Tag: Special Interest Business Finance

Latin America’s largest cosmetics company recently purchased 120,000 tons of carbon offsets from a REDD project in Brazil’s Amazon rainforest that is led by an indigenous tribe. This transaction marks the first sale of forest carbon offsets developed by indigenous people and can be used as a template for other indigenous peoples as well as companies looking to meet their Corporate Social Responsibility requirements.

This article was originally published in the Forest Carbon newsletter. Click here to read the original.

11 September 2013 | Brazilian cosmetics giant Natura Cosméticos has  become the first buyer of carbon offsets produced from a project led by the Paiter-Suruí­, an indigenous people who generated the credits by saving endangered rainforest under the Verified Carbon Standard’s (VCS) Reduced Emissions from Deforestation and Forest Degradation (REDD) methodology.  

“REDD+ is a bridge between the indigenous world and the non-indigenous world, so it’s an appropriate way to begin this process,” says Chief Almir Narayamoga Surui, who spearheaded the effort. “It creates a vehicle through which the capitalist system can recognize the value of standing forests, and indigenous people can be rewarded for preserving them.”  

Natura, Latin America’s largest cosmetics maker, purchased 120,000 tons of carbon offsets from the project as part of its efforts to reduce its greenhouse gas (GHG) emissions by one-third from 2006 levels by the end of 2013.

Five years in the works, the transaction required the development of a REDD template that can now be used by other indigenous people across the Amazon, as well as companies looking to meet their Corporate Social Responsibility requirements.  

Meanwhile, if the staff at the California Air Resources Board (ARB) gets its way, the board  will sign off on a proposal for California’s cap-and-trade program  to shift the invalidation risk for forestry projects away from forest owners to the buyers of offset credits from approved forestry projects.  

The so-called buyers’ liability provisions featured in the cap-and-trade regulations allow the regulators to invalidate credits that are found to be faulty or fraudulent and require regulated entities to surrender replacement offsets. Currently, forest owners are responsible for the invalidation risk, but the buyers bear the risk for the other project types eligible for the California program.  

The regulators are aiming for consistency in the buyers’ liability provisions, seen as a noble goal and one that could propel additional development of forest projects, according to some stakeholders. However, oil major Chevron pushed back against the forestry proposal in comments submitted to the regulators in early August.  

“ARB’s existing rule places responsibility with forestry owners because forests are a unique type of offset,” says Lloyd Avram, Chevron’s manager of state government affairs. “The forest owner has control over the forest and can manage it in accordance with the requirements or choose not to do so.”

“We are concerned that by changing the invalidation risk to the covered entity that uses the offset, ARB is adding unworkable burden and risk to forestry offset buyers which will ultimately discourage use of this important resource to reduce GHGs under ARB’s cap-and-trade program,” he says in the comments.

These and other stories from the forest carbon marketplace are summarized below, so keep reading!  

With the redesign of our  Forest Carbon Portal  and continued expansion of our  Spanish language sister website Valorando Naturaleza, Ecosystem Marketplace hopes to continue to bring you this kind of fresh information in the second half of 2013! If you value what you read, consider supporting Ecosystem Marketplace’s Carbon Program by contacting  Molly Peters-Stanley. We’re $50k away from being able to publish this year’s State of the Forest Carbon Markets report in a few months’ time – can we count on your support?

Here at Ecosystem Marketplace, we are transitioning from data collection to report-writing mode in order to bring you this year’s State of the Forest Carbon Markets report. For those of you developing forest carbon offset projects, if you have not yet responded with data and wish to participate in the survey, please notify  Daphne Yin.

