This Week in Forest Carbon: Cruising down the Autobahn

The collection of stalled and wrecked policies accumulating on the shoulder of the road to meaningful climate action are not distracting project developers and market players who appear to be staying confident with eyes fixed directly ahead.

NOTE: This article has been reprinted from Ecosystem Marketplace’s Forest Carbon newsletter. You can receive this summary of global news and views from the world of forest carbon automatically in your inbox by clicking here.

1 July 2011 | The collection of stalled and wrecked policies accumulating on the shoulder of the road to meaningful climate action are not distracting project developers and market players who appear to be staying confident with eyes fixed directly ahead.

In California, another firestorm of commentary and debate broke yesterday with news that the state will delay enforcement of its cap-and-trade scheme until 2013, a year later than previously planned. Despite repeated assurances over recent months that rule making and planning was going at pace to avoid delays in the roll out of the cap-and-trade program, it appears California’s regulators have faced more hurdles and detours than could fit into their ambitious time line.

On the sleepier international climate policy front, it came as little surprise when climate talks at Bonn ended with the post-Kyoto outlook gloomy as ever. With the EU being the only developed world constituency to agree to a post-2012 Kyoto-like agreement, many observers remain unconvinced that disagreements between developed and developing nations will be resolved between now and the Durban talks in December. At the same time negotiators continue punting on broader policy issues, REDD+ remains an enticing topic as negotiators move slowly forward evaluating financing mechanisms and options for forest emissions reference levels.

In Indonesia, the new car smell from the national forest moratorium (officially sanctioned just last month), has worn off as reports of its first alleged violation emerge. A Malaysia-based company with palm oil interests in Indonesia has been accused of violating the moratorium by clearing peat forest the day after the landmark decree was signed. The company, however, denies wrong doing, saying the operation was halted, and besides, it was part of a legal concession anyway. We’re trying hard to imagine a better recipe for confidence in the monitoring and enforcement many critics voiced concerns over prior to the belated Presidential decree.

Meanwhile, project developers are cruising down the autobahn. Indonesia’s Papua province will be the home to a new public-private partnership designed to fuel regional demand and reinvestment in REDD+and other conservation projects using VCS project grouping. The first forest project to be registered formally under the American Carbon Registry added a new notch to its belt after receiving a $5.6M investment from a US rail company. And what’s more, the first government-backed insurance package was unveiled covering political risks to a pioneering private REDD+ project developer. Not to give an overly happy picture, we also caught wind of one highly-rated, but nevertheless distressed, project calling out for bids to bankroll its next seven years in Mozambique. It’s probably no surprise by now for our dear readers to see the array of dedicated project developers working to forge boldly ahead while broader and fundamental political efforts seem to be stymied or only just moseying slowly along, but deep down we’re sure there’s still a little seed of hope in all of you that policymakers can find that needed rest-stop and finally get back up to speed with their private counterparts.

As always, read on for all these stories and more in this, the latest issue of Ecosystem Marketplace’s Forest Carbon News Brief.
—The Ecosystem Marketplace Team

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


US Policy

Hurry Up and Wait

California officials have now officially announced a one year delay in the enforcement of state’s landmark cap-and-trade scheme. Although the program will still begin in 2012 with an unchanged 2012-2015 cap on emissions, emissions trading will not be enabled until mid-2012 and annual compliance obligations for regulated emitters will not be enforced until 2013. At a legislative hearing yesterday, Mary Nichols, the chairwoman of California’s Air Resources Board, said that the program will be taking the extra time to solidify the market architecture and oversight to avoid gaming, downplaying the legal challenges that have been ongoing in California courts. That being said, most offsetters we spoke to remain optimistic that the additional time for emitters may actually be an upside for offset credits with a longer lead time to evaluate whether greater offset supply will be needed in the marketplace. See Ecosystem Marketplace’s latest on the breaking story here. Read more about the delay in the New York Times here, the LA Times here, and BusinessGreen here. See Mary Nichols’ testimony to a California Senate Committee where the headlines all began here.

WCI Paving the Way Offsets

The Western Climate Initiative has released draft recommendations dealing with the requirements and process for getting offset projects reviewed and credited. The recommendations cover a number of steps along the project approval process from validation to post-issuance activities. Comments on the draft recommendations are due by Friday July 8.* Read more on WCI’s website here.

