This Week In Biodiversity: Choose Your Own Adventure

The argument over voluntary approaches to conserve at risk-species like the greater sage-grouse isn’t waning. Meanwhile, new research applying the mitigation hierarchy to the agriculture and forestry sectors finds net positive impacts for biodiversity are possible and a separate report finds commodity subsidies driving deforestation vastly outweigh conservation finance to protect forests.

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

21 April 2015 | Greetings! In honor of those Mitmail readers whose next few weeks are dominated by preparing for exams or handing in dissertations, we thought we’d provide you all with some homework.

Your mission, if you choose to accept it, is to brush up on one of the “Three Cs”: commodities, candidate species, and carbon. Each is an emerging force that’s poised to radically change business-as-usual for biodiversity conservation and finance. So if you normally skim over these issues as you read our news briefs, this month pick a “C” to take a few minutes to get up to speed on.

 

If you choose commodities: Read our latest on applying the mitigation hierarchy to the agricultural and forestry sectors. Then get some background on the challenge: learn how commodity subsidies driving deforestation vastly outweigh conservation finance to protect forests, and how questions are emerging regarding the effectiveness of sustainable commodity roundtables. Finally, read about a new way to pair conservation finance and commodities, in which the Althelia Climate Fund is helping a sustainable cocoa project in Peru use carbon finance as collateral against loans to get the project off the ground. The project will then shift over time to sustainable cocoa production as its main revenue stream.

 

If you choose candidate species: Start with this piece introducing the concept of Habitat Exchanges, which help entities that impact imperiled – but not yet federally listed – species to pay to restore and protect critical habitat elsewhere, in order to keep those species from further decline. (Though arguably the system is set up for the energy and mining industries – not so much other sectors like agriculture.) Sounds good in theory, right? But as the first conservation bank for the greater sage-grouse prepares to open its doors in Wyoming, it’s beating back attacks from both sides of the political spectrum over whether voluntary mitigation really is the right mechanism to keep the grouse off the Endangered Species List.


If you choose carbon:
You’ll also want to read the article on how a sustainable cocoa project in Peru is using carbon finance to leverage start-up capital but isn’t exactly a carbon project. Then for a counterpoint, check out Mongabay’s reporting on efforts to get carbon projects going in Brazil’s Cerrado, which illustrates the larger point that carbon storage and biodiversity values don’t always go hand-in-hand. But! A carbon market that assigns higher values to biodiversity-rich areas could help undo fifty years of biodiversity decline on land, according to a new study. You have the weekend to ponder this challenge, dear reader.


Finally, Forest Trends is hiring
a Senior Communications Associate and a Research Assistant for Ecosystem Marketplace’s new Supply Change initiative. Scroll down to the Job Openings section for descriptions.
Cheers,


—The Ecosystem Marketplace Team

 

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

 

Venturing Into Uncharted Territory: Applying Net Positive Impacts For Biodiversity In Forestry And Agriculture

Despite the impact that the agriculture and forestry sectors have on biodiversity, the IUCN finds that companies active in forestry and agriculture tend not to participate in conservation efforts that apply the four-step mitigation hierarchy. Contrast this to the extractive industries like mining and fossil fuels as well as the infrastructure sector, which have been involved in mitigation, in partnership with NGOS like Flora and Fauna International,BirdLife International, and Conservation International since at least the early 2000s.

 

In the fall of 2013, IUCN’s Global Business and Biodiversity Program convened with private sector and biodiversity experts to figure out how the mitigation hierarchy could be applied to the agriculture and forestry sectors. The outcome of that informal meeting is the report, No Net Loss and Net Positive Impact: Approaches for Biodiversity, published this week.

Get the full story from Ecosystem Marketplace.

 

The BBOP Files: Lessons from the Community of Practice

Two recent Business and Biodiversity Offset Programme (BBOP) webinars offer insights from the ground on offsets practice and policy.

 

On March 27th, Sally Johnson and Kirsten Hund presented “National Biodiversity Offset Scheme: A Road Map for Liberia,” reviewing World Bank-backed efforts to explore the feasibility of a national offset program in Liberia to help minimize impacts from mining in the country.

 

Then on April 8th, Tom Grosskopf and Derek Steller discussed the use of offsets to finance conservation and manage growth areas in Western Sydney, Australia and the surrounding region.

Watch recordings and get a copy of presenters’ slides here.

 

Where Chocolate Meets Carbon: One Peruvian Project Finds The Sweet Spot

The Tambopata REDD project in the Madre de Dios region, known as Peru’s “Biodiversity Capital,” aims to help locals make ends meet while taking pressure off the valuable forest. But generating the offsets is only the first step. Project developers have to figure out how to sell them. Until governments reach a deal on integrating avoided deforestation into an international climate change agreement, the REDD market is entirely dependent on voluntary buyers. And though REDD offset sales are growing, prices are dropping, and last year project developers reported taking home less than 70% of the revenue they needed to keep projects afloat long-term.

 

The Althelia Climate Fund had an idea: Why not use REDD offsets as collateral against loans but also design projects to produce deforestation-free products, therefore creating multiple revenue streams?

Get the full story here.

 

Subsidies for Deforestation-driving Commodities Dwarf Conservation Finance – New Report

The race against deforestation is being won or lost hectare by hectare in the tropical rainforest countries that also provide the majority of the world’s agricultural commodities. But subsidies for commodities that drive deforestation may be undermining the efficacy of financial incentives for conserving forests and their carbon content, according to a new working paper by the Overseas Development Institute (ODI), a United Kingdom-based think tank.

Agricultural subsidies worth at least $486 billion in 2012 dwarf the $8.7 billion total that developed countries have committed towards Reducing Emissions from Deforestation and Degradation of forests (REDD+) since 2006, the report finds.

Get coverage here.

 

Commodity Roundtables: Green Gatekeepers Or Dirty Doormen?

It’s been a decade since the first commodity roundtables brought producers of soy, palm, and other crops together with environmental organizations. The results have been less than stellar, as the Roundtable for Sustainable Palm Oil recently disciplined 100 members for failure to comply with paperwork requirements. Critics say that’s a nice beginning, but we still have far to go.

Read more.

 

Opinion: Bioenergy Can Support Climate, Food, Land Restoration – If Done Right

Governments have long promoted the use of biofuels like ethanol derived from corn as a relatively clean-burning alternative to coal, but biofuels have gone from hero to zero as people started chopping forests to plant fuel crops. Many environmentalists today are calling for an end to pro-biofuel policies, but Emily McGlynn of The Earth Partners LP says we simply need to use land more efficiently.

Read it here.

Changing Course on Global Biodiversity Loss with a Carbon Market

The bad news: Since the 1500s, the Earth has experienced a 14% drop in the average number of species living in various ecosystems due to human-caused land use change. The good news: a first-of-its-kind global analysis finds that some of this biodiversity loss can be reversed. Using climate change mitigation scenarios, report authors found that establishing a strong carbon market that assigned higher values to biodiversity-rich forests was effective in conserving and restoring lost wildlife. The lead report author explains, “If society takes concerted action, and reduces climate change by valuing forests properly, then by the end of the century we can undo the last 50 years of damage to biodiversity on land.”

 

But in order to prevent further biodiversity loss and undo years of damage, more data and policy change is certainly needed. Another recent study, published in the journal of Applied Ecology analyzes the Essential Biodiversity Variables (EBV), a list of the essential elements related to biodiversity that require monitoring, to answer those questions. The study identifies gaps between global biodiversity goals, indicators used to develop policy reports and available data that measures the indicators and objectives.

Learn more about carbon and biodiversity conservation here.
Read about the EBV analysis.

 

Whither New South Wales’ Biodiversity Legislation?

Australia’s New South Wales recently held an election for state leadership. Prior to election day, residents expressed concern about the future of biodiversity legislation following an independent review that included the controversial suggestion to repeal the Native Vegetation Act and Threatened Species Act. It also recommended less government oversight on land clearing activities and a greater dependency on biodiversity offsets, which opponents say currently lack the transparency needed for meaningful offsetting. The Liberal-National Coalition announced that they would adopt all the recommendations for the state’s biodiversity legislation, if re-elected. And on March 28, they won the election.

Get analysis at The Conversation.
Read more on the Coalition’s announcement at the Sydney Morning Herald

 

The Greater Sage-Grouse Gets Its Own Marketplace

Some western landowners in the US are backing a new approach to conserve the declining greater sage-grouse. It’s the so-called “sagebrush marketplace,” which allows an assortment of developers that unavoidably destroy sage-grouse habitat to offset their impact by purchasing credits from landowners that have performed an amount of sage-grouse conservation like removing juniper trees that overtake the ecosystem.

 

The marketplace is made up of Habitat Exchanges, which are a type of payment for ecosystem services program developed by NGO Environmental Defense Fund (EDF). They’re taking hold in several states including Colorado, Wyoming and Nevada. As it stands, the bird isn’t listed under the Endangered Species Act yet so the exchanges operate on a voluntary basis. The energy interests, ranchers and others participating are intending for their actions to prevent regulatory obligations down the road should the grouse end up listed.

Yale 360 has the story.

 

Despite Potential, Litigation Marks Wyoming’s First Greater Sage-Grouse Conservation Bank

The Sweetwater River Conservancy in central Wyoming marks the first conservation bank for greater sage-grouse. Supporters hope that the 235,000 acre ranch can balance efforts to conserve and restore dwindling sage-grouse populations with energy development and other sources of economic growth.

 

However, the bank’s projected success is likely not enough to stamp out ongoing controversy regarding greater sage-grouse conservation, over whether mitigation can work, where it should take place, and how migratory grouse populations will be managed. In addition to these disputes, which have a big chance of ending up in court, a coalition of energy and farming interests are pursuing legal action against the federal government. The group claims the government is using bad science to justify top-down solutions to grouse conservation.

Read more about the bird wars from the Casper Star Tribune.
Learn about the greater sage-grouse conservation bank here.

 

Proactive Greater Sage-Grouse Conservation: Worth its Weight in Gold?

The Barrick Gold Corporation, a multinational gold mining company, is making its contribution to greater sage-grouse conservation by establishing a conservation bank in Nevada, one of 11 states that make up the bird’s range. The bank will allow Barrick to expand its mining operations while simultaneously conserving sage-grouse habitat. The sage-grouse is one of a few grouse species that has seen their numbers decline drastically in the last few decades. The Gunnison sage-grouse was listed as endangered last year, and the US Fish and Wildlife Service will likely make a decision on the greater sage-grouse this year. Voluntary efforts such as this conservation bank can help keep the sage-grouse off the endangered list, the US Department of Interior says.

NPR has the story.

 

Whether Tis Nobler to Maximize Minimization, or Just Go Ahead and Mitigate

A recent US District Court decision that upheld the US Fish and Wildlife’s issuing an incidental take permit for endangered Indiana bats at a wind power project may have implications for application of the mitigation hierarchy (avoid, then minimize, then mitigate) when it comes to impacts to endangered species. Union Neighbors United had challenged the permit on the grounds that Buckeye Wind had not minimized take to the lowest extent possible before moving on to mitigation.

 

The court rejected this argument on the grounds that the 1996 Habitat Conservation Planning and Incidental Take Permit Handbook takes the long view, allowing agencies to focus on whatever is most likely to deliver “substantial benefits” to the species. “Here, the USFWS found that the minimization and mitigation measures ‘fully offset’ the impact of the taking of Indiana bats, and thus, it was not necessary to determine if the plan was the ‘maximum that can be practically implemented by the Applicant,” the decision stated.

 

Get analysis at Lexology.

 

In Brazil’s Cerrado, the Co-Finance Dream Endures

In 2008, Hyundai announced an offset commitment aiming to conserve and reforest 3,000 acres of tropical forest in Brazil Cerrado region to great fanfare. The project was promoted as “one of the first voluntary carbon offset projects that will meet the high standards of the Climate, Community and Biodiversity Standards.” Within three years, the project had been quietly withdrawn from validation after auditors brought up concerns that despite the Cerrado’s biodiversity values, the area had little promise in terms of carbon storage.

 

It’s a familiar story, says Mongabay: opportunities to link carbon finance to biodiversity conservation have so far been a rare beast. In fact, the biggest carbon project in the Cerrado to date, which plants eucalyptus to burn as charcoal, is terrible for the region’s biodiversity. But that may be changing. New science suggests that even savanna ecosystems like the Cerrado can be valuable in the fight against climate change, and advocates for the Cerrado aren’t ready just yet to unpin their hopes from carbon.

Read it at Mongabay.

 

Payments for Ecosystem Services Turns Blue

As the value of coastal ecosystems like mangroves grows and their many ecosystem services become fully recognized, a new payment for ecosystem services (PES) mechanism is emerging. Right now, it’s focused on the ‘blue carbon’ that marine ecosystems store, with NGOs initiating projects like the International Blue Carbon Initiative. But recently, the International Center for Forestry Research (CIFOR) noted how PES projects are principally designed for terrestrial ecosystems. Therefore the special risks related to coastal ecosystems must be identified so project design can reflect them and the proper policies are in place. Stressors unique to marine ecosystems include hurricanes, sea-level rise and changes in sediment supply.

Read the blog post at CIFOR.

 

Proposed Alaskan ILF Aims to Go Beyond Preservation

A watershed coalition in southeast Alaska is in the midst of creating an in-lieu fee (ILF) program focused on local wetland and stream restoration and enhancement. If approved by the Army Corps of Engineers, the Southeast Alaska Mitigation Fund would be different for a couple reasons. First, preservation is the only type of mitigation currently practiced in southeast Alaska. Secondly, the fund says it’ll focus on mitigating impacts locally, a departure from what’s often current practice in the region.

Stikine River Radio has coverage.

 

VIP Treatment for Energy in Lesser Prairie Chicken Conservation?

A rangewide plan to conserve the federally listed lesser prairie chicken contains a mitigation banking program – but it’s primarily for the energy industries, as developers hoping to install a dairy worth $70 million found out. Wind and oil and gas developers can sign on to the plan which allows them to harm chicken habitat and compensate for it by conserving an area greater and of more value to the bird than what was destroyed.

 

According to state wildlife officials, the plan is much less costly for energy interests than consulting with the Fish and Wildlife Service on a case by case basis. In some circumstances, farming activities can qualify under the plan, but as officials explained, a dairy wouldn’t be able to comply with specific sound and activity rules during the prairie chicken’s mating season and so doesn’t qualify.

Get coverage from the Lamar Ledger.

 

Little Protection Happening in Indonesia’s Protected Areas

Areas protected specifically to preserve biodiversity in forest-rich Indonesia do very little in protecting these places from deforestation, a Singapore-based study has found. It’s a critical issue because not only do Indonesia’s forests contain high levels of unique and endangered biodiversity, but its standing forests help fight climate change. The increased demand for agricultural land and timber, combined with weak enforcement of protected areas, are the key reasons for the forest loss. Report authors suggest better monitoring efforts, particularly of road construction, stronger enforcement rules, and alternative livelihoods for local peoples as more effective methods to preserve the protected areas.

Learn more about the study here.

 

Connecting the Dots Between Human Health and Biodiversity

Biodiversity and human health are inextricably linked through biodiversity’s impact on ecosystem services like air and water quality, food production and medicine. And this year, the link was officially recognized at the 14th World Congress on Public Health where the World Health Organization and Convention on Biological Diversity launched a new report meant to be this issue’s flagship publication. The report offers recommendations that can help halt global biodiversity loss. Because land-use change and agriculture are dominant causes of the loss, sustainable production is one such suggestion. As for climate change and the risk to biodiversity it poses, report authors say ecosystem-based adaptation and mitigation strategies that build resilience are the best approaches. They also note another significant factor in preserving biodiversity: human behavioral change.

Mongabay has the story.

 

JOB LISTINGS

 

 

Senior Communications Associate – Forest Trends

Forest Trends – Washington DC, USA

Based in Washington, D.C., the Senior Communications Associate will support the Communications Manager in strengthening Forest Trends’ overall communications, with a special emphasis on media and social media outreach. S/he will be responsible for promoting Forest Trends’ work to the media and also generally strengthen the organization’s outreach by cultivating and organizing media contacts and lists, assisting with mailings (primarily electronic) and other forms of outreach, coordinating event logistics, supporting the publication and communications production process, and performing other duties as assigned. Successful candidates will have a bachelor’s degree and three to five years of relevant experience.

Learn more here.

 

Supply Change Research Assistant – Ecosystem Marketplace

Forest Trends – Washington DC, USA

Based in Washington, D.C., the Research Assistant will support Supply Change, a project that provides real-time information on the extent and value of commitment-driven commodity production and demand. The position involves researching public commitments to reduce supply chain impacts on ecosystem degradation, compiling data in Excel, identifying news for the Supply Change web platform, and conducting stakeholder outreach. The successful candidate will have excellent research, organizational and writing skills; an interest in agricultural commodity-related deforestation; and experience with Excel. The position runs for an initial three-month period at a negotiable hourly rate.

Learn more here.

 

Managing Director, West Africa

Envirofit – Lagos, Nigeria

Envirofit International (www.envirofit.org) is rapidly scaling its operations in West Africa. With this rapid growth comes the need for high quality in-country management to oversee operations and manage expansion. Envirofit is seeking a Managing Director to oversee and grow its operations, sales and business development within the West Africa region. This director will have full Operations and P&L responsibility. Position will be based at Envirofit’s West Africa Sales and Manufacturing headquarters in Lagos, Nigeria.

Learn more here.

 

EVENTS

 

2015 National Mitigation & Ecosystem Banking Conference

The 2015 National Mitigation & Ecosystem Banking Conference, scheduled for May 5-8, 2015, in Orlando, Florida is the only national conference that brings together key players in this industry, and offers quality hands-on sessions and training as well as important regulatory updates. Proven to be “the” place to gain insights, explore new markets and learn from sessions, the 2015 Conference will continue its focus on educational content – both advanced and basic sessions as well as moderated exchanges and a variety of mini workshops that help to connect bankers, regulators, users and others involved in this industry. Pre and post- event workshops include Primer 101, Stream Banking, Long-Term Stewardship, Financing & Valuation and more. Hear perspectives from bankers, regulators and users, get updated on regulations, legislation and legal challenges, participate in field trips and benefit from the many opportunities to network! With a high attendance this past year, we anticipate a record attendance in Orlando and encourage you to make plans to submit to present, attend, even sponsor or exhibit! Orlando FL, USA. 5-8 May 2015.

Learn more here.

 

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.

Additional resources

High-Risk African Nations Ratcheting Up Support For Results-Based Finance

21 April 2015 | Africa generates very little in the way of greenhouse gas emissions, but it’s especially vulnerable to droughts and flooding from climate change, which threaten to disrupt food and water supplies. Poor infrastructure, high poverty rates and little access to capital only enhance the continent’s vulnerability, the United Nations says.

To avert disaster, African countries are already gearing up for the 21st Conference of the Parties (COP 21) to the UN Framework Convention on Climate Change (UNFCCC), which takes place in Paris at the end of the year. At last week’s Africa Carbon Forum (ACF), delegates called for stronger emphasis on results-based climate finance for both mitigation and adaptation to climate change, and they reiterated their support for market-based mechanisms like the Clean Development Mechanism (CDM), which allows emissions-reducing projects to earn certified emissions reduction (CERs) that can be traded to meet overall national reduction goals.

“Participants particularly highlighted the usefulness of the CDM’s established rules in measuring, reporting and verifying results and its possible role to help define and clarify the content of INDCs,” the UNFCCC said in a press release. “The workshop also concluded that African countries could look at how best to link and leverage finance through the Green Climate Fund at the same time as increasing use of the CDM.”

“I agree with Ministers that the last 10 years in the implementation of the Clean Development Mechanism is a very valuable asset and that market mechanisms can play a significant role in raising the level of ambition, and supporting climate action,” said Hakima El Haite, the Delegate from Morocco’s Ministry of Environment.

Clean Energy, Green Agriculture

Roughly 730 million people across Africa rely on traditional forms of cooking using wood, which harms health and destroys forests, according to the International Energy Agency Africa Energy Outlook 2014. This report also found 625 million Africans lack secure access to electricity. ACF participants urged addressing this issue with the CDM, along with other tools that leverage private sector money.

“There is a great opportunity for the private sector to invest in a low carbon future for Africa, using market forces to bring innovative technologies so that the continent can develop in a sustainable way,” said Dirk Forrister, the President and CEO of International Emissions Trading Association, a business organization focused on greenhouse gas emissions trading. “The Paris agreement can help facilitate this by setting the right parameters for business to invest, including rules and guidelines for carbon markets.”

Preserve and Improve the CDM

Delegates repeatedly called for the CDM to not only be preserved, but improved to include climate-smart agriculture and urban development and build a more sustainable economy overall, according to the UNFCCC’s summary of the event. Forum participants noted the importance of addressing these key issues in African countries’ Intended Nationally Determined Contributions (INDCs), the post 2020 climate action plan each nation intends to take. The plans are submitted to the UNFCCC ahead of COP 21.

“In these last eight months before Paris, the focus must shift from restating negotiating positions to finding common ground solutions,” said UNFCCC Deputy Executive Secretary Richard Kinley. And according to another participate at the ACF, John Christensen of UNEP (United Nation Environment Programme). “African countries are ready to contribute and agree to a fair and balanced international agreement.”

 

NGOs, Cities Use Economic Argument To Win Industry Support For Stormwater Regs

Water brings life, but torrential downpours bring sludge and sewage overflow – contributing pollution around the world. In the United States, the Environmental Protection Agency is under pressure to regulate more aggressively, but, increasingly, NGOs and local authorities are moving ahead with cost-effective stormwater management plans of their own.

20 April 2015 | Stormwater, the dirty water that flows off pavement, rooftops and other impervious surfaces, is one of the biggest sources of water pollution in the United States. The U.S. Environmental Protection Agency (EPA) is charged with managing this pollution, but the agency is failing to enforce its own rules, according to many environmental groups.

The Conservation Law Foundation (CLF) and the Natural Resources Defense Council (NRDC) are suing the EPA – in separate lawsuits – in relation to the agency’s enforcement of stormwater regulation and the effectiveness of those rules.

Such legal actions have traditionally been the main recourse for environmentalists looking to promote better management of stormwater runoff, but legal action alone often creates a situation where the party with the best lawyer wins – or at least the lawyers do. And the actual cost of compliance is seen as a fraction of the cost of litigation. For that reason, several environmental organizations have been bringing carrots to accompany their sticks.

The Voices of Opposition

“EPA’s hearing very loudly from polluters in the development industry that oppose stronger stormwater requirements,” said NRDC attorney Rebecca Hammer.

Companies often equate the cost of compliance with the cost of construction or they view procedures to account for stormwater runoff flowing into waterways as an unknown – and frightening – liability. However, compliance costs make up a fraction of the overall cost of a development project, and Hammer argues that building things like permeable pavement, green roofs, and rain gardens – now called “green infrastructure” – saves companies money in the long run.

The stormwater rushing off impermeable surfaces dumps far more pollution into waterways than porous pavements that absorb and filter toxins. The result of these impervious areas is a contaminated pool of dirty water draining into rivers and streams, the CLF said in a statement speaking specifically about the Charles River watershed in Massachusetts. Gray infrastructure, then, equals a greater stormwater discharge cost for a property owner.

There is growing evidence supporting this concept that green infrastructure is in the business owners’ best interest. American Rivers, a conservation organization restoring US rivers, published a report in 2012 which found that these nature-based solutions can lower capital costs and operational expenses while increasing energy efficiency so energy costs are reduced. It also leads to an increase in property value and reduced costs associated with flooding.

And last year, the EPA projected a green infrastructure plan to manage stormwater for Lancaster, Pennsylvania could save the city $660,000 per year by lessening the treatment of wastewater. It also has the potential to deliver $4 million worth of energy, air quality and climate-related benefits.

But despite this mounting evidence on the benefits of green infrastructure, it isn’t typically incorporated into core business practices or investment strategies, a study by The Nature Conservancy, an environmental nonprofit, found. And as it stands, the key drivers for implementing green solutions are regulations. Brian Van Wye of the District of Columbia Department of the Environment (DDOE), notes how much farther along green programs with regulatory drivers are over the DDOE’s voluntary programs. “The regulated area is 10 times the size of the area that we’re able to touch with our voluntary programs,” he said.

Cities Leading the Way

But while the majority of businesses and places aren’t particularly supportive of nature-based solutions, there are a few areas where developers and local decision-makers are. A good example is Philadelphia, where the city’s water department has linked stormwater fees to the amount of impervious pavement on a property. More concrete means a higher bill.

The pricing structure incentivizes businesses to green their property and even includes a provision that allows property owners to write off their upgrade costs against future stormwater fees. However, that write-off could take years to materialize and doesn’t eliminate the upfront costs for companies.

Nonetheless, Philadelphia’s program spreads awareness on the importance of stormwater management, the lack of which Hammer called part of the problem. Developers aren’t aware of the benefits and don’t take advantage of the opportunities, she said.

Washington, D.C. is one city taking advantage of the opportunities. The city created the Stormwater Retention Credit (SRCs) trading program to provide flexibility in complying with new stormwater standards issued to D.C. through the EPA’s MS4 (Municipal Separate Storm Sewer System) permit. The program, which is the first stormwater retention trading program in the U.S., allows property owners to generate SRCs for voluntarily implementing green infrastructure that reduces stormwater runoff. They can then trade their SRCs with others needing to meet regulatory requirements.

