Ecosystem Marketplace.

Meanwhile Québec’s program, which linked to California’s market through the Western Climate Initiative (WCI), will raise an expected C$3 billion between 2013-2020 to be channeled into a green fund to support public transit, research and innovation, among other initaitives.

While Heurtel acknowledged the program been successful, “I think we need to put more emphasis on communicating that. We’ve been collectively talking to each other about this but we’re preaching to the choir. We need to do much more to explain and have real examples.”

Those real examples are something he thinks subnational jurisdictions can bring to Paris later this year. The conversation won’t be just about polar bears and small islands – he can speak to the St. Lawrence River Basin’s decline in water levels, which is predicted to continue to fall over this century due to climate change. He can also highlight success stories in the province, including a company called Biothermica that developed an offset project under California’s coal mine methane protocol and earned $900,000 by selling the offsets.

Joining Forces

The WCI cap-and-trade market’s success has been a bright spot in North America and has attracted interest from other jurisdictions working on their own climate plans. Most notably, Ontario announced its intention to join the cap-and-trade program. Though details of the market mechanism are expected in another six months, the long-term goal is to join the region’s bilateral carbon market.

Glen Murray, Minister of the Environment and Climate Change in Ontario, stressed the role of those “infra-nationals” in influencing Ontario’s recent announcement, highlighting the work done by Governor Brown, former California Governor Arnold Schwarzenegger and Québec Premier Philippe Couillard.

“Ontario would not be here if there wasn’t someone else who had actually stood up,” Murray said.

The province has experienced job and GDP growth despite shutting down all its coal plants (which previously contributed 1/3rd to its energy mix).

“If you want to understand why [carbon pricing] is a good idea, just try to shut down your coal plans without a carbon price – very expensive,” he said.

Minister Murray is optimistic that the new cap-and-trade plan will only bolster the economy. With emissions more than double that of Québec, the Ontario government is estimating C$1.5-C$2 billion annually generated by a similar cap-and-trade program to facilitate the transition to a low-carbon economy.

Outside of Canada, California has also pursued linkages with Mexico and China in the form of Memorandum of Understandings (MOUs). Formalized in late 2013, the MOU between the California Air Resource Board (ARB) and Chinese equivalent called the National Development and Form Commission (NDRC) lays out cooperation between the two agencies on key issues, including: mitigating carbon emissions, strengthening performance standards to control greenhouse gas emissions, designing and implementing carbon emissions trading systems, sharing information on policies and programs to strengthen low-carbon development, and researching clean and efficient energy technologies. Meanwhile, the California-Mexico MOU, signed in 2014, agreed to work together on a range of actions to address climate change, including pricing carbon pollution.

The state has most recently worked with the German state of Baden-Wí¼rttemberg to advance the “Under 2 MOU.” This MOU is designed for subnational states and regions to make commitments prior to Paris to either agree to reduce their GHG emissions 80-95% (a goal for developed countries) or limit to emissions to two metric tons CO2e per capita by 2050 (the target for developing regions) – with the first round of signatories announced later this month.

“Each of these is really aimed at Paris and beyond,” said Ken Alex, Senior Policy Advisor to Governor Brown. “Our hope is to represent a significant chunk of world GDP by the time we get to Paris. Regardless of what happens in Paris, there will be a very significant set of subnationals around the world committed to doing aggressive action.”

While not all 3,000+ subnationals will be able to sit at the table in Paris, officials in California and Québec hope collective initiatives such as their linked programs and MOUs will capture the attention of the international negotiators.

“We need to see Paris as a beginning, not an end,” Heurtel said. “Especially to recognize that the infra-national governments not only have a role to play but actually are the key players.”

New NMBA President Discusses Challenges, Possibilities For Mitigation Banking

6 May 2015 | Not all versions of mitigation are created equal. In fact, equivalency and standards are the fundamental challenges facing the mitigation banking industry today, according to Michael Sprague, founder of the ecological restoration firm, Trout Headwaters Inc, operating out of Montana.