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

International Policy Paradise Rejected   A week after Ecuador announced the dissolution of its Yasuni-ITT initiative, which sought international donations in exchange for not drilling large swaths of rainforests, President Correa announced another surprise: that  Ecuador would also cancel aid from Germany. Germany’s decision to oppose the Yasuni-ITT plans has been blamed for the reluctance of other international donors to participate. Despite withholding funds for that initiative, Germany and Ecuador had agreed on a 34.5 million Euro reforestation program set to start this year that would focus on REDD programs and managing forest protection areas. In a surprise declaration, President Correa just announced the dissolution of this program, citing German “arrogance” for criticizing Ecuador’s drilling plans. Deforestation in Ecuador  has already increased  300% ahead of last year’s rate.   Getting jurisdictional The Governors’ Climate & Forests Fund (GCF Fund) has just issued its first  Request for Proposal  through a grant funded by the US Department of State. Civil Society Organizations are invited to partner with GCF states or provinces to submit proposals to address collective needs to improve forest carbon assessments and capacity. Funding will be provided to proposals which strengthen or improve GCF state and province forest carbon assessments and capacity, and strengthen or improve subnational REDD+ programs and measurement, reporting and verification methodologies and capacity that support national REDD+ strategies.  Under this round of funding, the GCF Fund expects to support projects in all GCF tropical forest countries: Brazil, Indonesia, Mexico, Nigeria and Peru. Proposals are due on October 11. In plain sight In this opinion piece, Nigel Turvey, a fellow at Charles Darwin University, argues that Australia’s shadow environment minister Greg Hunt misses a key point about rainforest carbon:  that REDD already offers opportunities to protect tropical forests. Hunt hopes to broker a deal on rainforests and carbon reductions during the 2014 G20 meeting located in Australia. Australia may be ignoring REDD opportunities after its own $100 million AUD investment into the Kalimantan Forest Carbon Partnership proved unsuccessful. However, Turvey argues that policymakers have too many aspirational goals for REDD, and that going back to the basic focus on forests and people is the best hope for improving these projects. He ends with an appeal for the future Australian government to let REDD credits into its planned emissions trading scheme.     Project Development Hectares to cover before we sleep Following the landmark use of political risk insurance on a REDD+ project in Cambodia, project developers elsewhere have also tapped into the insurance – most recently on a bamboo reforestation project in Nicaragua. Despite these examples of early mover activity, awareness of political risk coverage and how it can help finance carbon offset projects is still very limited.  A new Ecosystem Marketplace article  provides a case study on the use of political risk insurance in Nicaragua before discussing the capacity for it to be used on other carbon offset projects, and additional innovation that seeks to cover a broader set of risks, political included.     A different sort of insurer European insurance giant  Allianz is considering expanding its business  of sourcing carbon offsets after buying enough credits to cancel out its own emissions using offsets from Infinite Earth’s Rimba Raya REDD+ Conservation Project in Indonesia – one of the world’s largest REDD projects, developed in accordance with VCS guidelines. According to Nicolai Tewes of Allianz, the insurer is looking into potentially investing in other offset projects on behalf of its clients. Allianz has a history of sourcing offsets from other projects, including the Kasigau Corridor REDD project in Kenya that was developed by Wildlife Works and validated and verified to VCS and the Climate, Community and Biodiversity (CCB) Standards.     Practicing what it preaches The World Agroforestry Center (ICRAF), an organization whose research includes climate change adaptation and mitigation in agriculture, announced that it has bought carbon credits  to offset its emissions for the next two years. This makes ICRAF the first of the Consultative Group in International Agricultural Research centers to assess and offset emissions. The organization purchased the offsets through The Carbon Neutral Company, and has captured 2,161 tonnnes of carbon dioxide (CO2) through credits from the Kasigau Corridor REDD Project, which protects more than 500,000 acres of forest in Kenya. Already, ICRAF’s main Nairobi office is carbon neutral, and the organization hopes to become fully neutral by tracking its carbon footprint and assessing regional offices.     Catching sight of carbon Even if whales aren’t spotted, carbon is guaranteed to be caught on the new OrcaSpirit Adventures tours. The company is  offsetting its whale watching and harbor cruises  in British Columbia by purchasing credits from another local project developer, the Great Bear Forest Carbon Project. The project preserves the rainforests and marine life along the British Columbia coastline. It is the first of its kind to be located in indigenous territory, and seeks to provide positive social and environmental impacts. OrcaSpirit Adventures added its enthusiasm for the local project, saying, “To directly be able to support such a cause and know where our contributions are going is incredibly rewarding, not only for our business and our industry but the surrounding ecosystems and communities affected by the conservation of this area.”     Nature and nurture An Oregon conservation group has proposed a health initiative called the  Forest Health Human Health program  that links landowners with carbon offset buyers, to be used in Willamette Valley, Oregon. The program is already in place elsewhere in the state, in Columbia County. Based on sustainable forest management, 90% of money from carbon credit sales would go into a healthcare account and the landowner would receive an “ATreeM Card.” The balance would go toward community health programs such as a scholarship fund to educate doctors on how to practice medicine in rural areas. The initiative can work for woodlots as small as 20 acres, and permits timber harvesting in the form of tree thinning or underbrush removal.     Golden Ranches turning green In 2010, a coalition of conservation organizations banded together to buy Golden Ranches, a site spanning more than 550 hectares in Alberta, Canada. Now the owners, including the Alberta Conservation Association, The Nature Conservancy of Canada, and Alberta Fish and Game Association,  have teamed up  with the locally-based Carbon Farmer to plant more than 200,000 trees on about 100 hectares of land. The Carbon Farmer works with landowners and land trusts to turn sites of previously tilled land into native forests and shrub land. The Golden Ranches site is an important wildlife corridor that links to nearby Elk Island National Park and Cooking Lake. It is hoped that the area will become a habitat for many species, including moose and songbirds.   Big names in a small forest In an effort to offset their unavoidable emissions, corporate giants Microsoft and Barclays have turned to a forestry project in Kenya. The Kasigau Corridor REDD project, developed by Wildlife Works, acts as a forest corridor that links two swaths of Kenyan national forests. The project has a dual conservation and sustainable development focus, as the sale of offsets has returned more than $3.5 million to the local communities and generated jobs since 2010. The companies describe their involvement with Wildlife Works as an opportunity “for Microsoft to help create a low-carbon economy” and to have an “on-the ground partner” for Barclays’ key Kenyan markets.     Getting the green light The Democratic Republic of Congo (DRC)  just received approval  for a $21.5 million grant from the Climate Investment Funds (CIF), which will finance most of the $26.6 million Integrated REDD+ Project in the Mbuji-Mayi/Kananga and Kisangani Basins (PIREDD/MBKISS). PIREDD/MBKISS aims to carry out pilot initiatives over 5 years and is projected to save about 4 million tonnes of CO2 over 25 years. Working with stakeholders, the project will directly benefit an estimated 400,000 people and indirectly benefit up to 1.5 million people. With this approval, the DRC becomes the first ever African grant recipient from CIF’s Forest Investment Program (FIP). It is one of three African countries to be selected to serve as FIP pilot countries. Burkina Faso and Ghana are the others.     National Strategy and Capacity Fifth year’s the charm After four years of REDD projects in Indonesia,  deforestation remains rampant and progress sluggish. Though REDD programs receive support from the national level, the slow payback period, corruption, and lack of education has plagued projects at the local and regional levels. After criticism from NGOs, the government of Indonesia  hopes to prove its commitment  through the creation of a national council on REDD+. The council, set to begin operating in September, will take over from the defunct REDD+ task force and will coordinate a nationwide REDD+ road strategy. While the council will not be able to manage projects, it will serve as a central coordination and reporting agency between the responsible Indonesian ministries.     Double the money Norway and the World Bank  just signed two agreements  with Ethiopia to provide funding for climate mitigation and sustainable land management. The first agreement will add $50 million to Ethiopia’s Sustainable Land Management Program that reduces land degradation while increasing productivity for small farmers. The program has already been successful in rehabilitating more than 190,000 hectares of degraded land since 2008. The second agreement will finance $13 million for the World Bank’s BioCarbon Fund, which will support Ethiopia’s Climate Resilient Green Management Program. The program  is currently building up  Ethiopia’s REDD+ readiness and aims to develop a REDD+ pilot program for the country.   Throwing money away After three payments totaling $1 million, a Peruvian journalist has discovered that  not one tree has been planted  in the city of Pajarillo’s 5,000 acres of reclaimed land. The Peruvian city used to illegally trade coca; the 2011 reforestation project was an attempt to create an alternative source of livelihood for the locals. However, further investigation revealed only a batch of abandoned seedlings. Meanwhile, the mayor’s office has received its final payment, likely approved from a corrupt supervisor from the National Commission for Development and Life Without Drugs. A false evaluation report has also been uncovered and the case is now being investigated by a local public prosecutor. Currently, Peru receives nearly $60 million in REDD money for reforestation.     Smooth sailing for the Atlantic The government of Paraguay  just extended  its Land Conversion Moratorium for the Atlantic Forest of Paraguay, also known as the “Zero Deforestation Law.” When the law was enacted in 2004, it reduced the deforestation rate by about 90% in a country that ranked second in the world in terms of deforestation rates. Despite a mere 7% of its original surface cover remaining, the Atlantic Forest is home to 7% of the world’s flora and fauna. The law was set to expire in December of 2013.     REDD+ doesn’t pan out in Panama   Despite strong governance and capacity in relation to many other Latin America countries, Panama’s REDD+ program  faces failure as indigenous leaders pull out. Panama’s indigenous constitute 5% of the population but inhabit 31% of its land. These groups were initially involved in REDD+ planning, and Panama’s National Coordinating Body of Indigenous Peoples (COONAPIP) submitted a draft plan for REDD+ capacity building in indigenous territories in 2011. However, this plan failed to receive UN funding. COONAPIP has since withdrawn from the REDD program in March, followed by the Guna General Congress (another indigenous authority) in June. Proponents of REDD+ fear that if indigenous peoples’ concerns spread outside of Panama, it could negatively affect perception of projects in nearby countries.     Finance and Economics Tracking REDD+ tracking (continued) Forest Trends’ REDDX and the Overseas Development Institute’s Climate Funds Update recently launched  Part V  and  Part VI, the last articles of  the organizations’ collaborative series that explains existing REDD+ finance tracking projects while identifying niches and cross-over areas to directly support more comprehensive assessments of REDD+ policy and finance gaps and needs. The series includes Forest Trends’ own new REDDX expenditures tracking initiative. In “Private Lessons for the Public Sphere,” Ecosystem Marketplace explores what policymakers can learn from today’s private sector projects, including due recognition of private sectors’ early action via public support of credited project-level activities; enacting policies that favor “zero-deforestation” or low-carbon products/commodities; and engaging with private actors to explore “carbon-linked” funding mechanisms. “REDD+ Finance: Where Next?” wraps up by identifying three concerted efforts needed to better track REDD+ finance.     Human Dimension Women leading the charge Most research on gender and forestry issues has been focused on South Asia,  a new literature review finds. The overwhelming concentration in the region is the legacy of Bina Agarwal, a widely-cited researcher who concentrates on gender and community forestry in India and Nepal. A recent paper by Coleman and Mwangi tested Agarwal’s hypotheses about female participation in African and Latin American countries. While most of their findings reinforced Agarwal’s model, they found that women’s participation in forestry institutions did not change women’s perceptions of fairness or rules and penalties. The study also found that wages differences correlated with the probability of women leadership in forest associations and that women’s participation in leadership positions resulted in less conflict.     Growing peace, one tree at a time Increased REDD+ and National Adaptation Programs of Action (NAPAs)  could help reduce conflict  in the Central African Republic, new research by the Center for International Forestry Research (CIFOR) shows. The African state, which has suffered from political instability and civil conflict since 1960, has attributed reduced water availability and increased agriculture vulnerability to the changing climate. Despite a high awareness of climate impacts, few mitigation programs exist due to insecurity, violence and high turnover rates. The study notes that REDD+ and NAPAs are instrumental to developing linkages across diverse institutions, and could contribute to the post-conflict reconstruction process.     Science and Technology Review Cutting down time Two scientists have discovered a way  to speed up tree measurements. Dr. Beth Middleton and Evelyn Anemaet created the new methodology after conducting research in bald cypress swamps. Traditionally, they would have to use dendrometer bands – two metal straps that bend around the trunk and are fed through a “collar,” which can allow the strap to expand and shrink to measure growth. Constructing these bands is complex and bending the material requires skillful navigation around sharp edges. The new method uses cable-tie heads that are modified to use as collars on the dendrometer bands. It requires less time (up to 20 minutes faster in field conditions) and standardizes the uniform bands to cut down on assembly time. The researchers hope that this method will be adopted into forest studies down the road.   Drawing a map of the world The  Global Conference on Community Participatory Mapping on Indigenous Peoples’ Territories  drew indigenous leaders from more than 17 countries. Meeting in Indonesia, these leaders shared their experiences in mapping their traditional lands and their successes against government and corporations intent on encroaching on their lands. Through simple hand-held GPS devices, communities can catalogue their key cultural and social sites and transfer their historical knowledge into concrete data points. Mapping allows indigenous people to establish their rights to a land and identify areas of conflict with government concessions and corporate project proposals. Already, communities in Brazil, Indonesia, and Malaysia have successfully used their maps to oppose land grabs in their areas.     Playing games   A  new game-based simulation called SimPachamama  allows policymakers and communities to simulate the effects of various policy actions, including efforts to stem deforestation. The user plays a village mayor whose job is to improve local livelihoods and reduce deforestation. The game found that levying a $450 hectare tax on deforested lands could help curb forest clearing. Researchers believe that the tax would not affect the agricultural sector’s profitability, and it would have a much larger impact on reducing deforestation and improving welfare.   Surveying crowd appeal   Carbomap, a new environmental survey company,  hopes to generate additional revenue for its forest mapping technology through crowd-funding. Carbomap has posted its idea on Share-In, a new Scottish-based crowd-funding platform, and hopes to generate interest and funds in its proprietary LiDAR technology. The technology, described as the “MRI Scanner of Forest Measurement,” will carry out airborne mapping of forest terrain to map and measure the CO2 emissions from the world’s forests.  The company has already been awarded an initial 141,000 pounds from the Scottish Enterprise’s SMART Scotland fund.   Publication and Tools Mitigating mitigation effects   The International Journal of Biodiversity and Conservation just published a new study titled  Local Vulnerability, Forest Communities and Forest Carbon Conservation: A Case of Southern Cameroon. Researchers found that understanding the vulnerability of forest-dependent communities is a point of departure for building more effective climate mitigation and adaptation strategies. Among its findings, the study reported that mitigation activities might make communities more vulnerable to the effects of climate change and other factors. It also argued that positive outcomes from conservation depend on the willingness and motivation of communities to engage and participate in mitigation activities.   Certifying Forest Management CIFOR just issued a  report  evaluating the impacts of forest management certification and the results of efforts to halt deforestation. The paper analyzes different forest management certifications with other market interventions. The report identifies a number of knowledge gaps for the evaluation of impacts, and calls for the early and effective engagement of stakeholders, the gathering of data on biophysical and socio-economic characteristics, and the sharing of evaluation results with a broad set of stakeholders and partners.     Jobs M-REDD+ Monitoring & Evaluation Coordinator – The Nature Conservancy Based in Merida, Mexico, the M-REDD+ Monitoring & Evaluation Coordinator will be responsible for monitoring and evaluating the on-going performance of the M-REDD+ Program, including providing technical guidance and support to ensure the quality of M-REDD+ products and deliverables. Candidates should have a BA/BS degree and 7 years’ experience in REDD+, climate change, forest conservation and/or sustainable rural development or equivalent combination of education and experience. Read more about the position  here.     Business Development Manager – Ecodit Based in Arlington, Virginia, the Business Development Manager will lead technical proposal development, develop relationships with clients and partners for current projects and new business opportunities, and cultivate and recruit global network of external experts and potential staff who will be featured in proposals. Candidates should have 6-8 years of experience and a technical expertise in one or more of the following areas: clean energy, climate change, REDD+, LEDS, food security, forest and biodiversity conservation, water and sanitation. Read more about the position  here.     Lead Researcher, Colombia Land-Use Strategy – Amazon Environmental Research Institute, International Program   Based in Bogota, Colombia, the Lead Researcher will contribute to the development of a low-emission land-use strategy in Colombia through outreach and consultation, synthesis of existing knowledge, and new analysis. Candidates should have a Master’s or PhD in environmental management, sustainability, agronomy, or equivalent experience and a minimum of 3 years of experience working in or living in tropical forest regions (preferably in Colombia). Experience in sustainable agriculture and climate change policy (including REDD) is required. Read more about the position  here.     Research Assistant, Ecosystems Services and Management Program – IIASA Based in Laxenburg, Austria, the Research Assistant will work with scenario design and model applications, particularly with respect to deforestation issues in a national context, and contribute to the further development of the model for the tropical regions and contribute publications of relevant results to peer-reviewed journals. Candidates should have a Master’s degree or equivalent in agriculture, forestry, or environmental economics with proven analytical skills and ease in manipulating large data sets. Read more about the position  here.     Environment and Natural Resource Staff Associate – Tetra Tech Based in Burlington, Vermont, the Environment and Natural Resources Staff Associate will work on both program implementation and new business development, primarily for USAID-funded projects. Candidates should have a graduate degree in forestry, environmental sciences, or related field, and at least 3-5 years of professional experience. Demonstrated excellence and qualifications in a natural resource or related field (e.g., forestry, climate change adaptation, etc…) is a plus. Read more about the position  here.     Science Editor/Writer – CIFOR Based in Bogor, Indonesia, the Science Editor/Writer will be responsible for editing “Forests News”, CIFOR’s influential blog on forestry research. Among other tasks, the Science Editor/Writer will edit articles, manage a pool of freelance writers, liaise with scientists and write for the blog. Candidates should have at least 10 years’ experience as an editor for a scientific or science-related publication and a strong understanding of environmental issues, preferably related to forests and climate change. Read more about the position  here.     Sustainability Intern – Forest City Based in Cleveland, Ohio, the Sustainability Intern will research and manage waste, water and carbon reduction benchmarking programs. Interns will work alongside Energy & Sustainability and Supply Chain procurement professionals to develop a program to record use and create recommendations on ways to minimize impact on today’s natural resources. Candidates should be pursuing a bachelors or masters degree in Sustainability or Environmental Studies and previous internships in a business setting is a plus. Read more about the position  here.     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 [email protected].