Van Wye credits the “progressive-minded development community” as one of several reasons D.C.’s program has met with success thus far. The MS4 permit is also unique to D.C. in that the city receives clean water rules directly from the federal government while most U.S. cities typically receive these rules from their states. The DDOE was looking for the best methods to meet these new standards that dealt with stormwater retention in a way that was both effective and fair to the regulated group, Van Wye said.

“In terms of trading, we realized we could allow a lot of flexibility to development while at the same time generating as good or better benefits for the water bodies,” he said.

Like in Philadelphia, the D.C. program incentivizes property owners to upgrade gray infrastructure to green. And these property owners are eligible to receive discounts on their stormwater fees down the line. The trading aspect of D.C.’s program also creates a revenue stream that can lead to installing more green stormwater controls.

Last fall, the SRC program transacted its first trade – 11,013 SRCs worth $25,000. The seller of these credits was a property manager, Ann Benefield for condominiums in Northwest D.C. As the city’s first group of development projects becomes subject to the stricter stormwater regulations, program developers are expecting demand to emerge.

More Innovation on the Horizon

Ecosystem Marketplace’s latest State of Watershed Investments report also highlighted the potential of another innovative approach: public-private partnerships to harness finance for green infrastructure. The private partner provides upfront capital and assumes implementation and financial risks while the public participant funds the project over the long term and manages maintenance.

In the Chesapeake Bay, where regulation regarding stormwater controls is tightening, project developers expect these types of partnerships to leverage hundreds of millions of dollars in the coming decades. That money is much needed in a place where implementing necessary stormwater controls is estimated to be as high as $15 billion.

Projects like the Re.invest Initiative, partially funded by the Rockefeller Foundation, are encouraging these public-private partnerships as a means to build more sustainable stormwater systems. The project is a collaboration among eight U.S. cities – Honolulu, Milwaukee, New Orleans, El Paso, Hoboken, Miami Beach, Norfolk and Virginia Beach – and engineering, law and finance firms to create public-private partnerships that will build resilient infrastructure.

Innovative projects such as the Re.invest Initiative, along with what is being done in Philadelphia and Washington, D.C., are moving forward despite the legal entanglements and slowdowns at the federal level. Hammer emphasizes this progress in saying local governments can step up and enforce the type of standards NRDC would like to see at the national level.

Additional resources

This Week In Forest Carbon: REDD Gets Sweeter

The Tambopata REDD, based in Peru, aims to pair carbon finance with sustainable cocoa production with help from a $7 million investment by Althelia Climate Fund. Rather than rely on carbon finance long term, the project is designed to use offset sales as the start-up capital to set up the sustainable cocoa production – which over time will become the main revenue stream for farmers.

This article was originally posted in the Forest Carbon Newsletter. Click here to read the original.

 

17 April 2015 | “You have two options for avoiding deforestation,” said Paul Ramirez. “One is to put fences and rangers to keep people out – this option in the long-term is not sustainable. The other, which is actually the good one, is to work with people to change their practices.”

Ramirez is a project manager at the Peruvian NGO Asociacií³n para la Investigacií³n y Desarrollo Integral (AIDER) that is working in the buffer zone of a national reserve in Madre de Dios, known as the “Biodiversity Capital” of Peru. There, the Tambopata National Reserve and the Buhuaja-Sonene National Park provide habitat for threatened species such as the black caiman, harpy eagle, and giant otter.

 

But, despite its protected status, the forest itself is threatened by migratory agriculture and illegal logging, both of which accelerated when construction of a new highway through the region began in 2006. An estimated 1,189 hectares are being chipped out of the 570,000-hectare protected area every year.

 

AIDER aims to change this by pairing carbon finance with sustainable cocoa production. Fueled by a $7 million investment by Althelia Climate Fund, the organization helped found a farmer’s cooperative focused on harvesting, processing and commercializing fine aromatic cocoa. This year, the cooperative is starting with 300 planted hectares, with plans to scale up to 4,000 hectares by the end of the decade. The cooperative aims to produce 3,200 tonnes of cocoa each year – enough to create annual revenues of nearly $10 million, if cocoa prices hold at 2014 levels.

Until then, the Tambopata REDD (Reducing Emissions from Deforestation and Degradation of forests) project will lean on revenues from carbon offset sales. Four Dutch companies – development bank FMO, carpet maker Desso, and energy competitors Eneco and Essent – have provided early carbon finance, as has the Peruvian insurance company Pací­fico Seguros.

 

Farmers receive financing “on the condition that they won’t deforest anymore and that a share of revenues will go to investors,” Ramirez explained.

 

The REDD offsets are used as collateral against Althelia’s loan. Rather than rely on carbon finance long term, the Tambopata project is designed to use offset sales as the start-up capital to set up the sustainable cocoa production – which over time will become the main revenue stream for farmers.

 

Althelia’s Latin America Director Juan Carlos Gonzalez Aybar also sees carbon finance as a gateway for companies to begin thinking more holistically about the impact of their supply chains.

 

“For example, Desso today makes carpets and tomorrow probably they will be sourcing – I hope – some materials, for example latex, from reforestation projects,” he said. “For companies to start buying offsets is important for the offset itself, but also for the contacts with the projects and the business opportunity it brings.”

The Tambopata REDD project has issued 108,335 offsets to date under the Verified Carbon Standard (VCS) and is expected to avoid the emission of 4.5 million tonnes of carbon dioxide into the atmosphere over its lifetime.

 

The full story in Ecosystem Marketplace is here. And more news from the forest carbon marketplace is summarized below, so keep reading!

—The Ecosystem Marketplace Team

 

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

ANNOUNCEMENTS

Call for reviewers

Ecosystem Marketplace is seeking a panel of expert reviewers to offer insight for our upcoming State of the Voluntary Carbon Markets 2015 report. The review entails two rounds of feedback: one on the draft figures for the report and one on the draft text. Reviewers must be active in the voluntary carbon market, have responded to our annual survey, agree to maintain confidentiality, and offer comments in a timely manner. Please send expressions of interest to Allie Goldstein (agoldstein@ecosystemmarketplace.com) by Friday, April 17.

 

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NATIONAL STRATEGY & CAPACITY

Two more years!

Indonesia will again extend its ban on forest clearing following a two-year moratorium originally set under a $1 billion climate deal with Norway in 2011. The ban was extended for two years in May 2013, meaning that, without another extension, it would expire next month. But an advisor to Indonesia’s Ministry of Environment indicated the policy would “certainly continue.” On the ground, the battle to save tropical rainforests in the province of Aceh recently meant dismantling 3,000 hectares of palm oil plantations illegally sited in protected areas. Aceh contains the Leuser Ecosystem, the last place on Earth where the Sumatran rhino, elephant, tiger and orangutan coexist in the wild.

 

A less than taxing proposition

Australia is scheduled to hold its first Emissions Reduction Fund (ERF) auction on Wednesday – the first test of the policy that replaced its carbon tax. Existing projects developed under the Carbon Farming Initiative will be incorporated into the auction, through which the government will submit a benchmark price and then select offset projects that bid in below this threshold. Market participants fear that the AU $2.6 billion ERF will not spur new project development. “The way Australia has implemented the ERF is not using markets so much as just using government money, which can provide support to some projects, but is not fully harnessing the market and directing private capital into markets,” said Jerry Seager, Chief Program Officer for the VCS.

 

PROJECT DEVELOPMENT

A second Genesis?

In 2008, Hyundai announced that it would offset the emissions from driving its Genesis sedans by investing in a REDD project in the Brazilian Cerrado, a biodiverse grasslands ecosystem covering two million square kilometers. The Ecological Institute proposed the Genesis Forest Project to reforest a barren cattle ranch. But the project failed after auditors raised concerns about low-carbon storage in a landscape regularly burned by wildfires. However, recent research out of the University of Brasí­lia shows the Cerrado may actually store large quantities of carbon in its soil. The Ecological Institute is now taking a different approach to carbon finance, working with 14 ceramics factories in the region to generate carbon offsets by fueling their kilns with rice husks rather than native wood.

 

North Carolina, c’mon and raise up

The California Air Resources Board (ARB) last week issued 608,000 offsets to seven projects. The majority of offsets – 394,000 tonnes – were issued to the Mattamsuskeet Ventures forestry project in North Carolina. Another 180,000 tonnes of carbon dioxide equivalent (tCO2e) were issued to three livestock projects and one ozone-depleting substances destruction project operated by Environmental Credit Corp. The remaining issuances went to small-scale livestock projects in Arizona developed under early action protocols recognized by the ARB. California’s compliance offset program now includes 70 early action and 40 compliance projects for a total supply of 18.8 million offsets.

 

Nonstop to neutrality

JetBlue will purchase 500,000 tCO2e from Carbonfund.org Foundation to offset the emissions from all of the airline’s flights in April. The offsets will be sourced in part from an avoided deforestation project in Brazil as a part of the airline’s “One Thing That’s Green” annual campaign. JetBlue has worked with Carbonfund.org for the past seven years, and its customers have offset 158,000 tCO2e to date. JetBlue’s head of sustainability Sophia Mendelsohn notes that jet fuel is still crucial to the airline’s operations, so emissions cannot be completely eliminated. “Protecting existing forests is a logical way to fund emissions absorption and helps us all adapt to a changing climate,” she said.

 

SUSTAINABLE COMMODITIES

The best idea since Doritos Locos Tacos

Yum! Brands, which owns KFC, Taco Bell and Pizza Hut, recently announced a zero deforestation policy for its palm oil sourcing. Yum! says it will ban plantation development in high carbon stock areas, setting December 2017 as the target date for establishing safeguards for palm oil sourcing. Greenpeace, which campaigned against the company’s pulp and paper sourcing practices in 2012, said the policy was a “good sign” but the company needs to do more to define terms like high carbon stock. The Union of Concerned Scientists (UCS) also noted that the commitment does not cover third-party vendors that provide baked goods and sauces that commonly include palm oil.

 

Holding out for a forest hero

Archer Daniels Midland (ADM), one of the world’s largest commodity suppliers, plans to release a no deforestation policy at its May 7th annual meeting. The policy will include an assessment of impacts on forests and high conservation value areas, with a particular focus on the Brazilian Amazon and other critical forests in South America. The company plans to work with nonprofit The Forest Trust to map its supply chain. Forest Heroes, a coalition of environmental advocacy groups, commented on the policy: “ADM has shown that they can boost soy production by focusing expansion on degraded land and yield improvement, instead of sacrificing forests.”

 

FINANCE AND ECONOMICS

Head in the clouds

The Food and Agricultural Organization (FAO) and Norway have signed a NOK 35 million agreement (about US $4.5 million) to improve the capacity of developing countries to monitor and report on changes in forest area. The project will facilitate access to satellite imagery, as well as a platform for analyzing the data, using cloud-based software that avoids the need for outdated computers to download data in areas with poor Internet connections. FAO’s Open Foris Initiative developed the software, which can be used without expensive licenses. The technology will be implemented in 13 countries developing activities under the UN REDD program.

 

Beefing up deforestation

Agricultural subsidies worth at least $486 billion annually dwarf the $8.7 billion total that developed countries have pledged to halt deforestation in tropical regions, according to new research by the Overseas Development Initiative. The working paper delved into subsidies in Brazil and Indonesia, which have been pledged 40% of the REDD funding committed to date but also have dozens of subsidies in place for commodities associated with deforestation: beef, soy, palm oil, and timber. The authors of the study suggest that REDD could be used as an opportunity for phasing out agricultural subsidies that incentivize deforestation.

That’ll cost you

Former Brazilian President Luí­s Iní¡cio Lula da Silva spent more than $2 billion on combating deforestation in the Amazon during his 2007 to 2010 term, while current President Dilma Rousseff spent $570 million on the cause from 2011 to 2014, according to a new report by InfoAmazonia. The lower spending was accompanied by a weakening of the Forest Code, the construction of hydroelectric dams, and a slowing in the demarcation of indigenous territories. Deforestation “only garners attention when it is facing a crisis,” said Mauro Oliveira Pires, former director of the Department of Deforestation at the Ministry of Environment, so as deforestation rates in Brazil dropped in the early 2000s, the issue “started to lose political importance.”

 

HUMAN DIMENSION

Anatomy of a commitment

The story of how Wilmar came to make a no deforestation commitment is not one of NGOs campaigning against companies, but rather a story of individuals. A recent piece in Grist anatomizes the 48 hours preceding Wilmar’s historic commitment in December 2013. It began, in some ways, with a letter from Kuok Khoon Hong, Wilmar’s CEO, to Glenn Hurowitz, founder of Forest Heroes, following an interview Hurowitz gave on Bloomberg. “I saw potential in that letter,” Hurowitz said. “I could see there was a seriousness and an openness to him. You know, Wilmar did what they set out to do well. The environment just hadn’t been their top concern. But they didn’t ideologically embrace deforestation.”

 

SCIENCE & TECHNOLOGY

Droning out deforestation

Oxford-based BioCarbon Engineering plans to plant one billion trees per year using drones. The technology will use unmanned aerial vehicles to map terrain, design appropriate planting patterns, and then plant up to 36,000 seeds per day. (In comparison, two human planters could do about 3,000 seeds per day.) BioCarbon Engineering is collaborating with the Brazilian NGO Imozen, with plans to kickstart the planting in either Brazil or South Africa within the next year. The organization won a $1 million United Arab Emirates Drones for Good competition. “We believe that industrial-scale deforestation can only be countered with industrial-scale reforestation,” said Susan Graham, an engineer for BioCarbon Engineering.

 

The naked North

Boreal forests in Russia and Canada lost significant tree cover in 2013, according to new data from Global Forest Watch. Russia lost 4.3 million hectares and Canada lost 2.5 million hectares, in part due to fires increasing in frequency and intensity as the climate warms. Because boreal forests maintain vast carbon stocks in their soils, their loss could facilitate an influx of carbon dioxide into the atmosphere. The data revealed other top deforesters by area as Brazil (2.2 million hectares), the United States (1.7 million hectares), and Indonesia (1.6 million hectares), though Indonesia’s loss was the lowest in nearly a decade.


PUBLICATIONS

The biggest zeros

The UCS has released its 2015 Palm Oil Scorecard that rates major companies on their commitments (or lack thereof) to source palm oil sustainably. Nestlé, Danone, Kellogg’s, Unilever, ConAgraFoods, PepsiCo, Colgate-Palmolive, Henkel, P&G, and L’Oreal all earned scores of 80 or higher, with many brands making significant gains from their 2014 ranking. However, a dozen companies – including The Clorox Company, CVS, Walgreens, Target, and others – earned a ‘0’ score for no commitment to end tropical deforestation. “The scorecard looks behind savvy marketing campaigns and feel-good branding to uncover the environmental impacts these companies condone when they fail to ensure their inputs aren’t harming the environment,” said Lael Goodman of UCS.

 

In the public disinterest

Monoculture plantations continue to drive illegal deforestation in Peru, according to a new report by the Environmental Investigation Agency (EIA). The investigation finds that Grupo Romero is currently the largest palm oil actor in Peru and its planned plantations would result in 25,055 hectares of illegal deforestation. Meanwhile, the Melka Group has requested at least 96,192 additional hectares of public land from the government after having already established 7,000 hectares of illegal plantations. “Procedural loopholes and violations of national law are facilitating palm expansion in the Peruvian Amazon,” the report finds. Peru has announced a potential for at least 1.5 million hectares of palm oil development, but the report finds that this potential is based on an “illogical definition” of suitable land.

 

JOBS

Senior Communications Associate – Forest Trends

Based in Washington, D.C., the Senior Communications Associate will support the Communications Manager in strengthening Forest Trends’ overall communications, with a special emphasis on media and social media outreach. S/he will be responsible for promoting Forest Trends’ work to the media and also generally strengthen the organization’s outreach by cultivating and organizing media contacts and lists, assisting with mailings (primarily electronic) and other forms of outreach, coordinating event logistics, supporting the publication and communications production process, and performing other duties as assigned. Successful candidates will have a bachelor’s degree and three to five years of relevant experience.

Read more about the position here

 

Supply Change Research Assistant – Ecosystem Marketplace

Based in Washington, D.C., the Research Assistant will support Supply Change, a project that provides real-time information on the extent and value of commitment-driven commodity production and demand. The position involves researching public commitments to reduce supply chain impacts on ecosystem degradation, compiling data in Excel, identifying news for the Supply Change web platform, and conducting stakeholder outreach. The successful candidate will have excellent research, organizational and writing skills; an interest in agricultural commodity-related deforestation; and experience with Excel. The position runs for an initial three-month period at a negotiable hourly rate.

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Project Development Coordinator, Uganda – co2balance

Based in Uganda, the Project Development Coordinator will work with co2balance partner Carbon Zero Kenya to deliver carbon reduction projects under the Gold Standard, VCS, and the Clean Development Mechanism. The coordinator must serve as the focal point for coordination with the United Kingdom-based project development team. The position requires proven team management experience, a minimum of three years of work experience in an environment-related sector, and good organization and negotiation skills.

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Senior Program Officer – United Nations Environment Programme, World Conservation Monitoring Centre

Based in Cambridge, United Kingdom, the Senior Program Officer will support decision-making at the intersection of climate change and biodiversity conservation policies, including REDD, biofuels, and ecosystem-based adaptation. The ideal candidate will have experience working at the interface of science and policy as well as leading project implementation. The role involves extensive international networking and collaboration.

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Global Forests Watch Website Assistant – World Resources Institute

Based in Washington, D.C., the Global Forests Watch (GFW) Website Assistant will work closely with the technology and communications teams to maintain the GFW platform and reach target audiences. This will include updating website text, launching campaigns targeted at priority users, and assisting with usability testing. The position requires a bachelor’s degree in environmental science or a related field, a minimum of one year experience, and strong communication skills. Basic programming skills, experience with GitBHub, and knowledge of CartoDB or other mapping technologies are a plus.

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ABOUT THE FOREST CARBON PORTAL

The Forest Carbon Portal provides relevant daily news, a bi-weekly news brief, feature articles, a calendar of events, a searchable member directory, a jobs board, a library of tools and resources. The Portal also includes the Forest Carbon Project Inventory, an international database of projects including those in the pipeline. Projects are described with consistent ‘nutrition labels’ and allow viewers to contact project developers.

 

 

ABOUT THE ECOSYSTEM MARKETPLACE

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

 

 

Additional resources

Global Forum To Highlight Solutions To Water Shortages, Stress And Scarcity

10 April 2015 | With historic droughts playing out in different parts of the globe, it seems that water is at the top of everyone’s mind. For the first time ever, groundwater legislation was introduced in drought-plagued California, shortly followed by mandatory water restrictions. Meanwhile, Sao Paulo, Brazil and Taiwan run dry – perhaps waiting for better water resource management.

But just how to manage this increasingly scarce resource is the constant question among those working in the water space. And the answer continues to evolve as policymakers, practitioners and scientists account for new factors like more people and a changing climate.

Center to the issue of water management is cities-hubs of not only water consumption but food and energy also and key to the water-energy-food nexus. A recent breakthrough regarding water management in cities came in the form of Lima, Peru’s new water tariff. The bill allows for nearly 5% of collected water fees to be devoted to green infrastructure, climate change adaptation and disaster risk reduction. Over a 5-year period, an estimated $112 million will be collected to address these issues. It’s a significant step forward in terms of not only actual progress made but also a huge show of leadership on the side of Peru’s water regulator-SUNASS (National Sanitation Service Superintendence), said Gena Gammie, a Manager in NGO Forest Trends’ Water Initiative

So it’s also a milestone cultivated in part by Forest Trends (publisher of Ecosystem Marketplace) over the past three years through its Watershed Services Incubator, a partnership with the Peruvian Ministry of Environment to develop cost-effective methods that would keep the water flowing in one of the world’s largest desert cities.

One such method under consideration by SUNASS is basically restoring pre-Incan canals, called amunas, which allow water to trickle slowly down the Andes Mountains arriving at the bottom just in time for Lima’s dry season. The amunas funnel water across the mountains instead of directly down. What’s more, a Forest Trends report found that amuna restoration – among other green solutions – is more cost-effective than the gray approaches assessed. And with the significant funding directed to initiatives such as this through the water tariff, the odds are in favor of moving the work on the amunas forward.

The water tariff will show how these green infrastructure approaches can address water scarcity, Gammie said. “It’s one part of the solution that’s been underutilized, but we’re now seeing the policy and mechanisms that can make a difference.”

Every Three Years

It’s a message Gammie plans on taking to the World Water Forum, a major convening of private and public representatives aimed at improving sustainable water resource management, happening this week from the 12-17 in Daegu, South Korea.

Hosted by the World Water Council, an international platform for the future of water, the World Water Forum is a big deal. Occurring every three years, it’s a high-level ministerial meeting that attracts CEOs and other top actors from the private sector as well.

This time, the forum was organized using a participatory process where all participants in the forum develop what are called ‘implementation roadmaps.’ These roadmaps are frameworks clarifying the activities and objectives pertaining to water management that governments and private companies are working on. They all feed into the forum’s four themes: Water Security for All; Water for Development and Prosperity; Water for Sustainability: Harmonizing Humans and Nature; and Constructing Feasible Implementation Mechanisms.

Forum events will address these themes through solutions and new data. For instance, one event addressing the fourth theme will discuss closing a finance gap estimated at trillions of dollars. It’s the gap in finance needed to fix existing water infrastructure that’s decaying and then also to construct new infrastructure that ensures the developing world has access to clean water. The panel will specifically look at identifying indicators to determine the role green as well as multi-purpose infrastructure plays in filling this gap. The indicators can then be used to evaluate finance for sustainable water management, according to the event description.

Tough Questions

What will the top topics of this World Water Forum be? It’s likely the current water shortages will come up in many discussions. “Hopefully, the forum will be able to identify and share some solutions that cities can use to mitigate these crises,” Gammie said.

Another topic related to current events that is sure to make its way into the forum’s dialogues is the Sustainable Development Goals (SDGs) negotiations. The United Nations is set to establish them this year with a singular goal focused on water, among other objectives relating to water.

“The World Water Forum will definitely be informed by those negotiations to help direct its own implementation roadmaps,” Gammie said.

Participants like Gammie expect the SDGs to be a key subject among high-level policymaker discussions asking questions such as how should water be positioned within the SDGs Because of the forum’s focus on water management, ensuring the SDGs adequately encompass all matters surrounding water management to achieve sustainable development will also most likely be debated.

“It’s a big year for the world,” Gammie said, referring to the SDGs. It’s fitting then that the World Water Forum is happening this year as well.

It’s also fitting that Fernando Momiy Hada, the President of SUNASS, will be on hand to discuss the groundbreaking water tariff, which has implications for other cities struggling with their own versions of water stress.

 

Additional resources

Where Chocolate Meets Carbon: One Peruvian Project Finds The Sweet Spot

9 April 2015 | Last November, a group of Dutch business leaders found themselves far away from their desks, standing damp but happy in the Peruvian rainforest. Representatives from development bank FMO, carpet maker Desso, and energy competitors Eneco and Essent were visiting the forest they’d paid to save.

A visit to Madre de Dios in December 2014 brought representatives from Dutch companies to the middle of Sandoval Lake inside the Tambopata National Reserve. | Photograph by Aldo Ramirez

The trip brought them to a 570,000-hectare protected area spread across the Tambopata National Reserve and the Buhuaja-Sonene National Park in the Madre de Dios region, known as the “Biodiversity Capital” of Peru. It earns its nickname by providing critical habitat to threatened species such as the black caiman, harpy eagle, and giant otter. A recent government census puts the human population of Madre de Dios at just under 110,000 – more than 20 times what it was in the 1940s, when gold mining began to draw migrants from the South Andes.

Though they are technically government-protected areas, the forest cover in Tambopata and Buhuaja-Sonene is dwindling, with an estimated 1,189 hectares lost every year. The construction of the South Interoceanic Highway, which started in 2006, has accelerated gold mining, wood extraction, and slash-and-burn agriculture. Migration to the region has also increased, with the city of Puerto Maldonado swelling.

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An informal gold mining camp near the Reserve. | Photo credit: Ecotierra Inc

“What is so depressing is I came to Puerto Maldonado 31 years ago,” said Mark Meyrick, who heads Eneco’s carbon desk. “That town has not changed materially in terms of development in that time. It’s still pretty dusty, still pretty rundown, still doesn’t have much going for it, and yet there has been a huge amount of environmental damage done in that area and I ask myself, to what end? Who has got rich on this? And it’s very difficult to see that anybody has.”

Meyrick’s company has invested in a program that might not make people rich, but will at least help them make ends meet while taking pressure off the valuable forest: the Tambopata REDD project.

Enter REDD

REDD stands for Reducing Emissions from Deforestation and Degradation of forests, and the Tambopata REDD project aims to spur economic activities that are based on the forest’s conservation rather than its destruction – activities such as cocoa production, chestnut harvesting, small-scale fish farming, and low-impact logging.

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The Tambopata REDD project is expected to avoid the emission of 4.5 million tonnes of carbon dioxide into the atmosphere. | Photo credit: Ecotierra Inc

The project took about three years to get off the ground. Project developers first had to identify which portion of the forest was in danger and calculate the deforestation that would occur with and without intervention. They created a detailed project design document that underwent an audit to ensure it met the requirements of the Verified Carbon Standard, the body that would eventually issue offsets, each representing a tonne of carbon dioxide kept out of the atmosphere (delineated as tCO2e).

“Our goal is to avoid the deforestation of almost 12,000 hectares in both natural protected areas in the first 10 years of the project, and contribute to biodiversity conservation and socioeconomic development in the buffer zone,” said Paul Ramirez, the project manager.

