Green Earth Africa

The policy-driven carbon market contracted in 2010, but the voluntary market achieved its highest volume ever – thanks in part to renewed spending on corporate social responsibility and the release of new methodologies for forest carbon.  Indeed, the number of participants based in the developing world more than doubled in response to demand for REDD credits.  

2 June 2011 | BARCELONA | The voluntary carbon market shrugged off policy failures and the closure of the Chicago Climate Exchange in 2010 to post a 34% surge in volume to a record 131 million tons of carbon dioxide equivalent (MtCO₂e) worth at least $424 million, according to Back to the Future: State and Trends of the Voluntary Carbon Markets 2010, published Thursday by Ecosystem Marketplace and Bloomberg New Energy Finance. 

“The healthy volumes reflect the growing emphasis of corporate social responsibility spending on climate change,” says Katherine Hamilton, Managing Director of Ecosystem Marketplace.  “The marketplace showed itself to be incredibly resilient – bouncing back from failed US legislation expectations, expanding its reach in developing countries and returning to its CSR roots.”

This marks the fifth consecutive year the two organizations have published the report, which this year is sponsored by Carbon Trade Exchange, together with ClimateCare, Climate Friendly, Det Norske Veritas (DNV) and Emergent Ventures International (EVI).  It is based on input from nearly 300 market participants and provides not only volumes and prices, but a comprehensive analysis of project types, locations, and the motivations of buyers. 

“As in previous years, the US remained the epicenter of the voluntary carbon market, providing and purchasing over one-third of carbon credits,” says Milo Sjardin, Head of US Analysis for Bloomberg New Energy Finance. “The evaporation of chances for federal climate change legislation, however, reduced its market share with growth coming from other areas such as Latin America and forestry.”

Latin America especially benefitted from the development of new methodologies for projects aimed at saving endangered rainforest and capturing carbon in trees – a mechanism known as “Reduced Emissions from Deforestation and Degradation (REDD)”.

REDD accounted for 29% of all emissions reductions documented, thanks in part to new REDD methodologies published by the Verified Carbon Standard (VCS), which provided project guidance for creating a full third of all credits documented in 2010.

The surge of REDD activity led to unprecedented market activity in the developing world.  This included a doubling of credits from Latin America, as well as more than doubling of the number of project developers and buyers headquartered in Asia, Latin America and Africa – thus laying the foundation for long-term growth in the Global South.

Global forest pact needs tweaking, experts say

An emerging global agreement to combat climate change by preventing deforestation will fail unless it pays more attention the needs of local people, concludes a new report from a prominent body of forest experts. The emerging pact — known as “REDD,” for “reducing emissions from deforestation and forest degradation” – needs to give greater weight to local and national efforts to sustainably manage forests, says the report, released on the eve of a major United Nations meeting on forest management.

REDD, which got a major boost at global climate negotiations in Cancun, Mexico in late 2010, seeks to create strong incentives to protect forests, which store vast amounts of carbon. Large emitters in the developed world, for instance, could offset their emissions by providing funds to preserve – or even plant – forests in poorer nations.

But “international approaches that aim to transform forests into storehouses for carbon, or for biodiversity or some other narrow purpose, are inevitably going to produce disappointing results,” warns Constance McDermott of Oxford University in the United Kingdom. She is one of about 60 experts who contributed to Embracing complexity: Meeting the challenges of international forest governance, a report coordinated by the International Union of Forest Research Organizations. Efforts to “lock up” forests for carbon could backfire, for instance, if local communities feel left out of the process, or realize no economic benefit.

“We are not saying we need to abandon a global approach to forest governance, but we do need to establish the appropriate roles,” says Jeremy Rayner of the University of Saskatchewan in Canada, who led the expert panel. “The REDD process, for example, might provide a great way to raise money for sustainable forest management and other forest programs, but much of the details and operational aspects would be undertaken at the regional and national levels.”

The new assessment is being released as the United Nations prepares to launch the International Year of Forests at a “Forum on Forests” in New York City. – David Malakoff | January 24, 2011

Source: Jeremy Rayner, Alexander Buck & Pia Katila (eds.). 2010. Embracing complexity: Meeting the challenges of international forest governance. A global assessment report. Prepared by the Global Forest Expert Panel on the International Forest Regime. IUFRO World Series Volume 28. Vienna. See:http://www.iufro.org/science/gfep/forest-regime-panel/report/

A new WRI project will quantify forest degradation and associated greenhouse gas emissions in the forests of the Republic of Congo.

