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Global Fund Would Provide Effective Means To Fuel REDD+ Climate Program: Experts
Source: Wed, 19 Jun 2013 03:06 AM . Efforts to stop an increase in global temperatures can succeed if policymakers put in place a broad governance structure to oversee REDD+ from which money would trickle down through state-level funding to local projects, according to a new research paper . How best to govern REDD+ — a UN-backed framework for reducing emissions caused by deforestation and degradation — is politically disputed, particularly over what role financial markets and governments should play in the scheme. “ National Governance Structures for REDD+ ”, co-authored by Norwegian University of Life Sciences professors Arild Vatn and Paul Vedeld, examines four potential national REDD+ architectures that could be funded directly by a compliance market or by a global fund supported by both public and private sources. The options outlined in the research paper consider strengths and weaknesses of channeling economic support from the global to the country level through financial-market directed intermediaries, a separate national fund, a fund in a national state administration, or conditional budget support that would direct resources into local projects, national programs or sector policies. “The main idea is to open up the box and start to think about wider governance structures, rather than just thinking about it as a market, which has been the preferred mechanism up until now,” said Vatn at the “ Options for National REDD+ Architectures ” conference in Norway. “The way funding is organised will have a decisive impact on its capacity to deliver reduced carbon emissions, improved local livelihoods and protect biodiversity.” LAYING THE GROUNDWORK REDD+ assigns financial value to carbon stored in trees, creating a disincentive to cut them down. If policymakers were to set up a global fund paid for by carbon markets, it would mean that countries and businesses could receive carbon credit payments as Certified Emissions Reductions (CERs), by an issuance from the fund as an alternative to the international carbon market, Vatn said. Currently, carbon credits in the form of CERs are issued by the Clean Development Mechanism (CDM) Executive Board, approved under the rules of the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC), an international treaty that sets binding obligations on industrialised countries to reduce emissions of greenhouse gases (GHG). They pave the way for investments in emission-reduction projects in developing countries. So far, because REDD+ is still in preliminary stages — referred to as the “readiness phase” — most of the $ 17.2 billion funding pledged for projects to protect standing forests has been made available to developing countries through the Forest Carbon Partnership Facility (FCPF) of the World Bank and the UN-REDD Programme . The funds are meant to create national capacity and strategies for REDD+ based on country-specific causes of deforestation. However, the scheme, intended to establish global climate policy, faces many challenges, according to Vatn. “In early discussions, everybody thought about developing compliance projects financed by firms like in the CDM,” Vatn said. “While we see some strengths with that, there are also some clear weaknesses, so we need to think about alternatives.” TRICKLE DOWN FUNDING OPTIONS The authors propose that REDD+ could be based on a CDM-like system, becoming in part a market-based carbon-trading system made up of buyers in the form of firms that need to reduce emissions and sellers who own — or have the right to use — tropical forests. “Given that a post-Kyoto agreement includes substantial cuts and accepts trade in emission permits, the market could raise significant revenues to invest in forest protection — this is seen as one of the strengths of a market-based solution,” Vatn said. “However, there are many problems with CDM, concerning such issues as additionality (the net positive difference resulting from economic development interventions) and transparency.” An international fund agreed by governments that would issue CERs to firms responsible for emission cuts, could be at least as effective in raising funding, he said, adding that it could also do away with problems encountered in the market-based solution by increasing transparency and including measures directed at lessening potential for fraud. Using an international perspective, several alternatives for a national REDD+ architecture could take shape. One alternative would be to set up a national fund outside of the state administration, where resources would flow from a global fund to national funds based on the level of reduced emissions from forests in each individual country. The national fund could be governed by an independent administrative board that would operate as an intermediary between forest owners — or users — and the international fund. The board could include representatives from the private sector, civil society and public authorities. Another option would involve a fund managed by the state administration. The money received would be allocated by a REDD+ -designated board made up of members from government, civil society and the business sector. It would function independently of a government budget, but have the capacity to use existing state administration to organize programs and coordinate among different sectors of society. While it has several of the strengths of the independent fund, an added advantage is that it would have the capacity to use existing public systems, and could ensure that such important sectors as agriculture and energy also get involved, Vatn said. The final option proposed by the authors would channel money from a global fund in the form of conditional budgetary support. While this solution would use existing administrative systems – it could also offer resources to make them more effective, and is expected to reduce transparency compared to both of the proposed national fund options. “While principally the best system for democratic accountability and potentially best at intersectorial coordination, the present situation concerning public misuse of money, may hamper its functionality in many countries,” Vatn said, adding that a separate fund within the present state administration may seem to offer the best solution in many contexts. “What stands out are the many challenges that organizing REDD+ at the national level will face,” the authors conclude, adding that their analysis of all options indicates the weakest option is the market-based system. ENHANCING TRANSPARENCY The main appeal of such a system has been its capacity to attract private funding, but it also raises the question as to whether international trades over government-owned forest lands are appropriate. In the market-based system, transparency can be reduced because traders can claim that information must be protected for business reasons, according to the paper. The analysis showed that it seems problematic to establish a system for combating deforestation and forest degradation that is separated from state decision-making and administrative bodies, leading the authors to suggest that considering local conditions is of paramount importance when choosing a feasible option. “We still need to define who are the