But generating the offsets is only the first step. Then they have to sell them.

The market for REDD offsets is currently valued at around $100 million per year, according to Ecosystem Marketplace’s 2014 State of the Forest Carbon Markets report. Governments are currently negotiating how avoided deforestation might be including in an international climate change agreement, but until then the REDD market is entirely dependent on voluntary buyers. Though REDD offset sales are growing, prices are dropping, and last year project developers reported taking home less than 70% of the revenue they needed to keep projects afloat long-term.

A Lifeline

The Althelia Climate Fund had an idea: Why not use REDD offsets as collateral against loans but also design projects to produce deforestation-free products, therefore creating multiple revenue streams? The Fund has raised more than 100 million euros to date from private investors and has attracted the attention of the US Agency for International Development, which last year announced it would guarantee Althelia up to $133.8 million to de-risk avoided deforestation projects.

The Tambopata REDD project was first conceived in 2010, when Althelia was just an idea. Ramirez, then a business manager at the Peruvian sustainable development NGO Asociacií³n para la Investigacií³n y Desarrollo Integral (AIDER), met Christian del Valle and Sylvain Goupille on a scoping trip to Paris to meet with companies interested in carbon finance. At the time, del Valle was the Director of Environmental Markets and Forestry at the French bank BNP Paribas, while Goupille was BNP’s Head of Carbon Finance.

A year later, the pair left BNP to start Althelia.

Althelia’s first investment was in Wildlife Work’s Taita Hills project in Kenya. But soon after, Juan Carlos Gonzalez Aybar, who did a brief stint at AIDER before becoming Althelia’s Latin America Director, started advocating for the project in Peru.

In September 2014, Althelia announced its $7 million investment in the Tambopata REDD project as part of a $12 million initiative. The Peru-U.S. debt swap fund “Fondo de las Americas” committed another $2 million in co-financing.

No Fences Around This Forest

While dozens of avoided deforestation projects are currently being developed around the world, Tambopata is among a subset of REDD projects that explicitly builds sustainable commodities into its business model.

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Slash-and-burn migratory agriculture is the major driver of deforestation in the region. | Photo credit: Ecotierra Inc

“You have two options for avoiding deforestation,” explained Ramirez. “One is to put fences and rangers to keep people out – this option in the long-term is not sustainable. The other, which is actually the good one, is to work with people to change their practices.”

SERNANP, the national protected areas authority of Peru, awarded AIDER a 20-year contract to manage Tambopata and Bahuaja-Sonene – an agreement that allows the non-profit to attract private investment for conservation. Through the REDD project, AIDER aims to work with 1,100 farmers in 19 villages around the buffer zone of the protected regions. These farmers practice migratory agriculture, moving from plot to plot over time and sometimes clearing sections of the Reserve. AIDER seeks to break this cycle by helping them intensify agricultural production on land outside of Tambopata and Bahuaja-Sonene, as well as by planting crops that are lucrative enough that farmers can earn a long-term livelihood from a finite land area.

The NGO helped to form a farmer’s cooperative called Tambopata Candamo, founded in October 2014 with an original 21 members. The cooperative is focused on harvesting, processing and commercializing cocoa, with a goal of maintaining 4,000 hectares of fine aromatic cocoa trees. With AIDER’s help, they’ve invested in infrastructure such as warehouses, dryers and fermentation facilities, and trucks that will transport the processed product to market. Between the chocolate trees, farmers will also plant other cash crops such as bananas and beans.

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Porfirio Garate Uscachi poses in front of the cocoa nursery. | Photo credit: Ecotierra Inc

AIDER is starting small, with a goal of planting just 300 hectares in this first year of the project – a proof of concept that they hope will convert skeptics. The biggest challenge so far has been communicating the concept of payment for performance to local farmers, according to Ramirez.

“It’s [hard] to make them understand that this is not a donation project, because they are used to NGOs coming with projects as grants and they don’t have to give anything back,” he said. “I think that’s why many projects don’t have the impact that they should have: Because people have machines and they don’t take care of the thing because it didn’t cost them. So this is a different project. It’s not a grant project, it’s a business project.”

Business Means Business

Farmers receive financing “on the condition that they won’t deforest anymore and that a share of revenues will go to investors,” Ramirez explained.

In exchange for that promise, the project will pay to get them up to speed for certification by Fairtrade, which ensures fair labor practices and establishes a floor price of $2,000 per tonne of cocoa. Ecotierra, a Canadian-Peruvian company, supports the cooperative with finding a “route to market” – helping overcome the most common barriers facing cocoa farmers in Peru. The real money, however, will come on the back-end.

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Victor Cordoba displays a cocoa fruit. | Photo credit: Ecotierra Inc

The cooperative will receive the majority of the revenues from what AIDER hopes will eventually be at least 3,200 tonnes of cocoa produced each year, certified as both organic and Fairtrade. AIDER expects farmers to earn a $500 premium over the market price because of their organic and Fairtrade certifications.

Premium or not, though, the cocoa industry in Peru is booming. Exports reached $146 million in 2013 and were forecast to rise 20% by 2014, according to the USDA’s Food and Agricultural Service. If cocoa prices hold at 2014 levels of $3,100 per tonne and if the project achieves 3,200 tonnes of annual cocoa production, this would translate into estimated revenues of almost $10 million per year for the cooperative.

The goal for the Tambopata project is to create a roughly equal split between the revenue streams from cocoa and carbon. But the project may lean more heavily on carbon sales in the beginning as the cooperative slowly expands its cocoa production and undergoes the organic and Fairtrade certification processes. Cocoa trees usually take three years to produce their first fruit and eight years to reach peak production. In the meantime, the revenue from the carbon offset sales begins to repay Althelia’s investors.

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The beginning of a new revenue stream. | Photo courtesy of Paul Ramirez

“We are entering into a mechanism which is like any other business,” Gonzalez Aybar explained. “So for the first time, we actually have carbon finance working. You have a carbon asset which is pledged for collateral for a loan and then you have companies that are buying the carbon from the project which serves to pay back the loan – and to make profits on top of that which are shared among the partners.”

The Tambopata REDD project has issued 108,335 offsets to date under the Verified Carbon Standard and is also validated under the Climate, Community and Biodiversity Standard. In addition to the Dutch companies that visited Tambopata last November, a Peruvian insurance company, Pací­fico Seguros, has also purchased offsets from the project, which is expected to avoid the emission of more than 4.5 million tCO2e by 2020.
Today, Carbon. Tomorrow, Commodities?

The trip to Madre de Dios left an impression on the representatives from the Dutch companies.

“I’ve been in the carbon market for 11 years now and the whole reason I came into it in the first place was because of my concern about the loss of biodiversity in the world,” Meyrick said. “So being able to actually get involved in a real project that protected some really key area of the world to me was absolutely massive.”

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Gilberto Santa Rosa Vera, AIDER’s chief agronomist, speaks to the group of visitors. | Photograph by Aldo Ramirez

Gonzalez Aybar admits that a company buying 100,000 carbon offsets “won’t change the world” – nor will it fully support the Tambopata project. But he sees carbon offset purchases as a gateway for companies to begin thinking more holistically about their supply chains and their impact on the environment.

“For example, Desso today makes carpets and tomorrow probably they will be sourcing – I hope – some materials, for example latex, from reforestation projects,” he said. “For companies to start buying offsets is important for the offset itself, but also for the contacts with the projects and the business opportunity it brings.”

The Althelia Climate Fund is set to mature in 2021, at which point investors will be repaid and cocoa production is projected to be in full swing.

“We really try to set up projects where we can catalyze a change into sustainable land use so that when we exit, when we are not there anymore, the project is self-sustainable,” said Edit Kiss, Director of Business Development and Operations at Althelia. “In the case of Tambopata, we estimate that from year six the project will have enough revenues from the cocoa and the carbon revenues will be much less needed, and we really hope that it’s going to be very successful.”

 

Subsidies for Deforestation-driving Commodities Dwarf Conservation Finance New Report

Agricultural subsidies worth at least $486 billion per year dwarf the $8.7 billion total committed to avoiding deforestation in tropical countries, a new working paper by the Overseas Development Institute finds.

6 April 2015 – The race against deforestation is being won or lost hectare by hectare in the tropical rainforest countries that also provide the majority of the world’s agricultural commodities. But subsidies for commodities that drive deforestation may be undermining the efficacy of financial incentives for conserving forests and their carbon content, according to a new working paper by the Overseas Development Institute (ODI), a United Kingdom-based think tank.

Agricultural subsidies worth at least $486 billion in 2012 dwarf the $8.7 billion total that developed countries have committed towards Reducing Emissions from Deforestation and Degradation of forests (REDD+) since 2006, the report finds. However, financial incentives for avoiding deforestation would be much more effective if countries address the heavyweights on the other side of the scale, the researchers, Will McFarland, Shelagh Whitley and Gabrielle Kissinger, argue.

“Instead of raising the cost of GHG (greenhouse gas) emissions or penalizing activities linked to forest loss and degradation, the balance of government support is in the form of subsidies to the production and consumption of the key commodities that are driving forest loss,” they write.

The Big Four deforestation drivers

Alongside population growth and rising incomes, global appetites for deforestation-driving commodities – namely beef, soy, palm oil, and timber – is set to expand over the next few decades, according to research by Forest Trends, Ecosystem Marketplace’s publisher. Agriculture accounts for 70% of deforestation in tropical countries.

The economic signals for clearing forests to make way for agricultural commodities are strong. Brazil is the world’s largest beef producer, with exports contributing $7 billion to the economy – 3% of total export income. Soy covers more than a third of Brazil’s arable land and exports to China, the European Union, and elsewhere earned $26.2 billion in 2010. In Indonesia, palm oil covers a fifth of agricultural land and exports reached $17.6 billion in 2012, with timber contributing another $10 billion.

As the top two deforesters in the world by land area cleared annually, Brazil and Indonesia are ground zero for figuring out how REDD+ financing can work with existing policies. Deforestation currently accounts for up to a fifth of global GHG emissions and preventing further deforestation is one of the most effective levers to pull to mitigate climate change in the short term, according the United Nations Framework Convention on Climate Change (UNFCCC).

 

Expanding cattle pastures and soy fields are the main drivers of deforestation in Brazil. In Indonesia, it’s palm oil and timber plantations that are encroaching on forests.

Competing incentives

Governments have various motivations for putting subsidies in place, the ODI study finds. Subsidies may aim to ensure food security, create energy security by encouraging homegrown biofuel production, or serve as temporary buffers against commodity price shocks. But once in place, subsidies are difficult to remove – even if they have outlived their original purpose. Interest groups that benefit from subsidies lobby for their persistence, and governments often keep subsidies in place to garner political support, the researchers find.

Subsidies may accelerate environmental degradation in various ways, the ODI paper argues. They may draw more investment to industries such as beef and palm oil than the market would otherwise support. They may lower the cost of consumption of agricultural products, leading to overconsumption. They may remove incentives for natural resources industries to operate efficiently. And, if commodities are sold below market price, they may deprive domestic governments of tax revenue that could otherwise be invested in enforcing conservation regulations.

 

Incentives for agricultural production dwarf those for avoiding deforestation in Brazil and Indonesia. | Source: Overseas Development Initiative, Subsidies to key commodities driving forest loss.

The working paper identifies eight beef and 16 soy subsidies in Brazil and 19 soy and 10 timber subsidies in Indonesia.

Brazilian cattle farmers have access to loans worth an estimated $218 million per year, and the below-market interest rates are credited with significantly reducing costs for producers. Brazilian soy growers have benefitted from about $540 million annual investment in roads, railways, and ports that help them get their product to market.

In Indonesia, developers benefit from about $800 million in annual concessional loans to develop commercial plantations for pulp and paper, with a government goal of establishing plantations across nine million hectares by 2016. Subsidies for smallholders palm producers led to the proliferation of palm oil plantations over an additional two million hectares between 2000 and 2009. A domestic mandate to produce fuel with at least 7.5% biofuel content is also encouraging palm expansion.

Overall, “levels of REDD+ finance stand in stark contrast to domestic subsidies, with average annual domestic agriculture subsidies in Brazil and Indonesia exceeding REDD+ finance by factors of 70 and 164 times, respectively,” the ODI paper finds.

Reweighting the scales

REDD+ financing could be used in part to reform subsidies to key commodities in a way that avoids further forest loss, the ODI paper suggests. In fact, the researchers identify examples of subsidy reforms that have already addressed the drivers of deforestation. The most successful example, according to the paper, is Brazil’s reform of its rural credit system in 2008 to require compliance with legal and environmental requirements. This resulted in an estimated $1.4 billion not loaned to out-of-compliance farmers between 2008 and 2011. The majority of this finance would have gone to supporting illegal beef production, leading to an estimated 15% increase in the rate of forest loss during those years.

There are also opportunities for subsidies to work harder in forests’ favor, according to ODI, particularly when it comes to intensification, or producing the same yields on less land area and with fewer inputs. Indonesia’s current palm oil yields of 3.8 tons per hectare fall below Malaysia’s yields of 4.6 tons per hectare. Smallholders in particular lag behind the productivity of private or government-owned plantations, indicating that with technology and financial support, smallholders could increase output without expanding plantations into the forest.

The ODI paper argues that these opportunities to shift the economic incentives around agriculture and forests should be an essential part of REDD+ process, both by phasing out or reforming subsidies that encourage deforestation and by designing any new incentives for REDD+ so that they complement other domestic efforts to shape private investment.

“There is current momentum on subsidy reform,” the authors write, citing countries’ emerging climate plans under the UNFCCC as well as the UN Sustainable Development Goals being developed for post-2015 as potential opportunities to rejigger agricultural subsidies to align with low-carbon development objectives.

Another key opportunity comes with the pending disbursement of the $10.2 billion in developed country pledges to the Green Climate Fund (GCF) established under the UNFCCC to support emissions reductions projects in developing nations. Norway, a major donor country, sees the GCF as an important channel for distributing REDD+ finance.

Thus far, finance for REDD+ “readiness,” or activities that will prepare countries to receive payments on the condition of successfully reducing deforestation, have not focused on changing subsidies connected to deforestation. However, this doesn’t have to be the case, the ODI paper argues.

“REDD+ finance could be used as a resource to support transparency, and as a lever to encourage subsidy reform,” the authors write.

Additional resources

The Climate Trust: Blazing The Oregon Carbon Trail

When Oregon-based The Climate Trust (TCT) was tasked with identifying and securing offsets back in 1997, there were precious few to find. This challenge shaped the organization as it stands today: TCT continues to trailblaze with new methodologies and innovative financing solutions, including a potential green bond to fund carbon offset projects.

2 April 2015 | With all eyes turned to California, it’s easy to forget that the state’s northern neighbor actually passed the first state-level legislation to curb carbon dioxide (CO2) emissions in the United States (US).

The Oregon Carbon Dioxide Standard, passed in 1997, requires new energy facilities in the state to meet an emissions standard 17% below the best-existing plants in the US. Effectively, this means that power plants have to either adopt mitigation technologies on-site or purchase offsets generated from off-site projects.

As might be expected, the new power plants were hardly pleased about venturing outside their expertise and into the nascent carbon market of that time. In response, the state offered a third option: a “monetary path”, where plants could provide funding to a state-recognized non-profit that would select and manage carbon reduction projects on their behalf.

To date, every regulated entity has chosen this path, which marked the beginnings of The Climate Trust (TCT).

Starting from Scratch

TCT has been the only non-profit to take up Oregon’s offer to work as a recognized carbon offset manager. Yet even without competition, trust officials had their work cut out for them, as carbon projects were more of an idea than actuality back in the 1990’s.

When the organization received its first contract from a new power plant back in 2001, it had only two years to commit $600,000 to projects. There was only one problem: “When we first started getting money, there wasn’t a lot [of projects] out there,” said Sheldon Zakreski, Director of Programs.

TCT’s unique funding structure meant that the organization “sees part of our role as improving capacity building. Through the Oregon program, we are in a position where we can afford to look at new standards.” This unusual combination of guaranteed funding, but quick turnaround demands resulted in an organizational culture that embraces trailblazing to this day.

Yet while the monetary pathway offers a windfall of cash, there’s a catch: the funding only appears with the construction of a new power plant. “It’s a boom-and-bust cycle,” said Dick Kempka, Vice-President of Business Development. “We went two to three years without money; then two facilities were announced, and we were flush with money again.”

Given this particular challenge, TCT decided to start consulting and looking into other revenue sources about four years ago. Those sources were easy enough to find: corporate buyers had expressed interest in offsets, believing that if they were good enough for a regulated market, they were good enough for voluntary purchases. But it was California’s announcement of an offset market that sealed the deal for TCT’s expansion. It created demand outside of Oregon, and, starting back in 2008, the organization began to actively invest in projects located beyond the state’s boundaries.

Now, the organization has invested in over 40 projects and delivered more than two million tonnes of emissions reductions. A number of these projects have introduced new methodologies into the marketplace, including a wetlands methodology in the US Gulf Coast and biochar methodology now recognized by the American Carbon Registry (ACR).

However, the trust doesn’t work on the ground on these projects. Rather, the organization enters into a contract with the project developer and provides upfront, early stage, or pay on delivery financing. That early-stage financing carries a risk – especially with untested methodologies – but the organization’s 15 years of experience has come in handy in picking successful projects.

So far, TCT has a 3.9% default rate for all of its Oregon program contractual commitments. In these cases, a “default” was defined as instances where the upfront funding provided wasn’t recouped in cash paid back and/or offsets supplied. The Blue Heron Energy Efficiency Project is one of six such projects, with TCT providing $500,000 in upfront financing and receiving only 70% of the contracted offsets once the mill filed for bankruptcy.

Seeing the Grasslands for the Ducks

TCT’s latest collaboration typifies recent projects as it involves a new methodology and collaboration across organizations. In this case, TCT partnered with Ducks Unlimited, Bonneville Environmental Foundation and Chevrolet.

Ducks Unlimited, the non-profit organization dedicated to preserving waterfowl and their habitat, had dabbled in carbon finance in the early 2000s. But it wasn’t until 2008 that the organization really started looking into scaling up its Prairie Pothole Avoided Conversion of Grasslands and Shrublands project. Officials engaged with local livestock landowners to increase the area of the project and then looked into developing a protocol.

Partnering with TCT made sense, said Billy Gascoigne, Economist/Environmental Markets Specialist at Ducks Unlimited, because the organization was waddling into unfamiliar territory. Ducks Unlimited’s primary expertise is, well, ducks. Not carbon pricing or marketing. And the organization made too much of a substantial investment into the project for it to fail because the offsets couldn’t be sold.

TCT knew how to work with a project from start to finish. The finish was especially important for the voluntary market, given that project developers often need to do a lot of legwork to find a buyer. Those were key components, Gascoigne said, especially since The Climate Trust knew how to market offsets and talk with the registries.

The connection was made through Dick Kempka, Vice-President of Business Development at TCT, who previously worked at Ducks Unlimited. He believed in the project’s potential to scale up, and its marketability for corporate buyers. Kempka’s belief in the project paid off when nearby Bonneville Environmental Foundation approached with an interest in securing offsets on behalf of Chevrolet.

Chevrolet didn’t provide money upfront, but the early expression of interest helped Ducks Unlimited with other financing. The methodology still took three more years before it was approved by ACR.

Officials at the automotive company weren’t surprised by the length of time required. Though primarily a buyer, Chevrolet had also ventured into methodology development with its Campus Clean Energy Campaign (spawning the similarly named Verified Carbon Standard-approved Campus Clean Energy and Energy Efficiency methodology), which took two years to gain approval. David Tulauskas, director of sustainability for General Motors, Chevrolet’s parent company, said the automaker prefers to buy from first-of-its-kind projects and those with an impact on local communities – boxes that the Ducks Unlimited project checked.

The Next Frontier: Green Bonds

Despite the success of this and other new projects, Kempka said, “I think we’ve transitioned our philosophy where it’s not as likely we would get as involved with this early-stage methodology development anymore.”

The organization wants to lessen its vulnerability to boom-and-bust financing cycles. When Executive Director Sean Penrith joined back in 2013, he was tasked with determining a new path for The Climate Trust. After two years of introspection, he decided that TCT had three exceptional skills: scoping investable projects, stewarding projects to completion, and commercializing projects.

“In short, I realized that we are very good carbon fund managers,” he said. So instead of investing in new projects as usual, Penrith has his eye on funding something more novel: green bonds.

With $25 million ready to invest, The Climate Trust would be able to attract investors to create a larger pool of money. The organization would then channel the proceeds into the forestry, grassland conversion and other landscape carbon offset projects that TCT excels at via bonds, which typically last for 5-10 years. The organization would sell carbon offsets into the compliance and voluntary carbon markets and thus repay its purchasers.

The Climate Trust is now actively exploring the possibility of a green bond as Penrith believes that the timing is ideal. Bond rates are low, and green bonds are predicted to balloon to $100 billion this year (compared to $35 billion last year, according to Bonds and Climate Change: The State of the Market in 2014). Existing green bonds are typically oversubscribed and sell out within a few hours.

“The reason we ended up with a climate bond is we see it as a large, fairly untapped reservoir of willing and interested capital,” Penrith said. “It’s an amazing intersection between the environment and institutional capital demand. It’s low interest, and it’s pretty timely given the current bond market rates.”

For next steps, the organization plans to use 2015 as a pilot year. TCT plans to invest some of its own capital in addition to partners’ capital, with the hope of demonstrating a successful proof of concept. “If that’s successful, we would look at tripling or quadrupling that size in the subsequent year and thereon. We want to get to the point where we’re managing issuances of $250 million per issuance.” Penrith said.

“We’re really taking a bet – we are not cavalier, very prudent, but what we’re saying is that the currency of carbon is going to increase in its value, it’s going to become increasingly common, widespread, used, managed, monitored and exchanged. We really believe that in the next five years, the time for carbon currency has come.”

 

Additional resources

This Week In V-Carbon: A Little Myth Busting

A new Ecosystem Marketplace report set out to determine how carbon offsetting fits into corporate carbon strategies and found that 14% of businesses disclosing climate change information purchased offsets. Among many significant findings, the report dispels the myth that companies buying carbon offsets do so to avoid making climate commitments.

This article was originally posted in the V-Carbon newsletter. Click here to read the original.

 

March 26 2015 | What do automaker General Motors, bank Barclays, cosmetics company Natura Cosméticos, and retailer Marks & Spencer have in common? They’re all leading voluntary buyers of carbon offsets, investing in emissions reductions projects outside of their immediate operations.

Fourteen percent of all companies publicly disclosing climate change information to CDP (formerly the Carbon Disclosure Project) purchased offsets in 2013 and 2014, according to a new report by Ecosystem Marketplace. The Bottom Line: Taking Stock of the Role of Offsets in Corporate Carbon Strategies looked at data from 1,882 corporate climate disclosures to better understand the prevalence of offsetting and how it fits into companies’ overall carbon management strategies.

 

The results dispel the misguided myth that offsetting is a way for companies to dodge climate commitments. In fact, offset buyers tracked by CDP spent $41 billion in 2013 on emissions reductions other than offsetting, undertaking all of these carbon-saving initiatives – from energy efficiency in buildings to employee engagement programs – at a higher rate compared to companies that didn’t purchase offsets. The typical offset buyer slashed almost 17% of their Scope 1 (direct) emissions while non-offset buyers reduced Scope 1 emissions by less than 5% in the same year.

 

“There’s a common misperception that offsetting is a way for companies to ‘buy their way out of the problem,'” said Allie Goldstein, Senior Carbon Associate at Ecosystem Marketplace and the author of the report. “But when you dig into the CDP data, it’s clear that offset buyers are actually just using more tools at their disposal to reduce emissions, and they’re investing in these activities at a higher rate compared to companies that don’t offset.”

 

Offset buyers have disproportionately large Scope 3 (indirect) emissions, the report finds, and offset purchases may be a way to address “upstream” supply chain emissions and “downstream” product use emissions that are difficult to get at in other ways. Customers’ use of sold products – encompassing everything from burning gas to operating computers to refrigerating food products to even using inhalers – accounts for more than 70% of Scope 3 emissions, according to CDP disclosures.

 

To fund emissions reductions projects, many companies – such as Japanese camera-maker Canon – have dedicated budgets for their offset portfolios. Forty-five offset buyers – including Microsoft, The Walt Disney Company, TD Bank, Aviva, and Barclays – have set an internal price on carbon, charging their business divisions according to their respective emissions. Offset buyers are five times as likely as non-offset buyers to use an internal price on carbon to drive emissions reductions within their company.

 

On average, offset buyers are also more concerned about regulatory and reputational risk. Nedbank, the first carbon neutral bank in Africa and an investor in Africa-based avoided deforestation offsets, reports that “climate change ignorance will translate into reduced shareholder value.”

 

A similar set of motivations may be driving the hundreds of companies that have committed to eliminate tropical deforestation from their supply chains. Join us this Wednesday, March 25th for the launch of Supply-Change.Org, which documents companies’ public pledges to source palm oil, soy, cattle, and timber & pulp without chopping the world’s remaining rainforests. Supply-Change is convened by Forest Trends, with Ecosystem Marketplace, CDP and WWF as strategic partners. The webinar launch event will include speakers from all three organizations as well as representatives from Marks & Spencer, Calvert Investments, and others.

 

More news from the voluntary carbon markets is summarized below, so keep reading!

