World Bank pays $4 for forest CERs

Africa’s first significant CDM forest carbon project has attracted a price of $US4 per tonne in temporary CER (tCER) carbon credits, according to a media report. The World Bank will buy the credits for half the carbon stored up to 2017 from an Ethiopian forestry project, the Humbo Assisted Natural Regeneration Project.

The first large-scale afforestation and reforestation (A/R) project to be registered under the Kyoto Protocol’s CDM, the Clean Development Mechanism, began in 2007. It involves the restoration and replanting of indigenous tree species on 2,728 hectares of degraded mountain forest area that has been stripped for fuel wood in south-western Ethiopia.

The Humbo project developer, World Vision, has arranged 800 local people into seven reforestation cooperatives. The carbon credit proceeds fund payments to the members, replacing their previous incomes from the sale of firewood. To minimise the potential leakage - the pushing of wood collection into forest outside the project area - the project also includes growing plantations for fuelwood harvest.

The World Bank BioCarbon Fund is buying tCERs for 165,000 tonnes of Humbo’s CO2 emissions reductions, nearly half the 338,000 tonnes the project is expected to sequester in its first ten years.

The Bank has agreed to pay $726,000 at $US4 per tCER, according to Hailu Tefera, manager of Climate Change Programmes at World Vision Ethiopia, one of the project proponents. His comments were published in the Addis Fortune newspaper.

The World Bank does not generally reveal the prices paid for CERs by its various carbon funds. But it did confirm in March a commitment to purchase 165,000 tonnes of CO2e for a sum suggesting a price of just over $US4 each.

Under the CDM rules for its A/R segment, permanent CERs cannot be issued over forest carbon sequestration, only temporary or long term CERs. This is because of the questions marks over the permanence of the planted forests. tCERs expire after five years and must be reissued upon verification the forest is still standing, or replaced with permanent CERs from elsewhere.

The World Bank says the development of such forestry and land-use projects is crucial for Africa, a continent that has so far attracted little CDM project investment.