Additional resources

10 September 2013 | Brazilian cosmetics giant Natura Cosméticos has purchased 120,000 tons of carbon offsets from the Paiter-Suruí­, an indigenous people of the Amazon who in June became the first indigenous people to generate credits by saving endangered rainforest using the Verified Carbon Standard’s (VCS) for “REDD” (Reduced greenhouse gas Emissions from Deforestation and forest Degradation). The transaction is also the first of its kind, and is being watched by indigenous people across the Amazon as well as by companies looking to meet their Corporate Social Responsibility (CSR) requirements.

“REDD+ is a bridge between the indigenous world and the non-indigenous world, so it’s an appropriate way to begin this process” says Chief Almir Narayamoga Surui, who spearheaded the effort. “It creates a vehicle through which the capitalist system can recognize the value of standing forests, and indigenous people can be rewarded for preserving them.”

Natura is Latin America’s largest cosmetics maker and has committed to reduce its greenhouse gas emissions by one-third from 2006 levels by the end of 2013. A cornerstone of this effort is the Natura Carbon Neutral initiative, a public commitment to offset those emissions that cannot be reduced internally by investing in emission-reduction projects from other institutions whose values and beliefs are aligned with their own.

“Since we made a commitment to be a carbon neutral company in 2007, Natura offsets 100% of its emissions,” says Denise Alves, Director of Sustainability.

The Suruí­ will use the proceeds to jumpstart their 50-year “Life Plan”, which is designed to create a sustainable economy that blends traditional land-use practices, ecotourism, and the harvesting of non-timber forest products with modern scientific methods and procedures.

Until 1969, the Surui were an isolated people living in harmony with the forest. After losing much of their territory to illegal logging, they have become leading proponents of rainforest preservation.

“Until now, companies have looked at rainforest preservation as something they do to be nice, or as philanthropy,” says Chief Almir. “Natura recognizes that carbon neutrality isn’t just a gesture, it’s an obligation, and it’s one we all have. REDD+ makes it possible for companies to meet that obligation, and for us to become providers of an ecosystem service.”

The Surui Forest Carbon Project is designed to prevent at least five million tons of carbon dioxide from being emitted over 30 years while protecting critical rainforest habitat, and its credits have been certified under both the Verified Carbon Standard (VCS) and the Climate, Community, and Biodiversity (CCB) Alliance. The VCS employs a rigorous set of criteria to ensure that actions taken by project proponents actually did preserve the forest, and CCB provides further tests to ensure the project doesn’t harm people or habitat. The project generated its first credits in June, 2013, after an audit by Imaflora (Instituto de Manejo e Certificaçí£o Florestal e Agrí­cola/Institute for the Management and Certification of Forests and Farms) and the Rainforest Alliance confirmed that protective actions taken by the Surui had been successful.

It began in 2007, when Chief Almir Surui first approached the Washington, DC-based environmental nonprofit organization Forest Trends (publisher of Ecosystem Marketplace) for help in reforesting his people’s territory after decades of invasion by loggers. There, he learned of REDD. To lay the foundation of a carbon project being able to be developed, Forest Trends commissioned a precedent-setting legal review that concluded that not only the Surui but all indigenous peoples in Brazil with demarcated territories have carbon ownership rights.

In 2009, the four clans and 25 villages of the Suruí­ voted to impose and enforce a logging moratorium and to work with Idesam (Instituto de Conservaçí£o e Desenvolvimento Sustentavel do Amazonas/Institute for the Conservation and Sustainable Development of Amazonas) to ensure that the impacts of the Suruí­ actions were measurable, reportable, and verifiable. In 2010, Funbio (Fundo Brasileiro da Biodiversidade/Brazilian Biodiversity Fund) joined the partnership to create the Suruí­ Trust Fund and ensure that income from the project is managed responsibly and transparently. Local authorities, including Funai (Fundaçí£o Nacional do índio/National Indian Foundation), have since endorsed the Suruí­ effort as a model project and are supportive of their deal with Natura.

In addition to Forest Trends, Chief Almir credits several partner organizations with bringing the project to fruition. Brazilian nonprofit organization Idesam provided technical support to determine which portions of the 248,147-hectare territory were in danger and estimate the carbon content. Longstanding Suruí­ partners Kanindé (Associaçí£o de Defesa Etnoambiental Kanindé) and ECAM (Equipe de Conservaçí£o da Amazí´nia/Amazon Conservation Team Brazil) helped members of the Suruí­ understand the project in accordance with the principles of Free, Prior, and Informed Consent (FPIC) as articulated in Convention 169 of the International Labor Organization (ILO).

Additional resources

Voluntary REDD projects are actively protecting more than 14 million hectares of endangered forest, but most multilateral funding looks destined for countries with no history of REDD and no local expertise. This makes sense from a capacity-building perspective, but is it the right approach?

NOTE: This story originally appeared on the Huffington Post, where Forest Trends is participating in the Social Entrepreneurs’ challenge. You can view the original here. If you’d like to see more of this sort of content, feel free to support us in the challenge here.

23 October 2013 |For three years now, the people of Kenya’s Kasigau Corridor have been protecting 500,000 acres of endangered dryland forest to prevent 54 million tons of carbon dioxide from soaring into the atmosphere. That’s good for all of us, and as a reward they hope to earn REDD+ (reduced emissions from deforestation and degradation) carbon offsets for keeping greenhouse gasses locked in trees.

Our research shows they’re far from alone. Voluntary carbon projects like these are actively protecting more than 14 million hectares of endangered forests around the world (see “Leveraging the Landscape: State of the Forest Carbon Market“) — a figure that has certainly grown in the past year.

Not only are these private-sector actors protecting millions of hectares of endangered forest, but they are doing so in a way that creates rigorous methods for measuring the amount of carbon captured in forests — methods that others can learn from and implement themselves.

And that, in fact, is exactly what’s happening, with state and regional governments around the world harvesting lessons learned in the voluntary carbon markets to develop their own home-grown programs (a trend we identified in “Bringing it Home: Taking Stock of Government Engagement with the Voluntary Carbon Market“).