 

—The Editors

 

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If you value what you read in this news brief, consider supporting Ecosystem Marketplace’s Carbon Program as a Supporting Subscriber. Readers’ contributions help us keep the lights on and continue to deliver voluntary carbon market news and insights to your inbox biweekly and free of charge. For a suggested US$150/year donation, you or your company can be listed as a V-Carbon News Supporting Subscriber (with weblink) for one year (~24 issues). Reach out to inboxes worldwide and make your contribution here (select “Support for Voluntary Carbon News Briefs” in the drop-down menu).

 

For comments or questions, please email: ggonzalez@ecosystemmarketplace.com

 

Announcements

Sleeker, jam-packed report seeks generous sponsors

We’ve now closed data collection for our State of the Voluntary Carbon Markets 2015 report – thanks to the hundreds of organizations that responded to our survey this year! We’re now delving into analysis of the results, looking at the motivations of voluntary buyers; how offset prices varied by project type, location, and standard; and emerging trends among project developers and investors. Interested in supporting this work? Last year’s report has been downloaded 53,000 times and informed consultations with noteworthy private sector stakeholders ranging from IFC to Nestlé regarding the structure of their sustainability policies and offset purchases/investments, as well as governments designing carbon pricing programs – including South Africa, South Korea, and Japan. In addition to logo placement on the cover, we offer Sponsors tailored pre-launch consultations on the findings, as well as other benefits. Check out our SOVCM Sponsorship Prospectus and get in touch with Gloria Gonzalez at ggonzalez@ecosystemmarketplace.com for more details.

 

How business can tackle deforestation – Understand deforestation risk, benchmark your policies and collaborate effectively with NGOs

How business can tackle deforestation is part of a global series of events combatting deforestation – this stage taking place in Washington, D.C. on April 14th-15th. By bringing together the corporate practitioners and NGOs that make a difference, the conference is designed to discuss the trends, debate the issues, connect the key players and drive change in the deforestation space. Already confirmed to participate are senior executives from the likes of Target, 3M, Greenpeace, Staples, Walmart, McDonald’s, Kimberly Clark, Wilmar, Johnson & Johnson, Dunkin’ Brands and many more. You can see the full details here.

 

Sustainable Brands ’15 San Diego

Reinvent yourself in response to changing norms. We know the world is changing – transparency is driving a multitude of stakeholders to connect the dots between brands and their positive or negative environmental and social impacts. The demand for brands to deliver purpose is soaring and resilient brand leaders will thrive. Dive deep into the brand innovation trenches with companies like Coca-Cola, Target, HP, BASF and others to explore and learn How you can successfully innovate your brand for sustainability Now. Join global business leaders for SB’15 San Diego, CA, June 1-4, 2015. www.SB15sd.com

20% Discount Code for your Member Network: NWemSB15sd

 

No Plan B necessary
One of the biggest voluntary buyers of carbon offsets in Ecosystem Marketplace’s new demand-side report, British retailer Marks & Spencer (M&S) has no plans of slowing down. The company’s first sustainability plan – known as Plan A – launched in 2007 and established 100 commitments to achieve in five years, among these a carbon neutrality goal. To meet that goal, M&S first started lowering its own emissions through energy efficiency improvements and renewable energy use and then turned to offsetting. Its partnership with The CarbonNeutral Company and UNICEF on a clean cookstoves program in Bangladesh has had such a positive impact that the company has now joined with the Global Alliance for Clean Cookstoves to promote similar projects. The new Plan A, targeted for 2020, seeks to make M&S the world’s most sustainable retailer.Read more from Ecosystem Marketplace here

 

Voluntary Carbon

Coming up roses

A multi-stakeholder collaboration between retail and wholesale firm Coop, South Pole Group and the World Wildlife Fund was able to offset the emissions of all goods that Coop imported by air to Switzerland. The collaboration invested in a project to distribute efficient cook stoves to Maasai villages in Kenya. The villagers represent the majority of employees at Oserian Flower Farm, the Kenyan-based producer of Fair Trade-certified roses. The initiative focused on reducing emissions from cook fires, reducing harmful illnesses, and halved demand for firewood in the area. The project has been validated under Gold Standard’s multi-country improved cookstove program of activities (PoA).

Read more here

 

Climbing up the carbon hill

County commissioners in Hillsborough County, Florida discussed the potential for selling carbon offsets generated by restoration activities underway at county conservation lands. Commissioner Al Higginbotham proposed directing the money generated by possible offset sales toward the $2.7 million annual cost of maintaining the county’s 61,500 acres of conservation land. Hillsborough first explored the idea of carbon offsets in 2011, with the study determining that offsets should be generated as part of restoration activities on conservation lands.

Read more here

 

Compliance Carbon

The Garden State is the biggest loser

The Regional Greenhouse Gas Initiative (RGGI) surged past the $2 billion mark in total revenues generated under the Northeast carbon trading program after RGGI’s first quarterly auction of 2015. The 15.2 million allowances sold for $5.4 per ton of carbon dioxide emitted, which generated over $82 million for clean energy and consumer benefits. But the quarterly auction proceeds were the lowest since late 2012 because RGGI offered fewer allowances as emissions decline across the region. The state of New Jersey is losing out in a big way, according to U.S. Representative Frank Pallone Jr., as Governor Chris Christie’s decision to withdraw from RGGI in 2011 has cost the state an estimated $114 million, with additional projected losses of $387.1 million through 2020.

Read more from Clean Technica here
Read more from NJ.com here

 

Transcontinental Trading

In California and Québec’s latest joint auction, the US state raised $629.5 million, bringing California’s total revenue from 10 auctions to almost $1.6 billion, while the Canadian province raised $150 million. California’s proceeds from the auction are put into a state account dedicated to funding clean energy programs, including Governor Jerry Brown’s high-speed rail project. About 84 million allowances sold for just over $12 per tonne (tCO2e) in the second auction for the now-linked jurisdictions, which some believe could serve as a template for a global carbon market.

Read more from Reuters here
Read more from Business Spectator here

 

No lumps of coal from Santa this time

Montreal-based Biothermica Coal Carbon, one of the first developers to receive offsets issued by the California Air Resources Board under the new coal mine methane protocol, sold all 80,766 offsets for Canadian $860,000, or about US $672,934. If you do the math, this results in a price of about $8.3/tCO2e. While this price would be on the high side of the voluntary market, it is nearly $1.4/tCO2e below the current spot market for California carbon offsets. The offsets were generated by the destruction of methane – a greenhouse gas 25 times more potent than CO2 – emitted by the ventilation system of Jim Walter Resources’ underground coal mine located in Alabama.

Read more from ICIS here
Read more from PR News Wire here

 

The United States of Carbon Trading

Duke University’s Nicholas Institute for Environmental Policy Solutions released a new paper suggesting that states adopt “common elements” that would allow them to participate in cross-state carbon trading systems to reduce power-sector emissions from greenhouse gases. The paper suggests states could develop their own targets for emissions reductions, rather than a multi-state shared target, and allow electricity generators to trade compliance permits with generators in other states. Robert Stavins, a Harvard University economist, called the idea “cap-and-trade from the bottom up, rather than the top down.”

Read more from E&E Publishing here

 

The EU ETS giveth, the EU ETS taketh away

The European Parliament’s Environment Committee recently voted to place unallocated carbon allowances into the reserve, which would introduce flexibility into the European Union Emissions Trading System (EU ETS) and help address the projected surplus by 2020 of two billion allowances. Questions remain about the potential for volatility in the market resulting from the release of unallocated allowances from the New Entrants Reserve and from closures of installations that previously held allowances. The International Emissions Trading Association said these excess allowances should be placed directly in the Market Stability reserve.

Read more from IETA here

NATIONAL POLICY

 


Delegating far and away

Norway is betting it will be easier to cut carbon emissions abroad than at home, and may pay 1.5 billion euros for emission cuts in European Union (EU) nations, or elsewhere if international climate negotiations fail, through 2030. Norway is not an EU member, but it is the region’s second biggest oil and gas supplier and participates in the EU’s carbon market for certain industries, including oil and gas production. Norway adopted a plan to cut emissions by the equivalent of 40% below 1990 levels by 2030, and the offsets they purchase will be used to meet this goal. This plan may boost EU carbon prices, which have fallen 81% since 2008, and could help reduce the current surplus of offsets in the EU market.

Read more from Bloomberg here

 

Carbon Finance

In China we trust

China will launch its first carbon-dedicated trust fund in an attempt to lure investors into fledgling CO2 markets. The trust fund, managed by CMB Sinolink Investment, a subsidiary of China Merchants Bank, reached a total of 50 million yuan in the first 18-month phase, and plans to raise another 300 million yuan this year. “We are targeting secondary trading in both permits and offset credits, and project development in the primary market,” said fund manager Pang Binfeng. Across China, more than 2,000 companies are now obligated to participate in the seven separate CO2 markets.

Read more from the Business Times here

 

If it sounds too good to be true…

Eco Business Management has been ordered closed by the High Court in Britain. The firm was ordered to liquidate after investigators found it sold overpriced carbon offsets and falsely claimed that investors would receive returns of up to 82% within six months to two years. The company was found to be related to Eco Asia Carbon Consultancy – a firm identified on the United Kingdom’s Financial Conduct Authorities’ scam warning list. Because the company did not need to prove an identity or address to register, there is little chance of quickly catching the responsible individuals.

Read more here and here.

Read more from This is Money here
Read more from Money Observer here

 

Standards & Methodology

Under the peat sea

Permian Global, Wetlands International, and Silvestrum revised the Verified Carbon Standard’s REDD+ methodology to include projects that address deforestation of tropical peat forests and projects to restore damaged peat lands. The methodology now includes six modules for determination, quantification, and monitoring of the baseline carbon stock changes and project emissions associated with peat land conservation and restoration. Peat forests in Indonesia store, on average, 2,009 tonnes of carbon per hectare.

Read more from Mongabay here
Read more from VCS here

 

Science & Technology

What’s on your phone?

The proposed “PayC” app is hoping to use crowd funding on Kickstarter to build a pay-as-you-go carbon offsetting platform. The developers will allow users to elect how much time they want to offset and will calculate their total emissions in that time period using rates based on the per capita emissions of their country. The app will allow users the choice to purchase offsets from United Nations’ registered projects, or from emissions trading schemes such as EU ETS.

Read more on Kickstarter here

Senior Communications Associate – Forest Trends

Based in Washington, D.C., the Senior Communications Associate will support the Communications Manager in strengthening Forest Trends’ overall communications, with a special emphasis on media and social media outreach. S/he will be responsible for promoting Forest Trends’ work to the media and also generally strengthen the organization’s outreach by cultivating and organizing media contacts and lists, assisting with mailings (primarily electronic) and other forms of outreach, coordinating event logistics, supporting the publication and communications production process, and performing other duties as assigned. Successful candidates will have a bachelor’s degree and three to five years of relevant experience.

Read more about the position here

 

Research Assistant, Carbon Group – Ecosystem Marketplace

Based in Washington, D.C., the Research Assistant will be able to commit to 35-40 hours per week to support a range of activities under the Ecosystem Marketplace Carbon Markets Program, including supporting the development of the State of the Forest Carbon/Voluntary Carbon Markets reports. The ideal candidate will have a graduate degree, an interest in conservation finance/payments for ecosystem services and basic knowledge of the carbon markets or another ecosystem service market; excellent writing, verbal communications, research and organizational skills; and excellent working knowledge of Microsoft Excel.

Read more about the position here

 

Managing Director – West Africa, Envirofit International

Based in Lagos, Nigeria, the Managing Director will oversee and grow Envirofit’s operations, sales and business development within the West Africa region. Successful candidates will have a bachelor’s degree or master’s of business administration, plus 10 years of experience with a proven track record and expertise in business development, manufacturing, supply chain management, sales, distribution and business growth in Africa.

Read more about the position here

 

Senior Program Associate – Sustainable Finance, ClimateWorks Foundation

Based in San Francisco, California, the Senior Program Associate will help build the sustainable finance strategy and execute key priorities under the direction of the Program Director to develop a philanthropic strategy to shift investment away from fossil fuels and into clean energy. Successful candidates will have five to seven years of experience supporting programs, and two to three years of experience in finance or related sector, advanced degree in business, finance, or other relevant field preferred.

Read more about the position here

 

Manager – Strategic Planning, ClimateWorks Foundation
Based in San Francisco, California, the Manager will work with senior leadership to design, compile, and maintain an ongoing database of historic, current and future funding for climate change mitigation strategies. Successful candidate will have over three years of experience in an analytical or consulting role, exceptional analytical and programming skills with two to three years of advanced Excel experience. A graduate degree in a field such as business, finance, accounting or information science or equivalent work experience required.Read more about the position here

 

Team Leader – Agricultural Waste Management, SNV Vietnam

Based in Hanoi, Vietnam, the Team Leader will support the Low Carbon Agricultural Support Project which is aimed to reduce air, water, and soil pollution with emphasis on treating livestock wastes through use of biogas and bio-slurry processing technologies. The successful candidate will have a relevant university degree in agriculture, management or a relevant discipline and at least 10 years of experience in project implementation management in a developing country.

Read more about the position here

 

Partnerships and Communication Director – Nexus-Carbon for Development

Based in Phnom Penh, Cambodia, the Partnerships and Communication Director will develop, manage and maximize the potential of current and new partnerships, in addition to overseeing the development and implementation of the organization’s communication strategy. Successful candidates should have an established network of engaged corporates and understanding of corporate social responsibility.

Read more about the position here

ABOUT THE ECOSYSTEM MARKETPLACE

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

 

Additional resources

New Site Tracks Corporate Action on Deforestation

25 March 2015 | The earth loses more than 6 million hectares of tropical rainforest – an area the size of Sri Lanka – every year, and two-thirds of it goes to meet demand for palm oil, soybeans, beef, and wood products, according to environmental NGO Forest Trends. At the same time, new Forest Trends research finds that companies worth nearly US$4 trillion have promised to reverse their role in degrading the world’s critical ecosystems. At least one third of these new pledges were made in 2014, nearly doubling 2013’s announcements.

These private sector actions are encouraging, but how realistic are the promises? How many of these promises are being kept? What challenges are businesses encountering?

To answer that, Forest Trends’ new platform Supply-Change.org lets users track the actions that companies are reporting against the promises they’ve made – in near – real time. Initial findings are summarized in “Supply Change: Corporations, Commodities, and Commitments that Count”, an easy-to-read, 32-page report based on the project’s current inventory of over 300 unique commitments – about one-third of which are targeted for achievement this year – from almost as many companies.

Mining Supply-Change.Org’s growing dataset, the report finds that well over half of forest-risk commodity commitments are tracked from companies in the food and beverage industry. The data also shows that corporate leadership has a multiplier effect: one commitment from a major retailer (think Walmart or Marks and Spencer) spurs another three commitments from their suppliers upstream.

The project, launched by the Forest Trends initiative Ecosystem Marketplace in collaboration with the World Wildlife Fund (WWF) and CDP (formerly the Carbon Disclosure Project), combines Forest Trends’ environmental markets expertise with WWF’s experience in supply-chain sustainability and CDP’s global collection of corporate environmental data.

“Transparency through public disclosure is a valuable tool for the world to gauge the corporate community’s progress in eradicating deforestation from key agricultural inputs,” says Michael Jenkins, Forest Trends Founding President and CEO. “These new relationships that underlie Supply Change harness the strength of our complementary skills to provide investors and other decision-makers with free access to information that will accelerate the transition to a zero deforestation economy.”

“We are seeing increasing awareness of the impact on businesses of deforestation risk and recently a growing trend for commitments to combat this. We are delighted that this new initiative further underlines the need for consistent corporate disclosure to CDP on the impacts of deforestation,” says CDP’s chief executive officer Paul Simpson.

“We believe that consumers should only have sustainable choices. To accomplish this, we need to completely rethink the way products are made, from the bottom up,” says Jason Clay, senior vice president of markets at WWF. “Corporate supply chain commitments send an unmistakable signal: ‘If you want to work with our company, the environment must be top-of-mind.’ Large corporations have the greatest leverage to shift whole industries, which is why supply chain commitments are so critical to our evolution to a market place full of sustainable choices.”

The Supply Change web platform (www.supply-change.org), including pilot company profiles and an initial findings report –Supply Change: Corporations, Commodities, and Commitments that Count – will be publicly launched on March 25, 2015.

Supply Change is powered by CDP and WWF data and insights; and financially supported by the Climate and Land Use Alliance (CLUA), Earth Innovation Institute, Global Environment Facility, JPMorgan Chase & Co., the Norwegian Agency for Development Cooperation, and the World Bank’s Program on Forests.

 

Additional resources

Commodity Roundtables: Green Gatekeepers Or Dirty Doormen?

2 April 2015 | King Arthur is supposed to have invented it, and he and his Knights are believed to have congregated around it: the table that has no head so that everybody at the table has equal status – the Roundtable.

Fast-forward to the 21st century, and Roundtables are springing up like mushrooms – particularly in the world of sustainability, where we have the Roundtable for Responsible Palm Oil (RSPO), the Roundtable for Responsible Soy, the Global Roundtable on Sustainable Beef (GRSB), the Better Sugar Cane Initiative (Bonsucro), the Roundtable on Sustainable Biofuels, and the Better Cotton Initiative – to name just a few. They’ve been in existence for nearly a decade, and are designed to forge consensus on how to more sustainably harvest some of the planet’s most environmentally destructive but economically lucrative crops.

Their track record is mixed, and critics argue that the standards they set are “low and ambiguous”, not binding, and that market transformation becomes too industry-friendly or, in the case of Roundtable for Sustainable Palm Oil, are not even worthy of being called “sustainable”  as they do not effectively protect secondary areas and peat swamps from the risk of deforestation.

Even those creating the standards will admit that they present the bare minimum of what is necessary, but producers – both smallholders and large-scale producers – hold the view that the requirements are too tough.

Still, the RSPO gained credibility as a self-regulatory organization earlier this month when it disciplined over 100 members who failed to submit an annual report. Fifteen of them were expelled immediately because they hadn’t submitted reports for three years or more, and 62 others were given 30-day warnings for going two years without filing.

“We hope that this is a sign that the RSPO and its membership are now taking seriously not only the need to report progress but also to show progress” said Adam Harrison, WWF’s lead on palm oil. “The duty to continuously improve performance is central to the founding vision of the RSPO, and this applies not only to the organization as a whole but more importantly to its individual members.”

He added, however, that only 57 of the 119 registered growers in the RSPO have any certified mills.

“That leaves more than half of them making no progress on their commitments,” he said. ”Additionally, only a little over two-thirds of the 1500 RSPO supply chain member companies are currently certified to actually use CSPO.”

The Roundtable Concept

At the root of these Roundtables lies the recognition that with global population said to be approaching 9 billion by 2050, the demand for food, fuel, feed, and fiber is continuously and relentlessly increasing – and with it the need to ensure these resources remain available in the future.

Since these resources are used by 7 billion consumers and produced by 1.4 billion producers, influencing the sustainable production is no small feat. Enter the commodity roundtables which, instead, target those companies that control a significant portion of the commodities demand trade, leveraging almost half of the production. To streamline this process even further, the idea was born to convene groups as a platform for convening different stakeholders – producers, processors/traders, manufacturers, retailers, bankers/investors, members of civil society to develop and implement standards for the sustainable production of their respective commodities – around the concept of sustainable commodity production.

Beyond this common goal, the work of the various roundtables differs considerably.

Different Approaches

Some of these efforts, such as the Global Roundtable for Sustainable Beef, limit their goals to facilitating “a global dialogue to advance continuous improvement in the sustainability of the global beef value chain.” Others, such as the Roundtable for Responsible Palm Oil and the Round Table on Responsible Soy, include development of standards for responsible production of their respective commodities; they also develop a certification system that indicates which products were sustainably produced and work to build the market for these commodities.

To comply with the standard the Roundtable on Responsible Soy, for example, producers must not covert areas with high conservation value for production purposes, they also must use the best management practices, ensure fair working conditions, and respect land tenure claims;. Whether or not producers adhere to these standards is verified by third-party auditors; and Chain-of-Custody Standards allow for the verification that products in the marketplace really do contain responsibly-produced soy.

The Role of the Consumer – The  Missing Link? Or the Weak Link?

Some have argued that the multi-stakeholder model is not “multi” enough, that having civil society at the table will not create the pressure that is needed to create standards that truly bring about sustainability.

Others, including Darrel Webber, Secretary General of the RSPO, argue that, with a few exceptions, uptake of certified products by consumers has been too slow and has not been creating the additional pressure needed from that end of the spectrum to speed up the sluggish pace of change.

Regardless of who is right, both sides seem to agree on the fact that the consumer plays a critical role in all of this – a notion that seems to be underpinned by the fact that those companies that most recently made drastic changes/commitments to sustainability in their supply chain are consumer goods companies.

A Strategic Approach to Sustainable Supply Chains

 

Anne Thiel is the Communications Coordinator for Forest Trends. Prior to joining Forest Trends, she worked at the World Resources Institute as executive assistant, development coordinator, and project management associate. She can be reached at athiel@forest-trends.org.

Marks & Spencer: Cooking Its Way To A Cleaner Future

15 April March 2015 | When you think of clean cookstoves, Marks and Spencer (M&S) is not the first name that comes to mind. And yet the UK-based retailer is the first in its sector to commit to increase the focus on clean cooking with the Global Alliance for Clean Cookstoves, building off its positive experience with a UNICEF-developed improved cookstove project in Bangladesh.

This commitment to clean cookstoves is the latest offshoot of the company’s sustainability plan, known as Plan A. The company launched Plan A in January 2007, establishing 100 commitments to achieve in five years, including a carbon neutrality goal. The plan has since been updated to Plan A 2020, with the company setting a goal of becoming the world’s most sustainable retailer.

 

Because there is no Plan B, Plan A lays out Marks & Spencer’s 100 sustainability commitments-including carbon neutrality-to be achieved in the next five years.

“Climate change is a big issue for business, especially retail that relies in raw materials being available to sell,” said Carmel McQuaid, head of sustainable business, Plan A at M&S. “There was always a focal point on how to become carbon neutral.”

The retailer began implementing its Plan A goals by looking for opportunities to lower emissions within its own operations, such as energy efficiency improvements and the use of renewable energy. Efficiency improvements alone – including in stores and across its fleet of trucks – account for reductions of around 16,000 tonnes of carbon dioxide (CO2) per year in the company’s UK and Ireland operations, according to the firm’s website. The company’s gross global CO2 emissions for 2013 were 566,000 tonnes, according to its Plan A report 2014.

By 2012, McQuaid said progress was evident. “But there’s only so far energy efficiency and renewable energy can go to deliver reductions in the timeframe science indicates is required,” she added.

 

Incorporating green into Marks & Spencer’s shop at Cheshire Oaks Designer Outlet-England’s largest outlet center.

 

The firm turned to the voluntary carbon offset market to help meet its carbon neutrality target, working with The CarbonNeutral Company – and in the process, becoming the fifth-largest voluntary buyer of offsets, according to a new Ecosystem Marketplace report that analyzes CDP data.

M&S has purchased carbon offsets from the Kasigau Sustainable Farming project in Kenya developed according to a Verified Carbon Standard (VCS) methodology, the VCS Sabah rainforest rehabilitation project in Borneo and a VCS waste-to-energy project in Wuhe, China, among others.

“Ideally, we would have wanted to buy from projects closely related to our business, but there’s not a lot [of offsets] in the market via supply chains,” McQuaid said.

Once M&S signed the contract to work with The CarbonNeutral Company, the retailer said it was also keen to work with an NGO partner to find ways of making the carbon finance go further and bring more benefits to the communities, she said.

 

A green wall at a Marks & Spencer operation in Sheffield, South Yorkshire, England.

“M&S asked its NGO partners if they had any interest in carbon finance to extend their programs, and UNICEF stuck its hand up,” said Rebecca Fay, London-based global marketing director for The CarbonNeutral Company. The NGO presented a couple of clean cookstove projects, and the Bangladesh one was deemed “the best fit, in terms of what was already in place to get the project developed and its alignment with M&S’s business,” she said.

Over the next 12-18 months, the three organizations worked closely together, with UNICEF new to the carbon finance sector and M&S new to clean cookstoves. This learning process was a real eye-opener for M&S, McQuaid said.

“Because we worked so closely with them [UNICEF], we really realized the benefits of [improved] cookstoves that, if someone had just walked in with a marketing brochure, we wouldn’t have realized,” she added. Improved cookstoves use less fuel wood than traditional stoves, reducing the risk of pollution-related ailments and lessening the need for woman to embark on often-dangerous trips in search of fuel.

The investment by M&S allowed the project to get off the ground and enabled the first 40,000 stoves to be installed – a process completed by November 2014 – and the first verification under the Gold Standard is imminent, Fay said.

Beyond this initial investment, however, M&S officials want to raise awareness of the sector among other corporates so officials decided to join the Global Alliance for Clean Cookstoves rather than duplicate its outreach efforts. Its commitment, announced at the Alliance’s inaugural Commitment Roundtable, as part of its Cookstoves Future Summit in November in New York, comprises three parts: to work with its suppliers to understand how employees of M&S suppliers of products such as textiles, coffee and food currently use cookstoves; to promote the UNICEF project; and to work with the UK government’s Department for International Development to raise awareness and share its experiences.

The retailer started working on these pledges even before the November summit. Together with The CarbonNeutral Company, M&S organized a roundtable in April 2014 – which included a BBQ using cookstoves – with executives from about 15 firms to showcase the Bangladesh project and encourage others to get involved.

