Bonn Talks Open After Global Stock-Taking

Last week was a busy one in forest carbon, with major conferences in Europe and Africa ahead of official climate talks, which are kicking off this week in Bonn.  Meanwhile, the text of Indonesia’s forest clearing moratorium is coming into focus, and Brazil’s legislature took the first major step towards weakening the country’s landmark Forest Code amid a growing deforestation crisis.

Last week was a busy one in forest carbon, with major conferences in Europe and Africa ahead of official climate talks, which are kicking off this week in Bonn.   Meanwhile, the text of Indonesia’s forest clearing moratorium is coming into focus, and Brazil’s legislature took the first major step towards weakening the country’s landmark Forest Code amid a growing deforestation crisis.

Much of this article has been adapted from Ecosystem Marketplace’s Forest Carbon Newsletter.   To view the original, please click here.

6 June 2011 | BONN, Germany The United Nations Framework Convention on Climate Change (UNFCCC) has kicked off a two-week meeting aimed at hammering out the technical details underpinning mechanisms designed to slow climate change. Talks failed to get rolling this morning, however, after failure to agree on an agenda.

Chief among the mechanisms under examination will be those designed to save endangered rainforests and capture carbon in trees by reucing greenhouse gas emissions from deforestation and forest degradation (REDD).

The meetings run through June 17, and come on the heels of a week of stock-taking that culmninated with the release of Ecosystem Marketplace’s annual State of the Voluntary Carbon Markets 2011 report.

While the World Bank’s latest review of global carbon markets shows the compliance markets slipping back into neutral, our report on the voluntary carbon markets shows anything but.   The voluntary market rebounded from a 2009 recessionary dip and achieved new records in 2010 for volumes of sales, led in no small part by REDD.

This year’s report, Back to the Future: State of the Voluntary Carbon Markets 2011 gives a clear sign that interest in forest-based projects is going nowhere but up, driving roughly a   majority of transactions in the voluntary marketplace.   The bigger story for REDD’s longer term cash flow remains to be written, but market players are clearly buoyed by the array of progress being made on forest carbon in the UN climate talks, California’s cap-and-trade scheme, and the release of new groundbreaking methodologies in the voluntary market.   For the nitty gritty of the forest carbon market story, stay tuned for Ecosystem Marketplace’s next State of the Forest Carbon Markets report coming in the fall.   In the meantime, you’ll find no shortage of insights in our latest report on the always evolving voluntary carbon markets.  

Outside Barcelona’s convention center, hundreds of delegates converged on a major forest and climate summit in Africa and negotiators prepare for a new round of climate talks and REDD+ meetings in Germany next week.   The text of Indonesia’s forest clearing moratorium comes into focus and Brazil’s legislature takes the first major step towards weakening the countries landmark Forest Code amid a growing deforestation crisis.  

In the US, New Jersey resigned its place in the Regional Greenhouse Gas initiative and California’s Attorney General registered an appeal to a Superior Court Judge’s ruling to place the state’s cap-and-trade rulemaking process on ice, leaving the unresolved question of whether the state will be able to meet its internal and external deadlines to get an emissions trading scheme in operation by January 1, 2012.

As always, read on for all this and more in Ecosystem Marketplace’s latest Forest Carbon News Brief below.

—The Ecosystem Marketplace Team

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


International Policy

Three Basins Head to Brazzaville

The Summit of the Three Rainforest Basins has been underway in Brazzaville, Republic of Congo since last Friday.  Bringing together more than 500 participants and representatives from 35 countries, the week-long summit is set to conclude tomorrow with a joint statement to inform upcoming international negotiations on climate and forests. Read about the summit in Reuters  here, and see more about the meeting including the draft of the statement expected tomorrow on the summit website  here.  

Screaming at a Wall

The world’s largest emerging economies are renewing calls for developed nations to extend their Kyoto Protocol commitments in the run-up to the next round of UN climate talks in Germany next week.  The “BASIC” countries – Brazil, South Africa, India and China – argue a new international treaty is contingent upon the Kyoto Protocol being extended to the second commitment period. Japan, Russia and the United States have already made clear that they will not participate, citing the fact that developing countries are not required to make any legally-binding commitments. Expectations are currently low that a binding international treaty can be reached by the end of the year, but negotiators will convene to see what progress can be made.  Read more about the divide at BusinessGreen  here, and find out more about the upcoming meetings from the UNFCCC website  here.  

REDD+ Partnership Reunion

On the sidelines of the upcoming Bonn climate talks, the 70+ countries and stakeholders in the REDD+ Partnership will reconvene to touch on the status of the Partnership’s Voluntary REDD+ Database and a recently commissioned analysis on the effectiveness of multi-lateral REDD+ initiatives.  In addition, the meeting is expected to confirm the succession of Germany and Guyana as the new co-chairs beginning in July.  A day-long workshop will also be held covering “REDD+ Finance.”  Read more about the next meeting and see the agenda, etc. from the REDD+ Partnership’s website  here.  