So, why are these green-minded entrepreneurs risking hundreds of millions of dollars to save the forest and develop new methods that the rest of us can use? Partly because governments told them to — as Conservation International (CI) highlighted in a September white paper called “REDD+ Market: Sending Out an SOS.”

Drawing on research from our Ecosystem Marketplace initiative and elsewhere, CI recounts in clear language how governments signaled green-minded entrepreneurs that they’d be rewarded for taking action on climate change by saving endangered forest, but how these same governments are now leaving some of the most productive projects in limbo.

The Pact
The paper shows how the private sector began stepping up as early as 2007, when the United Nations Framework Convention on Climate Change (UNFCCC) formally recognized the idea of creating a REDD mechanism. It explains how entrepreneurs ramped up their activities after the 2009 Copenhagen Accord and federal cap and trade legislation in the US promised support for REDD+, which meant that entrepreneurs who developed REDD projects would be able to sell their offsets into government programs iwhen those programs materialized. It also offers this summary of results so far, based just a handful of projects:

What REDD Has Wrought

Beyond the three big projects highlighted above, the paper points to a review of 41 projects that created thousands of jobs, built schools, and funded scholarships. It points, in other words, to a mechanism that is working — and is delivering results with limited resources from voluntary buyers.

And now governments are finally stepping up, with more than $30 billion in “fast-start” financing (as tracked by the World Resources Institute, our own REDDX initiative, and others) for projects that get rolling early. Almost none of that funding, however, is flowing to projects that are already rolling and have already delivered results. Instead, it’s going mostly to new pilots that have little transparency and no track record whatsoever.

It’s a problem we’ve covered extensively in the past, and one that CI illustrates with this chart, showing where World Bank money being deployed under the Forest Carbon Partnership Facility (FCPF) is going.

The Private-Public Disconnect

To be fair, the FCPF and other such funds weren’t created to support small, individual pilots, but rather to support national-level accounting mechanisms. That’s well and good, but those small, individual projects add up to a lot of forest already saved and scores of important lessons already learned, and countries that have nurtured them are in danger of being short-changed.

Voluntary carbon projects have already earned the trust of US companies like Microsoft and Disney and developing country companies like Brazil’s Natura Cosmetics, which are more than willing to voluntarily buy REDD offsets that conform to standards that they know and trust.

But these voluntary buyers are the minority, and private-sector funding won’t begin to flow on the kind of scale needed to slow climate change until governments impose global caps on greenhouse gas emissions, enacting policies that reward conservation with an adequate price on carbon. Until that happens, governments that choose to support REDD need to make sure that they are not leaving the good projects already underway in the lurch. Otherwise, not only will we lose the progress made to date, but we will dampen the enthusiasm of green entrepreneurs to take on risk to do the right thing.

How Can You Keep the Info Flowing?
This post is built on research generated by Forest Trends, a nonprofit environmental organization founded by foresters and economists to explore the interplay between economy and ecology. It’s part of our participation in the Social Entrepreneurs Challenge, which was launched on September 30 by the Skoll Foundation and Huffington Post. It’s a CrowdRise campaign designed to raise awareness and funding for social entrepreneurs, and we can certainly use it.

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Proponents of cap-and-trade argue that it creates the most efficient performance-based mechanism for reducing greenhouse gas emissions by funneling payments directly from emitters to reducers. Those who prefer a carbon tax argue that it’s a more manageable mechanism. South Africa says there’s a hybrid solution: one that blends a carbon tax with an offsetting mechanism.

5 September 2013 | To tax or to trade? That is the question countries are asking as they look for ways to incentivize the reduction of greenhouse gas (GHG) emissions.

South Africa has pitched a tent somewhere between the two camps by proposing a carbon tax to be implemented in 2015, but floating the idea of letting companies use carbon offsets to meet up to 10% of their carbon tax liability.

During the 2009 Copenhagen climate change negotiations, the country announced it would voluntarily aim to reduce its GHG emissions by 34% by 2020 and 42% by 2025 from business as usual. That triggered a series of consultations and research on the best ways to achieve those goals, with South Africa’s National Treasury department releasing a discussion paper specifically focused on the carbon tax option in December 2010.

That paper evaluated the benefits and disadvantages of implementing a carbon tax in South Africa versus an emissions trading scheme (ETS). Taking into account comments received in response to that paper, the government released an updated paper in May that settles on a proposal to implement a carbon tax in South Africa.

The paper concluded that South Africa would find it difficult to develop an effective cap-and-trade mechanism because the lack of energy industry players would likely reduce the efficiency gains that normally would result from a trading mechanism.

“In the South African context, a carbon tax is more appropriate than a cap-and-trade scheme in the short to medium term because of the oligopolistic nature of the energy sector,” the paper said. “A carbon tax can be complemented or replaced by an ETS at a later stage.”

“You can almost call it a tax-and-trade scheme rather than a cap-and-trade scheme,” says Robbie Louw, Director, Promethium Carbon.

The comment period for a planned third position paper on the carbon tax ended in early August.

What Do We Know?

The May position paper proposed the introduction of a carbon tax of R120 or about US $11.61 per tonne of carbon dioxide equivalent beginning January 1, 2015, rising at a rate of 10% per year until December 31, 2019. The paper provides other useful high-level information about the proposed carbon tax, including the covered GHGs, the sectors to be included and the thresholds above which the tax would apply, but stakeholders are anxious for more clarity about the role of offsets.

“The May position paper did give some broad guidelines around carbon offsetting, but not enough for us to really plan or really start developing projects while waiting for the carbon tax,” says Duncan Abel, Senior Transactor of Forestry Carbon at Nedbank Capital in Johannesburg.

At least one critical detail has emerged about the planned offset program. Firms would initially be allowed to use verified offsets developed under specific international offset standards: the Clean Development Mechanism (CDM) which is eligible for use in the European Union Emissions Trading Scheme (EU ETS) compliance market; and the Verified Carbon Standard (VCS) and Gold Standard that guide voluntary carbon offset projects. Development of a South Africa-specific standard would be considered at a later stage, according to the position paper.

Another key detail is that offset usage would be restricted, at least initially, to domestic projects, which would have a major impact on pricing given that South Africa has a fairly low number of carbon projects.

“There’s potentially a significant supply shortfall,” Abel says. “There’s not much of an existing offset market.”

South Africa has 41 registered CDM projects and an additional 93 projects are at different stages of the project cycle, according to the National Treasury paper. VCS has six registered projects in South Africa in various sectors: agriculture, forestry, land; transport; energy; waste handling and disposal and fugitive emissions from industrial gases. The Gold Standard has 21 projects in the country – 6 Certified Emissions Reductions (CER) and 15 Voluntary Emissions Reductions (VER) – with 19 energy efficiency projects, one wind project and one biomass project.

There are many unanswered questions about what the offset component will look like in the proposed South Africa program. It is unclear, for example, exactly what project types will qualify. In the May position paper, the government offered potential categories of project types that could be included: agriculture, forestry and other land uses, waste, community-based and municipal energy efficiency and renewable energy, electricity transmission and distribution efficiency, small scale renewable energy (up to 15 MW) and transport projects. But the expectation is that industrial gas projects barred by the EU ETS will be ineligible.

The market already has a pipeline of existing project activities, Abel says.

“The pipeline’s just been put on hold,” he says. “Once we have certainty around the carbon tax, we’d move pretty quickly into a development stage with a number of projects.”

Promethium Carbon is working on reforestation projects in South Africa, where there are large tracts of impacted and degraded land available for these projects, Louw says.

“In that respect, we think it’s very good that the carbon tax will allow the use of VCS credits because VCS gives you a little bit more of a suite of methodologies when you look at especially land management practices as opposed to pure afforestation and reforestation,” he says. “We also believe those projects have a larger community and social impact than standard CDM projects and therefore we think they should get a lot of support from the government side.”

How Low Can You Go?

A practical implication of the R120/tCO2e tax level is that it essentially puts a ceiling on the price of the carbon tax because the probability of a company paying more than that for a carbon credit is very low, stakeholders say.

“The European price went down with brute force, but it might just as well have gone up,” Louw says.

A carbon price that is too high becomes a burden on the economy and would stimulate negative consequences such as carbon leakage, he says. Leakage refers to the issue of industry and emissions moving out of a country because of its carbon price mandate.

“But with the ceiling that is set by the carbon tax, it will stop the price from going too high,” Louw says. “At the moment, everybody worldwide is worried about low carbon prices, but in the design of a system you must also worry about the opposite. So we believe that the fact that there is a ceiling in this scheme is also very good.”

In contrast, a potential floor price is not as much of a consideration because choosing to use offsets would be strictly a voluntary decision by emitters, according to some stakeholders. In addition, the depressed price of international offsets is not expected to be much of a factor in South Africa, where regulated entities will be restricted in their use of offsets to lower their compliance obligations and will be competing for a limited number of domestic offsets.

“The market price of CDM credits under the EU ETS will not have an influence on the price in South Africa, as only South African credits will be allowed and it is expected that there will be a shortfall in supply across all three standards,” Abel says. “As soon as there is certainty around what credits are allowed into the tax, then those credits will re-price in value upwards and the excluded credits will remain cheap, but not saleable in South Africa.”

If carbon prices in South Africa are low, regulated entities will maximize use of the offsets up to the 5-10% limit, but will avoid using the full allotment of potential offsets if the price gets too high, says Harmke Immink, Director, Promethium Carbon.
If the carbon tax program allows both CDM and voluntary program credits and the European market recovers significantly, developers will sell their CER credits to Europe, but the voluntary credits could still be sold locally, she adds.