M&S is also working with the Alliance to increase the uptake of clean cookstoves, particularly in its key supply chain countries of Kenya, Uganda and Ghana. By working with its suppliers, the firm wants to identify the barriers to clean cooking, including cost, awareness and education. While the company is open to participating in the development of more cookstove projects, the focus is on recognizing these barriers and determining who can best intervene, McQuaid said.

“If we can align it with our supply chain, that’s also good,” she said.

Katie Kouchakji is a freelance journalist covering the carbon markets based in the United Kingdom.
Additional resources

Corporate Carbon Offset Buyers Go The Extra Mile In Fighting Climate Change

19 March 2015 | Automaker General Motors, financial institution Barclays and cosmetics company Natura Cosméticos couldn’t be more different companies. But they all have one thing in common: they are top voluntary buyers of carbon offsets and pursue these purchases as part of comprehensive carbon management strategies.

A new Ecosystem Marketplace report called The Bottom Line: Taking Stock of the Role of Offsets in Corporate Carbon Strategies dispels the myth that companies purchase carbon offsets to avoid taking responsibility for their contributions to climate change.

Rather, 14% percent of companies publically disclosing climate change information to the CDP’s (formerly the Carbon Disclosure Project) annual survey practice “offset-inclusive carbon management,” meaning that they are investing in hundreds of unique emissions reduction projects in addition to directly reducing their climate impact through energy efficiency, improved product design and other measures. Offset buyers tracked by CDP spent $41 billion in 2013 to make their buildings and processes more energy efficient, install low-carbon energy, switch to cleaner transportation, design more sustainable products, and engage customers and employees around behavior change.

“There’s a common misperception that offsetting is a way for companies to ‘buy their way out of the problem,’” says Allie Goldstein, Senior Associate at Ecosystem Marketplace and the author of the report. “But when you dig into the CDP data, it’s clear that offset buyers are actually just using more of the tools at their disposal to reduce emissions, and they’re investing in these activities at a higher rate compared to companies that don’t offset.”

This new report analyzed data from 1,882 corporate climate performance disclosures collected by CDP in 2013 and 2014.

Offsetting is an indicator of a deeper climate commitment, with offset buyers engaged in activities that reduce their internal emissions at a higher rate than companies that do not buy offsets, according to the report. The typical offset buyer slashed almost 17% of their Scope 1 (direct) emissions in 2013 while non-buyers only reduced Scope 1 emissions by less than 5% in the same year. Offset purchases are one way to neutralize Scope 3 (indirect) emissions that occur upstream in a company’s supply chain or downstream in consumer’s use of the company’s products – emissions that are difficult to reduce by other means.

The majority of companies (214) offset emissions voluntarily, compared to 56 CDP-reporting companies that purchased offsets to comply with regulations. Companies based in regions with regulatory carbon pricing programs were more likely to buy carbon offsets, even on a voluntary basis, than companies based in locations without a cap-and-trade system or carbon tax. The European Union, home of the EU Emissions Trading System (EU ETS), hosts the largest number of buyers – both compliance-driven and voluntary – since even companies in unregulated sectors are more familiar with market-based mechanisms for emissions reductions.

Voluntarily taking the lead

CDP disclosers voluntarily purchased 16.5 million tonnes in 2013, according to the report, representing about a third of primary market demand as tracked by Ecosystem Marketplace’s State of the Voluntary Carbon Markets 2014 report.

US-based automaker General Motors topped the list of voluntary buyers of carbon offsets, purchasing 4.6 million tonnes of offsets over the 2012-2013 timeframe. Its Chevrolet division has been a leading buyer of carbon offsets as part of its commitment to reduce its emissions by up to eight million tonnes of carbon – at an estimated cost of $40 million. Chevrolet has also promoted widespread adoption of a new methodology financed by the automaker that aims to reward US-based colleges and universities for renewable energy and energy efficiency projects, purchasing the first 500,000 offsets generated by these projects.

U.K.-based Barclays was second on the list of top voluntary buyers with 2.1 million tonnes purchased, including from an avoided deforestation project in Kenya and renewable energy projects in India and China. In its CDP disclosure, the bank noted its anticipation that tropical cyclones will alter the credit profile of some of its clients.

California-based utility Pacific Gas & Electric and Brazil-based Natura Cosméticos tied for third place on the list of top voluntary buyers at about 1.4 million tonnes.

Natura has reduced its relative greenhouse gas emissions (GHG) by 33.2% over the 2007 to 2013 time period and offset all the emissions it couldn’t avoid through the acquisition of carbon offsets from reforestation, energy efficiency, fuel substitution, waste treatment and REDD+ (reduced emissions from deforestation and forest degradation), according to a company spokeswoman. The company prioritizes projects that generate other environmental benefits such as improvements in water quality, erosion control and promotion of biodiversity and social benefits in addition to offsetting carbon, she said.

In 2013, Natura purchased 120,000 tons of carbon offsets from the Paiter-Suruí­, an indigenous people of the Amazon who in June of that year became the first indigenous people to generate offsets by saving endangered rainforest using the Verified Carbon Standard’s REDD protocol.

Delta Air Lines is also on the top 10 list of voluntary buyers of carbon offsets and expressed concern in its CDP disclosure that rising temperatures could affect plane take-offs and that sea level rise may encroach on coastal airports.

The airline’s GHG emissions are primarily related to the amount of fuel it uses, which accounts for more than 98.5% of its total carbon footprint and almost one third of its total operating cost. This creates a major incentive to reduce its fuel consumption and costs through internal initiatives such as retiring smaller, inefficient 50-seat jets and replacing them with larger, more efficient aircraft, according to the airline.

Despite its fuel saving initiatives, Delta experienced a net increase in fuel consumption from 2012 levels due to growth in flying, leading the company to purchase and retire carbon offsets against its 2013 and 2014 emissions to achieve its voluntary goal of carbon neutral growth compared to 2012. The company’s offsetting strategy evolved from initially partnering with The Nature Conservancy to allow customers to purchase offsets to cover their travel emissions – Delta matches customer and employee offset purchases up to $25,000 every year – to purchasing offsets directly to achieve the airline’s voluntary goals.

Following the compliance rules

CDP-reporting companies purchased 32 million tonnes for compliance purposes in 2013, according to the report. These disclosures account for a subset of total primary market compliance demand, which the World Bank Group estimated at 174 million tonnes that year.

ExxonMobil was the top dog on the compliance side, purchasing 10.2 million tonnes of offsets in 2012-2013 – about 3 million more tonnes than Mexico-based cement manufacturer CEMEX – from dozens of projects developed under the Clean Development Mechanism. ExxonMobil is regulated under cap-and-trade programs such as the EU ETS, New Zealand’s ETS, and California cap-and-trade but has publicly advocated for a revenue-neutral carbon tax as the “more effective policy option.”

“Cap-and-trade systems inevitably introduce unnecessary cost and complexity, as well as unpredictable price volatility, as evidenced recently by the EU ETS,” the company wrote in its CDP disclosure. “It is important to remember that a cap-and-trade system requires a new market infrastructure for traders to trade emissions allowances.”

ExxonMobil mimics the effect of a tax through using a proxy cost of carbon embedded in its Outlook for Energy report. “Our proxy cost, which in some areas may approach $80/ton over our Outlook period, is our effort to quantify what we believe government policies could cost to our investment opportunities,” the company disclosed.

Delta has also been a compliance buyer of offsets, but sees the longer-term risk to the airline industry of neutralizing growing international emissions after 2020 through the International Commercial Aviation Organization’s (ICAO) development of a market-based program. As part of the International Air Transport Association, the trade association of the world’s airlines, Delta said it is currently engaged with ICAO in the development of a carbon offset approach to address the risk.

“With our current offset program, we are gaining experience in the carbon market,” a company spokeswoman says.

 

Additional resources

How Fine Italian Leather Drives Illegal Deforestation

17 March 2015 | Quick! What do Italian jackets, British beef, and French chickens have in common?

Answer: they’re overwhelmingly dependent on imports of illegally-harvested products driving deforestation across the developing world, according to a new report called Stolen Goods: the EU’s Complicity in Illegal Tropical Deforestation, released today by the environmental NGO Fern.

The group found that leather from cattle raised on illegally-deforested land tends to end up in Italy, while the beef ends up in the United Kingdom, and the soy ends up in France-mostly to feed the country’s chickens and pigs. The Netherlands and Germany are the largest importers of deforestation-linked palm oil, which goes into a variety of consumer products including cosmetics and food products.

The findings dovetail with those of Ecosystem Marketplace publisher Forest Trends, which found last year that agriculture is driving deforestation around the world, and almost half of global deforestation takes place illegally.

The report highlights the global forces driving deforestation and – ultimately – climate change, and it comes as governments and companies around the world pledge to slow or eliminate practices that drive deforestation. Next week, Ecosystem Marketplace, together with WWF and CDP, will launch a new site called Supply-Change.org to help people track the actions companies are taking to reduce deforestation.

What Constitutes “Illegal”?

Illegality is defined according to producer country laws. In some country that means converting forests to land for commercial agriculture without the right to clear the land, or using permits that were illegally issued or obtained to convert land. In some cases, even when companies have the right to convert land, they have been found to clear more forest than permitted, or to neglect agreed‐to payments to local communities or the government.

Gateway Netherlands

Globally, Fern says, the European Union imports 25% of all soy and 18% of all palm oil harvested on illegally-deforested land, 15% of all such beef and 31% of all such leather.

The Netherlands is the point of entry for one-third of all these products entering the EU, but much of that flows on to other countries. Still, combined, the Netherlands, Italy, Germany, France and the UK imported 75% and consumed 63% of the forest-risk products imported into the EU.

Indonesia and Brazil: Leaders in Illegality

The study says that more than half of the forest-risk products originate in Brazil, where it is estimated that some 90% of deforestation is illegal, while a quarter comes from Indonesia, where some 80% of deforestation is estimated to be illegal. Malaysia and Paraguay are among a number of other important source countries.

“EU consumption does more than devastate the environment and contribute to climate change,” said Sam Lawson, author of the report. “The illegal nature of the deforestation means it is also driving corruption, and leading to lost revenues, violence and human rights abuses. Those seeking to halt the illegal deforestation have been threatened, attacked or even killed.”

What to Do?

The report recommends that the EU ramp up its Forest Law Enforcement, Governance and Trade program (EU-FLEGT), which is designed to combat illegal deforestation.

“Demand for forest‐risk commodities is being driven by a number of different EU policies, such as agriculture, trade and energy policy,” says FERN co-founder Saskia Ozinga. “We urgently need an Action Plan to make these different policies coherent, reduce EU consumption and ensure we only import legal and sustainably produced commodities.”

This Week In Biodiversity: EM Tracks the Co-Financing Unicorn to the Gulf

It was a good month for conservation finance as a study on the potential of wetland carbon offsets in Louisiana found that the state’s blue carbon could be worth between $540 million and $1.6 billion over a five year period. And in California, farmers may be able to leverage finance from both the carbon market and a habitat exchange.

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

 

17 March 2015 | Greetings! Since the 1930s, Louisiana has lost an area of wetlands equivalent to the size of Delaware, and it continues to lose a football field of wetlands every hour. If current loss rates continue, by the year 2040 more than one million acres – or nearly another Delaware – of wetlands will be gone – and the carbon stored in these ecosystems will be released into the atmosphere.
But a new study says it’s possible to not only restore the wetlands – but generate a lot of money doing so: Wetland restoration in Louisiana could be worth between $540 million and $1.6 billion dollars over the next five decades, according to the Louisiana Blue Carbon study.

 

The study, supported by Entergy Corporation through their Environmental Initiatives Fund, and prepared in partnership by New Orleans-based Tierra Resources and Portland-based nonprofit The Climate Trust, looks at Louisiana’s potential to produce blue carbon offsets.

 

But the high costs of wetland restoration may surpass the value of carbon finance in projects – which means that project developers are looking at pooling finance from other quarters: stacking environmental credits, eligible types of conservation easements, and federal funds are all on the table.

 

Leveraging finance across ecosystem markets and funding sources is like a unicorn: often talked-about but rarely seen. But activities in the Gulf – and in California, where rice farmers this year for the first time may be able to draw finance for conservation from both a new habitat exchange and the California carbon market – suggest that we may be getting closer to a successful sighting.

 

Conservation finance got more good news with the launch of the European Investment Bank’s new Natural Capital Financing Facility, which will seek to support sustainable ventures – and attract additional investors – with an initial US$135M purse.

 

And it wouldn’t be Mitmail without some lawsuits and colorful language. This month, they’re in New South Wales, California, and Alaska.

 

Enjoy!

—The Ecosystem Marketplace Team

 

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

 

US Gulf Coast Prime For Wetlands Restoration

Since the 1930s, Louisiana has lost an area of wetlands equivalent to the size of Delaware, and it continues to lose a football field of wetlands every hour. If current loss rates continue, by the year 2040 more than one million acres of wetlands will be gone – and the carbon stored in these ecosystems will be released into the atmosphere.

 

But what if there is another way? While a large degree of wetland loss in the Gulf of Mexico is inevitable due to the dual forces of land subsidence and sea level rise, project developer Tierra Resources and utility Entergy are optimistic that wetland restoration is possible in some areas. Tierra Resources estimated that Louisiana has the potential to produce 1.8 million carbon offsets per year, or almost 92 million offsets over 50 years, according to the Louisiana Blue Carbon study. Wetland restoration in Louisiana could be worth between $540 million and $1.6 billion dollars over the next five decades, the study finds.

 

Learn more at Ecosystem Marketplace.

 

Opinion: Can Putting A Price On Environmental Risk Mainstream Corporate Sustainability?

As it stands, some companies take environmental issues and sustainability seriously but the majority don’t. In a new opinion piece, Ivo Mulder, the REDD+ Green Economy Advisor for UNEP (United Nations Environment Programme), argues how quantifying environmental risks in monetary terms may be necessary to convince the bulk of corporations to follow suit.

Read it here.

 

Researchers Say Ecotourism In Protected Areas Delivers 60:1 Annual Return On Costs

The world’s national parks and nature reserves receive around eight billion visits every year, according to the first study into the global scale of nature-based tourism in protected areas. The paper, by researchers in Cambridge, UK, Princeton, New Jersey, and Washington, DC, published in the open access journal PLOS Biology, is the first global-scale attempt to answer the question of how many visits protected areas receive, and what they might be worth in terms of tourist dollars.

 

The authors of the study say that this number of visits could generate as much as US$600 billion of tourism expenditure annually – a huge economic benefit which vastly exceeds the less than US$10 billion spent safeguarding these sites each year.

 

Scientists and conservation experts describe current global expenditure on protected areas as “grossly insufficient”, and have called for greatly increased investment in the maintenance and expansion of protected areas – a move which this study shows would yield substantial economic return – as well as saving incalculably precious natural landscapes and species from destruction.

Learn more.

EU NatCap Financing Facility Is Ready for Business

With the intention of attracting investments from a variety of public and private sources, the European Investment Bank (EIB) launched the Natural Capital Financing Facility last month, one of two pilot projects to grow investments in climate adaptation and energy conservation. The Natural Capital Financing Facility has pockets USD$135M deep for investing in – and attracting investors to – sustainability projects like forestry management.

Read more from Yahoo News.

 

Cozy Relationship Between Government and Mining Company Irks Australian Public

A controversial mine expansion in Australia grew more contentious when a media organization released information suggesting that the Office of Environment and Heritage (OEH) rubber-stamped offsets for the Warkworth expansion. The organization claimed the OEH approved the mine’s biodiversity offsets for clearing 600 acres of vegetation that contained endangered woodlands prior to actually calculating the value of the offsets. The area proposed for new mining itself was actually set aside as a biodiversity offset for prior impacts. An OEH spokesperson responded by saying that the calculation was done before certifying the mine.

 

Meanwhile, the Labor Party is promising that if elected it would scrap the Coalition’s current biodiversity policy in favor of a policy allowing only “like-for-like” offsets on land “within a reasonable geographic proximity” to the impacted area.

The Sydney Morning Herald has the story.

 

Mitigation Bankers, Locals Spar Over Recreating Wild Lands

Turning developed property back into natural habitat for mitigation purposes has become profitable in places like southern California where so many wetlands have been destroyed. As there is ample opportunity and money to be made, mitigation bankers have been busy buying agricultural land and business properties and converting them into mitigation banks. But owners of a shuttered golf course who are attempting to turn it into a bank have met with opposition from local residents concerned about the effect on local property values. Supporters counter that most opposition stems from misinformation, and that these issues can be ironed out through better community engagement.

Learn more.

 

BSI Unveils a Business Standard on Biodiversity

UK-based standards group BSI just released a new standard for business on biodiversity management. BS 8583 Biodiversity, Guidance for businesses on managing the risks and opportunities lays out a framework for setting targets on a local, national and global level, and managing biodiversity across normal operations, supply chain management, and land/premises management.

Read a press release.

 

Mitigation Roundup

Work is underway at Wildlands’ new San Luis Rey Mitigation Bank in Oceanside, San Diego County, California.

 

Cadiz Inc. saw its 7,400-acre Fenner Valley Desert Tortoise Conservation Bank in California’s San Bernardino County approved early this month.

 

A reservoir in Clitheroe in Lancashire, England, will be restored as a nature reserve, with funds coming from via the Environment Bank’s biodiversity offset pilot work.

 

 

‘Counterfeit’ Credits of Alaskan Mitigation Bank Drive Lawsuit Against the Corps

Last month, a mitigation banker operating out of Alaska sued the US Army Corps of Engineers for what he says is a violation of the Clean Water Act (CWA). The banker, Scott Walther, argues that in 2012 the Corps steered a developer in need of wetland mitigation away from his bank, which is authorized to sell credits to CWA permit holders, to a bank operated by the Matanuska-Susitna borough that Walther says has no business selling credits. Walther says the Su-Knik Mitigation bank’s credits were awarded in violation of the Final Rule. In the lawsuit, Walther is seeking an injunction blocking the Corps from directing CWA permit holders to buy bank credits fro Su-Knik until the bank comes into CWA compliance.

Read it at Law360 (registration required).

 

Can Colombia Create the World’s Biggest Ecological Corridor?

With the cooperation of its neighbors, Brazil and Venezuela, Colombia has plans to create the world’s largest ecological corridor. It would span over 135M hectares of Amazon rainforest ,helping to slow global warming by reducing deforestation and preserving the region’s biodiversity. Norway and Germany are pitching in as well: they have agreed to US$65M worth of finance for an Amazon protection program. He plans to announce the eco-corridor initiative, called ‘Triple A’, at COP21 in Paris later this year.

Learn more.

 

Cali Farmers See Opportunities in Habitat, Carbon

A farmer in California’s Central Valley will leave rice fields flooded for part of this season, to provide habitat for waterfowl, shorebirds, and Chinook salmon. John Brennan, who oversees the 1,700-acre Knaggs Ranch, says he hopes to be able to market these benefits on the Central Valley Habitat Exchange, a new mechanism channeling finance to landowners undertaking voluntary conservation. Funds are expected to come from private and public investors, including some with mitigation or restoration requirements. Brennan also has his eye on the California carbon market: this spring, the California Air Resources Board will likely approve the first standard for carbon sequestration from rice farming.

Learn more at the EDF blog.

 

Locals, Activists Protest to Save Australia’s Native Vegetation Act

The independent review board that recommended that Australia’s New South Wales government repeal the Native Vegetation Act is getting pushback from landowners and a local environmental group. Critics particularly take issue with the review’s suggestion that land conserved under voluntary conservation agreements (VCA) can be used as offsets for biodiversity loss elsewhere. “We are horrified to think that at some time in the future our VCA-protected land in this remarkable rainforest could become a tool to enable vegetation destruction in other areas,” said the secretary of the Gerroa Environmental Protection Society. But supporters of the repeal argue they are looking for fair policy that balances environmental stewardship with economic growth. And the review board claimed the Native Vegetation Act didn’t meet expectations for biodiversity conservation in the state.

The Kiama Independent has coverage.

 

Alberta Starting to Rethink Wetland Incentives

Researchers at the University of Alberta plan to pilot a reverse auction mechanism for wetland restoration in the province. The provincial government will fund the effort, which aims to test out market approaches to restoring wetlands. Offering payments to landowners from a designation restoration fund isn’t working, says U of A’s Peter Boxall: 90% of wetlands around Calgary have been lost, and 70% of wetlands in the ‘white zone’ (e.g. the developed part of Alberta).

The Edmonton Journal has coverage.

 

To Finance Green Growth, Namibia Needs A Little Green

Namibia has taken strides to protect its biodiversity: It’s one of the few countries that have a clause in the constitution targeting biodiversity management. And between 2001 and 2010, it implemented its National Biodiversity Strategy and Action Plan (NBSAP) to international recognition as one of the best first generation plans. Namibia is now undertaking implementing the second phase of its plan, which aims to promote the sustainable use of natural resources by mainstreaming biodiversity conservation across the government and private sector. But funding is a big impediment, the Minister of Environment and Tourism notes, as a conservative estimate for implementing NBSAP2 costs over US$40M. The Minister emphasized the importance of donor aid and exploring innovative finance as means to finance implementation.

All Africa has coverage.

 

Landscape Level Environment Project Saves Three Birds with One Stone in Vietnam

Vietnam is moving forward with a project integrating biodiversity, climate resilience and forestry management. The national government approved the “Integrating Biodiversity Conservation, Climate Resilience and Sustainable Forest Management in Trung Truong Son Landscapes” project, which is comprised of two parts. One is to manage biodiversity and forests in the region’s protected areas and their buffer zones. The other part is to implement landscape conservation at the community-level in the surrounding areas, which will promote sustainable livelihoods and reduce the bad environmental habits that contribute to climate change.

Learn more.

 

CEMEX and BirdLife Renew Partnership

CEMEX and BirdLife International renewed their partnership for another three years. The two groups have worked together since 2007 to improve understanding and monitoring of conservation actions at CEMEX’s quarry sites. The partnership has supported projects in Mexico, the UK, and France, and collaborated on a number of company-level initiatives.

Read a press release.

 

EVENTS

 

 

2015 National Mitigation & Ecosystem Banking Conference

The 2015 National Mitigation & Ecosystem Banking Conference, scheduled for May 5-8, 2015, in Orlando, Florida is the only national conference that brings together key players in this industry, and offers quality hands-on sessions and training as well as important regulatory updates. Proven to be “the” place to gain insights, explore new markets and learn from sessions, the 2015 Conference will continue its focus on educational content – both advanced and basic sessions as well as moderated exchanges and a variety of mini workshops that help to connect bankers, regulators, users and others involved in this industry. Pre and post- event workshops include Primer 101, Stream Banking, Long-Term Stewardship, Financing & Valuation and more. Hear perspectives from bankers, regulators and users, get updated on regulations, legislation and legal challenges, participate in field trips and benefit from the many opportunities to network! With a high attendance this past year, we anticipate a record attendance in Orlando and encourage you to make plans to submit to present, attend, even sponsor or exhibit! Orlando FL, USA. 5-8 May 2015.

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.

 

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.

 

JOB LISTINGS

 

Program Manager of Marine Ecosystem Services

European Institute of Marine Studies – Plouzané, France

The candidate(s) will work with Linwood Pendleton, the International Chair of Excellence at the European Institute of Marine Studies/Laboratory of Excellence of the Sea/Center for Marine Law and Economics/University of West Brittany to build an international program on policy, management, and science regarding human uses of the sea and coast. The program already has attracted over a million euros of research investment in just the last 6 months. The work of the International Chair focuses particularly on new and innovative science and policies to help better manage the ecosystem services provided by marine and coastal areas and to better coordinate development, conservation, and management to balance the use of living and non-living resources. The International Chair is a fundamental contributor to a proposed United Nations University for the Ocean. Research areas pursued by the International Chair and his team currently include the a Global Environmental Facility project on Blue Forests (i.e. blue carbon), a new European Commission study (ECOPOTENTIAL) that uses Earth Observation and Ecosystem Services data to monitor the effectiveness of protected areas, as well as projects that focus on the impacts of ocean acidification, mapping and visualizing ecosystem services, and managing resources in the high seas and deep sea. The successful candidate(s) will assist the Chair in all aspects of his work including (but not limited to) research, scholarly and popular writing and presentations, seminar and workshop planning, grant proposal writing, and project and grant management.

Learn more here.

 

Land Conservation Manager

The Nature Conservancy – South central Pennsylvania, USA

The Pennsylvania Chapter of The Nature Conservancy seeks a knowledgeable, energetic conservationist for the position of Land Conservation Manager. The position, based in south central Pennsylvania, offers the opportunity to join the staff of one of the largest, most successful conservation organizations in the world. The Nature Conservancy’s global success can be measured by the protection of 117 million acres in over 30 countries. The Pennsylvania Chapter is known in the Conservancy and beyond as a leader in innovative, effective strategies that benefit both people and nature at a scale that matters. The Land Conservation Manager will lead the Chapter’s efforts to protect and restore high priority areas in Pennsylvania, including lands along one of Pennsylvania’s most spectacular and scenic natural features, the Kittatinny Ridge, and lands within the Chesapeake Bay Watershed.

Learn more here.