The Republic of Congo is part of the larger Congo Basin region, which contains one quarter of the world’s tropical forests. Protecting the region’s forests has become a crucial part of the international effort to combat global warming. Yet the Republic of Congo, like other countries in the Congo Basin, is still putting the systems in place to implement an effective strategy to reduce emissions from deforestation and forest degradation (known as REDD) and to participate in future programs that incentivize reduction in emissions from these sources.

Photo credit: Matthew Steil, WRI

To support this effort, WRI is spearheading an innovative new project entitled Quantifying Forest Degradation and Associated Greenhouse Gas Emissions in the Forests of the Republic of Congo. Planned project activities will:

• Quantify greenhouse gas emissions from the country’s forests,
• Develop new methods to measure and monitor forest degradation,
• Build in-country forest monitoring capacity, and
• Ensure that spatial data sets are transparent and publically available.

WRI will coordinate these project activities with stakeholders from the Ministry of Sustainable Development, Forest Economy and Environment (MDDEFE) in the Republic of Congo, in a process facilitated by the country’s National REDD Coordination Committee (CN-REDD). The CN-REDD will ensure that the project is fully coordinated with the Republic of Congo’s climate change preparedness strategy.

The Forests of the Republic of Congo

Spanning 22.5 million hectares (ha), the forests of Republic of Congo cover two-thirds of the country. They provide significant ecosystem services to local communities such as fuel wood, timber, non-timber forest products, water purification, and cultural and religious values. In addition, these forests help regulate the climate by sequestering significant quantities of carbon, thereby supporting efforts to mitigate global climate change.

Forests of the Congo Basin

Historically deforestation rates in the Republic of Congo have been very low. The 2008 State of the Forests report for Central Africa estimates the annual net deforestation rate in Republic of Congo at 0.03%, driven primarily by small-holder agriculture and urban settlement. Forest degradation, though harder to quantify, is estimated to be a more significant driver of forest change in the country, and the Congo Basin in general. Degradation, while yet to be defined by the United Nations Framework Convention on Climate Change (UNFCCC), occurs as a result of activities such as shifting cultivation, fuel wood collection, selective logging, and the construction of roads for commercial logging or mining activities. A recent study estimates carbon emissions from degradation may be three times greater than those from deforestation in sub-Saharan Africa.

Although historical rates of deforestation and degradation have been relatively low, underlying factors such as population growth, poor rural populations, and lack of alternative sources of energy for low income people are expected to exacerbate forest cover loss in the future. Furthermore, lessons from Latin America and Southeast Asia suggest that commercial farming may gradually replace subsistence agriculture as an important agent of forest cover loss in the Congo basin. The map below illustrates the land cover and status of logging concessions in the Republic of Congo.

REDD: An Opportunity for Forest Conservation

REDD – or reduced emissions from deforestation and forest degradation – is a proposed framework to incentivize reductions in greenhouse gas emissions from deforestation and forest degradation. The range of possible activities that will fall under the framework is still under discussion, and a REDD+ framework is proposed which includes a wider range of forest activities such as enhancing carbon stocks in forests and sustainable forest management.

Whether designed as REDD or REDD+, the framework could provide compensation to governments, communities, companies or individuals who have taken actions to reduce emissions from forest loss below an established reference level. The effective implementation of a REDD strategy in the Republic of Congo can help protect carbon- and biodiversity-rich tropical rainforests while promoting local prosperity. However, countries in the Congo Basin region are currently not well-poised to employ these mechanisms and benefit from these emerging opportunities for several reasons, which the project will address:

1. Countrywide data on forest cover change is not gathered in a systematic fashion, and methods and systems for detecting forest degradation (the dominant form of land use change in the region) are absent. As a result, there is no country-specific information on forest carbon stocks and flows.
2. There is a lack of technical capacity to gather and utilize information on forest carbon. The government of Republic of Congo has not incorporated forest carbon data in their land-use policy decisions.
3. The nation has not yet developed systems to transparently share data on forests and forest carbon or mechanisms to facilitate broad-based civil society participation in REDD decision-making.