“As disparate as the issues in the industry are, it comes down to those two issues,” he says.

Mitigation banking, which is the restoration and creation of a stream, wetland or wildlife habitat as a compensation for environmental loss elsewhere, delivers a high-quality product in terms of ecological and regulatory benefits, Sprague says. Banking provides conservation in perpetuity, ensuring full compliance with regulatory requirements. But Sprague says there is a lack of high standards in mitigation today and it’s leading to “a race to the cheapest and most expedient form of offsets,” thus creating the biggest risk to mitigation banking.

It’s one of many issues that Sprague will have a chance to address this year. At this week’s National Mitigation and Ecosystem Banking Conference (NMEBC), he will become the new National Mitigation Banking Association (NMBA) president.

This year’s NMEBC, which takes place in Orlando and runs from May 5th to the 8th, has a data-focused element to it. Sprague will play a part in this by hosting a workshop on the latest version of Mitigation Analyst 2.0, a data and analytics system for mitigation and conservation banking.

“It’s a down-and-dirty user workshop that enables folks to really leverage all of this data when they leave the conference,” Sprague says.

After the conference, Sprague is looking forward to a dynamic year building on what he considers to be the success of his predecessor Wayne White. He recently talked with Ecosystem Marketplace about the aforementioned issues as well as on other topics related to his new position and mitigation banking.

Ecosystem Marketplace (EM): What key issues are shaping this year’s conference and the coming year?

Michael Sprague (MS): There is a different tone this year and one that is much more cooperative than in the past. We’re going to expand markets and look for opportunities for advanced compensatory mitigation. The NMBA has also been a huge provider of support for conservation banking so we’re now seeing opportunities in that area. We’re also seeing opportunities for banking in other markets like nutrient credit trading. The Emerging Markets session at the conference will be focused on these types of issues.

For me, over the year, I’m looking to build a five year strategic plan with the help of the (all volunteer) Board of Directors. The plan will dovetail with the Association’s newly hired Executive Director but basically, it will ensure that all the various assets we have, like volunteer time, staff and so on, is leveraged in a way that serves membership in the end.

EM: Can you talk a little more about what you view as the biggest challenges facing mitigation banking today?

MS: Banking sells a high quality product. It’s not a promise, not a prospect but a product. There’s no temporal risk or regulatory risk, which means that we’re not only able to save permittees and agencies time but we’re also able to deliver the highest possible environmental outcome. So the risk to our industry is what I call the race to the bottom. It’s the risk that the cheapest, lowest quality mitigation solution becomes the preferred mitigation alternative. Unfortunately, you can see that risk in some of the programs and offsets today in the US. The broad risks are reasonably consistent: a lack of standards or poor quality standards combined with a lack of equivalency for mitigation methods.

A lot of the problems I encounter could have been solved by simply choosing advanced mitigation with consistent high standards that ensures equivalency in its offsets.

EM: What are your key objectives as president?

MS: This is going to sound dull and boring but we need to put together a strategic plan and create a board member manual among other similar tasks. But I see my key objective as to help the Association grow membership and to work with the Board to deliver benefits to the members. We’ve seen a 12% growth over last year so if we continue to do these two things well, then our future remains bright. Because when we increase our membership, we gain intellectual capacity, the quality of our work improves and our ability to carry out initiatives becomes more efficient. A lot of hands make a lighter lift.

EM: The NMBA recently hired its first Executive Director, Barton James. What does this mean for the Association?

MS: It’s a great step forward to have 24/7 representation to add to our administrative, lobbying and volunteer efforts. We now have someone who is able to guide the ship day-to-day. And specifically, Bart brings us a real depth and expertise in Washington D.C. and I’m excited for what that means for membership.

 

Mitigation Bankers Seek Fulfillment Of Long-Term And New Goals At Annual Conference

The outgoing president of the National Mitigation Banking Association recently gave Ecosystem Marketplace a brief rundown on highlights of the past year and what to expect from this year’s National Mitigation and Ecosystem Banking conference, which should again see a focus on Interior’s landscape-level mitigation strategy. However, this year the strategy’s focus won’t be on its release but rather its implementation.