 

Environmental Finance Officer

International Union for Conservation of Nature – Vaud, Switzerland

The Environmental Finance Officer will undertake research and analytical work at the interface of economics, development, business and the environment. Contributions will be in the form of applied research (data collection and analysis), drafting of policy papers and reports for knowledge uptake, and providing environmental finance insights throughout IUCN programmes and projects. Broad thematic areas of work include:

 

  • Apply finance analytical tools and financing lenses to issues affecting biodiversity and ecosystems and their management and decision support;
  • Explore and develop innovative public and private sector financial mechanisms to support conservation and sustainable development initiatives;
  • Assess the role and contributions of financial mechanisms in equitable benefit-sharing for vulnerable natural resource dependent communities;
  • Follow the debates and developments on resource mobilization and sustainable finance in global policy fora such as UNFCCC, CBD, SDG, etc.;
  • Promote uptake of existing knowledge and generate new knowledge on environmental finance.

Learn more here.

 

Senior Program Associate, Ecosystem Services

Winrock International – Arlington VA, USA

The Senior Program Associate will be responsible for assisting in the implementation of projects related to ecosystem services including climate change mitigation and adaptation in the agriculture, forestry, and other land uses (AFOLU) sector. Responsibilities will include: performing field data compilation and collection, especially in relation to forest carbon and ecosystem services valuation; analysis and synthesis of data and information on land use and forests; tracking national and international activities in related fields; document and report writing; and assisting in holding capacity building training sessions on subjects related to climate change and ecosystem services.

Learn more here.

 

Program Associate, Ecosystem Services

Winrock International – Arlington VA, USA

The Program Associate will be responsible for assisting in the implementation of projects related to ecosystem services including climate change mitigation and adaptation in the agriculture, forestry, and other land uses (AFOLU) sector. Responsibilities will include: performing field data compilation and collection, especially in relation to forest carbon and ecosystem services valuation; analysis and synthesis of data and information on land use and forests; tracking national and international activities in related fields; document and report writing; and assisting in holding capacity building training sessions on subjects related to climate change and ecosystem services.

Learn more here.

Additional resources

What Do A Seed And A Website Have To Do With Stopping Climate Change?

Sustainably produced forest products have the potential to mitigate climate change, preserve biodiversity and enhance local livelihoods. But their value is underappreciated. Now, an online network called CanopyBridge, which brings together the sustainable sellers with interested buyers, is bringing these products to global markets.

This article was originally posted on Huffington Post. Click here to read the original.

16 March 2015 | Deep in the tropical rainforests of Latin America, a seed the size of a marble grows in abundance. Amid the many visual splendors of the rainforest, neither the tree from which the seed comes, Brosimum alicastrum, nor the seed itself seem of particular note. Indeed, though the seed (and leaves, sap, and wood) have been critical to the survival of people who have lived in the forest for years, it has been largely ignored outside of its native habitat.

Yet this seed–like other products of the rainforest–may be central to a shift in the universal understanding of how we fight climate change.

The thin, citrus-flavored skin of the seed covers an edible, highly nutritious “nut.” Known as the Maya Nut, this “superfood” was once a diet staple of forest dwellers, and in recent years, the Maya Nut Institute has been working to bring this ancient food back to prominence, and its production has already greatly improved the livelihoods and the health of forest dwellers.

The Maya Nut, like myriad other products of the world’s rainforests, has the potential for even greater impact, however, particularly for the value it adds to the world’s perception of the forests in which they grow–namely, that a forest is worth more alive than dead.

The forests of our planet, on the frontlines of climate-change mitigation because of their ability to store massive amounts of carbon, are in real danger from deforestation and degradation. But what if it were known, on a global level, that these forests contained value not just because of their timber, but because they contained sustainable and marketable products that could greatly impact lives–and keep the forests healthy and alive?

The Long Road to Market

Because it is harvested exclusively in the wild–deep in the forest–the Maya Nut, however, has a long way to go before gaining the global acceptance enjoyed by other superfoods like quinoa.

Making that journey a bit easier is CanopyBridge, an online global network that connects sellers of sustainable, wild-harvested products with international buyers. The site “allows members from around the world to list, describe, discover and learn more about natural products and the people behind them.”

The site aims to bring together small-scale producers–such as the Maya Nut Institute–and businesses looking to source such unique products and make the transaction process between them easy and transparent. “The world has about 400,000 plant species, but 90% of our food comes from only about 100 of these,” says Jacob Olander, director of EcoDecision, an environmental consultancy, and a founder of CanopyBridge. “There’s this vast storehouse of diversity and local traditions still waiting to be discovered, and there are literally millions of local producers whose livelihoods depend on finding better markets for their products. But it’s still really difficult to connect that potential supply with demand–both for buyers looking for new sustainably sourced products and for producers trying to reach broader markets.”

The Maya Nut Institute joins a long list of sellers connecting with buyers, such as restaurants looking for innovative menu items, boutique chocolatiers looking for single-origin cocoa beans, people looking for the next acai, or perhaps someone developing a new power bar. Smaller producers–many in the rainforest, for example–simply don’t have the advocates or the funds to go to an international trade fair and make the connections necessary to bring their products to a global market.

“We’ve got producers of alpaca fibers on the site,” says Olander. “We’ve got people who are purchasing ingredients for energy drinks. Then we’ve got Shea nut producers from West Africa. The idea is really that there’s a vast world of possible ingredients out there that should be discovered, and we want to create a space where you can find all that.”

Olander and Marta Echavarria founded EcoDecision, a company based in Ecuador, in 1995. EcoDecision is a pioneer in the emerging markets of ecosystem services. These markets work on the premise that natural ecosystems generate more value alive than dead. A swamp, for example, filters water and acts as a floodplain, while a forest sucks carbon dioxide from the atmosphere, and mangroves protect the coasts. All ecosystems, meanwhile, support biodiversity–and all of these services are lost when swamps are drained for farming, forests are cleared for timber, and mangroves become pricey resorts.

Some products can still be harvested from the forest without destroying it, and it was in their exploration of the non-timber values that a forest could provide that Olander and Echavarria hit upon the idea for CanopyBridge, an offshoot of EcoDecision.

“We were looking at the products coming out of projects that are related to conservation in some way, where additional income from sustainable crops or wild-harvested ingredients can make the financial difference between keeping or clearing a forest,” says Olander. “And we realized that the process of sustainability-minded buyers and sellers finding each other was really inefficient.

“We realized that if you’re a business and you’re looking to source these products, there is no easy way to find these things. There’s no community out there that somehow brings buyers and sellers committed to conservation together. Finding your market or finding your supplier still largely depends on personal contacts, word of mouth and chance.”

Of course there’s Google, Olander explains, and “the Internet in all of its breadth and depths,” but if you were looking for sustainable products, across a range of certifications and around the world, and if you needed to know the origins of the product, such a site did not exist. CanopyBridge was born of this need, and they settled on the name to communicate “the idea of building a connection between the sheltering forest, the forest canopy, and all that it contains, and building a bridge between the producers there and buyers who are using these products around the world.”

The products on CanopyBridge reflect these original goals in that they are produced in such a way that they protect nature and foster healthy communities. Runa, a Brooklyn, N.Y., and Ecuador-based seller on the site, makes energy drinks from the guayusa leaf, and is certified organic, Fair Trade, non-GMO and kosher, and the company itself is a B Corp.

“We’re huge fans of Runa, and we’re proud that they’re on our site,” says Olander. “We think they’re a great example of a company that’s working with one of the literally hundreds of thousands of potential ingredients that are out there in these natural ecosystems in the tropics that’s had a traditional use, and using it in a way that brings it to a new market, and at the same time reinforces its traditional value within the communities where they work.”

To use the site, buyers and suppliers create a profile for free, which provides detailed information about the product being sold or the potential selling venue. Although CanopyBridge does not require its members to hold a specific certification or follow a certain standard, it looks for users with a strong commitment to sustainability who are open and transparent about their products or services.

“Behind each of these products are wonderful stories,” says Echavarria. “Both from a human standpoint, but also from a biological standpoint.”

Focus on Food

The emphasis at CanopyBridge is on ingredients for either foods or cosmetics, or with medicinal and supplemental uses. With its focus on food, CanopyBridge is tapping into the burgeoning connection being made between conservation groups and the food industry. Superstar chefs like Pedro Miguel Schiaffino, of ímaz and Malabar restaurants in Lima, Peru, are sourcing and cooking with unusual and delicious ingredients from the Amazon, many of which are listed sellers on CanopyBridge. This kind of work is pushing the envelope on modern cuisine–and taking a big step in the preservation of the planet’s biodiversity.

“There are some fantastic ingredients out there,” says Olander. “You’ve got this wild fruit called camu camu, which makes this beautiful pink juice and grows on the river banks [of the Amazon]. It’s one of the world’s highest, most concentrated sources of vitamin C. Sacha inchi or Inca peanut from Peru is a great source of Omega-3s and protein. From Indonesia, several varieties of palm sugar, sweeteners that are not available or commonly used yet that I think have a huge potential. Baobab is coming into its own as an antioxidant superfruit from southern Africa. The list just goes on and on.”

CanopyBridge presents a tremendous opportunity for valuing biodiversity–these products are now given explicit market value–with potential for significant livelihood benefits for the producers of rainforest products as well as along the value chain.

Small Site With Far-Reaching Potential

As with the Maya Nut seed, the implications of what CanopyBridge is doing may not at first be apparent. But CanopyBridge is far more than simply a “Match.com” type site bringing vendors and producers together. By bringing sustainable, scalable products out of the forest into a global market, CanopyBridge is making an enormous ripple in the pond of biodiversity conservation, local livelihoods, and climate change mitigation. And according to Jacob Olander, such a ripple is vital.

“I got my start with non-timber forest products years ago, researching the potential for new ornamental plants from the rainforests of Costa Rica when I was in grad school,” says Olander. “There’s all this great stuff out there, these products that complement these other objectives of valuing nature and keeping communities healthy and prosperous. Paying for watershed services alone or paying for carbon alone is never going to get us [to climate-change mitigation].”

“If you start to look at how much the economy is already moving in these other kinds of sustainable products, it’s an astounding volume of trade, probably greater than the total amount of development aid globally. [CanopyBridge] just seemed like a really logical fit while we were looking for new ways to finance the protection of ecosystems. If we can bring all the pieces together–farmers, forest peoples, companies and consumers committed to sustainability–that’s a really, really powerful combination.”

Both in the forest and in business, big things grow from a single seed.

Ann Clark Espuelas is a writer for Forest Trends.


Additional resources

Opinion: Yes, The US EPA Can And Should Allow Offsets Under The Clean Power Plan

16 March 2015 | The US Environmental Protection Agency’s (EPA) proposed Clean Power Plan, the agency’s attempt to regulate existing sources of greenhouse gases (GHGs) in the electricity-generating sector under its Clean Air Act authority, may be the most controversial rule proposed by the agency. Weighing in at around 670 pages (with a 750-page technical support document,) it is certainly one of the most complex regulations ever attempted by the agency.

It should also be interpreted as offering the states maximum flexibility in how states handle their emission reductions, as we can see by zeroing in on just two sections of the Clean Air Act: Section 110 and Section 111.

Section 110 governs the State Implementation Plans (SIPs), which are the way in which ambient levels of criteria pollutants (like ozone), are to be enforced. Section 110 allows states to meet these goals in any way they wish as long as they do not interfere with another state’s compliance. Section 111, on the other hand, purportedly deals with reductions from source categories (such as electricity generating units).

Here, we’ll be looking at just two sub-sections of Section 111: Section 111 (b), which deals with new or recently upgraded sources of pollution; and Section 111 (d), which deals with older or existing sources of pollution not regulated by states under Section 110 (or as a hazardous air pollutant) . Since greenhouse gases are the only pollutants that exist in this category, and they have yet to be regulated, section 111(d) is as yet untested. The Clean Power Plan is the EPA’s attempt to do so.

Section 111(d) says the EPA may establish guidelines for how states meet reductions required, and it also says that the procedure governing approval of these state systems should be a “procedure similar to that provided by section 7410[Section 110].”

And guess what? Section 110 clearly leaves room for offsetting, as well as any measure that would reach the target required.

How Does the Clean Power Plan Work?

The Clean Power Plan sets individual targets for GHG emissions rates for each state through a formula the EPA developed, examining how various GHG reduction strategies could be implemented given each state’s own unique circumstances. In determining the state’s targets, the EPA critically made a decision that the Best System of Emissions Reduction (BSER) referenced by the Clean Air Act authority under its Section 111(d) provisions could include reductions in GHG emissions from end-user efficiency gains, electricity dispatch decisions, and new non- or low-carbon sources.

Because these reductions would not technically be from a regulated plant itself, they are characterized as “beyond the fenceline” reductions. It is this decision that is responsible for much of the rule’s complexity as well as the ability of the EPA to propose a more aggressive reduction target than could be achieved by changes at the electricity generating plant itself. This approach, the EPA says, allows the states maximum flexibility in meeting ion targets.

Unfortunately, the EPA has shied away from allowing states maximum flexibility for reductions by refusing to endorse (at this time) the use of GHG offsets, (such as biological offsets or reductions from other unregulated sources) even though the use of offsets is generally recognized as a more efficient way to reach tighter GHG reductions targets.

Lying at the heart of this decision, according to the EPA, is “legal uncertainty.” Because of the controversy in the United States surrounding any regulation of GHGs, the regulations are being, and will continue to be, challenged in court. One of these challenges suggests that in setting up the guidelines for the states, that the EPA (and presumably the states) cannot do any “outside of the fenceline” regulation, asserting that this differs from prior regulation of electricity generating units under other pollutants.

In response, the EPA correctly reasons that its authority under section 111(d) is different from its authority to regulate criteria pollutants under 111(b), and that the BSER can include the “outside the fenceline” reductions suggested, as well as emissions trading between sources. I believe the agency is absolutely correct in this interpretation, but this reasoning would suggest that offsets would also be legally allowed under Section 111(d).

To see why, we have to return to the relationship between Sections 110 and 111(d) that I alluded to at the start – namely, that Section 111(d) specifies that the Best System of Emissions Reduction adopted by a state be modeled on Section 110, which governs the State Implementation Plans . While the EPA has not had cause to consider the full meaning and implications of this statutory phrase before, I believe that it means that 111(d) provides that the “system” of emissions reduction can be anything that meets the target required by the EPA. Section 110 allows the states such autonomy in constructing how they will meet the ambient air quality standards for criteria pollutants. In Union Electric Co. v. EPA, 427 U.S. 246, 96 S.Ct. 2518, 49 L/Ed/ 2d 474 (1976), the Supreme Court upheld the EPA’s position that if a state proposes a strategy that is effective in meeting the ambient air quality standards, the EPA must approve that SIP. This follows statutory language in Section 110(a) and also supports the cooperative federalism at the heart of the Clean Air Act.

Though the EPA seems to distinguish between the reductions itproposes in the Clean Power Plan rulemaking and the use of offsets, if “outside the fenceline” reductions are allowed at all if the states so choose, which I believe they are because of the reference to Section 110, then they can be allowed in other arenas such as offsetting.

What it boils down to is this: Unless the EPA is willing to grant the same sort of flexibility to the states under Section 111(d) that it does under section 110, it reads the reference to section 110 out of the statute, which was not the intent of the drafters.

The EPA seems to be afraid that the use of offsets might be a step too far, and other commentators have suggested that the agency’s power under Section 111(d) becomes more precarious the further it moves from the fenceline. But the applicable law suggests otherwise. While the EPA may be trying to paint a smaller target for legal challenge or simply avoid the politics of proposing something that looks very much like a cap-and-trade system, these distinctions are not based on the law. As such, the EPA should clarify that the states could choose to keep or utilize verifiable offset emissions reductions and be compliant with the Clean Power Plan.

Because some of the states, such as California and the Northeastern states participating in the Regional Greenhouse Gas Initiative already have carbon trading programs allowing for GHG reductions from sources such as verified GHG offsets or other industries (such as the petroleum industry), this clarification would allow these states to keep or utilize such reductions and be compliant with the BSER rulemaking. Additionally, clarifying the allowance of verified offsets and reductions from other industrial sectors (if proposed by a state or states) would facilitate the creation of a GHG trading market, which the agency has correctly determined would allow for more reductions at lower costs.

Victor B. Flatt is the Taft Distinguished Professor of Environmental Law at UNC Chapel Hill School of Law.

US Gulf Coast Prime For Wetlands Restoration: Study

This article was originally published on the AnthropoZine. Click here to read the original.

12 March 2015 | Since the 1930s, Louisiana has lost an area of wetlands equivalent to the size of Delaware, and it continues to lose a football field of wetlands every hour. If current loss rates continue, by the year 2040 more than one million acres of wetlands will be gone – and the carbon stored in these ecosystems will be released into the atmosphere.

But what if there is another way? While a large degree of wetland loss in the Gulf of Mexico is inevitable due to the dual forces of land subsidence and sea level rise, project developer Tierra Resources and utility Entergy are optimistic that wetland restoration is possible in some areas. Tierra Resources estimated that Louisiana has the potential to produce 1.8 million carbon offsets per year, or almost 92 million offsets over 50 years, according to the Louisiana Blue Carbon study.

Louisiana landscape at sunset ” />

Louisiana landscape at sunset.

Wetland restoration in Louisiana could be worth between $540 million and $1.6 billion dollars over the next five decades. The study uses $4.4 per tonne as its lowest estimated price – based on the average historical price of a voluntary carbon offset developed under the American Carbon Registry (ACR). The study featured $10.8 per tonne as the high price – based on the higher value of offsets sold into compliance markets such as California’s cap-and-trade system.

Ultimately, the hope is that wetland projects will become eligible for the California market so that the Louisiana-based offsets can be traded there, said Brent Dorsey, director of environmental programs at Entergy. But the Golden State requires a 100- year project lifespan for land-based projects, compared to ACR’s 40-year timeframe, so additional hurdles remain, observed Sarah Mack, President and CEO of Tierra Resources.

Carbon Opportunities

Entergy has advocated and supported market-based solutions to environmental risks since 1998, when it became involved in the initial development of the Regional Greenhouse Gas Initiative, the carbon trading program of nine Northeastern states, some of them home to Entergy facilities.

Using its Environmental Initiatives Fund, Entergy financed Tierra Resources’ study of wetland restoration techniques and development of a new blue carbon accounting methodology under ACR. The Louisiana Blue Carbon project was a partnership between Entergy energy, Tierra Resources, and the Climate Trust. The goal was to develop opportunities for financially viable wetland offset projects in Louisiana.

The methodology that was developed focuses on four million acres of wetlands in the coastal zone of Louisiana, with a small amount of coast in Mississippi and Texas. They focused on scalable restoration methods that show commercialization potential as wetland offset projects to determine the carbon impact of incorporating prevented wetland loss in carbon accounting, determine the state’s offset potential, and what the financial estimates are of the blue carbon.

Tierra Resources reviewed restoration techniques featured in the “Louisiana’s Comprehensive Master Plan for a Sustainable Coast ” and researched additional restoration techniques, wetland assimilation and mangrove planting. The company then evaluated the commercial wetland offset potential for long-term enhancement of wetlands, scalability, and cost effectiveness. The Master Plan used a 50-year projection for the future of wetlands in Louisiana, which was also employed by Tierra Resources as the basis for its analysis to determine annual offsets and value, as well as long-term potential.

The study evaluated different types of wetland restoration, including mangrove planting, wetland assimilation – the introduction of treated municipal effluent into impounded and degraded wetlands to provide freshwater and nutrients for restoration purposes, and river diversion – use of new channels and/or structures to divert sediment and freshwater from the Mississippi and Atchafalaya Rivers into adjacent basins. The latter two techniques offer opportunities to stack carbon offsets with other mechanisms such as water quality credits, if those markets develop. Wetland assimilation offers the greatest net offset yield per acre: about seven tons of carbon for forested wetlands.

However, for land in Louisiana, mangrove planting (two tons per acre) and river diversions (3.8 tons per acre) are the most feasible options.

The challenges facing wetland restoration as a viable mechanism for carbon sequestration include the high costs of wetland restoration, which may surpass the value of carbon finance in projects, which necessitates partnering projects with more traditional funding pathways.

Mack outlined some of the policy options available to encourage wetland restoration including: “allowing the use of federal funds alongside carbon finance; environmental credit stacking, eligible types of conservation easements, rules and processes for project aggregation, and crediting period length for wetland restoration. Additionally, establishing funding pools to allow wetland project development to scale up and meet future carbon demands in the compliance market would benefit future wetland restoration projects.”

Money, money, money

In 2010, Entergy sponsored a study that found the cost-benefit ratio for wetland restoration is three to one, meaning for every three dollars invested in wetland restoration a dollar is gained in risk avoidance. Using this study as a baseline, Entergy partnered with Tierra Resources to explore additional benefits, such as hunting, fishing, water filtration, and other ecosystem services that could be gained by restoring wetlands, as well as carbon sequestration benefits.

The total potential benefit of just restoring coastal wetlands in Louisiana was determined to be between $400 and $1 billion. If prevented wetland loss, that is the prevention of wetlands from reverting to, or turning into, open water, is included in the carbon accounting, an additional $140 million to almost $630 million may be earned by Louisiana wetlands.

The case for preventing wetland loss is not just environmental, according to large oil and gas corporations such as ConocoPhillips and Shell currently involved in blue carbon projects. Dorsey highlighted an additional risk associated with wetland loss: “Existing wetland owners, if the wetlands convert to open water, they lose all title to that property including the mineral rights. That is some of the economic push for some of these folks to be involved with blue carbon.”

What motivates companies?

Entergy serves Louisiana, among other southern Gulf Coast states, as an energy generator and transmitter and is vulnerable to adverse weather events that may strike the area as Hurricane Katrina did in 2005, he said.

“Entergy is wed to their service area, we don’t have the luxury of pulling up poles and power plants and moving, we are a real member of our service area,” he said. “Looking at this from a risk-management perspective, a storm could wipe out transmission and distribution facilities and have significant economic impacts to our customers.”

 

Opinion: Yes, The US EPA Can And Should Allow Offsets Under The Clean Power Plan

16 March 2015 | The US Environmental Protection Agency’s (EPA) proposed Clean Power Plan, the agency’s attempt to regulate existing sources of greenhouse gases (GHGs) in the electricity-generating sector under its Clean Air Act authority, may be the most controversial rule proposed by the agency. Weighing in at around 670 pages (with a 750-page technical support document,) it is certainly one of the most complex regulations ever attempted by the agency.

It should also be interpreted as offering the states maximum flexibility in how states handle their emission reductions, as we can see by zeroing in on just two sections of the Clean Air Act: Section 110 and Section 111.

Section 110 governs the State Implementation Plans (SIPs), which are the way in which ambient levels of criteria pollutants (like ozone), are to be enforced. Section 110 allows states to meet these goals in any way they wish as long as they do not interfere with another state’s compliance. Section 111, on the other hand, purportedly deals with reductions from source categories (such as electricity generating units).

Here, we’ll be looking at just two sub-sections of Section 111: Section 111 (b), which deals with new or recently upgraded sources of pollution; and Section 111 (d), which deals with older or existing sources of pollution not regulated by states under Section 110 (or as a hazardous air pollutant) . Since greenhouse gases are the only pollutants that exist in this category, and they have yet to be regulated, section 111(d) is as yet untested. The Clean Power Plan is the EPA’s attempt to do so.

Section 111(d) says the EPA may establish guidelines for how states meet reductions required, and it also says that the procedure governing approval of these state systems should be a “procedure similar to that provided by section 7410[Section 110].”

And guess what? Section 110 clearly leaves room for offsetting, as well as any measure that would reach the target required.

How Does the Clean Power Plan Work?

The Clean Power Plan sets individual targets for GHG emissions rates for each state through a formula the EPA developed, examining how various GHG reduction strategies could be implemented given each state’s own unique circumstances. In determining the state’s targets, the EPA critically made a decision that the Best System of Emissions Reduction (BSER) referenced by the Clean Air Act authority under its Section 111(d) provisions could include reductions in GHG emissions from end-user efficiency gains, electricity dispatch decisions, and new non- or low-carbon sources.

Because these reductions would not technically be from a regulated plant itself, they are characterized as “beyond the fenceline” reductions. It is this decision that is responsible for much of the rule’s complexity as well as the ability of the EPA to propose a more aggressive reduction target than could be achieved by changes at the electricity generating plant itself. This approach, the EPA says, allows the states maximum flexibility in meeting ion targets.

Unfortunately, the EPA has shied away from allowing states maximum flexibility for reductions by refusing to endorse (at this time) the use of GHG offsets, (such as biological offsets or reductions from other unregulated sources) even though the use of offsets is generally recognized as a more efficient way to reach tighter GHG reductions targets.

Lying at the heart of this decision, according to the EPA, is “legal uncertainty.” Because of the controversy in the United States surrounding any regulation of GHGs, the regulations are being, and will continue to be, challenged in court. One of these challenges suggests that in setting up the guidelines for the states, that the EPA (and presumably the states) cannot do any “outside of the fenceline” regulation, asserting that this differs from prior regulation of electricity generating units under other pollutants.

In response, the EPA correctly reasons that its authority under section 111(d) is different from its authority to regulate criteria pollutants under 111(b), and that the BSER can include the “outside the fenceline” reductions suggested, as well as emissions trading between sources. I believe the agency is absolutely correct in this interpretation, but this reasoning would suggest that offsets would also be legally allowed under Section 111(d).