Developing Capacity in the Republic of Congo

WRI’s new project will address these challenges by providing data, methods and assistance in developing national forest carbon accounting strategies and reference forest carbon emission levels. The initiative aims to develop Republic of Congo’s capacity to meet future UNFCCC technical requirements for measuring, reporting and verifying information on forest change and associated GHG emissions.

Main project activities include:

• Quantifying forest carbon emissions from land use change, including tree cover change and forest degradation, using the most up-to-date methodologies and following IPCC Good Practice Guidance. These analyses will include an update of forest cover change from 2005-2010 and add missing years going back to the 1990s.
• Testing a variety of novel methods for measuring and monitoring fine-scale degradation – e.g. from selective logging – and calculate associated GHG emissions through field work. Additionally, the project will evaluate these pilot technologies to determine the most appropriate options balancing accuracy, cost and ease-of-use.
• Developing the capacity of the Observatoire Satellital des Forêts d’Afrique Centrale (OSFAC)as a regional center of excellence in forest monitoring and carbon accounting. OSFAC will be trained by WRI and partners on remote sensing and the carbon accounting methodologies for monitoring changes in forest extent, quality, and carbon emissions.
• Working closely with the government’s National REDD coordination committee to ensure integration with policy and coordination with other REDD initiatives in the country. This engagement includes a series of policy workshops with decision-makers in government ministries on how methods for monitoring and measuring forest loss/degradation and associated GHG emissions underpin REDD+ policies.
• Ensuring that the information, spatial datasets, and maps developed through this project will be transparently produced and publically available. Additionally, the project will encourage participation of civil society, academic institutions, and local communities through a series of training events on the drivers of deforestation and degradation, costs and benefits of alternative policies, and lessons learned from other countries.

Project Partners and Collaborators

WRI will collaborate with the following project partners:

• A research group from the Geographic Information Science Center of Excellence at South Dakota State University, led by Dr. Matthew Hansen, will use satellite imagery to provide annual estimates of deforestation from 2000 to 2010. Additionally, the team will test new methods to measure forest degradation.
• Dr. Sandra Brown and a team from the Ecosystem Services Unit of Winrock International will lead the assessment of carbon stocks and flows.
• A team from the Instituto do Homem e Meio Ambiente da Amazônia, led by Dr. Carlos Souza, will apply low-cost semi-automated methods of measuring forest degradation developed in Brazil to the forests of the Republic of Congo.
• The Observatoire Satellital des Forêts d’Afrique Centrale (OSFAC) will participate in all project activities and staff will be trained by WRI and partners on remote sensing and the carbon accounting methodologies for monitoring changes in forest extent, quality, and carbon emissions. OSFAC will go on to become a regional training center for government and civil society stakeholders.
• WRI will collaborate with stakeholders from the Ministry of Sustainable Development, Forest Economy and Environment (MDDEFE) on REDD preparedness activities.
• The Republic of Congo’s National REDD Coordination Committee will work closely with WRI and partners to ensure that the project activities are coordinated with the country’s climate change preparedness strategy.

For more information on

The Australian carbon trading company Shift2Neutral aims to become “the leading neutraliser of carbon emissions in the world”. The company appeared to come closer realising its aim this week whenReuters reported that Shift2Neutral “signed a deal aimed at protecting tropical forests in the Democratic Republic of Congo as well as boosting renewable energy there”.

If true, this would be by far the biggest REDD-type deal between a private company and a government. But is the deal really what it appears to be? As with other Shift2Neutral announcements, little information about the DR Congo deal is publicly available. REDD-Monitor has asked a series of questions to Brett Goldsworthy, chairman of Shift2Neutral, and looks forward to posting his response.

Until then, we have an article by Reuters journalist David Fogarty, and a press release from Shift2Neutral, dated 24 August 2010 (see below). Fogarty’s only source for his article seems to be an interview with Shift2Neutral’s Brett Goldsworthy. Let’s see what Goldsworthy says about the deal.

According to the Reuters article,

“Shift2Neutral and its partners would help value the carbon storage from forest and land protection, certify carbon related services to communities in the DRC and help sell certified carbon offsets.