5 May 2015 | This week, mitigation and conservation bankers from around the US are convening in Orlando, Florida for the annual National Mitigation and Ecosystem Banking Conference (NMEBC), arguably the most important gathering for the mitigation industry. It’s been a progressive year for the sector, says Wayne White, the President of the event’s organizer, the National Mitigation Banking Association (NMBA) with several noteworthy changes.

White recently chatted with Ecosystem Marketplace about the NMBA’s achievements of the last year and significant happenings for the industry. The NMEBC started today and runs through the 8th.

Movement on New Mitigation Strategy

Last year, the Department of Interior (DOI) released a new more inclusive mitigation strategy that encompassed its many agencies: the Fish and Wildlife Service and the Bureau of Land Management to name a couple. As the DOI’s new strategy follows the mitigation hierarchy, which takes full advantage of compensatory mitigation mechanisms such as conservation banking, the strategy has many implications for the banking sector. The NMBA has been heavily involved in working with DOI agencies to implement this new strategy. White named implementation of this plan as the most significant point of 2014.

In fact, Letty Belin, Senior Counsel to the Deputy Secretary in the DOI, and a person closely watching the adoption process play out, is the NMEBC’s keynote speaker this year.

The NMBA’s Forever Goal: Full Implementation of the 2008 Rule

Moving forward on the Final Compensatory Wetland Mitigation Rule, issued in 2008, is what White calls the NMBA’s “forever goal.” The Army Corps of Engineers (USACE) and the Environmental Protection Agency (EPA) passed this rule which says wetland banking is the most effective form of mitigation and should be used above others. But ever since it became a regulation, the Rule has had issues with bankers claiming the USACE fails to enforce it.

This past year, however, White feels they made real progress in part because of the NMBA’s involvement in local activities for the first time. In the past, the NMBA didn’t assist individual Association members having trouble with implementation of the Rule. We thought it was beyond our control, White says.

But this year, the Association tried something new. The NMBA provided national support for local challenges through draft letters the Board of Directors signed. A copy of this letter not only went to the district where the implementation problem originated but also to the USACE and the EPA.

“We’re giving our members support and also displaying to the federal agencies challenges with the 2008 Rule,” White says.

Controversy Continues with Voluntary vs. Compliance

Similar to last year, there has been much talk on the voluntary approaches to conservation-particularly species conservation. While last year, it was the lesser prairie-chicken, this year talk is focused on another wild bird with a western range: the greater sage-grouse. The bird is at-risk after its population plummeted these last decades. Federal agencies are encouraging innovative voluntary conservation to keep the bird off the Endangered Species List.

But White, like many others, is skeptical of this voluntary approach. He notes that one of the first areas to lose funding when money for a development project gets tight is the mitigation. Without compliance, there isn’t a guarantee the mitigation is being implemented, White says.

At any rate, this argument between voluntary and regulated conservation is a debate that shows no signs of going away.

Hiring the NMBA’s First Executive Director

For the first time in its history, the NMBA has hired an Executive Director to work full-time on NMBA policy and implementation objectives. The association’s board of directors chose Barton James, a familiar face on Capitol Hill because of his longtime involvement in conservation policies.

“With Bart up on the Hill making contacts, we really see ourselves making major strides at meeting some of our goals and objectives,” White says.

He notes James’ hiring as one of his key accomplishments. Near the end of last year’s NMEBC, White compared the NMBA to volunteer firefighters where the association’s volunteer board is at a standstill until there is a fire or, in the case of the NMBA, a serious situation regarding the banking industry.

“We need someone working 24/7 and in contact with the relevant agencies consistently to move the policy action forward,” White said last year.

James feels policy action will be his greatest strength as well. As Director of Public Policy at Ducks Unlimited, a nonprofit focused on wetland and waterfowl conservation, James became heavily involved in the policy side of mitigation banking.