The carbon tax as currently proposed makes room for the use of both compliance credits from the CDM and voluntary offset projects under the Gold Standard and VCS, a smart recognition of existing schemes, stakeholders say.

“There is always a danger that government is trying to reinvent the wheel,” says Adrian Rimmer, CEO of The Gold Standard Foundation.

Back to the Future

Although the National Treasury is still indicating the tax will be implemented on January 1, 2015, there are some concerns that the government will not be able to meet that deadline and the implementation of the tax will be delayed. But there is also a school of thought saying the tax may not be implemented at all amid significant pushback from industry.

“There’s pretty strong opposition to the tax from various different sectors,” Abel says. “Obviously, there are concerns around the impact it will have on competitiveness, the impact it will have on electricity pricing, the impact it will have on job creation, etc.”

In a broader sense, there is also some debate over whether South Africa, as a developing country, should be taking the lead in addressing climate change, he says. South Africa is ranked among the top 20 countries measured by absolute carbon dioxide emissions.

Stakeholders are awaiting the government’s next budget speech in February. If the speech details how the carbon tax revenues will be spent, that is considered a fairly strong indication that the tax will be implemented. Rimmer wonders if the carbon tax revenues will be devoted to low-carbon development or directed toward the general fund.

But if the speech lacks details about the tax, then that would indicate there will be a delay from the planned January 2015 start date. The carbon tax has been discussed several times by government officials, as have other environmental taxes mentioned in a 2005 paper.

“It is a consistent message that the carbon tax is coming,” Immink says.

“Except for the size of the market, we feel that will really make a difference in reducing emissions and helping South Africa move towards a low-carbon economy, even though we’ve got a heavy fossil fuel- grid,” she says.

Over the past six weeks, Forest Trends’ REDDX and ODI’s Climate Funds Update have been exploring the state of REDD+ finance with input from Transparency International, the Tropical Forest Group, Ecosystem Marketplace and UNEP Finance Initiative. Here’s how these organizations can work together in the future to shine more light on this critical process.

29 August 2013 | In bringing together the views of a number of initiatives tracking REDD+ finance, this series has highlighted why there isn’t a single aggregate figure for global REDD+ finance flowing. Despite this, we are increasingly able to assess where finance is coming from, how it flows through different channels and funds to recipient countries and eventually to REDD+ projects and activities on the ground. But knowledge remains incomplete and we are still faced with challenges and gaps that make it difficult to make comprehensive and conclusive remarks about the state of REDD+ finance.

The road ahead

Marigold Norman is Program Manager for Forest Trend’s Forest Trade and Finance Program. Her work focuses on tracking public and private funding delivered for Reducing Emissions from Deforestation and Degradation (REDD+) activities in thirteen REDD+ partner countries. Charlene Watson is a Research Officer at the Overseas Development Institute; her work focuses on the flows, sources and instruments of climate finance at both the national and international level.

Following the landmark use of political risk insurance on a REDD+ project in Cambodia, project developers elsewhere have also tapped into the insurance – most recently on a bamboo reforestation project in Nicaragua. Despite these examples of early mover activity, awareness of political risk coverage and how it can help finance carbon offset projects is still very limited.

27 August 2013 | In 2011, a few years after US-based land-use carbon consultant Terra Global Capital (TGC) launched its Oddar Meanchey REDD Project in Cambodia, it asked the Overseas Private Investment Corporation  (OPIC)  to shield its investment from political risk.

More specifically, the project helps Buddhist monks and other community members reduce greenhouse gas emissions from deforestation and forest degradation (REDD), and it does so in a way that could serve as a template for community-based REDD projects around the world. But it’s located in a country that most investors don’t understand. So TGC asked OPIC, the US government’s primary development finance agency, to provide protection against the risks of expropriation, war, and civil unrest – risks familiar not only to Cambodia, but to countries around the world. In the very first instance of political risk insurance for a forest carbon offset project, OPIC came through with $900,000 in political risk insurance – a service that the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) also offers.

Between the two of them, OPIC and MIGA have so far insured several carbon offset projects around the world designed to promote sustainable forestry, wind farms, and solar energy, allowing them to move forward in some of the world’s riskiest political and economic environments.

Nicaragua’s bamboo kingdom

In 2012, MIGA provided its first political risk insurance to a carbon offset project on the Atlantic Coast of Nicaragua, where EcoPlanet Bamboo (EPB) has been developing a forest carbon offset project to support its work reforesting degraded pasture land with guadua aculeate, a native bamboo species. The project is just one piece of the company’s growing efforts to provide timber manufacturing industries with a sustainable alternative fiber in order to reduce pressure on natural forests.

The production of palm oil is expanding and threatening forests in  Nicaragua’s coastal region, not far from EcoPlanet Bamboo’s sustainable bamboo plantations. For the land to be primed for palm oil, the forests are being burned, sometimes without removing the timber.

While EPB hopes to use carbon finance to meet debt repayments and support bamboo-processing activities and social programs in the area, MIGA’s $27-million guarantee backs the company’s investment in the purchase and conversion of degraded land into commercial bamboo plantations for the sale and export of bamboo fiber.  

Troy Wiseman, CEO and Co-Founder of EPB, says he was initially attracted to MIGA’s political risk coverage due to the perception of Nicaragua as a high-risk environment, especially in Europe, where EPB had the opportunity to raise debt finance for the project. Despite Nicaragua’s recent economic turnaround, the country still has a reputation among investors as one of Latin America’s least-developed countries, with high poverty rates following decades of political instability. Political risk insurance, he reasoned, could help overcome that hurdle and lower the interest rate at which EPB could access capital.

In April 2011, land preparation began at EcoPlanet Bamboo Central America’s Rio Siquia Plantation.

“Once we had political risk insurance, you could take the risk argument away because the cost of capital  would come down,” says Wiseman. “It came down for us by about 40%.”

As for the insurance itself, aside from the potential payoff in case an insurance claim is triggered, Wiseman notes that having MIGA on the contract reduces the risk that expropriation even occurs in the first place. MIGA underwriter Gloriana Echeverria says that’s partly because the Nicaraguan government is a shareholder in MIGA, which means it’s literally invested in its performance.

“This reduces the chance of expropriation because the government is unlikely to interfere with a project that has MIGA – and therefore the World Bank – as its partner,” she says. “We’ve gotten involved in over 100 cases where the investor has a certain problem with the government interfering. MIGA can mediate between the government and the investor to arrive at a solution that will make both parties happy.”

Political risk aside, the decision to invest in the project using carbon finance required taking on a significant amount of risk in its own right. “No one really had a proven bamboo methodology at a commercial level that could be duplicated,” says Wiseman. Indeed, EPB is the first organization to use a bamboo-based carbon offset methodology on a project validated under the Verified Carbon Standard (VCS) and the Climate, Community, and Biodiversity Alliance (CCBA), and is also certified under the Forest Stewardship Council for sustainable forest management.

EPB’s project is not a pure carbon offset project insofar as it derives revenues from bamboo sales. MIGA’s financial analysis of the project takes into account all revenue streams. For projects that are strictly dependent on carbon finance, Echeverria says MIGA’s financial analysis could differ in accounting for the financial sustainability of the project. A project relying solely on carbon revenues could be seen as a riskier project to insure.

Navigating the kitchen sink

For project developers trying to distinguish between OPIC and MIGA insurance, the primary difference is that OPIC requires majority US participation in an investment, whereas MIGA is open to nationals of any of its 179 member countries as long as the coverage is for a cross-border investment. MIGA is usually competitive in the riskier countries where investors are more concerned about getting the World Bank umbrella effect of deterrence, whereas OPIC tends to focus its activities in countries where a strong bilateral relationship might exist with the US. There is also a private political risk insurance market, but arguably without the deterrence effect. It is unclear whether carbon offset project developers have used this market.

Guada aculeate bamboo growing wild in their native habitat on EcoPlanet Bamboo’s Rio Kama Plantation. November 2011.

Ultimately, MIGA can provide up to $220 million in insurance coverage per project, whereas OPIC can provide up to $250 million  – both agencies able to provide additional coverage through reinsurance. But how affordable is political risk insurance at the end of the day? And what incentives exist to help project developers invest in poor and risky countries where capital is hard to come by?  

The cost of the policy depends on the country, with insurance premiums rising significantly for particularly high-risk environments. For countries in the middle tier, the insurance itself may not be prohibitively expensive, but cash-strapped project developers looking to tap into political risk insurance can ultimately face additional upfront costs if—unlike EPB or TGC—they aren’t already in compliance with the prerequisite environmental, anti-corruption, and other policies required to land MIGA and OPIC insurance.

“There is already significant environmental work that project developers have to deal with in order to register with VCS and CCBA, which may be costly,” says Ruth Ann Nicastri, Managing Director of Political Risk Insurance at OPIC. “Terra Global Capital had already started those processes before they sought political risk insurance from us, so those costs were already taken into account in their budget. For project developers working on projects that haven’t taken the steps to obtain that kind of rigorous certification, it might be onerous to suddenly have to meet OPIC’s environmental requirements.”

For smaller projects that cannot afford certain evaluations, OPIC sometimes undertakes these evaluations as part of its own due diligence process, she notes. OPIC also provides discounted rates for small businesses, while MIGA provides subsidized rates for investments of $10 million or less with an average 25% discount, with specific rates depending on the country.