“It had signed the deal with the national government as well as state governments and local tribal chiefs and landowners after more than a year of negotiations, the firm’s chairman, Brett Goldsworthy, said.”

Shift2Neutral’s press release states that the contract was signed, not with the “national government” as Reuters reports, but with the “spokesperson of the senate”:

“Shift2Neutral and its partners sign an exclusive environmental contract with the Democratic Republic of the Congo through its Provinces, Tribal Chiefs, Land Owners and the spokesperson of the senate has signed a progressive (step by step) agreement with Shift2Neutral for environment and renewable energy to protect the forests, flora and fauna and improve the standard of living to the Democratic Republic of the Congo.”

(As an aside, it’s worth noting how badly written this is, particularly given the size of the deal. Part of the press release was cut and pasted from Avoided Deforestation Partners’ website – text coloured blue, below. Surely, at some point during “more than a year of negotiations”, Shift2Neutral had time to work on a well written press release?)

It appears that two separate signings took place:

1. Shift2Neutral and its partners (whoever they are) signed an “environmental contract” with the Democratic Republic of the Congo through its Provinces, Tribal Chiefs and Land Owners.
    
2. The spokesperson of the senate signed an agreement with Shift2Neutral. This agreement is “progressive” (step by step) for “environment and renewable energy”.

The agreement, will, according to Shift2Neutral’s press release,

“extend to all the stakeholders of the vast Congolese (Democratic Republic) territory (2,345,000 square km) as progressively through the process and advantages of the project for their urban and rural populations.”

Reuters explains that,

“The deal covers the whole country and is aimed at sourcing carbon offsets from saving forests and reforestation programmes as well as deploying renewable energy such as solar.

“‘It’s the entire nation that we’re working toward but at the moment we’re taking it state by state, piece by piece,’ Goldsworthy told Reuters.

So, a small Australian carbon trading firm, with no experience in managing forest projects (apart from three small REDD-type projects in Malaysia, Indonesia and the Philippines, about which details are sketchy, to put it mildly) has signed a deal with as yet unknown people in a country covering an area the size of Western Europe. Road transport from one end of the country to the other is simply impossible. Despite a 2003 peace deal, the UN maintains a US$1.35 billion per year peace keeping mission in DR Congo. On the same day that Shift2Neutral put out its press release, the Guardian reported a horrific story of nearly 200 women and four baby boys who had been gang-raped by Rwandan and Congolese rebels in eastern DR Congo.

“Nothing can ever be guaranteed in a case of a potential war zone,” Goldsworthy told Reuters, with perhaps just a little too much understatement. Reuters reported Goldsworthy as saying that Shift2Neutral “had won the backing of senior government officials and leading figures in the African business community and that this would help mitigate some of the risk of working in a country riddled with violence and corruption.”

No names of anyone from DR Congo appear in either Shift2Neutral’s press release or in the Reuters article. Three days after Shift2Neutral’s press release, the deal has been reportednowhere except the Reuters article. As far as I can tell, no government minister has commented. DR Congo is one of the UN-REDD’s pilot countries, yet there is no mention of Shift2Neutral on the UN-REDD website. DR Congo’s Ministry of Environment, Conservation of Nature and Tourism produced a final version of its Readiness Plan for REDD in July 2010 under the World Bank’s Forest Carbon Partnership Facility and UN-REDD programme.*Perhaps surprisingly, there is no mention of Shift2Neutral’s “more than a year of negotiations” in that 153-page report. Neither is there any mention of Shift2Neutral.

Peatlands now seem to have a firm footing in REDD.  Russia’s wildfires dramatically highlighted the importance of these ecosystems and the devastating costs of peatland degradation.  And while the haze slowly receded over Russia, the wind was at the Voluntary Carbon Standard’s back as their first REDD methodology targeting the soggy swamps went live this month.  

From carbon payments for helping re-wet drained peatlands to aligning economic incentives to prevent their degradation in the first place, Ecosystem Marketplace digs in to peatlands with two recent articles exploring both the Russian wildfires and the potential for carbon finance in light of the new VCS REDD methodology.  

Moving past peat, but still stuck in the muck, corruption and challenges to REDD transparency surfaced from a variety of sources this month.  The billions of dollars just starting to be funneled into REDD programs are being eyed suspiciously and efforts to ensure transparency may be a hard sell.  

