Reduced emissions from deforestation: towards an international framework

Transcription

1 Reduced emissions from deforestation: towards an international framework Author: John Lanchbery November 2007

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3 Contents Summary 2 Introduction 2 The RSPB and BirdLife experience 3 Drivers of deforestation 4 The aims and scope of a REDD regime 5 Setting a baseline 8 The policy approach 8 The place of REDD in a post-2012 regime 10 Monitoring, methodologies and definitions 11 Monitoring and methodologies 11 Baselines 12 Non-permanence and leakage (displacement) 14 Non-permanence 14 Displacement/Leakage 14 1

4 Summary The planet faces two crises: catastrophic climate change and the devastating loss of biodiversity. Action to reduce emissions from deforestation in developing countries can address both these concerns. Currently tropical deforestation account for about 20 percent of all greenhouse gas emissions. This report explains how a mechanism to be developed under the United Nations Framework Convention on Climate Change could deliver the necessary resources required to reward countries for reducing emissions from deforestation. Recommendations are offered which we hope will be adopted by the Conference of the Parties in Bali in December Introduction The forests of the world are disappearing at the rate of one football pitch (one acre) per second. In climate terms, tropical deforestation accounts about 20% of all human-induced emissions every year, roughly the same volume of greenhouse gas emissions as produced by the USA or China. The loss of natural tropical forests is a catastrophe for the world s biodiversity. Tropical forests are the most ecologically rich of all forest types. They are home to 70% of the world s plants and animals, more than 13 million distinct species. They contain 70% of the world s vascular plants, 30% of all bird species, and 90% of invertebrates. Deforestation is also a disaster for the many thousands of people who live in and depend on tropical forests, and yet have little say in their fate, and rarely benefit from their exploitation. Yet in countries with the highest deforestation rates, there is little or no incentive to protect natural forests. Indeed, economic realities generally favour cutting the forest for timber and converting the land to commercial plantations or large scale farming. This could change under new proposals submitted to the UN Framework Convention on Climate Change (UNFCCC) by Papua New Guinea, Costa Rica and the Coalition of Rainforest Nations in late The proposal would enable developing countries to benefit financially from protecting their forests. With this change could come the chance to protect the unique wildlife of tropical forests and offer sustainable livelihoods to the many people who depend on them. The RSPB strongly supports the initiative by Papua New Guinea (PNG) and the Coalition of Rainforest Nations (CRN), on reducing emissions from deforestation in developing countries (REDD). We 2 1 The Coalition currently comprises Bangladesh, Bolivia, Central African Republic, Cameroon, Chile, Congo, Colombia, Costa Rica, DR Congo, Dominican Republic, Ecuador, El Salvador, Fiji, Gabon, Ghana, Guatemala, Honduras, Kenya, Lesotho, Malaysia, Nicaragua, Nigeria, Panama, Papua New Guinea, Paraguay, Peru, Samoa, Solomon Islands, Thailand, Uruguay, Uganda, and Vanuatu.

5 wish to see the proposal firmly embedded in the global climate change regime. We are in an excellent position to help push forward the initiative. We have long worked on international climate change issues, especially those concerning land use change and forestry. We can also call upon first-hand experience of managing forest conservation projects on the ground in Asia, Africa and Latin America. In the following pages, we describe how we think that a REDD regime should develop as part of a so-called post-2012 climate change regime. (The first period of the Kyoto Protocol ends in 2012 and agreement needs to be reached on how to continue the treaty with additional elements, such as REDD.) First, however, we examine some of the drivers of deforestation because, to be successful, any regime to limit deforestation must address its causes. The RSPB and BirdLife experience The RSPB and its BirdLife partner organisations have a valuable role to play in helping to develop a successful international agreement on reducing emissions from deforestation in developing countries. We have two flagship forest conservation projects in Sumatra, Indonesia and Sierra Leone, which will provide crucial lessons about the financing and management of forest protection projects. They are designed to deliver benefits for biodiversity, local people and the climate. In each case, the RSPB and its BirdLife International partners (Burung Indonesia and the Conservation Society of Sierra Leone, respectively) are building trust funds to finance the ongoing protection of large areas of forest. We have worked closely with national governments to create the legal and fiduciary arrangements at country level to make these conservation areas possible. We are also building relationships with provincial and district governments, local leaders and local communities, to begin to put in place management plans at the project level which offer them real and sustained benefits. Both projects provide interesting lessons for the financing of forest protection outside formal protected areas networks. Harapan Rainforest in Sumatra is a mix of good and degraded secondary forest that was classified as production forest by the Government of Indonesia. It is some of the last remaining tropical lowland forest on Sumatra, threatened principally by the expansion of oil palm. The Gola Forest, Sierra Leone was gazetted as a production forest for the first few years of the RSPB/CSSL project. Both forests have considerable carbon value, which, if realised, could be re-invested in sustainable management and in the provision of jobs and services for local communities. We are actively seeking partners in the private sector with whom to develop these projects, in a way which can provide a clear assessment of their carbon value; safeguard benefits 3

