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Is it time to stop arguing about trading forest carbon?

Forest carbonIn a recent paper published in the Journal of Sustainable Forestry, Doug Boucher of the Union of Concerned Scientists puts forward an interesting argument: REDD funding is likely to remain tiny compared to the amount of finance that drives deforestation.

Boucher writes:

“The resources mobilized by the principal drivers of deforestation — beef, soy, palm oil, and wood products — dwarf all REDD funding, even if one only counts exports of these commodities from tropical forest countries.”

Most funding for REDD has so far come from public funding, not carbon markets. But Boucher’s point is that it is far more urgent to work out ways of changing the behaviour of the industries driving deforestation, rather than debating whether forest carbon markets are a solution or a threat.

In a blog post about his paper, Boucher sums up the debate over forest carbon trading as follows:

BoucherOne side sees trading credits for forest emissions reductions in cap-and-trade carbon markets as the best way – some would say the only sufficient way, in terms of potential funding – to give standing forests a value and prevent them from being cut down. The other side sees credits for reducing deforestation as undercutting the necessary transition to renewable energy by flooding the market with dubious low-cost offsets, as well as threatening the rights of indigenous communities to their traditional lands and in general “commoditizing nature.”

There’s also the important point that carbon trading doesn’t reduce emissions, it just shifts them from one place to another.

And that’s at best – a recent study by the Stockholm Environment Institute found that more than three-quarters of credits issued under the UNFCCC’s Joint Implementation scheme would have happened anyway. The result was that carbon trading increased emissions by 600 million tonnes. (REDD-Monitor’s arguments against trading forest carbon are set out in detail here.)

Boucher is keen not to take sides in the carbon trading debate. “The purpose of this short article is not to weigh in on either side, but rather to point out the extremely small scale of what is being argued about,” he writes. Boucher’s subtitle is “Big Argument, Small Potatoes”.

Boucher uses a graph to illustrate his point. The column on the left is the total export value for beef, soybeans, palm oil, and wood for the year 2011 (US$134 billion). In the middle is the public funding for REDD (US$7.2 billion), and on the right (invisible to the naked eye) is carbon market funding for forests in 2012 (US$220 million).

REDD funding

Boucher notes that the figure for carbon market funding is likely to be an overestimate, for two reasons. It includes secondary and subsequent trades, where the same carbon credits are resold. And the figure includes all forest carbon credits, not just from the tropics.

Boucher spells out the conclusions from the graph:

Even if one counts the entire forest carbon market and ignores the fact that 90% of its value is from noncompliance credits, it is less than 3% of the size of the public funding recorded in the Voluntary REDD+ Database. This is small, but compared to the export value of the four largest drivers of deforestation and forest degradation, it is miniscule — less than 2/10 of 1%. (If one counts only compliance credits, the percentage goes down to less than 2/100 of a percent.)

Boucher points out that even though carbon markets may increase in size, the European Emissions Trading System, which is by far the largest carbon market does not allow REDD credits. Only the New Zealand market accepts forest carbon credits for compliance. Boucher writes that, “[T]he possibility of a large increase in forest carbon markets seems to be mostly a matter of hopes on one side and fears on the other, rather than a forecast based on actual evidence.”

Boucher argues that rather than debating REDD offsets in carbon markets, a more urgent task is to redirect “the corporate policies of industries driving deforestation”. Boucher acknowledges that the debate about “nature and markets is sure to continue”, but concludes that,

Moving [the debate] away from the question of forest carbon markets and on to the question of how to transform supply chains driving deforestation — using carrots or sticks? — would be a positive step for both sides, and for the planet’s tropical forests.

I agree with Boucher that carbon trading is irrelevant to addressing deforestation. I disagree with him about not taking sides on carbon trading. But I am in favour of scrapping carbon trading and looking for ways of addressing deforestation that actually work.

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  1. An interesting article and important points raised, particularly about the lack of impact on actual emissions.

    There has to be a business incentive for companies to decouple their profits from impacts on forests and at present there is none. Can carbon credits not be used as a tool to affect that aim? Both the carrot and stick approach.

  2. I Think what’s Boucher pointed out are some facts that each country should reflect in climate and forests negotiation. Look in the country cases where local and public more interests in investing money on the driver of DD activities shown that the big homework on saving the planning is not simple about building a financial mechanism to paying for carbon emission reduction but how to make sure that behavior changes is happens in big actor of global DD.