First, the Interim REDD+ Partnership is stepping in to provide its first official attempt at surveying the landscape of REDD+ activities — in the timespan of two weeks — as part of its stated desire to produce a transparent global registry.  In Indonesia and Brazil, renewed concerns over corrupt officials siphoning off money from nascent deals with Norway emerged in the press.  And finally, the announcement of a forest carbon deal between an Australian firm and the entire country of the Democratic Republic of Congo is raising eyebrows as the information on such a vast deal remains shrouded in mystery.  This, in the wake of a agreement (covered in our last newsletter) the company says it signed with Malaysian tribes to pursue REDD projects that is also being contested.

On firmer footing, Australia signaled a new move to get its forest owners out of the carbon market mire.  Stranded by the government’s abandonment of the operational Greenhouse Friendly program and failure to follow through with a nationwide trading scheme, Aussie forest spirits may be up again as a new proposal to allow forest owners to generate carbon credits emerges and kindles new interest from neighboring New Zealand as well.

Baka, Bagyeli and Bakola forest people – together with their local support NGOs – have been conducting consultations in southern Cameroon to inform their communities about potential REDD projects. The Government of Cameroon is seeking funding from the World Bank’s Forest Carbon Partnership Facility (FCPF) to establish these projects which are intended to Reduce Emissions from Deforestation and Forest Degradation (REDD).

A civil society workshop, held in Yaounde on June 30th 2010, brought together a range of civil society organisations and indigenous peoples to reflect on the consultations and prepare recommendations for a subsequent meeting with representatives of relevant Government Ministries on 1st July 2010.

The Baka, Bagyeli and Bakola Communities made it very clear:

1. That climate change is happening now in their forests and, to stop this, industrialised countries must stop polluting, which means that any protection of forests must not be through market mechanisms (like carbon credits) which allow this to continue, nor through mechanisms which end up funding industrial logging (presented as ‘sustainable forest management’) industrial plantations (presented as ‘reforestation’) and the exclusion of local people (presented as ‘conservation’).

2. That they fear that REDD projects will not benefit them but will exclude them and benefit others (including industrial plantations, loggers, conservationists, more powerful neighbouring communities, and state and local authorities). They insist they be included equally in benefit sharing, which (from their experience of, for example, not receiving any portion of the Annual Forest Royalties) requires they be treated separately so that benefits actually reach them.

3. That their rights to their forests must be recognised, and that their right to be included in decision-making be realised. The Baka, Bagyeli and Bakola have not been consulted (as required by the World Bank’s own procedures) in the process of drawing up Cameroon’s application to the World Bank for REDD funding.

In conclusion, they made clear that: (i) if their right to free, prior and informed consent (FPIC) is not realised; (ii) if their rights to their forest are not recognised; and (iii) if there are not clear mechanisms for including them equally in the benefit sharing that should flow from any REDD project, then they will not accept REDD.

The forest peoples and other civil society organisations at the civil society workshop questioned whether REDD in its current form can: (i) help solve climate change; (ii) help secure the rights of forest peoples to their land; or even (iii) ensure all local communities (including forest peoples) benefit from REDD projects. They suggest REDD may simply allow industrialised countries to continue polluting, and allow industrial loggers, plantations and conservation organisations to take more control of the forests.

The Baka, Bagyeli and Bakola point out that their activities have not harmed but have protected the forest, and they would welcome a form of REDD that would support them to continue this, not one that would continue the destruction of their forests and perpetuate their marginalisation.

Camisea, Peru. Photo credit: Emily Greenspan, Oxfam

Can forest-rich countries learn from the mistakes of extractive projects and avoid unleashing their own resource curse?

For poor developing countries, exploiting natural wealth such as minerals and metals should prove a blessing, offering the potential to generate huge revenues and help lift them out of poverty. Instead many have been inflicted by the “natural resource curse”, in which countries with an abundance of natural resources enjoy less economic growth and worse development outcomes than those endowed with less of Nature’s bounty.

Despite efforts to improve governance and oversight related to extractive industries projects, the natural resource curse persists today. A recent WRI, Oxfam and Bank Information Center report shines the spotlight on the Camisea natural gas project in Peru and highlights the importance of investing in sub-national governance and capacity building before scaling up investments in natural resource projects.