US Policy

New Jersey Wins Rush for the Exit

Just as Delaware, New Hampshire, and Maine were  tabling  their own plans to abandon the Regional Greenhouse Gas Initiative (RGGI), New Jersey Governor Chris Christie, reportedly mulling a 2012 presidential run, announced his state would withdraw from the cap-and-trade initiative by year’s end. Despite  raiding  the state’s RGGI fund to cover a budget gap last year, Christie is now toeing the party line, arguing RGGI is an energy tax with no emissions reduction results to show. While Christie is apparently hoping the withdrawal will reduce the cost for producing electricity in the state, considering most electricity producers in the region are connected to the same grid and in the 9 remaining states participating in RGGI, we’ll have to wait and see whether New Jersey’s isolated withdrawal will actually have an upside for consumers to balance out the millions the state will now forego from the auction of CO2 allowances.  Read more about Governor Christie’s announcement and reactions at New Jersey Online  here  and the New York Times  here.

I’ll See Your Stay and Raise It

Last week California’s Attorney General lodged an appeal to the earlier ruling of a San Francisco County Superior Court Judge’s halting the development of California’s cap-and-trade rules.  ARB has argued the appeal stays the judge’s own order, allowing rule-making to continue, but despite ARB’s optimism and insistence to the contrary, it remains to be seen whether the emissions trading program can readied in time for the scheduled start date of Jan. 1, 2012.  The proof will be in whether ARB can meet its own internal deadline of Oct. 28 for completing the cap-and-trade rules.  Read about the ruling in the New York Times  here  and the ensuing response to keep moving forward in EIN News  here.  

Market Players Urge Changes in Offset Liability

California’s cap and trade rules as the currently stand place liability for replacing fraudulent or otherwise invalidated offset credits in the hands of the buyers. Several firms have petitioned the California Air Resources Board for a change to the rule, arguing that while the collective risk of buying invalid credits is small, the individual risk is large enough to deter buyers from purchasing offset credits at all. One proposed solution is a program-wide buffer pool to replace any offset credits invalidated after they have been purchased. Read more on the petition from Bloomberg  here.  


Project Development

Bringing REDD to India

The Mawphlang tribal community in Meghalaya, India is working in collaboration with California-based Community Forestry International to pilot REDD on a 75 hectare watershed project that began in 2005. The project targets fire, grazing, fuelwood collection, and quarrying as the major deforestation and degradation drivers and is seeking financial support to cover the project and opportunity costs the community will incur. Read more about the project from Climate Connect  here.  Read more about the project from the CFI website  here  (PDF).  


National Strategy & Capacity

Crisis? What Crisis?

Last Tuesday, Brazil’s lower house voted 410-63 in favor of loosening restrictions in the country’s long-standing Forest Code. The bill has been sent to the upper house where a vote is expected in 3 to 4 months. This vote follows one week after shocking revelations of a major spike in deforestation prompted the creation of a “crisis center” by the Minister of Environment to address illegal deforestation.  The bill would allow landholders to develop closer to rivers and on hilltops, reduce “legal reserve” requirements, and grant amnesty to landowners who have illegally cleared forests before July 2008. Brazilian President Dilma Rousseff has vowed to veto any bill that grants amnesty to offenders of the Forest Code.  Read about the pending legislation in the Guardian  here  and Mongabay  here.  Read about the new crisis center in the Guardian  here  and from the AP  here.    

Reading Between the Lines

President Yudhoyono’s presidential decree authorizing the nation’s forest clearing moratorium was published May 20. The forest protections prohibit conversion of primary forests, ignoring the larger area of secondary forests, and allocate a further 35M ha of “degraded forest” for development. The moratorium also exempts projects for energy, sugar, and rice, and allows businesses with existing permits to extend them.  A detailed analysis of the decree has concluded the language is too vague to determine whether the moratorium will ultimately lead to a reduction in greenhouse gas emissions. Nevertheless, the ban’s implementation now provides greater certainty to investors looking to develop projects within the country. Read more about the moratorium from Reuters  here  and Mongabay  here. See the presidential decree for yourself in Indonesian  here  (PDF), or as translated into English by Daemeter Consulting  here  (PDF).  See Daemeter’s analysis of the moratorium  here.  

Of Bans and Barcodes

Home to two-thirds of the remaining rainforest in West Africa, Liberia recently signed a deal with the European Union to ban international trade of illegal timber. The deal stipulates that Liberia must demonstrate the legality of the timber it sells. Liberia’s solution? Assign a barcode to every harvest-able tree and log in the country. Yale Environment 360 explores the feasibility of implementing such a system in a country otherwise plagued by strife and corruption. Read the article  here.


Finance & Economics

Compliance Markets at a Standstill?