To see why, we have to return to the relationship between Sections 110 and 111(d) that I alluded to at the start – namely, that Section 111(d) specifies that the Best System of Emissions Reduction adopted by a state be modeled on Section 110, which governs the State Implementation Plans . While the EPA has not had cause to consider the full meaning and implications of this statutory phrase before, I believe that it means that 111(d) provides that the “system” of emissions reduction can be anything that meets the target required by the EPA. Section 110 allows the states such autonomy in constructing how they will meet the ambient air quality standards for criteria pollutants. In Union Electric Co. v. EPA, 427 U.S. 246, 96 S.Ct. 2518, 49 L/Ed/ 2d 474 (1976), the Supreme Court upheld the EPA’s position that if a state proposes a strategy that is effective in meeting the ambient air quality standards, the EPA must approve that SIP. This follows statutory language in Section 110(a) and also supports the cooperative federalism at the heart of the Clean Air Act.

Though the EPA seems to distinguish between the reductions itproposes in the Clean Power Plan rulemaking and the use of offsets, if “outside the fenceline” reductions are allowed at all if the states so choose, which I believe they are because of the reference to Section 110, then they can be allowed in other arenas such as offsetting.

What it boils down to is this: Unless the EPA is willing to grant the same sort of flexibility to the states under Section 111(d) that it does under section 110, it reads the reference to section 110 out of the statute, which was not the intent of the drafters.

The EPA seems to be afraid that the use of offsets might be a step too far, and other commentators have suggested that the agency’s power under Section 111(d) becomes more precarious the further it moves from the fenceline. But the applicable law suggests otherwise. While the EPA may be trying to paint a smaller target for legal challenge or simply avoid the politics of proposing something that looks very much like a cap-and-trade system, these distinctions are not based on the law. As such, the EPA should clarify that the states could choose to keep or utilize verifiable offset emissions reductions and be compliant with the Clean Power Plan.

Because some of the states, such as California and the Northeastern states participating in the Regional Greenhouse Gas Initiative already have carbon trading programs allowing for GHG reductions from sources such as verified GHG offsets or other industries (such as the petroleum industry), this clarification would allow these states to keep or utilize such reductions and be compliant with the BSER rulemaking. Additionally, clarifying the allowance of verified offsets and reductions from other industrial sectors (if proposed by a state or states) would facilitate the creation of a GHG trading market, which the agency has correctly determined would allow for more reductions at lower costs.

Victor B. Flatt is the Taft Distinguished Professor of Environmental Law at UNC Chapel Hill School of Law.

REDDX: Keeping Track Of Forest Carbon Finance In 2015

8 January 2015 | The Lima Climate Talks last month yielded the Lima Call for Climate Action, which includes both a negotiating text that will be the basis for the start of negotiations in 2015 and general rules for countries to develop their Intended Nationally-Determined Contributions (INDCs) to the climate effort. With deforestation accounting for more than 15% of all greenhouse gas emissions, many countries will undoubtedly seek to incorporate REDD+ (Reduce Emissions from Deforestation and Degradation and other land use activities (REDD+) into their INDCs, meaning we now have two separate REDD+ tracks to consider.

That’s because INDCs don’t kick in until 2020, but REDD+ is already being deployed today through the private sector and various donor agencies. That means countries will need to figure out exactly how REDD+ is financed in the 2015-2020 period and how it will be integrated into INDCs after 2020. For that to happen, we must all be able to see where REDD+ finance comes from, where it goes, and what it achieves activities that have, until now, been difficult at best.

REDDX

In 2011, Forest Trends launched the REDD+ eXpenditures Tracking Initiative (REDDX) to provide greater transparency around REDD+ financial flows. Despite over US$7.3 billion pledged to support REDD+ Readiness by 2015, information has remained limited on how much of this finance has actually flowed to implementing REDD+ on the ground. In partnership with national government and civil society organizations, REDDX currently operates in fourteen countries collectively representing around 1.1 billion hectares of forest, or about 72% of the global tropical forest cover.


For a comprehensive overview of the Lima COP, see “Countries Know They Have to be Bold and Ambitious Next Year: Lima Negotiations Set That in Motion“.

For a detailed understanding of the new bottom-up approach to combatting climate change, see “INDCs, REDD+, And The Alphabet Soup of COP 20“.


We just released our first REDDX report, “Tracking REDD+ Finance“, which focuses on the years 2009-2012, covering the major developments of the Fast Start Finance period, in the initial seven REDDX pilot countries: Brazil, Colombia, Ecuador, Ghana, Liberia, Tanzania and Vietnam. The consolidation of the major trends and findings in each of the seven REDDX pilot countries presents a microcosm of the global picture of REDD+ finance. Key findings include:

  • Increasing commitments to REDD+: Between 2009 and the end of 2012, total REDD+ finance commitments increased steadily to US$1.2 billion.
  • Large gap between commitments and disbursements for REDD+: In the seven pilot REDDX countries, large commitments by donors for REDD+ were often followed by long delays before initial disbursement of funds. Of the US$1.2 billion tracked by REDDX in seven countries, less than a third (US$378.3 million) had been disbursed by the end of 2012.
  • Multilateral sources of funds are beginning to overshadow the bilateral donors and private foundations that had supplied early REDD+ finance: Approximately 78% of all REDD+ finance was committed by bilateral government donors, with the governments of Norway and Germany responsible for over 91% of these commitments.
  • The role of domestic contributions by REDD+ countries increasingly recognized: The extent to which national governments are themselves supporting activities for REDD+ has not been comprehensively quantified, yet domestic financing is increasingly being recognized as an important piece of the REDD+ finance landscape.
  • Low level of private sector financing: Our findings show that the private sector is still not making large-scale REDD+ investments. Data from the voluntary carbon market indicates that the private sector spent US $379 million in carbon offsets in 54 countries during 2013 while the seven REDDX countries only tracked around US $1.2 million. REDDX tracks funding and activities associated with national level REDD+ development. For private sector projects that are not linked with jurisdictional REDD+ programs, please refer to Ecosystem Marketplace state of the voluntary carbon market report 2014.

This report and other information can be found on the REDDX website at: http://reddx.forest-trends.org/

The Environmental Mortgage: Connecting The Dots Between Microfinance And Ecosystem Services

29 January 2015 | All around the world, we see that environmental degradation and poverty go hand in hand – as do sustainable land-use and wealth. This link builds a case for using microfinance to support payments for ecosystem services (PES) – or, more specifically, investments in watershed services (IWS), because PES delivers social benefits providing sustainable and healthier livelihoods for communities.

In short, microfinance provides financial services (loans, insurance) to individuals and groups living in poverty-people who lack access to these services normally. Access to these services has the potential to attract more investors to PES projects. The steady cash flow required to attain credit would demonstrate to institutional investors that a watershed restoration project, for instance, is worth backing.

These were some of the thoughts of Josh Donlan, founder of the environmental organization Advanced Conservation Strategies, and his colleagues a few years ago when they wrote a paper on the subject. They reasoned an ‘environmental mortgage’ initiative could go something like this: a coastal fishing community in a developing nation has access to a more profitable and resilient fishery nearby but needs fishing gear-boats and nets-to reach it. A local environmental lending group could provide the needed finance as a low-interest loan. In return, the fishing community conserves a patch of reef proportionate to the area being fished along with paying a percentage of the fishing profits to the lender. Project design is specific to the region and repayment plans would vary accordingly. For instance, a larger area of reef conserved could result in a lower interest rate.

Donlan, along with the other authors of the paper, spent some two years scoping out potential pilot projects, mainly in South America. For a variety of reasons, though, the projects never got off the ground as planned. One of their projects in Peru was further developed, but Donlan was never assured that a microfinance component was part of it.

As it turns out, adopting microfinance as a means to finance environmental work is complicated and expensive with several issues that need to be ironed out in order for it to move forward. Donlan’s difficulty in implementing projects is just one example backing this up. According to Ecosystem Marketplace’s State of Watershed Investments 2014 report, only three projects use some sort of credit mechanism: one in Brazil, one in Costa Rica and one in Nepal. The latter two each use revolving-loan funds to finance restoration activities that repair damaged watersheds.

There are a few other examples of success. At the climate talks in Lima, an event focused on an initiative that partners with microfinance institutions over ecosystem based adaptation in the Andean region known as MEbA (Microfinance for Ecosystem-based Adaptation).

Also, a start-up working in Kenya called F3 Life provides credit and sustainable land-use support to smallholder farmers. With F3 Life loans, farmers implement conservation practices such as planting trees and grass strips that reduce soil erosion while also preventing soil from rolling directly into waterways. These activities deliver long-term benefits for the farmers allowing more productive agriculture long-term. And they protect the environment.

F3 Life is a relatively new enterprise having launched officially in 2013. So far, the company has met with success.

The Basic Problem

For the most part, however, credit mechanisms aren’t widely used. The most basic challenge, perhaps, is locational. Microfinance has met with success in urban areas whereas environmental loans would be happening predominantly in rural areas. As there is basically no access to credit in these places, it greatly increases the transaction costs. What’s more, environmental performance has to be tracked and verified adding more costs to an already expensive process.

The monitoring needed is just one of the extra risks for microfinance institutions, Donlan says. They also face correlated risk. Traditionally, microfinance institutions form diversified portfolios to protect themselves from a slew of defaulting loans when one industry falters. But environmental activity requires a focus on behavioral change at a community level rather than on the individual. It takes the bulk of a village practicing good environmental stewardship to make a meaningful impact. If the Brazil nut business tanks after a microfinance institution lends 100 nut gatherers capital on the basis of sustainable production, the institution stands to lose much more than if they had issued just one or two loans to that particular business.

Group-type models of microfinance like cooperatives and associations do exist but there is an emphasis on the individual, Donlan says, which can easily conflict with conservation activities.

Luis Rodriguez, an Australian-based ecological economist, also mentions the importance of critical mass in the success of PES.

“The public good feature of ecosystem services make them hard to be captured by microfinance,” Rodriguez says. In part because there is little to no incentive for one landowner to take out a loan for services that he/she will benefit from along with many others who won’t ever make payments on that loan. So it makes much more sense, from a PES standpoint, to have a large number of participants.

A Multi-Faceted Problem

This disparate structure remains an issue, but interest appears to be growing. Kiva Microfunds is a non-profit organization that provides loans funded mostly through internet donors, and project managers say there is some growth and definite interest in expanding, even though conservation-centered activities make up only a small portion of its portfolio.

“This is an area that Kiva is actively pursuing,” says Claudine Emeott, Kiva’s Director of Strategic Initiatives. “But our growth is dependent on existing opportunities.”

And as of right now, opportunities are slim. They’re dabbling in lending to sustainable forestry projects in Latin America. Kiva is also involved in the carbon markets, providing loans to East African communities so they can access chlorine drips to purify water without boiling it and funding clean cookstove distribution partly through carbon finance. The risk is very high, Emeott says, as repayment is dependent on behavior change.

As for reasons why opportunities are few, she thinks it could stem from philanthropic capital being the dominant form of funding in the conservation space. But as conservation finance continues to collect a mainstream audience, opportunities for Kiva and, thus, credit mechanisms, in this sector could increase as well.

Awareness Issues

Simple awareness on conservation finance and PES projects is also serving as a barrier.

Sean DeWitt, a Senior Manager for the Global Restoration Initiative at World Resources Institute (WRI) and a previous director at the Grameen Foundation, a microfinance organization, says he hadn’t heard of PES until he joined the environmental sector at WRI.

“In this space, we assume people are aware of things that they aren’t,” he says.

There’s also a longstanding culture around the environmental sector that we should be conserving because it’s the right thing to do, says Donlan, and the idea of PES just didn’t sit well with a lot of people.

However, like Emeott, Donlan says this mindset is changing especially as the poverty issues that cause and are a result of environmental degradation are taken into account. This, combined with the growth of conservation finance, could cause a shift in how conservation efforts are thought-of and managed.

Rodriguez points out several existing efforts backing up their claim such as MEbA and Bolsa Verde, a Brazilian project focused on environmental and social goals. Though Bolsa Verde doesn’t use a credit mechanism, its purpose is to alleviate poverty using conservation.

What needs to Happen?

Although expensive and full of potential issues, a method of finance dependent on sustainable behavior is a tempting and promising concept. And the price tag shouldn’t be too big of a deterrent.

Microfinance may be expensive but it isn’t more expensive than just pumping money into an environmental effort with zero expectation of a return, Donlan says.

“The starting point shouldn’t be making money or even breaking even,” he says, “rather it should be focused on cost recovery.”

In order to get microfinance for PES moving, the first step should be establishing the pilot projects Donlan and colleagues had previously tried to initiate. “That would provide a learning platform to figure out issues like the low cost monitoring, the sweet spot between individuals and the group, and what the main transaction costs are,” Donlan says.

Identifying the risks to microfinance institutions could also be addressed with pilots. They could help develop different lending portfolios for the various types of environmental loans possible, which could result in a degree of certainty surrounding this branch of lending.

There are different styles of microfinance: the Missing Middle or the Grameen model, for instance. Specialized banks typically provide agricultural loans, DeWitt says, because of the variability in repayments (they can be dependent on harvest) and increase in risk. Environmental lending, then, could be scoped and analyzed forming a unique type of borrowing.

It’s a definite possibility. Meanwhile, conservation activities will continue as will the documented evidence on the social benefits of conservation. And the quest for long-term finance to support these endeavors-both social and ecological-will continue as well.

“The question we should be asking,” Donlan says, “is does debt make sense from a human behavior standpoint and a long-term incentive standpoint.”

Paiter-Surui Take Stock Of Community Fund Charged With Managing Finances

17 January 2015 | One month after an opposition leader of the Paiter-Surui indigenous people sparked an uncharacteristically public debate about the people’s landmark forest carbon project, several village and clan leaders sent a “letter of clarification” to the Federal Public Ministry (Ministério Público Federal) outlining what they see as flaws in the governing mechanisms designed to handle community finances.

In general, the signatories praised the Carbon Project itself, but said the governance apparatus that the Brazilian Biodiversity Fund (Fundo Brasileiro para a Biodiversidade, “Funbio“) created for the community had been slow to disburse funds, and that too much authority had been vested in the Metareilá Association, which is the indigenous organization selected by the Paiter-Surui to implement the project.

“We are not questioning the Surui Carbon Project and its partners,” they wrote. “But there is a huge discrepancy between the money that the Surui Fund received and the amount passed on to the associations.”

The Surui Fund – officially known as the Fundo Paiter-Surui – only began to earn income from the Carbon Project in September, 2013 when Brazilian cosmetics giant Natura Cosméticos purchased the first tranche of offsets. Income from that sale was earmarked for institutional strengthening, border control/surveillance and jump-starting economic alternatives to illegal logging. The signatories say that funding began flowing quickly into the community early in 2014, but slowed as the year progressed. It’s not clear whether the alleged discrepancy reflects the Fund’s allocation of income to community-wide programs, or whether it is symptomatic of growing pains or issues that need adjustment.

Fundo Paiter-Surui

Despite its name, the Fundo Paiter-Surui is more than just a depository for money. It’s a long-term governance apparatus developed by Funbio, together with members of the Paiter-Surui, to operationalize the 50-Year Management Plan that Chief Almir Surui created a decade ago. The Carbon Project spawned the Fundo, but the Fundo and the Project are two separate, symbiotic entities.

The Fundo‘s mission, according to a document prepared by Funbio (See English and Portuguese versions of “Fundo Paiter Surui Explainer”, right), is “To generate benefits to the indigenous territory by organizing, centralizing and providing transparency for the collection, management and use of resources for the governance of the Paiter Surui and the implementation of the Management Plan.”*

Governance

In the explainer and in the longer Operating Manual, Funbio commits to shepherding the creation of a Deliberative Council (“Conselho Deliberativo” ) and a Conflict-Resolution Chamber (“Câmara de Resolução de Conflitos“) to govern the fund with the Labiway Esaga, or overall chief, acting as administrator.

Chapter 8 of the Operating Manual clearly describes the roles of each body: the Deliberative Council is to choose a financial manager and supervise the selection of projects, among other things; the Conflict-Resolution Chamber is to keep information flowing and resolve conflicts; and the Labiway Esaga acts as the voice of the Fundo and has veto power over projects.

The manual describes a detailed, multi-level process for proposing projects and a system of checks and balances to prevent the concentration of control in any one person or entity. It also lays out an intricate set of procedures through which Funbio will launch and oversee the fund while gradually training members of the Paiter-Surui to assume management themselves over time.

Ângelo dos Santos, Funbio’s head of Climate Change and Clean Energy, acknowledged the grievances and said they reflected theFundo‘s stepwise implementation.

“This is a process in which the Fund’s structures are implemented in different stages depending on their incorporation by the Suruí,” he said, adding that Funbio was reviewing the grievances and would provide a detailed response shortly.

“The structure has a certain degree of complexity, which is learned gradually during the incubation period,” he added. “This first year the governance is being tested, and the basic management processes have advanced well in comparison to the beginning of 2014.”

Chief Almir said he was reviewing the grievances with the signatories, and he would offer a formal response early next week.

The Grievances

While the manual describes an emerging participatory process involving all of the various clan associations and the creation of new associations to handle new business areas, the signatories say the reality is a more concentrated. They often, however, refer to the governance structure (Fundo) as the “project”, which has led to confusion outside the community.

“During the preparation of the project, it had been agreed that each association would be responsible for an area: agriculture, education, health, environment, culture and tourism,” they wrote. “But when the funding arrived, from the sale of sale [of carbon offsets] to Natura, this agreement was not honored.”

Instead, they say, “[Labiway Esaga] Almir created departments within the Metareilá Association, reducing the involvement and autonomy of the other clan associations within the Suruí Fund.”

They called on Surui leaders to decentralize the implementation of the community-assistance work financed under the project, and they also called on federal authorities to monitor illegal logging and to take an active role in supporting the project.

“We expect that the Federal Public Ministry, in addition to monitoring the illegal logging, also monitor the correct implementation of the Project, because it is an innovation and might serve as an example to other indigenous peoples, if well executed,” they wrote.

Taking Stock

The grievances come amid general stock-taking involving internal and external actors. In July, for example, Metareilá Association invited an outside consultant to carry out a workshop assessing its governance, and that workshop produced recommendations for better integrating all the Surui communities to benefit from the Surui Carbon Project. It is not clear, however, which of those recommendations have been implemented.

The Carbon Project is also undergoing verification from external auditors under the rules of the Climate, Community and Biodiversity (CCB) Association as part of the normal procedure and safeguards for projects of this caliber. The verification includes an assessment of governing structures, and it is expected to yield similar recommendations.

Logging and Financial Pressure

The signatories also defended the motivations behind the resumption of logging by some families, which they say began in 2012. That was three years after they implemented a logging moratorium to support the carbon project, two years before funding from the carbon sales started to flow into the community in January 2014.

“Some of our people were selling wood to survive, and in 2009 discontinued this illicit activity thinking that now things would get better,” they wrote. “However, legal and bureaucratic obstacles delayed the availability of financial resources, [and] in 2012, some community members were forced to return to selling wood, because there was no project that would have allowed these families to sustain their livelihoods, many people were going hungry.”

Differentiating Between the Carbon Project and the Fundo

The wording of the list of grievances is at times confusing, with the Carbon Project and the Fundo Paiter-Surui being used interchangeably. In the final paragraph of their clarification, for example, the signatories deviated from the messaging in the bulk of the document and appear to call for the carbon project to be terminated, but they also call for more autonomy given to the associations.

“Given the above, the leaders who have signed this document want that the Paiter-Suruí Carbon Project to be terminated and for the associations to develop and implement projects that ensure real autonomy for communities with a sustainable development and income generation without depredation of natural resources.”

In context, and given the earlier support of the project and references to the Fundo as the “project”, the paragraph could refer to the Fundo or some of its mechanisms. Furthermore, several of the signatories, including former overall chief Anine Surui, had recently voiced support the project but criticized the administration of the funds. Ecosystem Marketplace has reached out to Anine and others for clarification, and will provide an answer as soon as we receive it.

Financial Flows

The signatories offered a detailed breakdown of expected financial flows vs. actual flows, and they pointed out that many of the chiefs went without compensation in the years during which the project was working its way through the four-year process of verification and validation.

“It was foreseen in the project budget that the board members of each clan association would receive a salary of R$2,000.00 ($762.00) for a period of three years,” they wrote. “This salary would be paid for accompanying and supervising the project together with the communities that each association represents, but no such payment was made.”

But they said disbursal slowed down as the year progressed.

“The projects that had been approved received their contributions in two instalments,” they wrote. “The first was released in June, 2014 but some associations have not yet received the second instalment.”

They added, however, that “Technicians from Metareilá claim that they are still analyzing the statements of accounts presented for the first installment.”

The letter also says that 2014 funding to associations for general administration fell $R1,000 ($382.00) short of expectations.

“Contracts had been signed for an amount of R$7,500.00 ($2,866.00), payable in three monthly installments of R$2,500.00 ($955.00), but associations received two installments of R$ 2,000.00 ($763.00) and one instalment of R$ 2,500.00,” they wrote. “When they requested the amount still due, the Metareilá Association claimed that it had no means to pay the outstanding amount.”

Chief Almir acknowledged that some of the funds had been held up over concerns about how the first tranche was spent, but he pointed out that most of the allocated funds had been disseminated to the community. Both he and Funbio’s dos Santos said they would provide a detailed response shortly.

Norway Pledge Brings Green Climate Fund To $9.95 Billion

5 December 2014 |Lima | Peru | Norway last night announced that it has doubled its pledge to the Green Climate Fund (GCF) to NOK 1.6 billion (US $258 million), bringing the fund to $9.95 billion, within sight of the generally-accepted bare minimum of $10 billion needed to be pledged at the 20th Conference of the Parties (COP 20) to the United Nations Framework Convention on Climate Change (UNFCCC), underway here through December 12.

The Fund is designed to be a conduit for much of the roughly $100 billion per year that should be flowing annually from rich to poor countries to combat climate change.

Norway will make its funds available over the next four years, with NOK 400 million coming each year, beginning in 2015 and continuing through 2018. Earlier in the week, the fund’s director of mitigation and adaptation, Tao Wang, said the bank would begin selecting targets to disburse funds in March of 2015.

“Rich countries must provide the greatest share of the funding, but all countries that have the economic capacity should contribute, said Minister of Climate and Environment Tine Sundtoft. “Recipient countries have a particular responsibility for providing conditions that attract climate investments.

What’s in it for Forests?

While Norway’s pledge doesn’t have a direct impact on halting deforestation, one of the Green Climate Fund’s priority areas is reducing emissions related to land-use. As deforestation and forest degradation falls under this category, a boost in the GCF’s overall funds has broad implications for the sector, Research Analyst at the World Resources Institute, Alex Doukas, says.

A Good Start

Observers welcomed the announcement, and expressed a hope that it would trigger additional funding from other donor countries.

“More financial support for the Green Climate Fund is always welcome and we applaud Norway for increasing their commitment, said Kelly Dent of Oxfam. “Several developed countries including Australia, Austria, Belgium, Ireland, Iceland, Greece and Portugal have still failed to offer their support. The Fund has just barely reached the minimum level it needs to get off the ground, but this is still only the first step in achieving the financial support required to enable climate action in developing countries. Negotiators in Lima must not rest on their laurels; a roadmap for how countries will meet the $100 billion annual commitment is urgently needed.

The $10 billion mark is somewhat arbitrary, Doukas says, noting the adaptation and mitigation needs far outweigh that amount. But it’s still a significant number as UNFCCC Executive Secretary Christiana Figueres noted the number would serve as the minimum threshold to make a meaningful impact and serve as a signal to developing countries.

Doukas says reaching $10 billion by the end of COP 20 should prime the pump for discussions leading up to the climate talks in Paris.

Colombia, Guyana, Indonesia, Malaysia And Mexico Submit Forest Data For Reference Levels

8 December 2014 | LIMA | Peru | Colombia, Guyana, Indonesia, Malaysia and Mexico today formally submitted information and data on the status of their greenhouse gas emission reductions in the forest sector to the secretariat of the UN Framework Convention on Climate Change (UNFCCC). Such data is required for establishing a forest reference emission level for these countries.

Reference levels in turn constitute benchmarks to assess the performance of developing countries in the implementation of REDD+ (Reducing Emissions from Deforestation and Forest Degradation, plus conservation and enhancement of forest carbon stocks and sustainable management of forests).

Actions on REDD+ establish a financial value for maintaining carbon stored in forests and reducing emissions from land-use changes by using a performance-based approach.

“The knowledge of forest inventories and their carbon stocks is essential to be able to take action on forests,” said Manuel Pulgar-Vidal, President of the UN Climate Change Conference and Environment Minister of Peru. “Countries are not only recognizing the economic value of forests, but also their value for biodiversity, their cultural value and their ability to provide people with a better quality of life.

The data will now be assessed by forestry experts coordinated by the UNFCCC secretariat under rules agreed on last year in Warsaw.

In June, Brazil was the first country to submit information and data on the status of its greenhouse gas emission reductions in the forest sector. The technical assessment of Brazil’s submitted forest reference emission level was finalized last week.

Mexican Indigenous Community Road Tests Forest Carbon Offset Project, With Help From Disney

21 November, 2014 |When Climate Action Reserve (CAR) President Gary Gero started thinking about the perfect corporation to partner with the Chatina indigenous community of San Juan Lachao in Oaxaca, Mexico for the first forest carbon offset project under CAR’s Mexico protocol, he knew exactly who to call.

Gero dialed the folks at the Walt Disney Company’s Climate Solutions Fund, an active buyer in the voluntary carbon markets. “The CAR folks thought we would like this project and they were absolutely right, said Bob Antonoplis, Disney’s assistant general counsel.

The community of San Juan Lachao has launched the first pilot project under CAR’s Mexico forest protocol approved in October 2013 with the assistance of Mexican environmental nonprofit Pronatura and financial support from Disney to get the project off the ground. The project is currently estimated to generate 20,000 tonnes of offsets per year. The size of the area is about 25,000 hectares.