“Because of my background, I bring a different dynamic to working with elected officials than many other NMBA members,” James says.

Growing membership and advancing NMBA goals in D.C. are James’ main objectives. He also sees great potential in schooling decision-makers on mitigation banking and all it entails. “Many Capitol Hill staffers and members of Congress know the term but they don’t have a good understanding of the financial benefits it offers.”

On the Agenda

At the conference, Michael Sprague will take over as president of the NMBA officially ending White’s presidency. White says Sprague will continue the Association’s recent endeavors such as expanding member services and participating at a local level. He will also continue to keep the dialogue going between the industry and policymakers, White says, which are efforts rooted in several past NMBA presidents.

Engagement between lawmakers and bankers is evident at the conference with sessions discussing communication between the two spaces as well as the relationship with bank users.

This interaction is much needed, White says. Outside of the DOI’s mitigation strategy, he mentions proposed water policy-currently working its way through the legislature-which seeks to clarify water protected under the Clean Water Act. It carries implications for the banking world with many in the space saying clearer definitions could streamline banking procedures. One session explores water quality credit trading banks while another looks at wetland functions at a watershed scale.

Water policy is something to watch at the conference and throughout the year. As is the mitigation strategy and several other ongoing efforts, White says. But overall, it’s been a good year for the industry, according to White. And while much more needs to be done in order to continue to grow the market and fulfill long-term objectives, White is ready to celebrate his year as president and reflect on what he has learned.

Opinion Rebooting America’s Voluntary Offset Market

The voluntary carbon market arguably delivers benefits to larger society, but only a narrow slice of us are buying. Sheldon Zakreski of The Climate Trust says it’s time for the US federal government to step in with more loan guarantees and outright purchases that would give the market support until private-sector buying materializes.

This article was originally posted on The Climate Trust website. Click here to read the original.

1 May 2015 | Depending who you talk to, the offset market is either alive and well, or dormant.

Consider two recent Ecosystem Marketplace reports. The Taking Stock of the role of Offsets in Corporate Carbon Strategies report notes that in 2013, 14% of companies that disclose their carbon emissions purchased a volume of offsets equivalent to avoiding the emissions associated with using 117 million barrels of oil. Meanwhile, the State of the Voluntary Carbon Markets 2014 report described a stagnant market in 2013 where three of every four offsets were sold to pre-existing clients.

These two truths underscore a huge opportunity, as well as presenting some peril for the future of the voluntary offset market. Although there is clearly a strong foundation of corporate voluntary buyers, the lack of diverse offset supply is a huge impediment to attracting new buyers to the market. Worse yet, if left unchecked, it will likely result in notable departures from the market as companies look for innovative ways to address greenhouse gas emissions.

The Good

The use of offsets as part of a company’s corporate social responsibility (CSR) strategy gained traction as a widespread practice in the early to mid-2000s. Despite the economic recession that began in late 2008, and the failure of federal cap and trade legislation, many companies that began buying offsets in the mid-2000s are still committed to offsets.

Additionally, although federal carbon legislation has failed to re-emerge, corporations are continuing to lead the way towards putting a price on carbon. The CDP (formerly the Carbon Disclosure Project) compiled a database last year that showed 150 companies globally, 29 of which are U.S.-based, use an internal carbon price ranging from $6 to $60 per metric ton of carbon dioxide equivalent emissions.

This near ten year track record of unwavering commitments to addressing corporate carbon footprints, points to the fact that concern and action on greenhouse gas emissions is here to stay; the issue transcends political cycles. It’s been 9 years since An Inconvenient Truth was released, and seven since Congress defeated federal cap and trade legislation.

Even more promising is the cutting-edge corporate trend towards greening their supply chains. Although this is part of a larger initiative, a role for offsets exists here, as last year’s State of the Voluntary Carbon Market research found that 2% of 2013 corporate offset purchases were practice change/supply chain motivated.