Beyond that, some have floated the idea of having public entities, possibly domestic, help subsidize insurance fees. “Depending on the country, it may be possible to provide additional layers of subsidy or premium pricing in a way that could offset political risk insurance premiums,” says Cameron Prell, Senior Counsel at US-based law firm McGuireWoods.

Project developers also have the option to apply to grants from donor agencies such as FMO, the Dutch development bank, that have strong stated interests in sectors relevant to carbon offset projects such as agribusiness, energy, food, and water to underwrite the cost of the insurance premium instead of provide a traditional grant or donation, Wiseman notes.

If a tree falls in the forest…

In spite of early-mover activity, there is still relatively low awareness that political risk insurance is available for forest carbon offset projects through MIGA and OPIC. The default risk management tool remains the buffer pool approach, which requires that project developers set aside carbon credits as reserves in order to cover unforeseen losses in carbon stocks.

“I don’t see the buffer pool approach as having a necessarily conflicting goal as these new emerging products, but the purpose of the buffer pool is definitely not to encourage financing,” says Stephen Matzie, Investment Officer at the US Agency for International Development (USAID), the US federal government’s principal aid agency. “It does require a significant amount of credits over the project’s lifetime, but I think it’s one of those things that can be tweaked to encourage private financing.”

While reportedly cheaper than the buffer pool approach, political risk insurance does not cover the broad set of risks that are technically covered by the buffer pool approach.

“OPIC and MIGA political risk insurance are advisable in many emerging markets that lack a robust regulatory regime for forest carbon,” Prell says. “However, the riskier markets are going to potentially result in higher premiums. Regardless, the insurance products should not be viewed as a sufficient instrument able to cover the current market demand and price risks inherent in forest carbon projects.”

There has been some push to expand the offering of products that can cover exposure to political risk alongside other risks. “The private sector and willing development finance institutions are developing additional guarantees that may address some measure of market risk, including project performance and valuation,” he notes. “The coverage is not 100%, but such mechanisms could provide some measure of risk mitigation for investors.”

USAID’s Development Credit Authority has been a prime innovator in this space, having been approached in early 2012 to develop a special loan guarantee for REDD activities. The agency is now working on several transactions simultaneously, with the one furthest along covering the Choco region in Colombia where it’s helping local communities pull together a REDD project. USAID’s guarantee covers a broad range of risks in addition to political risk, including those associated with verification, weather, and the production of carbon credits.

The path forward

Carbon offset projects continue to enter the pipeline to tap into political risk insurance on a case-by-case basis, including new prospects in Colombia, Brazil, and Indonesia. However, whether the market can see scaled-up adoption is hard to say.

While the use of MIGA’s political risk insurance for carbon offset projects is limited thus far, Prell notes that there has been some discussion about the potential for a new political risk insurance product for forest carbon to be modeled after the index-backed agricultural insurance programs offered by the World Bank’s Global Index Insurance Facility.

On OPIC’s end, Nicastri says, “As far as we can tell, we’re still the only ones willing to cover regulatory risk for forest carbon. However, OPIC is happy to work with other insurers to provide the product to a broader range of investors.”

As for EcoPlanet Bamboo? “We plan to use political risk insurance in every country where we plant bamboo as we embark on a new goal of reforesting 1 million acres of degraded land in Southeast Asia and Brazil, while expanding our current footprint in Africa,” says Wiseman. Some of this work could potentially include a carbon offset element.

A significant shortfall currently exists in the private sector funding needed to truly propel REDD+ forward. But better engagement with private sector players, clearer definitions of what constitutes REDD+ private sector finance and strategic targeting of public sector dollars could help make these projects more attractive to private investors.

15 August 2013 | There is broad consensus that private finance and investment are needed for REDD+ to meet its climate change mitigation potential in the medium to long-term. Those who are familiar with REDD+ will have heard countless variations of an equation that currently does not balance. Annual REDD+ additional investment needs are estimated to be in the order of tens of billions of dollars, yet the current sums available – which are largely public funds- are a fraction of this number. The hope and expectation is that private sector capital will conveniently fill the gap, et voila! The burden placed upon private capital to balance the books has also been creeping higher over the past few years. REDD+ is not only more complex and expensive than first thought five years ago but public sector finances have also been decimated by successive financial crises in every corner of the globe.

The anticipated flows of private sector finance have yet to materialize. REDD+ finance remains dominated by public sector flows focused on the capacity building and enabling conditions that are the foundation stone of REDD+ and which are vital to catalyze private sector capital. For private sector capital to flow at scale, these public sector funds must be used strategically to improve the financial attractiveness of REDD+ for the private sector. Private sector investment is driven by expectations of future returns and these are currently too low and opaque given the risks and uncertainties compared to other potential investment opportunities.

Despite this broad consensus on the need for private finance and investment in REDD+, very little is known about current flows of private sector finance into REDD+, and what little is known shows that current amounts being channeled are close to insignificant. Difficulties in estimating and tracking volumes of private sector capital flowing into REDD+ arise from a variety of reasons.

There is no standardized definition describing what REDD+ finance or investment constitutes. Should investment into activities that contribute to REDD+, but aren’t directly linked to REDD+ verified emission reductions (VERs) count? Examples might include ‘climate-smart’ agricultural related to drivers of deforestation, green bonds where proceeds are used for ‘forest-friendly’ activities or corporates investing in medium or long-term supply chain security.

Different types of finance are often considered as equal. However, grants, short-term loans, equity investments, ‘in-kind’ payments and carbon off-take agreements all differ in how, why and when they are used. Aggregating these numbers can also potentially confuse and inflate the volume of private sector capital flows through double or triple counting and it also hampers attempts to identify financial bottlenecks at different points in the lifecycle of an activity.

It is also important that we use greater precision when describing sources of finance. ‘Institutional investors’ such as pension funds are one of the largest sources of private sector capital. As the ‘big beasts’ of the private sector financial world- they are sometimes referred to as one of the great hopes for the REDD+ related financial ills we currently face. They can allocate the ‘patient capital’ that REDD+ needs and have trillions of dollars under management. However, in order to unlock this huge pool of potential investment, we must first acknowledge the fact that most pension funds can’t currently allocate to anything resembling a ‘REDD+ investment’. The majority of pension fund capital is invested in liquid, listed securities yet many of the investment opportunities in the REDD+ space are through unlisted private equity or debt vehicles that a large amount of pension funds can’t allocate capital to at the required scale. Unlike publicly listed companies, private companies also have fewer legal obligations to report their finances which further compounds efforts to track financial flows.

Tracking private sector finance into REDD+ will be a daunting task until some of the above issues are addressed. Currently, however, more efforts should be placed in better understanding the role that private climate finance can play in contributing to REDD+ through some of the following activities:

• Engage with and involve the private sector in a constructive discussion on REDD+ to understand what the enabling conditions are that would attract private sector capital at scale. This can be done during the development of national REDD+ strategies.
• Develop clear definitions and parameters for what constitutes REDD+ private sector finance and investment.
• Appreciate that the finance landscape is extremely varied and different types and sources of capital have different uses at different times. This is a key step in connecting the vast pools of private sector capital with the activities that need funding.

UNEP FI is supporting efforts to engage the private sector in general and the private financial sector in particular in REDD+ at both the national and international level. The ultimate aim of this engagement is to reshape the way forest assets are currently exploited and help the transition towards more sustainable land-use patterns.

This series of blogs on REDD+ finance intends to create a forum for debate and exchange of ideas, this blog reflects the opinions of Iain Henderson & Jacinto Coello of UNEP FI, and should not be understood to reflect the views of ODI, Forest Trends, REDDX or Climate Funds Update.

Iain Henderson works at the United Nations Environment Programme Finance Initiative primarily focused on issues related to forestry, (REDD+) agriculture and finance. He can be reached at [email protected]. Jacinto Coello works at the UNEP FI. He can be reached at [email protected].

10 September 2013 | Brazilian cosmetics giant Natura Cosméticos has purchased 120,000 tons of carbon offsets from the Paiter-Suruí­, an indigenous people of the Amazon who in June became the first indigenous people to generate credits by saving endangered rainforest using the Verified Carbon Standard’s (VCS) for “REDD” (Reduced greenhouse gas Emissions from Deforestation and forest Degradation). The transaction is also the first of its kind, and is being watched by indigenous people across the Amazon as well as by companies looking to meet their Corporate Social Responsibility (CSR) requirements.

“REDD+ is a bridge between the indigenous world and the non-indigenous world, so it’s an appropriate way to begin this process” says Chief Almir Narayamoga Surui, who spearheaded the effort. “It creates a vehicle through which the capitalist system can recognize the value of standing forests, and indigenous people can be rewarded for preserving them.”

Natura is Latin America’s largest cosmetics maker and has committed to reduce its greenhouse gas emissions by one-third from 2006 levels by the end of 2013. A cornerstone of this effort is the Natura Carbon Neutral initiative, a public commitment to offset those emissions that cannot be reduced internally by investing in emission-reduction projects from other institutions whose values and beliefs are aligned with their own.

“Since we made a commitment to be a carbon neutral company in 2007, Natura offsets 100% of its emissions,” says Denise Alves, Director of Sustainability.

The Suruí­ will use the proceeds to jumpstart their 50-year “Life Plan”, which is designed to create a sustainable economy that blends traditional land-use practices, ecotourism, and the harvesting of non-timber forest products with modern scientific methods and procedures.