The forests of San Juan Lachao have been grazed and left in poor conditions with an increased risk of wildfire and reduced water quality. Hundreds of thousands of people from the state of Oaxaca, Mexico have migrated from their homes to the US state of California in search of better economic opportunities.“They immigrate because they have no income and no alternatives and they haven’t really figured out how to get resources out of forests, said Carlos Sada, Mexico Consul General in Los Angeles.

However, the community will receive financial revenues from the sale of the offsets to support forest management and protection, provide clean water and improve the standard of living of its people. The project will provide about 30 direct jobs and 150 indirect jobs to the local community, at an average salary of $15 per day for each person, which is well above the $10 per day minimum wage in the area, said Adolfo Alaniz, General Director of Pronatura.

The Chatina community consists of 4,531 people. And for the project proponents, one of the key highlights is that the community members themselves are doing the work rather than outside consultants. CAR and Pronatura conducted a general training session on global warming and then focused on teaching community members the technically complex tasks of measuring trees and installing plots. They just finished putting in 300 plots for the project.

“It’s creating an employment opportunity for them, said CAR Director of Forestry John Nickerson. The young men and women are getting a lot of technical expertise that will stay with them for a long time and are demonstrating a “strong willingness to succeed and a lot of local pride, he said.

It is exactly those clean water and employment and economic benefits that made the project so attractive to Disney, as well as the partnership with and participation of the local community, Antonoplis said. “This project just has a fantastic story to tell, he said.

In Mexico, about 80% of the forests belong to the local or indigenous communities so it is crucial to understand how they feel about and interact with their forests through projects such as this one, according to the project proponents, who are looking to expand the pilot activities elsewhere in the country.

“This project will have a very direct impact on the communities all over Mexico, Sada said.

The First Test

This community-led project is the first test of CAR’s Mexico forest protocol, which provides standardized guidance for carbon enhancement projects within a reduced emissions from deforestation and forest degradation (REDD+) framework and addresses eligibility, baseline, inventory, permanence, social and environmental safeguards, and measurement, reporting and verification requirements.

The project involves improved forest management activities, with uneven-aged management of native species the most popular management strategy among project developers in 2013, according to the State of the Forest Carbon Markets 2014 report, to be released later this afternoon. It is also flexible to include urban forestry and agroforestry activities.

The project is more akin to the domestic forestry projects allowed into California’s cap-and-trade program than an avoided deforestation project, but CAR sees this as the type of project activity that could be nested under a jurisdictional REDD program and potentially eligible for a compliance program such as California’s.

“We developed it to be adaptable to Mexico’s REDD+ program as a nested project in the future, Nickerson said.

“I would love to see (the Mexico protocol) built into the California program and other regulatory programs, Antonoplis added.

A Broader Impact

Disney is no stranger to investments in Latin America-based forest carbon projects. With the help of a $3.5 million donation from the company, Conservation International was able to develop a REDD+ project in the dwindling Alto Mayo Protected Forest in Peru. The project has generated at least three million tonnes of emissions reductions so far, and delivered a host of benefits for the local populations.

Disney’s operations do not subject it to compliance obligations under California’s cap-and-trade program, meaning it purchases offsets for strictly voluntary reasons.

“But that didn’t stop us obviously, Antonoplis said. “We felt we had an obligation, irrespective of what (California’s GHG reduction law) was going to require, to do something about our own greenhouse gas (GHG) emissions and to encourage others to do the same.

The company has generated more than $48 million for these types of projects by charging an internal carbon price to its business units for their GHG emissions and has openly discussed its carbon pricing program in its corporate social responsibility reports and public events.

“It’s very powerful tool, he said. “So when the private sector does something like that and tells its story, it encourages other companies to do the same.

The project comes after a historic agreement between the governments of Mexico and the US state of California to cooperate on climate issues in July and could pave the way for more international cooperation ahead of the upcoming United Nations negotiations in Lima, Peru in December and Paris in 2015.

“While we’re waiting for national governments to come together, to take the broader action they will hopefully take, it’s these actions that demonstrate real and positive benefits in the community and that we can address climate change on a broader scale, Gero said.

For their part, private companies such as Disney can provide critical seed funding and partnership expertise to allow these voluntary projects to flourish, which will demonstrate to governments that carbon projects can be successful and should be a part of regulatory carbon pricing programs.

“We think the private sector, even if you’re not subject to a compliance program, plays a vital role in advancing the cause of greenhouse gas emissions reductions, Antonoplis said.

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Gloria Gonzalez is a Senior Associate in Ecosystem Marketplace’s Carbon Program. She can be reached at ggonzalez@ecosystemmarketplace.com.

VCS, CCB To Cooperate On Standards

19 November 2014 | After a long courtship, the most popular carbon standard and the leading co-benefits standard on the voluntary carbon market have taken their relationship to the next level: The Verified Carbon Standard (VCS) will now manage the day-to-day operations of the Climate, Community and Biodiversity (CCB) Standards.

More than 70% of forest carbon offsets developed under VCS also pursued certification with CCB, according to Ecosystem Marketplace’s State of the Forest Carbon Markets 2014 report, to be released this week. For many buyers, the “beyond carbon benefits of these projects benefits such as job creation and endangered species protection are what piques their interest in carbon offsets in the first place.

“Corporate buyers are really placing an increasing importance on non-carbon benefits,said David Antonioli, VCS’s Chief Executive Officer. “At the end of the day, that’s often what’s creating demand.

Both standards emphasize that “project developers should expect no immediate changes, but that the new arrangement should increase efficiency and reduce transaction costs. Though the dozens of projects that pursue “VCS+CCB certification are already trying to sync up validation and verification schedules, the management of both standards by a single team may better harmonize this timing. If projects are able to use a single auditor that makes one trip to a project site, that could also result in cost savings.

There are already joint templates for project developers to use VCS and CCB in conjunction, but Antonioli notes that there may be opportunities to make the carbon and co-benefits requirements even more compatible. For instance, CCB uses a helpful checklist approach something VCS might consider in the future.

Before making any new moves, though, VCS plans to settle into its new workload. Since releasing the first edition of the CCB Standard in 2005, CCB now has 85 validated projects across 35 countries 23 of which have already achieved verification. Though many of these projects are already pursuing VCS as well, their processes have been separate until now. And there are some project developers that do not plan to monetize carbon offsets and so pursue CCB verification alone meaning the VCS team will be seeing some brand-new project documents cross their desks.

While the CCB Standards were developed specifically for land-based carbon projects and the majority of transacted CCB tonnes in 2013 were sourced from avoided deforestation (REDD), the transfer of management could open the possibility for CCB to be applied to new project types.

“We’re interested in exploring the way that CCB Standards can be used for a broader range of projects, though we’ve focused on land-based projects [to date], said Joanne Durbin, Director of the Climate, Community and Biodiversity Alliance (CCBA). “We’re excited about the opportunity to explore further ideas with VCS.

After handing off the management of CCB, representatives from the Alliance’s five member organizations CARE, Conservation International, The Nature Conservancy, the Rainforest Alliance and Wildlife Conservation Society will continue to offer guidance through a steering committee co-chaired by Durbin and VCS Sustainable Landscapes Director Toby Janson-Smith.

This will free them up to focus on the broader vision of the CCBA, including the REDD+ Social and Environmental Safeguards currently being used in 13 countries participating in the United Nations REDD Programme. These safeguards are creating the “enabling conditions for REDD to move forward through 2020 the deadline to implement an international climate agreement and to facilitate financing in the meantime.

“Standards and safeguards are so important because they build confidence in the results, and we’re really talking about results-based payments,said Durbin.

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Forest, Ag Project Developers See Opportunity, Concern In California ODS Offset Invalidation

18 November 2014 | California regulators shook the North American carbon markets to their core with their plans to invoke the invalidation provisions featured in the state’s carbon offset program for the first time. While the affected producers of ozone-depleting substances (ODS) offsets and their allies loudly lobbied the regulators to change their minds, developers of forest and livestock carbon offsets quietly mulled what the decision means for them.

 

The ODS invalidation “could be the most important topic affecting California offsets right now, said Kevin Townsend, Chief Commercial Officer of Blue Source, which develops forestry and other types of carbon offset projects. “This is immensely important for all California offset types, including forestry.

Keep reading (for free!) at the Forest Carbon Portal.

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Despite Market Outcry, California Voids Some Carbon Offsets

14 November, 2014 | California regulators rejected pleas from carbon market stakeholders to abandon their effort to invalidate ozone-depleting substances (ODS) offsets generated at an Arkansas facility, but limited the invalidation to one particular carbon offset project.

The California Air Resources Board (ARB) the agency tasked with overseeing the state’s cap-and-trade program and its offset component in May began reviewing offsets issued for ODS destruction events at the Clean Harbors Incineration Facility in El Dorado, Arkansas. These substances, which include foam-blowing agents and refrigerants, are much more potent than carbon dioxide in terms of their global warming potential, so the ARB adopted a process to count the greenhouse gas (GHG) emission reductions associated with destroying these materials in the United States and allow these reductions to be used for compliance in its program.

In October, the ARB issued a preliminary plan to invoke the so-called buyers liability provisions that allow the regulators to invalidate offsets found to be faulty or fraudulent and require regulated entities to surrender replacement offsets for compliance. The ARB ruled the offsets generated by two ODS projects one developed by Environmental Credit Corp (ECC) and the other by EOS Climate should be invalidated because the Arkansas facility was out of compliance with its operating permit issued under the Resource Conservation and Recovery Act (RCRA). Of the 231,154 offsets the ARB is seeking to invalidate, 142,199 were generated by ECC’s offset project and 88,955 from the EOS Climate project.

On Friday, the ARB decided to proceed with the invalidation of the offsets generated by the EOS Climate project. But the regulators backed away from plans to invalidate the offsets generated by the ECC project because the ARB ultimately concluded that the destruction activities related to that project occurred outside of the timeframe when the Clean Harbors facility was purportedly out of compliance with its RCRA permit. ECC and EOS Climate could not be reached for immediate comment.

“It’s not good news, but I don’t think it’s market-destroying news either, said Peter Weisberg, Program Manager, The Climate Trust.

The ARB’s final determination clears the vast majority of the 4.3 million compliance offsets it was investigating to be returned to the accounts from which they were removed on May 29 when the investigation was launched.

 

A Shocking Turn of Events

While expressing support for the regulators efforts to protect the environmental integrity of the program, in the weeks following the preliminary determination, stakeholders painted a picture of the market chaos created by what they called a subjective and error-prone investigation.

For example, the ARB’s seizure of the 4.3 million offsets before determining the validity of the offsets was called “improper and unlawful by Nicholas van Aelstyn, a lawyer representing ECC, a comment echoed by many other stakeholders in more measured terms. He also alleged serious errors by the ARB, including the fact that the ODS destruction related to the ECC project occurred several hours after the alleged RCRA violation was resolved, meaning the offsets should not have been subject to invalidation at all.

The preliminary decision was shocking to market participants for many reasons, not the least of which was that ARB seemingly had the discretion based on the language in the regulation to decide not to invalidate the offsets because the alleged violation was unrelated to generation of the offsets. By the ARB’s own admission, the offsets generated during the time when the facility was allegedly in non-compliance with its RCRA operating permit met the ARB’s criteria of representing real, quantified and verified emissions reductions. Market stakeholders lobbied the ARB not to invalidate the offsets given that their environmental integrity was not in question.

The preliminary decision was also surprising because ODS had been the top choice for compliance offsets for some time as buyers were reassured by the accuracy of the emissions reductions created by these projects a critical consideration when California regulators retained the right to force buyers to replace invalidated offsets. But the preliminary determination demonstrated the inherent risk associated with developing ODS projects when there are only seven commercially available destruction facilities, according to some developers.

Responding to complaints about a lack of clarity and transparency in its preliminary determination, the ARB laid out its argument for invalidation in the final determination. The ARB cited the language of the ODS protocol, which states that offset projects are ineligible to receive ARB or registry offset credits for GHG reductions that occur as the result of collection or destruction activities that are not in compliance with regulatory requirements. The regulatory compliance requirement extends to the operation of destruction facilities where the ODS is destroyed. All destruction facilities must meet all applicable regulatory requirements during the time the ODS destruction occurs, according to the language of the protocol.

The cap-and-trade regulation and the ODS protocol are complementary regulatory documents that “must be read in harmony with each other according to the ARB’s final determination. The regulators interpreted these provisions to require that both the project activities associated with the destruction of ODS as well as other activities at the facility in question must be in “accordance with all local, state, or national environmental and health and safety regulations. ARB interpreted this provision to be applicable to all requirements that have a bearing on the integrity of the generated offsets; and environmental and health and safety requirements associated with the collection, recovery, storage, transportation, mixing, and destruction, including the disposal of the associated post-destruction waste products.

 

The Fallout

The invalidation rules are often blamed for a lack of transactions in the California offset market and there is a general consensus that the ARB’s decision could only further dampen what little liquidity currently exists.

The investigation disrupted commercial processes in the offset market because of its length and lack of clarity, remarked Mark Krausse, Senior Director for State Agency Relations for Pacific Gas & Electric, during the public comment period. The ARB’s investigation took more than four months and was characterized by a lack of transparency, according to several stakeholders.

And the ARB’s approach raises questions about potential scenarios under which forestry or livestock offsets other project types eligible for California’s cap-and-trade program could be invalidated, Weisberg said.

“There’s so much uncertainty in these markets, he said. “It’s very difficult to convince investors that it’s worthy investing.

The ARB should consider alternatives to buyers liability such as a buffer account to cover these types of losses, Krausse, Weisberg and other stakeholders suggested. Quebec the Canadian province partnering with California on carbon trading via the Western Climate Initiative established a buffer pool that sets aside 4% of offsets to cover reversals or invalidations.

In discussions with Oregon and Washington, which are both considering options to comply with upcoming federal carbon regulations, Weisberg has encouraged them to follow Quebec’s model or the approach of voluntary standards in ensuring offset integrity rather than California’s approach. However, he also noted that there are potential solutions to the risk created by California’s buyers liability provisions, including insurance policies designed specifically to cover the invalidation risk.

“It’s definitely an unfortunate risk, he said. But “we still think this is a risk that can be managed.

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Gloria Gonzalez is a Senior Associate in Ecosystem Marketplace’s Carbon Program. She can be reached at ggonzalez@ecosystemmarketplace.com.

Cookstove Distribution Soars; Carbon Finance Now Top Funding Source

12 November 2014 | Last year, when Hillary Clinton announced the Results Report 2012 at the Global Alliance for Clean Cookstoves (“the Alliance”) Leadership Council, she spoke to a crowd including a President, former President, and other notable guests. This year’s report launched quietly online with little fanfare. Though lacking the star-studded attention, the results remain just as important in understanding the latest progress toward ending the four million annual deaths from household air pollution that occur across the globe.

The Results Report 2013 is the second year-long effort by the Alliance to track activities in the improved stoves and fuels market. Like last year, Forest Trends’ Ecosystem Marketplace assisted with this effort. Unlike 2013, Ecosystem Marketplace administered, analyzed and wrote the most recent report.

A total of 456 Alliance partners responded to this year’s survey, up from 246 in 2012, which means that greater insights can be gleaned about market activities. Of particular note are the headline numbers of stoves distributed: an all-time high of 14.3 million stoves were tracked, a 75% jump from 2012 estimates.

However, both the volume and overall value of cookstove project offsets fell by 63%, to 6.3 million offsets worth $61 million. Likewise, the number of stoves distributed with carbon finance dropped from four million last year to one million stoves in 2013. A look beyond 2012 reveals that the 2013 changes still represent a gradual increase from 2008-2011 (Figure 1); meaning that the market should be viewed as cyclic rather than declining.

The 2013 report did feature some good news for carbon finance in that it was the top reported source of funding, edging out government grants. Last year, government grants totaled 36% of all reported finance while carbon finance made up only 6%. This year, the latter jumped to 36% and government grants subsided to 25%.

Another positive outcome for carbon developers is that pricing remains strong, with the overall price rising a modest 5% to $10.4 per tonne of carbon dioxide equivalent (tCO2e). The average voluntary emissions reductions and certified emissions reductions (CER) spot price both rose significantly, to $12.2/tCO2e and $6.4/tCO2e, respectively.

The higher prices found on the voluntary market are reflected in the shift of primary certification types. Last year, over half of cookstoves were developed in compliance with Clean Development Mechanism (CDM) guidelines and only 36% were verified through the Gold Standard (GS) Foundation. This year, GS offsets represented 61% of all transacted volumes, which marks a shift towards targeting voluntary buyers. The CDM made up an additional 37%, with Verified Carbon Standard and dual CDM/GS offsets making up 1% each. While CDM/Joint Implementation (CDM/JI) offsets averaged $6.3/tCO2e, an improvement from 2012, they still don’t match the GS $12.1/tCO2e average.

Despite this shift, compliance markets remain committed to cookstoves. European governments remained willing to pay higher-than-average pricing for cookstove CERs as evidenced by the jump in CER prices. This includes a substantial commitment from the Swedish Energy Agency (SEA) to pay above-average prices for offsets that comply with the Europe Union’s Emissions Trading System (EU ETS). In late 2013, the SEA confirmed two large-scale contracts to deliver 500,000 offsets each by 2020; scales the project developers said were not possible with constrained voluntary market demand.

Luckily for large-scale projects, Sweden is not the only country considering this. The United Kingdom (U.K.) developed the Carbon Market Finance Programme, which will contribute £50 million between 2013-2025 to support greenhouse gas mitigation and renewable energy generation in least developed countries though increased access to carbon finance.

In December 2013, the World Bank’s Carbon Initiative for Development Fund received additional financial support from Sweden, the U.K. and the Swiss-based ClimateCent Foundation in the form of a $125 million pledge. The Fund targets carbon projects that focus on clean energy technologies.

In September, the Nordic Environment Finance Corporation announced a second call for proposals for the Norwegian Carbon Procurement Facility to “prevent the reversal of emission reduction activities by procuring credits from projects whose survival or continued emission reductions depend on a higher carbon price than achievable under current market conditions.

These initiatives reflect the EU ETS’s new regulation beginning in 2013, which requires compliance buyers to purchase any new CERs from Least Developed Countries (LDCs). Unsurprisingly, Africa, home to the most LDC countries, provided 78% of all carbon offsets. Asia and Latin America snagged an equal share of the rest, with 12% and 10%.

Graph1

 

Kelley Hamrick is an Associate in Ecosystem Marketplace’s Carbon Program. She can be reached at khamrick@ecosystemmarketplace.com.

Carbon, Cookstoves, And Kids

When Hurricane Mitch blew through Central America in 1998, the result was catastrophic. The second deadliest Atlantic hurricane in history claimed 11,000 lives and caused an estimated $6 billion in damage.

Honduras, a poor country with even poorer infrastructure, did not fare well. Humanitarian aid groups flocked to the region, including medical mission volunteers Richard Lawrence and his daughter Skye. The medical mission headed towards Atima, a town in the mountainous coffee growing-region of the country surrounded by countless rural villages.

Richard Lawrence, Executive Chairman of Overlook Investments and future Founder of Proyecto Mirador, acted as a translator for doctors on the trip. Standing in the midst of the crush of people who waited to see the doctors in a primary school temporarily converted to a medical clinic, he was struck by the number of children lined up against one wall of the schoolroom breathing with nebulizers.

“I’m not a doctor, and I thought, the air seems really clean so it beats me what it’s about, he said.

Skye stumbled upon the explanation by chance, when she visited one of the local children’s homes. The inside of the house was black and filled with smoke from the cooking stove. The stove was constructed of adobe mud, with an oil drum for a cooktop and a wide stove mouth stuffed with logs. There was no chimney, so the smoke curled around the room and turned the ceiling black.

 School children participated in a contest to name the Mirador stove.   Reina Mejia called it Dos por Tres because it is Honduran slang for an in an instant--and she felt that the stove cooked fast, quickly used less wood, quickly got smoke out of the house.
School children participated in a contest to name the Mirador stove. Reina Mejia called it Dos por Tres because it is Honduran slang for an in an instant–and she felt that the stove cooked fast, quickly used less wood, quickly got smoke out of the house.

After research some improved stoves, the family raised money from friends to build 29 stoves designed by Aprovecho Research Center, a US-based stove research organization. An investor by trade, Lawrence couldn’t help making some quick calculations. With improved stoves using half the wood, how long would it take families to earn the rate of return on investment? The answer: in a few short months. People will line up to improve their stoves, he thought.

Thus, Proyecto Mirador was born. But despite the fact that the stoves were popular with users, turning it into a sustainable enterprise wasn’t as easy as those calculations.

Finding the finance

For one, selling the stoves outright was out of the question. In rural Honduras, poverty affects almost two-thirds of the population, and more than half of rural households struggle with extreme poverty, living off of $1.25 a day. Proyecto Mirador targets these villages in Honduras.

While a few families could afford the stoves, the majority couldn’t or wouldn’t purchase one even if the families might recover their costs within two months. Even with available money, men control the purse strings. Since most work outside, fewer health impacts from cookstove smoke and didn’t see the necessity of spending money on cleaner stoves.

Instead, Lawrence’s family and friends financed the early installations. Co-director Do Emilia Mendoza, the wife of a Honduran Episcopal minister and cook for the mission trips, kept costs down by running the enterprise out of her house. Metal sheets and clay parts littered her backyard, and she drove the materials to homes in a pickup truck.

The Lawrences decided early on against relying on donors (or friends) for future funding. They wanted a steady source of financing and – at the time – carbon offsets provided that.

Using initial “donated equity from foundations, Proyecto Mirador spent three years certifying their carbon offsets under the Gold Standard. Though the complicated process took far longer than expected, the gamble worked. Mirador became the 4th project to be certified under the Gold Standard methodology that includes consultation with local stakeholders and provides sustainable outcomes; this was before the UNFCCC (United Nations Framework Convention on Climate Change) developed an official Clean Development Mechanism (CDM) cookstove protocol.

Family with clean cookstove. 

“We’ve been fortunate to have success with carbon, Lawrence said, referring to the more than 430,000 metric tons of carbon dioxide offsets sold. “But it’s harder than it should be… I’ve got two people who spend 24-7 reaching out to corporations to try and convince them to offset.

Carbon offsets finance 75% of the stove costs, with families contributing the rest in the form of cement, sand, bricks, adobe and labor. The latter is part of Mirador’s philosophy that stoves are not gifts and that families must “have skin in the game or “No Cuesta, No Cuida (no cost no care). Mirador uses the income from the sale of offsets to provide the plancha cooktop, firebox and chimney; technicians to build the stove; and supervisors who make three regular follow up visits to ensure the proper stove use and maintenance.

Revving up the impact

If the beginning of Proyecto Mirador seems a bit homespun, the result is anything but. The organization has scaled up from building 250 stoves in a year to nearly 125 a day now. With more than 80,000 stoves disseminated in the last five years, the organization has become the largest in Latin America.

While selling the carbon offsets remains an unpleasant task, verifying the offsets has only gotten easier. Though the process takes at least nine months of documentation, reports and technical review, the actual site visit only takes four or five days. The main reason for this quick turnaround is technology.

Around 2010, the stoves were really taking off. Community solicitations, requiring at least 10 families to sign on from a single village, poured in and started the beginnings of the now 2-year backlog of requests. Copycat chimneys started appearing on houses Proyecto Mirador hadn’t visited, making it difficult to follow up with customers. Carbon finance couldn’t cover the costs, so the organization once again turned to foundations.

Using the donations, they hired a consulting firm to build a platform and implemented the first use of Salesforce.com, a well-known customer relationship management product, in Latin America. It took a year for the program to be implemented and an additional three months to train the staff. Donations were used to equip all stove builders and field supervisors with GPS and reporting system to upload information online.

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Entrepreneur teams, called Ejecutores, and Proyecto Mirador staff use smartphones to record and upload data while in the field. Salesforce and GPS points are stored in the cloud, allowing staff to monitor installations and material needs or to provide interactive imagery of stove locations in real time.

“It’s really something,” Lawrence said. “All the employees at the office have been trained and know Salesforce. We built a special holder for the phones on the front of each motorcycle, so when supervisors make home visits, they can identify exactly where the houses are that have our stoves.

Though initially made to keep track of stoves by staff on the ground, the investment also paid off for remote staff. “We use it as much in California as they use it in Honduras, he said, referring to Proyecto Mirador USA, the non-profit side of the organization that manages Gold Standard certification, finds donors and helps with the business issues of Proyecto Mirador, Honduras.

A smoke-free Honduras?

Now, Proyecto Mirador supports 17 full-time businesses: six Ejecutore construction companies, nine suppliers and two consultants. Outsourcing has allowed the organization to go from 250 stoves in a year to a predicted 29,000 stoves this year. However, Proyecto Mirador is still dealing with a backlog of stove requests. These households may have to wait a little longer for their stoves.

“The idea is that we would rather grow in a very measured way than grow exponentially and have troubles and have to stop, he said.

However, health remains at the heart of the organization’s work. Mirador surveyed stove recipients and almost all 99% – reported cleaner indoor air and improved respiratory health after switching. One grandmother, Maria Claudina Diaz Vargas, said: “my granddaughter suffers from a chest ailment and today without smoke she has improved.

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Kelley Hamrick is an Associate in Ecosystem Marketplace’s Carbon Program. She can be reached at khamrick@ecosystemarketplace.com.