The Bad

The offset market is stagnant. Don’t get me wrong. There are notable initiatives from active voluntary buyers such as Microsoft, Interface, Chevy, Coke, Seattle City Light, and Google. These are companies that are truly to be commended for their ongoing commitments, but when was the last time a new entrant has embarked on a significant offset purchase commitment? Meaningful expansion of notable commitments are few and far between.

It could be that most companies are still focusing largely on direct reduction activities. Many offset leaders are well aware that in order to walk the talk, it is wise to strive for substantial internal progress prior to making a noteworthy commitment to offsets. If this is the case, and a rise in offset purchases is inevitable, what kinds of projects and supply will these new entrants find if they decide to buy? Unfortunately this is where the ugly comes into play.

The Ugly

If a company that is interested in entering the market were to assess current supply options, it would find a market long on dated vintages from established sectors such as landfill gas, and a dearth of new project types. For comparison sake, imagine a mobile device market where your choices are various several year old Blackberries, and iPhones or Galaxies are largely a pipe dream. That is basically the state voluntary buyers are encountering in today’s offset market. The result is that there is pent up demand that goes unfilled due to a lack of choice.

Like every other nascent sector, diversity is key for the offset market to grow and stabilize. The promising news is that a lot of groundwork has been done to introduce those iPhone and Galaxy type offsets into the marketplace, especially in the agriculture sector. The challenge lies in what can be done to advance those sectors and provide safeguards that will foment the generation of meaningful volumes of supply.

The Showdown—What Needs to be Done?

There are three key areas that could kick-start the implementation of projects and the generation of new sources of supply.

  1. Don’t just build it—test it

Voluntary market certification standards such as the American Carbon Registry, Climate Action Reserve and Verified Carbon Standard are doing their part to diversify supply by launching new project standards, also known as protocols. In the last few years alone, several new protocols have been introduced in the agriculture sector that offer a pathway for generating offsets through grasslands conservation, rice cultivation and nutrient management practices on farms and in fields.

Such efforts are necessary to diversify supply, but simply releasing a new protocol doesn’t mean that the market will rush to adopt it.

While protocols help in providing a useful guide, they do not eliminate the risks of actually monitoring, verifying and issuing new offsets. This is important because third-party verification is essential for generating real and credible offsets that can be traded. Verification is also generally the largest cost offset suppliers will face. Additionally, there have been several instances were verified volume for new offset project types are generated at a fraction of the anticipated rate.

The implication here is that there is a huge “first mover disadvantage” and worse yet, some promising offset sectors could de dead on arrival following the first verification of the first project.

Mitigating verification risk by subsidizing the initial verification is one way to overcome this uncertainty. This is something standards setting organizations could consider. Otherwise, they face the risk of investing substantial time and effort developing and releasing protocols that are not adopted by offset project developers.

  1. Plant the seed and watch it grow

Given this chicken-egg scenario where buyers are staying out of the market due to lack of supply and suppliers aren’t diversifying the market due to uncertain demand, if ever there was a need for a large new buyer to enter the market, now is the time. Such a buyer exists in the federal government—where a recent executive order increased their prior reduction commitment (28% below 2008 levels by 2020) for federal agencies to 40% below 2008 levels by 2025. The Council on Environmental Quality estimated that the original executive order would result in 101 million mtCO2e reductions by 2020. If federal agencies were allowed to use greenhouse gas offsets as 8% of the reductions they must achieve under the executive order, The Climate Trust estimates they could demand up to 1.35 million offsets per year, creating 15% growth in the voluntary carbon market.

Currently, federal agencies are allowed to purchase renewable energy certificates to meet this target, while offset purchases are prohibited. Removing this constraint could add millions of tons of demand to the market, while saving taxpayer dollars to the extent offsets cost less than other emission reduction options available to federal agencies.

Federal government support of offsets in general—and agriculture specifically—could have the exponential effect of drawing corporate buyers, especially food and beverage companies that are motivated by greening their supply chain.