Until 1969, the Surui were an isolated people living in harmony with the forest. After losing much of their territory to illegal logging, they have become leading proponents of rainforest preservation.

“Until now, companies have looked at rainforest preservation as something they do to be nice, or as philanthropy,” says Chief Almir. “Natura recognizes that carbon neutrality isn’t just a gesture, it’s an obligation, and it’s one we all have. REDD+ makes it possible for companies to meet that obligation, and for us to become providers of an ecosystem service.”

The Surui Forest Carbon Project is designed to prevent at least five million tons of carbon dioxide from being emitted over 30 years while protecting critical rainforest habitat, and its credits have been certified under both the Verified Carbon Standard (VCS) and the Climate, Community, and Biodiversity (CCB) Alliance. The VCS employs a rigorous set of criteria to ensure that actions taken by project proponents actually did preserve the forest, and CCB provides further tests to ensure the project doesn’t harm people or habitat. The project generated its first credits in June, 2013, after an audit by Imaflora (Instituto de Manejo e Certificaçí£o Florestal e Agrí­cola/Institute for the Management and Certification of Forests and Farms) and the Rainforest Alliance confirmed that protective actions taken by the Surui had been successful.

It began in 2007, when Chief Almir Surui first approached the Washington, DC-based environmental nonprofit organization Forest Trends (publisher of Ecosystem Marketplace) for help in reforesting his people’s territory after decades of invasion by loggers. There, he learned of REDD. To lay the foundation of a carbon project being able to be developed, Forest Trends commissioned a precedent-setting legal review that concluded that not only the Surui but all indigenous peoples in Brazil with demarcated territories have carbon ownership rights.

In 2009, the four clans and 25 villages of the Suruí­ voted to impose and enforce a logging moratorium and to work with Idesam (Instituto de Conservaçí£o e Desenvolvimento Sustentavel do Amazonas/Institute for the Conservation and Sustainable Development of Amazonas) to ensure that the impacts of the Suruí­ actions were measurable, reportable, and verifiable. In 2010, Funbio (Fundo Brasileiro da Biodiversidade/Brazilian Biodiversity Fund) joined the partnership to create the Suruí­ Trust Fund and ensure that income from the project is managed responsibly and transparently. Local authorities, including Funai (Fundaçí£o Nacional do índio/National Indian Foundation), have since endorsed the Suruí­ effort as a model project and are supportive of their deal with Natura.

In addition to Forest Trends, Chief Almir credits several partner organizations with bringing the project to fruition. Brazilian nonprofit organization Idesam provided technical support to determine which portions of the 248,147-hectare territory were in danger and estimate the carbon content. Longstanding Suruí­ partners Kanindé (Associaçí£o de Defesa Etnoambiental Kanindé) and ECAM (Equipe de Conservaçí£o da Amazí´nia/Amazon Conservation Team Brazil) helped members of the Suruí­ understand the project in accordance with the principles of Free, Prior, and Informed Consent (FPIC) as articulated in Convention 169 of the International Labor Organization (ILO).

Additional resources

Proponents of cap-and-trade argue that it creates the most efficient performance-based mechanism for reducing greenhouse gas emissions by funneling payments directly from emitters to reducers. Those who prefer a carbon tax argue that it’s a more manageable mechanism. South Africa says there’s a hybrid solution: one that blends a carbon tax with an offsetting mechanism.

5 September 2013 | To tax or to trade? That is the question countries are asking as they look for ways to incentivize the reduction of greenhouse gas (GHG) emissions.

South Africa has pitched a tent somewhere between the two camps by proposing a carbon tax to be implemented in 2015, but floating the idea of letting companies use carbon offsets to meet up to 10% of their carbon tax liability.

During the 2009 Copenhagen climate change negotiations, the country announced it would voluntarily aim to reduce its GHG emissions by 34% by 2020 and 42% by 2025 from business as usual. That triggered a series of consultations and research on the best ways to achieve those goals, with South Africa’s National Treasury department releasing a discussion paper specifically focused on the carbon tax option in December 2010.

That paper evaluated the benefits and disadvantages of implementing a carbon tax in South Africa versus an emissions trading scheme (ETS). Taking into account comments received in response to that paper, the government released an updated paper in May that settles on a proposal to implement a carbon tax in South Africa.

The paper concluded that South Africa would find it difficult to develop an effective cap-and-trade mechanism because the lack of energy industry players would likely reduce the efficiency gains that normally would result from a trading mechanism.

“In the South African context, a carbon tax is more appropriate than a cap-and-trade scheme in the short to medium term because of the oligopolistic nature of the energy sector,” the paper said. “A carbon tax can be complemented or replaced by an ETS at a later stage.”

“You can almost call it a tax-and-trade scheme rather than a cap-and-trade scheme,” says Robbie Louw, Director, Promethium Carbon.

The comment period for a planned third position paper on the carbon tax ended in early August.

What Do We Know?

The May position paper proposed the introduction of a carbon tax of R120 or about US $11.61 per tonne of carbon dioxide equivalent beginning January 1, 2015, rising at a rate of 10% per year until December 31, 2019. The paper provides other useful high-level information about the proposed carbon tax, including the covered GHGs, the sectors to be included and the thresholds above which the tax would apply, but stakeholders are anxious for more clarity about the role of offsets.

“The May position paper did give some broad guidelines around carbon offsetting, but not enough for us to really plan or really start developing projects while waiting for the carbon tax,” says Duncan Abel, Senior Transactor of Forestry Carbon at Nedbank Capital in Johannesburg.

At least one critical detail has emerged about the planned offset program. Firms would initially be allowed to use verified offsets developed under specific international offset standards: the Clean Development Mechanism (CDM) which is eligible for use in the European Union Emissions Trading Scheme (EU ETS) compliance market; and the Verified Carbon Standard (VCS) and Gold Standard that guide voluntary carbon offset projects. Development of a South Africa-specific standard would be considered at a later stage, according to the position paper.

Another key detail is that offset usage would be restricted, at least initially, to domestic projects, which would have a major impact on pricing given that South Africa has a fairly low number of carbon projects.

“There’s potentially a significant supply shortfall,” Abel says. “There’s not much of an existing offset market.”

South Africa has 41 registered CDM projects and an additional 93 projects are at different stages of the project cycle, according to the National Treasury paper. VCS has six registered projects in South Africa in various sectors: agriculture, forestry, land; transport; energy; waste handling and disposal and fugitive emissions from industrial gases. The Gold Standard has 21 projects in the country – 6 Certified Emissions Reductions (CER) and 15 Voluntary Emissions Reductions (VER) – with 19 energy efficiency projects, one wind project and one biomass project.

There are many unanswered questions about what the offset component will look like in the proposed South Africa program. It is unclear, for example, exactly what project types will qualify. In the May position paper, the government offered potential categories of project types that could be included: agriculture, forestry and other land uses, waste, community-based and municipal energy efficiency and renewable energy, electricity transmission and distribution efficiency, small scale renewable energy (up to 15 MW) and transport projects. But the expectation is that industrial gas projects barred by the EU ETS will be ineligible.

The market already has a pipeline of existing project activities, Abel says.

“The pipeline’s just been put on hold,” he says. “Once we have certainty around the carbon tax, we’d move pretty quickly into a development stage with a number of projects.”

Promethium Carbon is working on reforestation projects in South Africa, where there are large tracts of impacted and degraded land available for these projects, Louw says.

“In that respect, we think it’s very good that the carbon tax will allow the use of VCS credits because VCS gives you a little bit more of a suite of methodologies when you look at especially land management practices as opposed to pure afforestation and reforestation,” he says. “We also believe those projects have a larger community and social impact than standard CDM projects and therefore we think they should get a lot of support from the government side.”

How Low Can You Go?

A practical implication of the R120/tCO2e tax level is that it essentially puts a ceiling on the price of the carbon tax because the probability of a company paying more than that for a carbon credit is very low, stakeholders say.

“The European price went down with brute force, but it might just as well have gone up,” Louw says.

A carbon price that is too high becomes a burden on the economy and would stimulate negative consequences such as carbon leakage, he says. Leakage refers to the issue of industry and emissions moving out of a country because of its carbon price mandate.

“But with the ceiling that is set by the carbon tax, it will stop the price from going too high,” Louw says. “At the moment, everybody worldwide is worried about low carbon prices, but in the design of a system you must also worry about the opposite. So we believe that the fact that there is a ceiling in this scheme is also very good.”

In contrast, a potential floor price is not as much of a consideration because choosing to use offsets would be strictly a voluntary decision by emitters, according to some stakeholders. In addition, the depressed price of international offsets is not expected to be much of a factor in South Africa, where regulated entities will be restricted in their use of offsets to lower their compliance obligations and will be competing for a limited number of domestic offsets.

“The market price of CDM credits under the EU ETS will not have an influence on the price in South Africa, as only South African credits will be allowed and it is expected that there will be a shortfall in supply across all three standards,” Abel says. “As soon as there is certainty around what credits are allowed into the tax, then those credits will re-price in value upwards and the excluded credits will remain cheap, but not saleable in South Africa.”

If carbon prices in South Africa are low, regulated entities will maximize use of the offsets up to the 5-10% limit, but will avoid using the full allotment of potential offsets if the price gets too high, says Harmke Immink, Director, Promethium Carbon.
If the carbon tax program allows both CDM and voluntary program credits and the European market recovers significantly, developers will sell their CER credits to Europe, but the voluntary credits could still be sold locally, she adds.

