This Week In Forest Carbon: REDD Gets Sweeter

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

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

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


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

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


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


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

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


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


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


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


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

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


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

—The Ecosystem Marketplace Team


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Two more years!

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


A less than taxing proposition

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



A second Genesis?

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


North Carolina, c’mon and raise up

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


Nonstop to neutrality

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



The best idea since Doritos Locos Tacos

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


Holding out for a forest hero

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



Head in the clouds

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


Beefing up deforestation

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

That’ll cost you

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



Anatomy of a commitment

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



Droning out deforestation

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


The naked North

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


The biggest zeros

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


In the public disinterest

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



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