6 for biodiversity and people; and ensure that they play a useful role as pilot projects in the context of REDD negotiations. Our intention is that these projects should develop in a way that is closely aligned to, and capable of merging with, a formal forest carbon market as it emerges over the next five to ten years. Drivers of deforestation To be effective, an international regime to limit emission from deforestation will need to provide sufficient resources to negate the driving forces behind deforestation. The level of financial resources required will, in turn, be important in determining the type of international policy instrument required because some policy mechanisms are likely to deliver more money than others. The costs of slowing or halting deforestation vary depending on the type of activity that needs to be displaced. Conversion of forest to subsistence agriculture is, for example, quite cheap to compensate for but conversion to the large-scale cultivation of soya or oil palm is much more expensive - because these are lucrative crops that can be sold on global markets at a high price. Indeed, the costs of displacing soya and oil palm production are likely to rise if, as seems likely, there is a boom in biofuels in Europe and North America. A key feature of any successful REDD regime is that it must provide sufficient funds to replace not just the annual income from a particular activity but to permanently displace it. So to prevent conversion of forest to, say, soya, it would be necessary to compensate for the ongoing income from growing the crop into the indefinite future. This could cost $30/tonneCO2 or much more with a boom in biofuels. A cost curve presented by the World Bank at a recent UNFCCC workshop in Cairns is given below. It is based on South American experience and a similar curve for SE Asia would include prevention of conversion of forest to oil palm at a rather higher level than conversion to soy beans. 4 Costs also vary from region to region and from country to country. For example, in SE Asia selective logging can be a profitable activity, with significant income being derived from the sale of timber alone,

7 without necessarily converting the forest to another use. Where forests are clear cut, income is derived from both the sale of the timber and then, for example, oil palm production. In parts of Latin America, the timber is not sold and land simply cleared for cattle ranching or soya. Partly as a result of such differences, it has been estimated that deforestation could be halted at a far lower cost in South America than in South East Asia. The Stern Review, whose figures are regarded by many to be low, estimates that 70 per cent of emissions from land use could be [covered by] around $5 billion per annum initially, although over time marginal costs would rise. To begin to halt tropical deforestation, a mechanism that delivers at least US$5 billion per year is thus required. The nature of drivers might also be expected to influence other factors that are important in a REDD regime. For example, one concern is socalled leakage or displacement in which stopping an activity in one place merely leads to it happening somewhere else instead. Conversion of forests to subsistence farming might be expected to lead to little international leakage because poor farmers in, say, Gabon, would be unlikely to move to Brazil. On the other hand, if the driver were selective logging for the sale of timber then the chances of international leakage might be high. The aims and scope of a REDD regime Currently, it is unclear in the UNFCCC process whether an international regime would seek to ultimately address all drivers tropical deforestation and hence all emissions from it, or whether the aim is partial coverage or, indeed, whether a progressive approach might be employed, addressing lower cost drivers first and higher ones later. The RSPB considers that the aim should be to ultimately address all drivers which, in turn, has implications for our preferred policy approach. It is also unclear whether an international regime should seek to cover only forests that are natural or intact, or whether all existing forests, natural and plantations, should be included. The RSPB is of the view that any regime should cover forests that are natural, rather than human-induced, although we appreciate that this might be a hard distinction to make in practice because, for example, many natural forests are degraded but we would still seek to include them. Many forests are degraded by, for example, selective logging. Such degradation is often an important precursor to clear cut deforestation and, in itself, leads to considerable greenhouse gas emissions. The RSPB therefore considers that degradation must be included in any agreement. 5

