CAN FORESTS THRIVE IN THE WORLD OF CARBON TRADING?
By Lara Farrar
CNN
pe/04/23/eco.tree.carbontrading/?hpt=Mid
April 26 2010
CNN — So few forests remain in the tiny country of Armenia that the
World Bank has warned it could one day become a desert.
For more than 15 years the Massachusetts-based Armenian Tree Project
has been replanting the country’s forests lost during its energy
crisis in the early 1990s.
Recently the group, like many similar organizations, has considered
raising funds by selling carbon credits.
But questions persist over whether applying carbon finance to forestry
projects can be good for the environment as well as for the communities
where the trees are planted.
"The thing about forestry and carbon, obviously it is very new,
and it is complicated," said Jason Sohigian, deputy director of the
Armenian Tree Project.
"The reason why people want to invest in it is they understand trees
and carbon have a relationship, so it is easy for the public to make
an association between climate change and trees."
Deforestation is responsible for up to 20 percent of greenhouse gas
emissions worldwide, according to the United Nations. Yet forests
also absorb huge amounts of planet-warming carbon dioxide, which can
be quantified and bought as credits by companies and countries to
offset their pollution.
Currently carbon offsets purchased from reforestation projects
represent only a fraction of global carbon markets.
A reason for this is that few projects have gained approval by the
Clean Development Mechanism, an arrangement under the Kyoto Protocol
that allows industrialized countries to buy carbon credits from
projects in developing countries.
"The verification process is quite rigorous to go through and
satisfy the questions, especially on how you measure emissions,"
said Alexander Rau of the Helsinki-based Climate Wedge, a carbon
management and investment advisory firm.
The European Union’s Emissions Trading System also has a ban on buying
forestry offsets from developing countries.
Growth of forest offsets now largely depends on whether the U.S.
passes legislation prioritizing forestry as part of a federal
cap-and-trade market. And while climate negotiations in Copenhagen
last December did not result in a legally-binding global pact to cut
greenhouse gases, there was significant political and financial support
of a UN plan to reduce emissions from deforestation and degradation
(REDD).
Costing the Earth
However, for small non-profits like the Armenian Tree Project, the
cost of even becoming certified on voluntary markets is prohibitive.
"That is one of the problems with forests," Sohigian said. "With most
systems, you don’t get the money until after you sequester the carbon.
So how do you even get off the ground without the money up front?"
Once a project is certified, revenue generation can still be
difficult. For one, the price of offsets in voluntary markets is
significantly lower than those traded in regulated markets, which
means more trees will have to be planted to make money.
Projects will often sell credits in advance based upon the projected
amount of carbon the trees will absorb over time but "the risk is very
big," said Jutta Kill of FERN, a Brussels-based environmental group.
"You have a lot of obligations for a very uncertain return of
revenues," said Kill. "Some involve signing a very long-term contract,
guaranteeing your trees will be standing for the next 100 years."
If something happens to the trees, the communities and organizations
that have planted them will sometimes be responsible for replanting
them or will have to buy offset credits from other projects to supplant
what was lost, said Kill. This possibility adds more cost concerns.
"Most of the contracts are not public, which puts a lot of the
communities at a disadvantage," Kill told CNN. "They have no way to
know whether they are being offered a fair deal."
"When you have a project that involves local communities, it is
interesting to see if it would benefit or if it would suffer from
presenting itself as a carbon project," Kill said.
Sohigian said the Armenian Tree Project has worked hard to engage the
support of villages in their endeavor, starting poverty alleviation
programs and environmental education initiatives in combination with
their efforts to replant trees across the country.
Becoming an offset project could mean they have to refocus their
efforts to measuring the carbon absorbed by the forests, diverting
attention away from the people who will be crucial to ensuring the
trees are not cut down in the future.
"If you are helping families and reducing poverty, that reduces
pressure on forests and increases the likelihood the forests will be
able to survive," Sohigian said.
An article published in "Science" in early April warned REDD could
place forest management in the hands of governments, reducing the
rights and responsibilities of local communities charged with managing
the trees.
Some critics of the forestry and carbon offset schemes suggest that
because voluntary markets are unregulated, such projects also are
susceptible to fraud.
"I call it the Wild West mentality of carbon offsets," said Scott
Jones, executive director of the Forest Landowners Association,
a U.S.-based group that lobbies for private landowners rights.
"There are no rules right now, so if you can figure out a way to go
make money and show social responsibility, then go ahead."
Others are more optimistic about the future of carbon offsetting
and forestry.
"This is an evolving market and mistakes will be made," said Jim Lyons,
a lecturer at Yale University’s School of Forestry and Environmental
Studies and former under secretary for natural resources and the
environment in the Clinton administration.
"I feel confident smart people can work out the details, and the
market will evolve into a market that will prove much more viable
than the existing market for cutting down trees," Lyons said.