Why Europe torpedoed the REDD forests-for-carbon credits initiative
Reducing emissions from deforestation and forest degradation (REDD) has been widely lauded as a mechanism that could fund forest conservation and poverty alleviation efforts while fighting climate change. At the December U.N. climate meeting in Bali, delegates agreed to include REDD in future discussions on a new global warming treaty — a move that could eventually lead to the transfer of billions of dollars from industrialized countries to tropical nations for the purpose of slowing greenhouse gas emissions by reducing deforestation rates. Conservationists and scientists applauded the decision.
Yet when the European Commission met in January, it proposed to exclude forestry credits from the E. U.'s Emission Trading Scheme — the world's largest carbon market — until 2020. The decision came as a sharp reality check for REDD proponents who had been riding a wave of support set in motion by the formation the Coalition for Rainforest Nations — an advocacy group made up of tropical countries — in 2005.
The E. U. made is decision based on concerns that "easy" REDD credits would undermine efforts to reduce its own industrial emissions. It feared that credits for deforestation, which annually accounts for roughly 5-6 gigatons or 20 percent of carbon dioxide emissions, would swamp the nascent carbon market. Or, as an article published in this week's Nature puts it, "that an endless stream of deforestation credits will simply allow companies in the developed world to pay a little extra and pass costs on to consumers without otherwise changing their policies."
"We want to see real emissions reductions in Europe," Artur Runge-Metzger, Head of Climate, Ozone and Energy at the European Commission, told Nature.
Still supporters of REDD are hopeful. Last week at roundtable discussion convened by Avoided Deforestation Partners, a REDD policy group, a broad range of interests agreed to begin forging a path for REDD in U.S. policy discussions on climate change. At the same time there are indications that a market for REDD credits is already forming — last month the Indonesian province of Aceh signed a deal to protect the forests of Ulu Massen in exchange for 100 million tons of carbon credits in the voluntary market. Several other deals in the region as well as the Amazon are also reportedly in the works.
Nevertheless, until REDD credits are traded on legally binding markets, they will be limited to voluntary markets where they see substantially lower prices than conventional carbon credits. Credits on voluntary markets like the Chicago Climate Exchange (CCX) currently trade at an 80-90 percent discount to EU allowances (EUA) which closed Wednesday at €21.40 ($32.53).
Jeff Tollefson (2008). Save the trees. Nature Vol 452 | 6 March 2008