*The original version of this blurb incorrectly reported the date of the conference call to discuss the draft proposal.   That call was held on June 15, 2011.   Comments on the draft recommendations are still due by July 8, 2011.

International Policy

Where the beer is cold and so are the negotiations

The second week of climate talks in Bonn wrapped up on June 17 with no major policy or technical breakthroughs. Signals and expectations that a new Kyoto Protocol commitment period or successor to the treaty will not be ready before the end of the first commitment period in 2012 are repeatedly being reinforced at each negotiating session. Despite political divisions, slow but steady progress is reportedly being made on a number of technical issues, particularly regarding verifying reductions for REDD in tropical countries. Nevertheless, much work is left to be done and contention left to be resolved before the parties convene in Durban, South Africa this coming December. Meanwhile, a debate over strategy for how to most effectively move forward on climate talks carries on. Read recaps of the talks at the Guardian, Climate-L, and Carbon Positive here, here, and here.

Prejudging Durban

With Russia, Canada and Japan backing away from a second commitment period for the Kyoto Protocol, many people are asking themselves – what’s next? Chris Spence from IISD describes the lay of the land on the climate negotiations, arguing success of the next round of high-level negotiations in Durban will be judged on three separate issues: consensus on the fate of the Kyoto Protocol post-2012; a broader agreement to expand emissions reductions to all major emitters; and tangible progress regarding institutions for clean tech transfer mechanism a global fund for climate adaptation and mitigation. Check out his analysis and prediction of the likelihood for each in Durban here.


Project Development

PPPaving the Way for West Papuan REDD

First Growth Funds, Greencollar Group, First Growth Forests and the provincial government of West Papua, Indonesia have announced a public-private partnership to develop REDD projects across the province. So far 16 pilot projects are under development using Verified Carbon Standard’s IMF and REDD methodologies. The group is using the VCS project grouping provisions to streamline the validation and verification processes and bring down transaction costs. With the first carbon credits on track to be delivered in the third quarter this year, read more about the partnership from Indonesia Today here and check out First Growth Funds’ press release here (PDF).

Risky Business

Terra Global Capital has announced a first-of-a-kind insurance agreement with the Overseas Private Investment Corporation to cover political risks for a REDD project. Now backed by the full faith and credit of the United States Government, Terra Global will no doubt keep building on its portfolio of REDD+ and other market-facing conservation activities around the world. Terra Global Capital has been busy for several years bringing the Oddar Meanchey Cambodian REDD project to fruition and paving the way for further projects through the development of two forest carbon methodologies under the VCS. For more detail on this novel insurance policy, see the press release issued this morning here (PDF).

GreenTrees Gets Railroaded

Norfolk Southern, a major rail operator in the Eastern US has jumped on board as the largest investor in American Carbon Registry’s first registered forest project. Infused with a fresh $5.6 million to plant millions of trees across the Mississippi Alluvial Valley, the GreenTrees project estimate estimated 1.1 million tons of CO2 will be sequestered over the project’s lifespan. Read more about the project from the Norfolk Southern’s press release here, see a fact sheet here (PDF), and view the project listing on the ACR website here.


Let’s Make a Deal

Despite receiving the highest possible ratings across the CCB standard and the development of a community-based strategy under the Plan Vivo Standard, UK-based project developer Envirotrade has been had pressed to find sufficient credit buyers. And so, the developer of one of the earliest forest carbon projects in the world to pursue certification has made an open request for bids on the project’s credits. Although the target date for submitting pre-qualification information was set for today, the current deadline for making legally binding bids July 15. Read more about the call for bids and the bidding process on the Envirotrade website here.

Project Database Roundup

This week we visited the registries of the major public standards, and here is what we found.