8 The current mandate of the UNFCCC s REDD group is to discuss reducing emissions from deforestation alone but, in addition to degradation clearly being and important issue, it is also apparent that means should be sought of rewarding states that are not, at present, deforesting significantly. Surinam and some countries in the Congo Basin are, for example, presently experiencing little or no deforestation. It would seem perverse if they were not to be recompensed for keeping their forests intact. Otherwise, they might be encouraged by the international regime to start deforestation in order to be able to later claim credit for stopping it. The RSPB s view is that means should be sought of including countries that presently undertake little or no deforestation in any REDD regime or related instrument. A related matter is whether to include countries whose deforestation rate has stabilised to zero or are actively afforesting or reforesting. The RSPB does not consider that countries which are afforesting or reforesting should be included in an agreement to reduce emissions from deforestation, in part because there is already an international mechanism for crediting these activities: the Kyoto Protocol s Clean Development Mechanism (CDM). Whilst is can be argued that the CDM does not address such activities in a sufficiently comprehensive way, this matter should be addressed via a review of CDM eligibility criteria rather than under REDD. (This review must occur anyway because the current agreement on afforestation and deforestation only runs until 2012.) Also, and probably more importantly, reducing emissions from deforestation is about avoiding emissions whereas reforestation and afforestation are about carbon storage, a very different physical phenomenon that should be addressed by a different mechanism. 6

9 The RSPB is undecided about how to address the case of where a country has stabilised emissions from deforestation to zero. Given that this should be the aim of a REDD regime, we feel that its achievement should be rewarded. However, we are uncertain about how an agreement could or should do so. One solution might be via a sectoral sustainable forest management regime. For a view on how the different issues discussed above might be addressed by different types of mechanism, see the figure below (from a presentation by Papua New Guinea). Key: REDD = Reduced Emissions from Deforestation RSF = Reforestation/replacement Forestry Sectoral SFM = Sectoral Sustainable Forest Management CDM-AR = Clean Development Mechanism Afforestation/Reforestation 7

10 Setting a baseline To reward decreasing emissions requires a baseline, against which any gains and losses of carbon stocks can be measured. There are two approaches to developing such baselines: (i) to establish a national baseline to measure any reduction in emissions from deforestation against; or (ii) to set baselines on a project-by-project basis. The RSPB considers that any agreement which is going to deliver meaningful climate benefits must be founded on the establishment of national baselines. Without such an approach, a perverse situation could occur where credit was given for one small forest conservation project in a country, whilst the rest of its forests were razed to the ground. For the REDD regime to work, it must operate at a national scale, and guarantee that the savings made in one place are not being lost in another part of the same country. The policy approach A number of different mechanisms have been proposed for an international REDD regime. At one end of the range of possible mechanisms is a market-based approach, proposed by PNG, in which a country would commit to limit its emissions from deforestation to a national baseline and carbon credits would be given for emission reductions below that baseline. It is then envisaged that the credits would be tradable with other credits in the Kyoto Protocol s emissions trading scheme 2. (This type of approach is commonly know as a sectoral commitment or programmatic CDM, where a developing country agrees to limit its emissions from a particular emissions sector, in this case forestry, and can then its trade additional emission reductions. The PNG and Costa Rica initiative is the first formal proposal of this type, although similar approaches have been mooted informally for other sectors.) At the other end of the policy spectrum is a fund-based approach, advocated by Brazil, in which developed countries would voluntarily contribute to an international fund and the money would then be distributed to developing countries that had reduced emissions from deforestation. Between and within these extremes, different options have been proposed. For example, one envisages a separate, closed market dealing solely in deforestation allowances and another suggests a system in which only a certain proportion of REDD credits would be tradable in the Kyoto market. All approaches have difficulties associated with them. For example, it seems to many that a market-based approach, linked to the Kyoto market, has the potential for providing the level of funds needed to address the drivers for deforestation. However, the market will only deliver a significant carbon price, and a sufficient volume, if there are 8 2 That is, with CDM and JI project-based credits and with Assigned Amount Units from developed countries.