$1 billion in gas revenue, but poverty remains

The findings of the report, People, Power and Pipelines, as described in this article, have implications not only for extractive industry projects, but also for forest management in developing countries. In particular, international financial institutions, national governments and other stakeholders involved in REDD – that seek to reduce emissions from deforestation and forest degradation – should learn from the mistakes of extractive projects and avoid unleashing their own resource curse.

The massive Camisea project’s gas production infrastructure and pipeline physically impacted five of Peru’s 24 regions, three of which are among the poorest in the country. Between 2004 and 2009, over $1 billion in gas revenues were distributed to sub-national governments. Yet the social benefits have arguably been slight. In 2008 close to 60% of Peru’s rural population remained mired in poverty, including regions benefiting from pipeline revenues, and despite the fact that national poverty levels declined steadily from 2006 through 2008. In addition, the project took aheavy toll on local ecosystems with three major oil spills occurring within the first 15 months of construction.

Local governments unprepared for influx of funds

Peru embarked on a substantial decentralization process in 2002, handing more political and fiscal control to sub-national governments. This meant that provincial and district governments in the vicinity of the project were unprepared, only two years later, either to manage the significant social and environmental risks associated with a major gas pipeline or to effectively deploy the massive revenues generated.

Peru: Camisea Pipeline Path and Poverty

Against this backdrop, People, Power and Pipelines analyzed the experience of sub-national government in the Cusco region in managing the natural gas project’s impact and associated revenues between 2005 and 2007, researching public records and conducting interviews with key players. The report’s findings highlight five challenges, stemming largely from weaknesses in sub-national planning and capacity, which may provide an instructive lesson for similar situations in other countries and sectors.

1. Significant surplus revenues were carried over from year to year by sub-national Governments, without applying an investment strategy. This resulted in missed opportunities to gain returns on these funds, address the risks of oil price volatility and to prepare for the eventual decrease in gas revenues.
2. While institutions, procedures and plans for fiscal management were in place, interviews with municipal officials suggested that these were rarely used in day to day administration.
3. A lack of strategic planning hindered municipal governments’ ability to coordinate large land use projects, plan for the future, and manage the impacts of infrastructure expansion in environmentally and socially sensitive regions. For example, a road was built through the Megantoni National Sanctuary without assessments of impacts on the local environment or on indigenous populations.
4. Visible investments, such as roads and buildings, were favored over less visible investments that would enhance social capital such as health, education, and agriculture.
5. Public access to information on how gas revenues were being used was limited and insufficient for citizens to hold government accountable.

Lessons for REDD Revenues

Peru’s experiences from the Camisea project could prove instructive for REDD as the international community ramps up efforts to provide a financial compensation mechanism for developing country actions to reduce emissions from forest loss. Although funding for REDD will likely take different forms, a frontrunner option is to link it to carbon markets in developed countries. Companies would then meet their emission reduction commitments by channeling funding to REDD projects in forest-rich countries.

Like Camisea, and extractive projects more broadly, carbon markets would generate funding for poor, but natural- resource- rich, nations, at a scale rarely seen before. There is a risk, though. If REDD does not work as intended, its failure could not only undermine climate reduction goals in developed countries but also inflict a new kind of resource curse on developing nations.

Drawing on Peru’s Camisea experience, international financial institutions and others designing REDD should therefore:

• Withhold access to carbon markets until in-country governance and capacity is sufficient to manage the scale up of funds. Indicators developed by WRI’s Governance of Forests Initiative (GFI), for example, can be used to assess the strengths and weaknesses of forest governance in a given country.
• Support sub-national capacity building for long-term strategic planning and programs that strengthen transparency and accountability mechanisms for tracking revenues and expenditures in areas where REDD funds are channeled.
• Draw on and adapt best practices from successful extractive industry projects to avoid known pitfalls.

Above all, careful sequencing of governance and capacity building should be employed before scaling up revenue flows. This will help ensure that urgently needed REDD and extractive industry payments are used in a way that generates long term development benefits, especially for the poor. It will create incentives for strengthening developing country governance and capacity. And it will help architects of REDD avoid inflicting a new “REDD resource curse” on nations whose wealth lies in forests.