  • ACR quietly listed two new afforestation projects in Madagascar, bringing the grand total of forest projects listed up to 3, but with only one issued credits to date.
  • CAR’s project registry now shows 52 listed projects and 4 registered projects which have been issued a total of just under 2.5 million CRTs. No projects have yet been verified under CAR’s latest Forest Project Protocol v3.2, which was approved in August 2010.
  • CCB’s project list shows 16 projects undergoing validation, a total of 38 projects completed with validation, and 2 of which were the first to receive verification under the standard in May.
  • CarbonFix’s website lists 9 projects, 4 of which have been registered on the Markit Environmental Registry. The CarbonFix project listings indicate over 650,000 ex-ante credits have been issued, though Markit currently lists fewer than 75,000.
  • VCS’s newly remodeled project registry features 12 forest project listings, and brings the total issuances from 6 verified projects up to nearly 3.9 million VCUs since the first credits were issued back in October 2010.
  • Plan Vivo’s project list shows 5 projects registered, with another 10 in various stages of validation. And congratulations are in order for Plan Vivo’s recent passing of the 1 million credit mark. A total of 1,011,773 Plan Vivo certificates have now been issued across these five projects.
  • The Risoe CDM pipeline shows 61 active AR projects, with 33 at validation, 2 undergoing a review request, 5 requesting registration, and 22 registered. And nope, still no tCERs or lCERs issued.*
  • *The original version of this blurb incorrectly stated that 4,069 CERs had been issued to CDM  AR projects.   That number actually refers to the estimated annual production of CERs from CDM  AR projects; in fact, no CERs have yet been issued to any CDM  AR projects. We regret any confusion that may have resulted from this error.

Finance and Economics

FCPF’s Carbon Fund Eclipses Readiness Fund

Norway and Germany continue to forge ahead on funding REDD programs, donating a combined US$90 million to the Forest Carbon Partnership Facility’s Carbon Fund. The fresh investment, brings the fund’s prospective load up to $1.78 billion, offers further promise of much-needed rewards for partner countries that have made verified emissions reductions from controlling deforestation. The FCPF also has a Readiness Fund to help countries develop policies and systems for REDD in order to achieve emissions reductions, which is currently stocked with $214 million from 14 donors. Very little of the money has yet made it out the door, but so far the FCPF has engaged 37 tropical and subtropical countries in the process. Read more about the FCPF funds at Reuters here and see the latest update from the FCPF here (PDF).

New Faces at UN-REDD

In a newsletter released last week, 6 new countries have announced joining the UN-REDD Programme (Cí´te d’Ivoire, Ethiopia, Honduras, Mongolia, Pakistan and Peru) in addition to the current roster of 29 others. The UN-REDD team has brought a modest footprint to the Bonn talks and other fora as well, including sharing experiences and lessons learned from the centralized administration of REDD+ support and developing country progress. The Programme has expanded its funding beyond the original 9 pilot countries to include 4 others who have submitted National Programmes. Read about these and stories in the UN-REDD newsletter here.

National Strategy & Capacity

Off to a Great Start

A palm oil subsidiary of a Malaysia-based conglomerate has been accused of breaching Indonesia’s forest moratorium
on the very day President Yudhoyono signed the decree formalizing the national policy. This is particularly noteworthy considering the
government of Norway, the primary backer of Indonesia’s REDD strategy to the tune of $1 billion is also has a multi-million dollar stake as an investor in Kuala Lumpur Kepong, the Malaysian parent company. Telapak and the UK-based Environmental Investigation Agency report being on site in Central Kalimantan to observe the clearance of peatland by the subsidiary PT Menteng. Kuala Lumpur Kepong has disavowed wrongdoing, stating it halted its subsidiary from clearing a concession area exempted from use under the moratorium. Indonesia’s REDD+ Task Force now has plans to investigate the allegations. Learn more about the developments in chronological order at Mongabay here, Reuters here, and Mongabay again here. Read the EIA report about the breach here (PDF).

Over Before it Started

The Peruvian government is rescinding permission for the construction of a major dam on the Inambari River, a major tributary of the Amazon River. Community protests initially led the government to form an investigative committee to explore whether or not the state should give the green light for the project, and the committee has now decided to cancel it. The dam would have flooded 410 square kilometers of forest and farmland to install 2GW of electrical capacity, equivalent to the Hoover dam in southwestern United States. The Inambari River dam is the second Brazilian-Peruvian dam to be cancelled in the past two years. Check out Environment News Service to read more here


Drawing a Line in the Sand

Several northern countries in sub-Saharan Africa are undertaking a massive project to stop the advancement of the Sahara desert. Called the “Great Green Wall”, the proposal is to reforest an area 15km wide and nearly 8,000km long from Senegal, over by the Atlantic Ocean, to Ethiopia, next to the Gulf of Aden. The proposal has been supported by the African Union and efforts are already underway in countries like Chad and Senegal to grow tens of thousands of drought resistant trees. Whether projects have the capacity to successfully move the trees from nursery stage to self-sustained growth remains to be seen. Check out stories related to the Great Green Wall at the Guardian here and BBC here.