11 tight caps on developed country emissions. Without stringent emission reduction targets for developed countries, demand for carbon credits would be slight and the price too low to yield enough money to address the drivers of deforestation. Also, it seems probable that many nations lack the capacity, in terms of both technical and financial resources, and in some cases governance, to take on and implement such a market-based commitment. Yet if only a few countries were able to take on a commitment then global deforestation would only be slowed to a limited extent and there might be significant international leakage, i.e. displacement of deforestation activities from a country with a commitment to one without. Other policy approaches, such as having a limited, separate market or a voluntary fund avoid the need for a tight cap on developed countries but, on the other hand, it is questionable whether they would deliver sufficient funding to address some of the major drivers of deforestation, such as conversion of forest to oil palm or soya. Indeed, it is questionable whether there would be sufficient volume of funding to adequately address lower cost drivers. The RSPB inclines towards a market-based approach with tradable allowances being accrued in excess of a national baseline to limit the rate of emissions from deforestation primarily because this approach seems the only one likely to deliver the level of resources required to solve the problem. In our view, such allowances should be fully interchangeable (fungible) with other allowances of the type currently generated in the first commitment period of the Kyoto Protocol. We accept, however, that it may not be feasible for all countries to adopt such an approach and that a step-by-step or basket approach may be required - in which some countries would adopt a market-based approach with open trading, others might adopt a fund-based approach and yet others might receive funding to build capacity. We note that it may be important to address the phasing of payments under any policy approach. Credit for not deforesting (and avoiding the resultant emissions) could presumable only be given once, on the grounds that it would be unacceptable to be repeatedly paid for avoiding the same emission, and so any payment would have to cover both present and future avoided deforestation, into the indefinite future. Because technical and institutional capacity is low in almost all countries likely to be eligible to undertake REDD activities, The RSPB strongly supports initiatives to build capacity as a matter or urgency, prior to a REDD regime becoming operational post Such initiatives should not be policy-prescriptive, however, because 9

12 that might unduly and illegitimately influence the outcome of the forthcoming negotiations. Also, there should be no early crediting (pre-2013) under such initiatives. The place of REDD in a post-2012 regime An agreement on REDD needs to be reached as part of an overall post-2012 deal, together with agreements on other types of emission reduction or limitation commitment and project-based mechanisms such as the CDM. This is particularly important because a REDD regime is likely to have a strong influence on other mechanisms, and vice versa, especially if the policy approach adopted is for an open market based on a sectoral commitment. Any international system for reducing emissions from deforestation will almost inevitably have knock on effects upon the CDM and upon other types of sectoral commitment that might be adopted. Certain REDD policy approaches are likely to have larger effects than others. A market approach based on sectoral commitments would, for example, be expected to unleash significant, essentially transaction cost free, flows of finance (assuming tight caps on developed countries) and this might divert money from the CDM or other mechanisms. However, even a voluntary fund-based might be expected to have an effect. Questions therefore arise as to what steps might be taken to minimise effects on the CDM and, indeed, what effect the use of sectoral commitments in other sectors (such as power generation) might have on both a reduced deforestation regime and the CDM. There is a widespread fear that cheap credits from a REDD regime would flood the allowance market, not only undermining the CDM but encouraging developed countries to purchase REDD credits rather than reducing emissions at home. The RSPB considers that this fear, although it has a reasonable basis, is often exaggerated. We consider that REDD credits are unlikely to be very cheap and will become increasingly expensive as higher cost drivers are tackled. It is thus imperative that there are tight caps on developed countries to drive the REDD market, as well as reducing emissions in developed countries. We note, however, that any policy approach based on an open market will necessarily encourage that take up of the lowest cost options. This, of course, means that there may be little take up of REDD credits if there are cheaper options elsewhere. Within a REDD regime, it means that certain geographical regions and certain types of activity will be favoured over other regions and activities where costs are higher. A potential difficulty with almost any policy approach associated with REDD is that whilst entering a scheme would be voluntary, because all participants would be developing countries, once in a scheme 10