 Kuala Lumpur, Malaysia, 26 July 2010—WWF’s Global Forest & Trade Network (GFTN) and TRAFFIC, with support from the USAID’s Responsible Asia Forestry and Trade programme (RAFT), will meet suppliers of forestry products from Malaysia this week to explain the implications of laws such as the amended Lacey Act.

The Lacey Act is the first law of its kind to prohibit the import, sale or trade of illegally-harvested wood and wood products into the United States. 

Companies dealing in forest products need to be aware of new legislation in some importing nations Click photo to enlarge © Tantyo Bangun / WWF-Canon Kuala Lumpur, Malaysia, 26 July 2010—WWF’s Global Forest & Trade Network (GFTN) and TRAFFIC, with support from the USAID’s Responsible Asia Forestry and Trade programme (RAFT), will meet suppliers of forestry products from Malaysia this week to explain the implications of laws such as the amended Lacey Act. The Lacey Act is the first law of its kind to prohibit the import, sale or trade of illegally-harvested wood and wood products into the United States. Companies importing timber products to the US will need suppliers, such as mills and manufacturers from across South-East Asia, to understand their role in ensuring compliance with the revised regulations. To help them, WWF’s GFTN and TRAFFIC are holding a series of Legality Training Workshops across Southeast Asia this July, August and September. The workshops will bring together representatives from government, industry and the environmental community, to cover a range of topics including information on the amended Lacey Act, what US importers need from suppliers in Malaysia, how to help US customers demonstrate due care, relevant legislation in Malaysia, information on legal and responsible trade and training materials for staff involved in the timber trade. The US is not the only major timber importer introducing legislation to tackle the illegal timber trade: the European parliament recently voted to pass new a law that will require companies importing and selling timber in the EU to demonstrate they have exercised “due diligence” to ensure their timber has been felled legally. The EU is also currently negotiating bilateral voluntary procurement agreements (VPAs), which focus on legal timber sourcing from producing countries. “The amended U.S. Lacey Act is an important tool in helping Malaysia enforce its own laws governing trade in timber and timber products,” said Brian McFeeters, Acting Deputy Chief of Mission at the U.S. Embassy. “It is imperative for companies in Malaysia to understand the law, what’s required from them to help their customers in the U.S. demonstrate compliance and how they can play a part in a larger international movement to combat trade in illegal wood.” As new product declarations under the Lacey Act are enforced from September, a growing number of US-based forest products importers will seek assurances from their suppliers that the products they source have been legally produced. This means they must be able to demonstrate the timber has been harvested, possessed, transported, sold or exported without breaking any relevant underlying laws in the country where the tree was grown, even if it was processed in another country. “If you are exporting to the U.S. market, you need to understand how the Lacey Act impacts your customers in the U.S., who will face large fines, confiscation and imprisonment if they cannot demonstrate that the wood used in making the products they import is legal,” said George White, Head of WWF’s Global Forest & Trade Network (GFTN). “With a long-standing history in advancing responsible forestry and trade, the GFTN is well placed to help Malaysian suppliers understand this groundbreaking law, learn specific steps to demonstrate legal sourcing and most importantly, source responsibly by purchasing certified timber.” “Illegal logging and timber trade not only undermine conservation, but also result in reduced profitability of legal trade, loss of foreign revenue and currency exchange, uncollected forest-related taxes and depleted forest resources and services,” said Chen Hin Keong, TRAFFIC’s Global Forest Trade Programme Leader. “As international legislation increases to combat trade in illegal timber, it will be imperative for all links in the supply chain to show that they have taken the appropriate measures to keep illegal timber out the global marketplace.”

For more information, visit gftn.panda.org/training

An estimated 16% of the total global GHG emissions are directly attributed to the destruction of tropical forests. Forest carbon based projects, which include reforestation, afforestation, improved forest management and Reducing Emissions from Deforestation and Forest Degradation (REDD), have evolved from the early stages of the carbon market and were some of the first carbon finance projects designed to mitigate GHG emissions and generate voluntary carbon offsets. As the voluntary carbon market has grown and the necessary building blocks have been cemented, specifically in respect to standards, protocols and registries, forestry projects have also matured and legitimized.

