The paper, from researchers Martin Persson and Christian Azar of the Chalmers University of Technology, Sweden, warns that increased prices of carbon credits worldwide – upon which most forest carbon trading scenarios rely on – would also simultaneously drive up the prices of biofuels such as palm oil, thus making forest clearance more profitable then REDD payments.
The new study, entitled “Preserving the world’s tropical forests: a price on carbon may not do”, shows that clearing tropical forests for palm oil plantations, producing both liquid and solid biofuels, will remain highly profitable even when faced with a price on the carbon emissions arising from deforestation. The current efforts to include tropical deforestation in a future climate regime may therefore not be sufficient to protect the world’s tropical forests.
“It is argued that [forest carbon payments] would make forest clearance unprofitable and tropical countries would choose to preserve more of their remaining forests. However, a carbon price will also increase the demand for bioenergy and make forest clearance for agricultural land more profitable,” says Martin Persson, researcher at the Department of Energy and Environment at Chalmers University of Technology, Gothenburg, Sweden.
The expansion of palm oil plantations is already an important driving force behind deforestation in South-east Asia, although the proportion of palm oil that goes into biodiesel production is still small. In addition, with increasing profitability there is a risk that palm oil plantations will also start to expand in the Amazon and Congo basins, areas with a large share of the world’s remaining tropical forests.
“These results should not be taken as an argument for keeping tropical deforestation out of a future international climate regime. That would only make matters worse. But it implies that in addition to a price on the carbon emissions from deforestation, other and stronger protection measures will still be needed,” Martin Persson concludes.