Methodology & Standards

VCS Seeking Standardized Peer Reviewers

VCS has issued a call for the peer review of draft guidelines for creating standardized baseline approaches including emissions reductions quantification and eligibility criteria. The group is looking for detailed technical input on the logic, rigor and practicality of the guidelines. Recommendations are to be submitted by Friday, July 1st and peer reviewer applications are due the following Friday, July 8th. Learn more on the VCS website here.


Among several other concerned environmental groups, FERN has decided to drop its membership in the Forest Stewardship Council (FSC) in the run-up to the next member meeting in Malaysia this week due to the FSC’s consideration of certifying forest carbon offsets. FERN is arguing FSC, which provides an international set of standards for certifying sustainable forest management, has overlooked important social issues and perverse incentives in its inquiry into certifying REDD projects. A long-standing opponent to markets for REDD+, FERN is also likely to be non-plussed with a new motion put forward for the FSC to effectively lift a moratorium on certifying plantations that have contributed to deforesting much of Indonesia and Malaysia. Proponents believe that the new rule will act as an important step for FSC in staying relevant and maintaining influence over how forests are managed in Southeast Asia, speeding implementation of sustainable practices in the region, but critics are concerned that the new rule will effectively wipe clean companies’ records for destroying natural forests to build monoculture plantations with substantially lower environmental and social benefits. Read more about FERN’s concerns here and the motion in Malaysia here.

Human Dimension

Indigenous Indonesians Irate about REDD

The Central Kalimantan chapter of the Indigenous People’s Alliance in Indonesia have come out objecting to the way REDD projects are currently being handled in their province. The group is calling for a province-wide moratorium on REDD projects, arguing indigenous land rights are being ignored and that they face being kicked off their land. Indonesia’s leading presidential advisor on climate change called the group’s statements baseless, stating the indigenous group will be serving on the REDD program’s board and have direct influence over project implementation. Read more about from AFP here.

Do Poor People Drive Deforestation?

The results from an survey of 8,000 families from 24 countries undertaken by the Center for International Forest Research (CIFOR) suggests the contrary. The researchers found that income derived from forest resources remained relatively consistent at 20% of rural people’s overall income. Within each site, the richest people tended to deforest more than the poorest people, contradicting the common claim that the marginalized people in forest communities are major drivers of deforestation. The authors contend the take away from their study is that forests are a valuable resource for people of all income levels and that REDD+ policymakers must carefully address the real needs and impacts of poor rural communities. Read more about the study at NatureNews here, Mongabay here, and the Ecologist here.

Science & Technology Review

Upper Bounds on Forest Mitigation

A study from two Canadian researchers in the journal Nature Geoscience last month finds afforestation and reforestation of cleared land across the globe may have a more modest impact on mitigating climate change than many proponents may have in mind. The study, which incorporated the light-reflecting properties of trees which can offset some of their carbon storage ability particularly in northern latitudes, found that reforesting 100% of croplands on the planet by 2060 would produce a temperature benefit of only 0.45 C by 2100, still a ways off from the 2 C target that has been set through international talks as the point beyond which many irreversible climate change impacts will take hold. The scientists recommend that solar radiation be incorporated into assessments for tree planting projects, and reiterate that although tree planting is a key piece in the fight against climate change, it’s still no magic bullet. Read more about the study at New Scientist here and read the abstract at Nature Geoscience here.


Learning from the Past, Building for the Future

At the Africa Carbon Forum set in Marrakesh, Morocco next week, two new documents are likely to catch your eye. The World Bank BioCarbon Fund expects to release the full findings from its experiences bankrolling CDM Afforestation/Reforestation projects, and Forest Trends will be unveiling the updated and expanded tome “Building Forest Carbon Projects: A Step-by-Step Guide.” Offering unrivalled depth into strategic guidance for developing forest carbon projects, this guidebook includes a step-by-step program to steer projects through successful operation including certification under VCS, CCB, and CDM standards. With new and updated coverage on the latest in A/R and REDD accounting, social and biodiversity impact assessment, forest carbon inventory tactics, legal background and contracting guidance, and cost-effective community engagement, keep your eyes on the Forest Trends website for the new guidebook early next week here. To see a detailed agenda and register for the Africa Carbon Forum, visit the conference website here.


If you think working for ONF International as an expert on forest carbon project methodologies in Paris sounds like your cup of tea, check out this or other job opportunities on the Forest Carbon Portal’s Jobs page, where you can also post your own job listings.


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