The World Bank has released its annual State and Trends of the Global Carbon Market report looking back at 2010. The report sees the global value of the market down slightly from 2009 to US$142 billion, the first time in the last five years that the market did not grow. The authors cite several reasons for the slow down: post-2012 Kyoto Protocol uncertainty, the failure of several developed countries in establishing national-level cap and trade systems, and lower emissions stemming from the global recession making it easier for developed countries to meet their existing commitments, thus lowering demand for permits. The market remains buoyed by the EU-ETS, which represents 97% of the market when accounting for secondary CDM transactions. Read the World Bank’s press release  here.  

Taking Aim: REDD Payments

A new study published in Nature Climate Change argues for a new REDD strategy where deforestation is driven by subsistence farming. Studying Tanzania’s Eastern Arc Mountains, researchers found that compensation communities receive for not converting forest into farmland was insufficient to improve their livelihoods. Threats of food insecurity, low yields, and population growth offer strong countervailing concerns against a shift towards greater forest conservation.  The researchers propose REDD money should instead go more directly towards reducing deforestation drivers such as improving crop yields and access to better cooking equipment and fuel. Read about the study from Nature  here  and Reuters  here.  

Paying for Protection

Brazil’s Ministry of the Environment and the UN Environment Programme have released a study on Brazil’s protected areas system, concluding that the system lacks adequate funding and capacity to conduct operations. Brazil has designated 1.2 million sq km as protected areas–the fourth largest in the world–yet Brazil still lags behind poorer and smaller countries in its financial commitment to such programs. While Brazil has more than doubled the size of its protected areas since 2001, funding has remained flat taking inflation into account. Read more from Mongabay  here.  

Cultivating Leakage

Despite a ban on the expansion of soy farming into the Amazon, a team of American researchers has found that the soy industry is indirectly financing the expansion of cattle ranchers into the forest. In what is perhaps a textbook example of “leakage,” the soy farming ban has driven the price for pastureland through the roof, encouraging cattle ranchers to sell their land and buy up forestland in other areas to convert into pastureland.   Check out a summary of the soy production study at Environmental Research Web  here.


Methodology & Standards Watch

Global Conservation Standard Issues Call for Experts

The Global Conservation Standard, a program intended to standardize conservation projects and crediting of multiple ecosystem services, has issued a call for experts to serve on its Technical Panel. The Technical Panel performs several functions for GCS such as developing and providing quality assurance for project standards, as well as reviewing proposals for projects seeking certification. Selected experts will serve a 6 month term. Contact Dr. Michael Dutschke at [email protected] to learn more.   Applications are due by June 21. Learn more about GCS from the standard’s website here.

VCS AFOLU Requirements Open for Public Consultation

Verified Carbon Standard has posted revisions to its AFOLU requirements for public review open until July 23. The document includes two major revisions. The first deals with the incorporation of a new project type – Avoided Conversion of Grasslands and Shrublands – into the AFOLU requirements. The second updates AFOLU leakage requirements to clarify the accounting of market and non-market leakage. Visit VCS’s website  here  to view the announcement and consultation document.


Science & Technology Review

“Avoided Wildfire” Offsets: Crash and Burn?

As the costs, severity, and extent of wildfires continue to escalate with climate change, budget constraints are leading policymakers to tough choices.  Looking around for the money to support preventative treatments, some policymakers and forest managers have been optimistic that emissions benefits from “avoided wildfire” might be a potential source of funding via carbon markets.  But the latest research continues to indicate the carbon balance of these treatments rarely pencil out.  See Ecosystem Marketplace’s review on the current state of wildfire and carbon science in the US and what may be the final nail in coffin for offsets from “avoided wildfire” here.

Bringing Brazil’s MRV Strengths to Bear

The UN-REDD Programme and the Brazilian National Institute for Space Research (INPE) met in Rome a couple weeks ago to continue planning for a system to allow other REDD countries to autonomously monitor forest cover and emissions. The systems will be integrated into INPE’s TerraAmazon, a software platform that combines GIS, image processing, and database management. Read more about the partnership in UN-REDD’s May 2011 newsletter  here.  


Publications & Tools

The REDD Readiness Checklist

FAO and PROFOR have released a new forest governance assessment framework and an additional REDD-focused draft, citing a perceived need for countries to have a comprehensive analytical framework to diagnose, assess, and monitor forest governance. Both documents aim to improve forest management and encourage REDD readiness programs by providing a checklist of what should be addressed to demonstrate a country’s ability to effectively support a mechanism for REDD+ finance. Read the press release on the UN FAO website  here  and visit Climate-L to download the reports  here.

Norwegian Academics Join the REDD Revue

Researchers from the Norwegian University of Life Sciences evaluate four potential REDD+ governance structures in a new study.  Specifically, the options considered cover a market/project-based architecture, a system with national REDD+ funds outside existing national administrations, a national REDD+ fund organized under the national administration, and conditional budget support. Despite finding that the market-based structure could attract significant private financing, the study concludes that it provides the weakest governance structure to channel international finance to ground-level incentives and capacity. Find out more  here.
Additional resources

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