carbon buyers, who are the sellers and define the relationships between them,” Vatn said, adding that all four funding models are open to corruption due to REDD+ delivering large amounts of money to developing countries, which could attract organizations and people who are after the money, rather than supporting the REDD+ ideals. “Obviously governance issues and rent-seeking behaviour — characterized by pursuit of the money — aren’t only important when it comes to the actual set up of a REDD+ system, but these factors are at play in most forest resource-rich countries, and can hinder any kind of major policy changes if actors from state bureaucracy and business profit from current business-as-usual”, said Maria Brockhaus, an economist and policy analyst in forestry and agricultural sciences at the Center for International Forestry Research (CIFOR). For more information on the issues discussed in this article, please contact Maria Brockhaus at m.brockhaus@cgiar.org This research is part of the Global Comparative Study on REDD+ , which forms part of the CGIAR Research Program on Forests, Trees and Agroforestry . It is supported by the Norwegian Agency for Development Cooperation, AusAid, the UK Department for International Development and the European Commission. Continue reading
China Launches First Carbon Market In Shenzhen
http://www.ft.com/cms/s/0/ccf2987e-d808-11e2-9495-00144feab7de.html#ixzz2WeKodNcr By Kathrin Hille in Beijing China saw its first-ever domestic transaction in the right to discharge carbon dioxide at the launch of its first pilot carbon market on Tuesday, moving the world’s largest CO2 emitting country closer to capping such pollution. A power plant of Shenzhen Energy Group, a state-owned utility, sold an emission permit for 10,000 tonnes to the Guangdong arm of state oil group PetroChina for Rmb28 ($5) a tonne and another 10,000 tonnes to Hanergy, a privately owned power generator and solar-panel maker, for Rmb30 a tonne, according to the Shenzhen Carbon Exchange. “This means that our country has taken a key step in establishing a carbon market,” the exchange said in a statement. Carbon markets allow companies to buy permits to emit carbon dioxide from those that burn less fossil fuels. They thus help set a price on emissions, a mechanism that aims to encourage companies to reduce such pollution and invest in cleaner technologies. The trading scheme, launched in a grand ceremony in the presence of local and national policy makers, is the first among seven regional trading platforms to start operating this year or next to help the government decide in 2015 whether to set up a nationwide carbon market. “This is further proof that China recognises the need to address climate change,” said Dan Dudek, head of the China programme of the US non-profit group Environmental Defense Fund. However, some experts say the scheme is little more than a drop in the ocean considering China’s massive total emissions and the country’s pressure to keep its economy growing fast enough to continue lifting people out of poverty. The Shenzhen pilot involves 635 local companies which account for 26 per cent of the city’s gross domestic product and 38 per cent of its CO2 emissions, or about 30m tonnes – a tiny amount compared with the 8bn tonnes China emitted in 2012. The enterprises that participate in the Shenzhen scheme, which have been allotted permits for total emissions of 100m tonnes between 2013 and 2015, are set to reduce their carbon intensity by close to 7 per cent over the next two years, the exchange said. But the pilot market starts at a difficult time for global carbon markets including the world’s largest, the EU’s Emissions Trading System, which is struggling with record price falls as the sluggish economy exacerbates an oversupply of emissions permits. The prices of the first permits sold on the Shenzhen market were about 25 per cent lower than benchmark prices in the EU Emissions Trading System, where permits were trading for €4.65 a tonne at midday on Tuesday. That is nearly 90 per cent higher than in April, when prices collapsed after the European Parliament voted down a bid to tighten the flailing market, but well down from July 2008 when benchmark prices were nearly €30 a tonne. Chinese observers said the government was likely to move cautiously to avoid any adverse impact as China’s economy is slowing as well. “Progress will depend on the government’s determination,” said Lin Boqiang, an energy economist at Xiamen University. “The question is what impact it will have on the market – unlike other commodities, for example when you buy oil you get oil, here you spend money and the only thing you get is a contribution to the global climate.” Experts say what the Shenzhen scheme and the other regional pilots that are expected to follow can achieve is also limited by the lack of a nationwide legal framework. “Unless the government sets up a binding framework, it will be very difficult to determine fair transactions, and trading will be hampered,” said Mr Lin. Additional reporting by Li Wan Continue reading
Chinese Expert: Latin America Can Become Major Player in Bamboo Industry
QUITO – Latin America can become a significant player in the bamboo industry, though not without major support from regional governments and a bigger effort to raise awareness about the potential economic benefits, Chinese expert Li Zhiyong told Efe. “I think there’s great potential in Latin America if we can obtain the positive support of governments, and also we need to do something to inform people about the advantages of bamboo,” Li said during the inaugural International Congress on Sustainable Forest Production, which kicked off Wednesday in Quito. Li, deputy director general of the International Network for Bamboo and Rattan, or Inbar, said soft bamboo has “great potential” as a food source and noted that Chinese people have been eating that evergreen plant for more than 3,000 years. Inbar says bamboo, which covers 3 percent of the world’s forest area, is one of the world’s tallest and fastest-growing plants and its rate of growth and maturation allow it to be selectively harvested year after year. It therefore is a sustainable alternative to the use of wood and an important source of income for both producers and processors. Bamboo forests also make a valuable contribution to the ecosystem, helping to combat soil erosion and assist in capturing carbon dioxide. Among Latin American countries, Brazil may be able to develop a bamboo industry the soonest since it has vast areas under cultivation and is working with China on ways to develop this product, Li said. But many other countries in the region have “very good conditions” for developing their own bamboo industry. “We’ve had successful experiences with countries like Indonesia, Malaysia, Vietnam and China because the governments have supported the producer and the companies to develop the bamboo industry” through policies such as subsidies, he said. “An important part of this story is having demonstration plots,” in which a few families plant bamboo and benefit from the crop, thereby serving as an example to others who may decide to join the initiative, Li said. In China, bamboo is not only consumed as a food but also used to make “more than 10,000 bamboo-derived products,” generating a range of profit-making activities, Li said. EFE Continue reading