13 nations would need to comply with its rules which would probably need to be obligatory, almost certainly in the case of an open trading system. This raises questions as to how to a cope with non-compliance an issue that must be addressed if any post-2012 regime is to be effective. The current non-compliance regime under Kyoto might need to be amended. Monitoring, methodologies and definitions Monitoring and methodologies Being able to reliably estimate emissions is clearly essential for any international regime designed to limit emissions from deforestation. There appears to be emerging consensus within the UNFCCC working group on REDD that IPCC reporting and best practice guidelines should be employed. The RSPB strongly supports the use of the IPCC guidelines, not simply because they are an obvious choice for reporting under the Climate Convention but because they have a number of significant advantages over other methodological approaches and neatly finesses a number of potentially complex and difficult definitional issues. The IPCC methodologies are based upon estimating changes in carbon stocks, potentially including both above and below-ground biomass. For example, if a forest were converted to rangeland for cattle then the amount estimated would be the carbon in the original forest minus the carbon in the rangeland. For reducing emissions from deforestation the calculation would need to be different because, in this case, the aim would be to only estimate the loss of carbon from the forest, not subtracting off what it is converted to. This so-called gross, rather than net, approach makes estimating rather simpler because there is no need to assess the carbon value of the converted land which can change over time 3. The RSPB supports the gross accountancy approach. The IPCC methodology is based on so-called tiers. The lowest, Tier 1, simply provides default values, or rather ranges, of the carbon content of different, quite broadly categorised forests. Higher tiers (2 and 3) essentially employ nationally-based definitions and methodologies where these can be shown to be more reliable. (This is generally true of all IPCC carbon accounting, including for energy-related emissions.) The IPCC methodologies also incorporate a conservative approach in which one only accounts for what one can reliably estimate. Therefore, in the case of a REDD regime, it would be possible to claim very little credit in terms of deforestation emissions employing a tier one approach based on default values, where it would be necessary to claim only the estimate of stock at the bottom end of the range. 3 In fact, for reporting purposes under the UNFCCC and Kyoto it would be necessary to report on the Change in stocks but this would not be necessary for estimating a REDD baseline or for crediting REDD. 11

14 Employing Tier 2 or Tier 3 approaches, it would be possible to reliably claim more and so there is a built-in incentive to develop better, nationally-based approaches. There is a widespread view in the UNFCCC group that a REDD regime should employ at least Tier 2. Not only would this encourage governments improve the accuracy of their estimates (so as to be able to claim more credits) but it would have the significant side benefit that there would be no need to devise a host of international definitions for different types of forest, different types of degradation, and so on, because Tiers 2 and 3 employ national definitions and national approaches. On the other hand, employing higher tiers would requite significant capacity building in most countries. Also, it would not avoid the need to have definitions of different forest types and degradation; it would merely transfer the onus of making the definitions to the national rather than the international level. Nevertheless, because nationallybased definitions are more appropriate, The RSPB supports the use of a Tier 2, or perhaps 3, approach, coupled with the IPCC s conservative approach to accounting for emissions. We recognise that including degradation in a REDD regime is likely to significantly increase the burden of monitoring, and consequently capacity building efforts too. Whilst remote sensing could be used to monitor forest cover and hence deforestation fairly reliably, the same is not generally true of degradation, where ground-based measurement will be required. However, we do not consider that the task of monitoring will be as great as assumed by some, because it will not be necessary to constantly monitor a country s entire forested areas. Deforestation and degradation takes place first around the margins of forests and along roads or rivers within them and it is these areas that need to be monitored. Baselines Developing national baselines, sometimes called reference scenarios or levels, will require significant effort in all countries likely to participate in a REDD regime and setting reliable, realistic baselines is likely is likely to be a difficult issue to resolve. The RSPB assumes that because the aim is to reduce emissions from deforestation it will first be necessary to establish a reference level based on those of the recent past and then use the average deforestation rate to establish a reference rate for reduced deforestation in the future. This begs two questions: firstly, how to establish a reliable baseline for current deforestation and, secondly, how to set a reduced rate for the future. Brazil has made an interesting proposal for how to establish a reference rate based on emissions from deforestation in the immediate past, which indicates ways of accommodating the fact that deforestation rates fluctuate considerably from year to year. This proposal might form the basis of a methodology for establishing 12