  1. If it falls—catch it

The third impactful area that could expand supply offerings are financial models that mitigate price risk. Here exists a significant role for impact investors, program related investments from foundations, and government agencies that could invest in, and provide guarantees for nascent agriculture offset projects. Upfront funding is crucial to bridge the many months (sometimes years) it takes to develop a project, as well as launch and verify offsets. However, securing such funding on viable terms has proven elusive; perhaps a barrier that could be bridged is if a guarantee is provided that the funding will be repaid. One way to do this is to apply federal loan guarantee programs to certain offset project types. Full disclosure, The Trust occupies the role of providing early stage capital to carbon reduction projects.

The voluntary carbon offset market has shown resiliency, but it is still a young market that requires nurturing in order for it to grow and flourish. This market will never compare in size and scope to regulated markets, but further investment in building the capacity in the voluntary market is needed. An investment will not only diffuse further knowledge on how to design, implement and operate successful offset projects and deepen the engagement level of corporations, it will also provide a useful roadmap as the policy debate on subnational, national and global emission reduction initiatives proceeds.

Sheldon Zakreski is the Director of Risk Management at the Climate Trust. He can be reached at szakreski@climatetrust.org.

Lima To Invest $110 Million in Green Infrastructure And Climate Adaptation

30 April 2015 | LIMA, Peru | The alpacas of Peru are prized for their soft, fluffy wool, and farmers have been raising them on the steeppuna grasslands high in the Andes above Lima for millennia. Alpacas also have soft, padded hooves; the bottoms of their feet are more like house slippers than like street shoes, which means they can plod around on the grass without stampeding the absorbent dirt into an impenetrable hard surface. Cows and sheep, however, are a different animal completely: their hard hooves compress the dirt, and when they graze, they yank the grass out of ground rather than snipping it with their teeth the way alpacas do. This all results in grasslands that repel water rather than absorb it, contributing to a feast-or-famine cycle in Lima, which is the world’s second-largest desert city after Cairo.

In the wet season, the rivers that flow down from the Andes break their banks, while in the dry season, they slow to a trickle – and those cows and sheep are one reason for that. On top of that, the soils are carbon-rich, and as they’re degraded, carbon is released into the atmosphere.

Then there are the natural swamps and bogs that, like the soils, have traditionally absorbed water in the wet season and released it in the dry season. Over the last century, they’ve been drained so animals can graze, and that makes the downstream wet seasons wetter, and the dry seasons even drier.

Earlier this month, the city’s water utility, SEDAPAL (Servicio de Agua Potable y Alcantarillado de Lima), announced it would funnel nearly 5% of the water fees it collects from users into addressing this issue. Some of the money will go into programs that help farmers better manage their livestock – in part by rotating their animals, but also by keeping fewer – but fatter – cows. Other funds will go to close the drainage ditches so that wetlands can replenish their stored volumes, and deep infiltration of surface water regulation processes will recover, while some will go to restore pre-Incan “amunas” that siphon water off high-altitude streams in the wet season and funnel it into the mountain itself, where it filters down through the rocks over several months and emerges from springs in the dry season. Of the activities, restoration of amunas will likely provide the greatest impact and at the lowest cost, according to a cost-curve analysis carried out by Ecosystem Marketplace publisher Forest Trends and Consorcio para el Desarrollo Sostenible de al Ecorregión Andina (CONDESAN).

 Amunas will xx
The restoration of amunas will provide nearly half the dry-season water increase. Source: Forest Trends and CONDESAN.

“As the regulatory agency of Water and Sanitation in Perú, it is our responsibility to protect and preserve the river basins,” says Fernando Momiy Hada, President of national water regulator SUNASS (Superintendencia Nacional de Servicios de Saneamiento). “‘Gray infrastructure tools,’ like pipes and sewers, have their place, but we need to restore and protect the watershed, and re-grout the amunas to preserve and increase the quality and the quantity of water in the river basins.”

The funds will be divided between two activities: 1% of the total water tariff, or PEN 70 million (USD 23 million), will go explicitly to green infrastructure; while 3.8%, or PEN 266 million (USD 89 million) will be used for climate change adaptation and disaster risk reduction more generally.

