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REDD – or not? Avoiding Emissions from Deforestation

November 6, 2009

Deforestation is a major contributor to greenhouse gas emissions.  There is strong in-principle global support for action to reduce emissions from this source.  But there are also numerous disagreements and difficulties around programme design, incentives and investments.  Can the issues be resolved and, if so, when?

Deforestation and land degradation accounts for approximately 20% of global greenhouse gas emissions –  more than transport, and second only to energy generation.

Every month, more than 1 million hectares of tropical forests are lost, resulting in more greenhouse gas emissions than the total emissions of the European Union emits in a month.

Reducing Emissions from Deforestation and forest Degradation – REDD – is therefore a critical component of the negotiations at the UNFCCC meeting at Copenhagen for the post-2012 framework. 

The action agenda for REDD was first set at COP 11 at Montreal, with the policy approaches being considered under Decision 1/CP13 (para 1.B(iii) of the Bali Action Plan.  Relevant information and formal negotiation documentation can be accessed here.

Much of the emissions related to deforestation emanate from emerging economies.  They need to be incentivized to put measures in place to reduce, and ultimately halt, the rate of deforestation.  These measures are not currently subject to substantial investment, as programme standards have not been formalised, and the measures are not eligible under the Clean Development Mechanism (CDM) carbon credit project mechanism of the Kyoto Protocol.  (Further information about treatment of Land-Use and Land-Use Change under the Kyoto Protocol can be found here).

Deforestation and forest degradation are driven by agricultural expansion, forest resource exploitation, and infrastructure development.  Local communities, national economies, and rural industry are all stakeholders in managing forest exploitation.  REDD must incorporate considerations of capacity, conservation, sustainable forest management, and enhancement of carbon stocks.  Therefore, the solutions to deforestation are highly complex.

This means that flexible, but credible approaches, will need to be established to incentivize and manage REDD, which will need to take into account national and local public, civil and private sector institutions and participants – and be palatable to the negotiating Parties at Copenhagen.

A report by the Informal Working Group on Interim Finance for Reducing Emissions from Deforestation and Forest Degradation (IWG-IFR) – a document designed to ‘inform and be informed’ by the ongoing REDD negotiations – estimates a 25% reduction in deforestation could be achieved by 2015 with a financial commitment of US$22-29 billion for the 2010 – 2015 period. 

This would represent a cumulative reduction of 7 gigatonnes of CO2 equivalent by 2015, reducing deforestation by 3 million hectares per year.  That’s a very large potential contribution to short-term global emissions reduction requirements.

It implies a not-insignificant level of North-South investment enabled only by substantial emissions reduction commitments by Annex 1 Parties (‘developed’ countries) and both government-to-government transfers as well, likely, as linking to emissions trading and thereby private sector participants in ‘industrialised’ countries. 

Both industrialised and developing country Parties are supportive of REDD.  There were strong statements (at the UN Secretary-General’s high-level REDD event on the margins of the 64th UN General Assembly) to the effect that inclusion of REDD in a post-2012 package is critical. 

For developing countries, REDD represents an opportunity to realise the value of a mis-priced asset (ecosystem services provided by forests), drive and manage investment into rural industries and communities as well as the potential for signficant benefits to national revenue.  Industrialised countries see a politically palatable and low-cost option to secure substantial greenhouse gas emissions abatement through mechanisms that may appear as extensions to existing bilateral and multilateral aid programmes.  In addition, a sectoral benchmark and approach opens an avenue to the potential for developing countries to assume commitments.

The Meridian Institute, in a March 2009 report on options for REDD developed for the Government of Norway, proposes a three-stage approach to incorporating REDD, including capacity building, payment for specific activities, and finally participation in compliance markets through a sectoral approach.  It is proposed that the approach be compatible with other forestry, agriculture and other land-use activity treatment.

The IWG-IPR takes a similar approach:

In the first phase developing forest countries would receive grants to develop a REDD+ strategy.  In the second phase, the REDD+ strategy implementation phase, grant support would be provided to build capacity, while large-scale payments would be provided for demonstrated results in reducing emissions relative to an agreed reference level, as estimated by proxies for greenhouse gas emissions.  In the third phase, countries would receive payments for verified emission reductions and removals, as measured by compliance grade and transparent measurements of environmental integrity, and for the conservation of existing stocks.

However, it is not just financial incentive structures and stakeholder participation issues that need to be established and agreed, but also procedures for setting emissions reference levels (historic and dynamic), methodologies for monitoring, reporting, and verification.

The reference year chosen, and reference deforestation emissions rates, will strongly impact the extent of apparent abatement achieved and potentiality to attract investment flows.  Therefore, there are critical technical and political dimensions to those decisions.

At present, payments are deemed to occur only once emissions reductions have occurred.  This facet implies that resource-constrained developing countries may not be able to fund the implementation and certification resources required (if there is no forward market).

The nature of emissions removals means that developing countries would effectively assume long-term constraining liabilities for forest protection in return for a one-off payment.  Problematic indeed.

As a consequence of these many considerations, there are as many proposals relating to how REDD might be approached.  The numerous proposed approaches are outlined in a 2008 publication ‘The Little REDD book’.

If it sounds far-fetched that REDD will overcome all the challenges and become operational, we (in Australia) sit in the one place that has overtly benefitted so substantially already from avoided emissions from land use degradation.  That benefit came in the way of Article 3.7 of the Kyoto Protocol – known as the ‘Australia clause’ – which enables Australia to benefit from reduced rates of land-clearing since the baseline year (1990).  Emissions from land-clearing in 1990 in Australia were 103 MtCO2e and are now about half of that.  The reduction is effectively due to business-as-usual trends.  It has meant that Australia has an eminently achievable emissions reduction target, potentially allowing for surplus carbon for export if low-cost emissions abatement could be found elsewhere in the economy.

Australia is already investing $200m in REDD-related activities in PNG and Indonesia.

Achieving emissions abatement potential from REDD requires substantial investment – of the level that industrialised countries are evidently not yet prepared to countenance.  While developing country and technical concerns should not be overlooked, availability of investment is a primary factor for success. 

As per the IWG IFR :

Developed countries are hesitant to generate payments at the scale required because of uncertainties over whether the results will be achieved in a sustainable way, will be measurable and verifiable, and will demonstrate environmental, political, and social integrity.

(….)

Furthermore, developed country governments face challenges in articulating to their citizens why they would be facilitating large-scale financial transfers to developing forest countries during difficult economic times

As it stands, the phased approach to REDD which is emerging, dictated by the requirement to resolve technical and resource issues, will mean that it is unlikely that there will be any short-term large-scale programmatic investment into REDD. 

How investment can practically be phased and tapped through the framework being devised at the negotiations is a critical issue if the emissions abatement from REDD is to be secured. 

Let’s hope it doesn’t take too long to operationalise – the forests will continue to fall in the interim.

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