15 current deforestation rates, although it is worth noting that Brazil probably has better information on deforestation than most countries likely to qualify for REDD yet, even then, they probably lack adequate information on degradation. The Brazilian proposal seems to assume that the reference level established on the basis of current and past information would form the reference level/baseline against which to assess future deforestation. (The baseline would be regularly updated.) If this is the case, then it would lead to credit being given for any reduction in emissions below of what is already occurring, but it would not constitute a reference level that, in itself, led to reduced emissions from deforestation. In other words, a country participating in a REDD regime would commit to keep deforestation at a business-as-usual level and emissions from deforestation would only decrease if credits were purchased, either via a fund or a market; a nation would only reduce its emissions if it were paid to do so. The RSPB is not clear that it would be adequate to set a reference scenario that constitutes business-as-usual. It can be argued that, within the UNFCCC, developing countries do not have to take action on climate change and that, if they do, then the developed countries should pay for such action. On the other hand, it would seem perverse to set up a mechanism that could result in the unabated destruction of tropic forests (and continued emissions) if adequate funding were not forthcoming. Our tentative view is that if nations are to take on commitment to reduce rates of deforestation then that should be reflected in a reference level which would steadily decline from current levels over time, although we are open to discussion on this matter. We note that setting a declining reference level would raise the question of what the rate of decline should be and how this rate would be decided. Would the rate be the same for all countries? In considering how to set reference levels, it will also be necessary to consider how to accommodate countries that are not currently deforesting, such as many in the Congo basin. In their case, it might be necessary to assume a deforestation rate (or rather a carbon stock rate change) in order for them to obtain credit whereas, in fact, the rate would be zero. The question of what default deforestation rate could be assumed would then arise. 13

16 Non-permanence and leakage (displacement) Non-permanence Non-permanence describes the fact that a forest may be degraded or destroyed by natural forces, outside the control of forest owners or nations, such as fire, pests, diseases or climate change. Nonpermanence was a central cause of difficulty in the negotiations on including afforestation and reforestation in the Clean Development Mechanism (CDM), eventually overcome in accountancy terms by employing temporary or insurance-based CERs. It is widely assumed that it will, similarly, be central to any agreement on avoiding emissions from deforestation in developing countries. However, whilst clearly a difficulty that needs to be overcome, it is considered by some to be less intractable. It is arguably the case that non-permanence is less of an issue in an international regime based on national reference emissions rates, rather than in the case of a purely project-based mechanism, such as the CDM. This is partly because it is seems unlikely that a significant proportion of national forest would inadvertently be destroyed whereas a significant proportion of forest covered by a single project could be. (An entire national forest stock is unlikely to be consumed, for example, by fire whereas a significant fraction of the stock of a project might be.) Allowances for non-permanence would still need to be made at a national level but this might be in the form of allowances held back in a reserve, rather than via the issuance of temporary or insurance-based credits. There has been little discussion of non-permanence in the Convention discussions so far and it would be helpful if this matter were clarified rather more. Displacement/Leakage Like permanence, displacement is an issue that will need to be addressed in constructing any international agreement to reduce deforestation but, again, it has been argued that it may be less of a difficulty in a regime based on national baselines than in one based solely on projects, as in the CDM. This presumption, however, depends heavily upon the drivers for deforestation. If the driver were the clearing of land for subsistence agriculture then presumably there would be little international displacement, certainly over long distances overseas. On the other hand, if the driver were the acquisition of valuable hardwood for the international timber trade then international displacement might be very likely. 14