The PEN 70 million investment is more than any other Latin American city or water utility has ever committed to green infrastructure.

Lima’s challenges are far from unique. Due to extreme water shortages, California is imposing dramatic water use reductions and, as a result of an extreme drought, São Paulo, Brazil, the world’s fourth-largest city, is contemplating similar measures. The water crisis is front page news every day these days – and Lima is taking a very important and big step into the right direction.

“Latin America is a hotbed of innovation when it comes to tackling the global water crisis, and Peru is a leading country in Latin America,” says Michael Jenkins, President and CEO of US NGO Forest Trends, which conducted the cost-curve analysis. “This is exactly the kind of leadership and creativity we need if we’re going to confront similar challenges around the world.”

SUNASS tentatively approved the proposal on March 26 followed by a public hearing that took place this month. Based on the public hearing, SUNASS anticipates it will be approved next month with no changes to green infrastructure and climate change adaptation funds.

Lima’s water utility, SEDAPAL, had submitted a proposed budget that included a plan for investing PEN 12 million (USD 4 million) in green infrastructure for the city. The approved budget is nearly six-fold that proposal.

Climate Negotiators Want Emissions Trading Rules Even If They Don’t Plan To Play The Game

The United States and the European Union both excluded market-based mechanisms to reduce emissions in the national climate plans they submitted to the United Nations. But negotiators say a framework for international emissions trading is needed, even if many countries won’t use it (yet).

30 April 2015 | Implementation, balance, inclusiveness. Those are the three words Gao Feng, China’s Foreign Ministry’s Special Representative for Climate Negotiations uses to describe his hope for an international climate agreement to be negotiated this December in Paris. Speaking on a Center for Climate and Energy Solutions’ (C2ES) panel last week, officials from China, the European Union, Gambia and New Zealand grappled with the question of how market-based mechanisms for emissions reductions might be included in the Paris agreement – among other issues.

Gao is doubtful that emissions trading will be a significant part of an international climate deal under the United Nations Framework Convention on Climate Change (UNFCCC), at least in the short term.

“I don’t see sufficient demand to drive the so-called global carbon market right now,” he said, citing the fact that both the United States and the European Union (EU) – two of the largest potential government buyers – excluded market-based emissions reductions from the first drafts of their Intended Nationally Determined Contributions (INDCs). “If a contribution is to be determined nationally, then in theory you may not have the demand at home because every country may calculate the exact amount that it can do,” he said.

Of the eight INDCs submitted so far, only Switzerland’s and Liechtenstein’s mention market-based instruments that would allow investments in emissions reductions abroad to be counted against a national target. Norway plans to use international carbon offsets only if it cannot secure a collective agreement with the EU. The United States and the EU both took a pass on using international offsets to meet their targets, though their climate plans do not preclude the use of domestic carbon markets to lower emissions.

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Leaving an Open Door

The EU plans to cut emissions 40% under 1990 without purchasing offsets from outside the region. Nevertheless, the Paris agreement should ensure that those countries that want to use carbon markets to reduce emissions can do so in an accountable way, said Jake Werksman, Principal Adviser for DG Climate Action of the European Commission. This would include some kind of regulatory framework to prevent double counting of emissions reductions, he said. (For instance, if Switzerland finances a wind power project in Mexico and then counts those emissions reductions against its total, Mexico could not also count those reductions domestically.)

The European Union launched the EU Emissions Trading Scheme (EU ETS) in 2005 to reduce emissions in the bloc, also providing a mechanism for handling offsets – mostly anticipating the Kyoto Protocol’s Clean Development Mechanism (CDM), which came into effect in 2008, but also to handle offsets from other cap-and-trade initiatives. Entities covered by the EU ETS have historically been the major source of compliance demand for carbon offsets, but oversupply of allowances in the EU ETS has caused CDM prices to plummet below the $1 mark, and a plan to link the EU ETS with Australia’s fell through after Australia repealed its carbon tax.