The carbon tax as currently proposed makes room for the use of both compliance credits from the CDM and voluntary offset projects under the Gold Standard and VCS, a smart recognition of existing schemes, stakeholders say.

“There is always a danger that government is trying to reinvent the wheel,” says Adrian Rimmer, CEO of The Gold Standard Foundation.

Back to the Future

Although the National Treasury is still indicating the tax will be implemented on January 1, 2015, there are some concerns that the government will not be able to meet that deadline and the implementation of the tax will be delayed. But there is also a school of thought saying the tax may not be implemented at all amid significant pushback from industry.

“There’s pretty strong opposition to the tax from various different sectors,” Abel says. “Obviously, there are concerns around the impact it will have on competitiveness, the impact it will have on electricity pricing, the impact it will have on job creation, etc.”

In a broader sense, there is also some debate over whether South Africa, as a developing country, should be taking the lead in addressing climate change, he says. South Africa is ranked among the top 20 countries measured by absolute carbon dioxide emissions.

Stakeholders are awaiting the government’s next budget speech in February. If the speech details how the carbon tax revenues will be spent, that is considered a fairly strong indication that the tax will be implemented. Rimmer wonders if the carbon tax revenues will be devoted to low-carbon development or directed toward the general fund.

But if the speech lacks details about the tax, then that would indicate there will be a delay from the planned January 2015 start date. The carbon tax has been discussed several times by government officials, as have other environmental taxes mentioned in a 2005 paper.

“It is a consistent message that the carbon tax is coming,” Immink says.

“Except for the size of the market, we feel that will really make a difference in reducing emissions and helping South Africa move towards a low-carbon economy, even though we’ve got a heavy fossil fuel- grid,” she says.

The Makira REDD+ project in Madagascar, which aims to protect 400,000 hectares of forest, announced its carbon credits are for sale becoming the first of its kind to put credits on the carbon market. Devastated by illegal rosewood logging just a few years ago, the Makira REDD+ project is part of Code REDD, a group of projects with high standards on conserving biodiversity and supporting local livelihoods.

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

19 September 2013 Carbon credits generated from protecting thousands of hectares of endangered rainforest in northeastern Madagascar have now been certified for sale, reports the Wildlife Conservation Society (WCS), the project’s main organizer. The development represents the first time that credits generated by African government-owned project have been put on the voluntary carbon market.

The Makira REDD+ Project aims to protect 400,000 hectares of forest in a part of Madagascar that has suffered from illegal rosewood logging. Backers estimate the initiative will prevent emissions of 32 million tons of carbon dioxide over the next 30 years, or roughly the annual emissions of the state of Montana. More importantly, the project will help protect some 20 species of lemurs, including more than a dozen at-risk species, while creating new economic opportunities for locals living in and around the park, according to WCS.

“Along with its benefits to wildlife, the sale will directly benefit local communities living around the protected area by allocating 50 percent of the net revenues of carbon sales to improve local infrastructure, provide health and education services, and support training, inputs, and technical assistance for sustainable agriculture,” said the group in a statement. WCS is charged with implementing the project.

The Makira REDD+ Project was conceived before the March 2009 coup that displaced Madagascar’s democratically-elected president from power. The coup cut off the flow of critical conservation funds, spurring an orgy of illegal logging and poaching in Makira and the neighboring protected areas of Masoala and Marojejy. While some of the illegal logging and rosewood smuggling was linked to political officials who took power after the coup, the activity has since slowed dramatically, offering opportunities to strengthen conservation efforts in the region, including bolstering the Ministry of Environment and Forests, whose staff made heroic efforts to stave off illegal logging during the worst of the 2009 political crisis.

Accordingly, Madagascar’s Secretaire General of the Ministry of Environment and Forests welcomed the milestone validation and verification under the Verified Carbon Standard (VCS).

“Green growth is the fruit of a green economy within the context of sustainable development realized through the implementation of an appropriate management of natural resources and the valuing of biodiversity,” said Pierre Manganirina Randrianarisoa in a statement. “Thus, the sale of carbon stored in the protected forests of Makira Natural Park provides a significant financial opportunity for Madagascar.”

The Makira REDD+ Project is run by the Makira Carbon Company, a non-profit subsidiary of WCS. The project is part of Code REDD, a bloc of REDD+ projects that set high standards for conserving biodiversity and supporting local livelihoods. Code REDD aims to create a class of premium REDD+ offsets to set their credits apart from those generated by less stringent and more controversial projects.

WCS president and CEO Cristií¡n Samper says the Makira project sets a good example for what REDD+ can deliver for conservation in developing countries like Madagascar.

“This sale is a major step forward for the Government of Madagascar in advancing the use of carbon credits to fight climate change while protecting biodiversity and human livelihoods,” said Samper. “WCS congratulates Madagascar and is proud to partner with them on the Makira REDD+ project.”

“The sale of these carbon credits has triple bottom-line benefits; it helps wildlife, local people, and fights climate change,” added Todd Stevens, Vice President of the Makira Carbon Company.

Rhett Butler founded Mongabay in 1999 and currently serves as its president, head writer and chief editor.

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29 July 2013 |The Bonn International Cooking Energy Forum in Germany was the site for the unveiling of StovePlus, a program to provide residents of developing countries in Africa and Asia with alternatives to inefficient cookstoves. GERES, the French non-profit organization behind the new program, aims to distribute 2 million improved cookstoves in these regions by 2017 through StovePlus.

Nearly 3 billion people in the world rely on solid biomass for cooking and heating on a daily basis, but most of them use inefficient devices and open fires, leading to 4 million premature deaths every year, according to the Global Burden of Disease Study commissioned by the Institute for Health Metrics and Evaluation. Reliance on biomass also puts great pressure on natural resources, putting the world’s forests at risk, GERES notes.

The StovePlus program aims to strengthen the clean cooking sector and provide technical support to project developers in South-East Asia and West Africa, with the support of the Global Alliance for Clean Cookstoves (the Alliance). The Alliance provides funding to the GERES Biomass Energy Lab in Cambodia, one of the services offered in StovePlus. In 2012, the Alliance released a request for proposals (RFP) to enhance capacity for a global network of centers to provide testing, cookstove development, and capacity building services. Thirteen centers were selected for awards in Bolivia, Cambodia, China, Ghana, Honduras, India, Kenya, Nepal, Nigeria, Peru, Senegal, South Africa, and Uganda (lab and field). Under the RFP, $1.6 million was made available to support these centers.

Cookstove projects can provide significant health benefits and empower women – who often walk long distances to collect the necessary wood fuel for heat or cooking purposes – by freeing up their time and increasing their household income, says Jennifer Tweddell, Manager of Carbon Finance and Impact Investing for the Alliance. In addition to reducing greenhouse gas (GHG) emissions, the projects also have the impact of reducing deforestation, she says.

Clean cookstoves have become all the rage in the voluntary carbon markets, with voluntary buyers funneling $80 million toward offsets from these and water filtration projects last year, according to the State of the Voluntary Carbon Markets 2013 report. These household devices that burn fuel more efficiently or not at all (thus reducing GHG emissions while sparing households from harmful smoke inhalation) were the voluntary market’s fourth most popular mitigation activity – transacting 5.8 MtCO2e, or 80% more than in 2011. These projects have so far delivered at least 4 million cookstoves from 45 projects to developing country households with the aid of carbon revenues, the report finds.

In 2012, carbon finance for clean cookstove distribution reached 15 country locations on three continents, according to the report. The most prominent project locations included Peru, Ghana, Mozambique and Kenya.

Developers of cookstove projects are determined to secure buy-in from stove users, with only 2% of clean cookstove projects engaged in stove giveaways and the majority of projects charging users between $2 and upwards of $140 per device, a finding that pleased Tweddell.

“We’re very much in favor of a market-based approach so we’re glad that there aren’t a lot of free giveaways because we really feel that to be sustainable and to reach universal adoption, which would be 500 million households, you can’t do that on donor dollars and (corporate social responsibility),” she says. “You do that through having a thriving marketplace where people at the base of the pyramid are consumers who go out and actually purchase these products from social enterprises that are also making a profit doing that.”

Transactions of clean cookstove offsets were valued at $65.3 million in 2012 – 54% more than in 2011. Over time, the value of private sector support for clean cookstove carbon projects is estimated to be $145 million.

The average price for offsets from clean cookstove projects was $11.3/tCO2e in 2012, representing a 15% fall in price from 2011’s $13.2/tCO2e. The price decline was attributed to the growing volume of available cookstove project offset supply and a lack of clarity regarding certified emissions reduction demand in the European Union Emissions Trading System – a source of demand for some clean cookstove offsets. But the price for cookstove projects was well above the volume-weighted average price of $5.9/tCO2e of all project types seen in 2012.

“I really do think it’s because of all the additional benefits that these projects bring,” Tweddell says. “Certainly, you can tell a really great story about having a health benefit, improving the lives of people in developing countries, as well reducing your carbon emissions.”

In trying to attract investment, the Alliance often hears people talk about the crash of the carbon markets, but the report is very useful because it provides evidence of the higher prices commanded by these charismatic projects, she says.

“That helps us to demonstrate the value to potential buyers, but also to investors who often don’t understand the carbon markets and are a little bit leery of businesses that are reliant on carbon revenues,” she says.

For more findings on cookstoves and other voluntary carbon projects, read the Ecosystem Marketplace report here.

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