Recent discussions, within the US and at an international level, have increasingly looked to include forestry based projects within the regional compliance sectors which indicate both the importance of the voluntary market as a commercial incubator and the acceptance of large scale forestry projects expanding in the regulatory markets. That said, whilst being well positioned for future compliance markets, forestry projects remain a fundamental voluntary product with increasing market appeal to large corporate buyers which will continue to mobilize future regulatory and voluntary demand.

A great deal happened in the climate change policy arena in 2009 and while uncertainty and speculation remain around climate policy at the international and regional levels, recent policy and market developments suggest the role of forests in climate change mitigation will continue to grow. As we all know, the United Nations Framework Convention on Climate Change (UNFCCC) undertook intense negotiations that culminated in early December with COP15 in Copenhagen. Forestry was an important component and REDD made encouraging progress resulting in a draft decision text. The failure to progress other negotiation streams prevented the text for a REDD mechanism from being formally approved by the parties.  The climate policy landscape in the US in 2009 and 2010 has been turbulent to say the least. Despite the continued uncertainty and speculation on when and what the Senate Bill will ultimately produce, The American Power Act under Kerry and Lieberman has positioned forestry projects as a significant offset category which is encouraging for both US based and international forestry projects.

A research report conducted by EcoSecurities and partners, including Conservation International and Climate, Community & Biodiversity Alliance (CCBA), set out to analyze the perceptions and opinions of offset buyers towards forestry as an option for corporate offsetting in this dynamic period of policy development. The report is based on the survey responses of over 150 corporate organizations representing a wide range of sectors and geographies.

The survey showed that the majority of respondents have a very positive perception towards forestry as a viable offset category. Many of the participants also indicated a growing acceptance toward forestry projects compared to previous years. Despite the inconclusive results from COP15, which disappointed many constituents, the appetite for forestry as a voluntary offset option does not seem to have been negatively impacted.

Forest carbon projects score highly in relation to other offset categories based on the projects’ ability to generate sustainable co-benefits to indigenous communities and biodiversity elements. Reforestation with native species and avoided deforestation were rated the most ‘highly desirable’ project types and purchasers showed a preference for projects located in developing countries, especially South America.

In addition to the traditional demand in the voluntary market, there is an increasing interest from buyers who fall under current regulatory schemes as well as those likely to be regulated in the future, i.e. pre-compliance. Compliance interest in forestry is particularly strong among buyers from North America and Australasia. While buyers based in North America show preference to domestic projects, the most important factor remains certification under a leading market based standard. According to the report, the most attractive carbon standard is the Voluntary Carbon Standard (VCS), however respondents from North America were also particularly interested in Climate Action Reserve (CAR) and the CCB Standards combined with a credible carbon accounting standard, and even indicated a willingness to pay a price premium for this additional certification.

The “State of the Forest Carbon Markets 2009? research conducted by New Carbon Finance suggests that the upward trend in the total volumes transacted for forest carbon credits over the past few years continued in 2009 despite signs that overall activity in the voluntary markets was on the decline. Other key forest carbon market developments recently seen include the positive progression for forestry certification; for example, VCS registered its first Agriculture, Forestry and Other Land Use (AFOLU) project, and Climate Action Reserve (CAR) published its new version of Forestry Protocols, increasing activities around domestic forestry in the US. Furthermore, the number of afforestation/reforestation (A/R) projects registered under the Kyoto Protocol’s Clean Development Mechanism (CDM) increased significantly in 2009 and a substantial increase in trading activity of compliance forest carbon credits, primarily forest backed Assigned Amount Units (AAUs) coming out of New Zealand, took root in the market in 2009.

There appears to be increasing support and momentum for forestry projects in relation to policy and regulatory developments, but the real driver and key influencer remains the voluntary market. Once policy is instituted at the global level then large-scale forestry projects will be well positioned to scale. In the meantime, the emergence of forestry projects in the developing world and North America, and the development of core market components – primarily standards and corporate demand – will continue to move forestry to the forefront of the carbon market.

Steve Baczko is Senior Commercialization Manager at EcoSecurities, a recognized carbon market pioneer that has amassed one of the industry’s largest and most diversified portfolios of carbon credits.