“We’ve had great experience in terms of running a carbon market domestically, but we’ve had difficulty managing the relationship between that domestic carbon market and international carbon markets in a way that ensures environmental integrity and a good carbon price at home,” said Werksman. “So we’re really focusing on getting our domestic house in order at the moment.”

New Zealand enacted emissions trading in 2008 under its Permanent Forests Sink Initiative, but the market has been so flooded by lower-priced CDM offsets that domestic forest project developers have been hard-pressed to find buyers for their tonnes. Nevertheless, the country is very interested in an international carbon market and would welcome a framework establishing minimum standards and guidelines, said Jo Tyndall, Climate Change Ambassador for New Zealand’s Ministry of Foreign Affairs and Trade.

“In New Zealand’s case we have got some challenges around how much we can reduce our emissions domestically and the ability to purchase emissions reductions elsewhere allows us to be much more ambitious than we would otherwise be able to be,” she said, emphasizing that emissions trading should be a voluntary tool available to governments.

Reality Check

Developing countries that would likely be on the receiving end of carbon offset investments have mixed views on market-based mechanisms. In its INDC, Mexico actually proposes two different targets, committing to a 25% reduction in emissions by 2030 without international assistance, and raising the ante to a 40% cut conditional on “fully functional bilateral, regional and international market mechanisms.”

Other countries, such as Bolivia, oppose market-based mechanisms that allow developed countries to meet targets through offsetting.

The question remains as to how the UNFCCC’s Green Climate Fund (GCF), to which industrialized countries are supposed to provide $100 billion per year by 2020, will distribute its money for mitigation and adaptation. Some funder countries are advocating for “payments for performance” for avoided deforestation and other carbon-cutting initiatives – meaning that the money only flows if the emissions reductions are achieved. (This concept is also central to carbon markets.)

The GCF was capitalized at $10 billion during last year’s negotiating session in Lima, Peru, but it will only be able to start spending if additional contributors meet an April 30th deadline to sign their contracts. The U.S., for instance, said it would not meet the end-of-month GCF deadline due to its budget cycle.

Pa Ousman Jarju, who has the wide-ranging title of being Gambia’s Minister of Environment, Climate Change, Water Resources, Parks and Wildlife, criticized the U.S. for dragging its feet on financial disbursements.

“It’s beyond imagination that the United States of America [would have] people in Congress and some so-called scientists denying what is happening in the world,” he said. “This is money that is going towards really supporting those who are in dire need.”

Paris or Bust?

While the upcoming Conference of the Parties of the UNFCCC has the same objective as before – to limit global temperature rise to no more than two degrees Celsius – the bottom-up approach currently underway is starkly different from the top-down Kyoto Protocol that aimed to limit emissions from developed countries.

“One of the big challenges that negotiators have had in this process is how to describe the agreement that is beginning to emerge in terms of an existing legal format,” said Valli Moosa, South Africa’s former Minister for Environment and the co-chair of C2ES’s ‘Toward 2015’ dialogues. “They’ve found it really difficult to do so.”

“The main difference between Kyoto and what we will see in Paris is that the numbers will not necessarily be in the printed protocol,” said Harald Dovland, the former co-chair of the UNFCCC’s Ad Hoc Working Group on the Durban Platform, and the other Toward 2015 co-chair. “I foresee that what negotiators and parties can agree on is that there will be a core agreement of a legally binding nature but there will be a lot of important material in the supporting decisions, declarations, or whatever [they’re] called.”

Another key difference? After more than twenty years at the table, many negotiators see Paris as their last chance.

“The current generation of chief negotiators – and I know a number of them – they seem to have a sense of mission,” said Moosa. “They know that if we fail in Paris, it will be a big blow in a number of ways. One is that the global climate agreement could then possibly happen outside of the UNFCCC framework.”

A scenario in which a global climate deal was left up to heads of state rather than hammered out under the UNFCCC process “would not necessarily make it easier,” he added. “I am on tenterhooks and extremely worried that this process might not succeed, notwithstanding the fact that all the ingredients are in place for success.”