October 29, 2008
The United Nations hopes to use carbon credits to save rainforests as part of a broader pact to fight climate change.
 | The UN wants to use carbon credits to avoid deforestation (Photo: Shutterstock) |
A United Nations scheme aims to use carbon credits to save forests. Called REDD, or reduced emissions from deforestation and degradation, the scheme won backing at last year's UN-led climate talks in Bali. Trial schemes are now being developed, a number of them in Asia.
Why is REDD important?
Deforestation contributes about 20 percent of mankind's greenhouse gas emissions, particularly carbon dioxide and methane from clearing and burning forests. Tropical rainforests are crucial water catchments and act as lungs for the planet by soaking up vast amounts of carbon dioxide from the air.
They also contain a rich array of plant and animal species and many indigenous communities depend on them for their livelihoods. Paying to preserve these forests can help brake climate change and maintain the planet's rich biodiversity.
What is the aim?
REDD's aim is simple: saving remaining tracts of rainforest by paying national and local governments to keep them standing. The payment, via the sale of carbon credits, would reflect the value of carbon stored in the forests or the lost opportunity costs of cutting down the forest for its timber, for cattle farming, or growing crops, such as palm oil.
How will it work?
Mechanisms are still being worked out. But essentially one idea is to use the sale of fully fungible REDD credits to help developing nations halt logging and in return allow rich nations to meet a portion of their U.N. emissions reduction goals. Estimates vary but REDD could yield between 10 billion dollars and 30 billion dollars a year in funds for the developing world, with REDD credits fetching 4 to 10 dollars a ton.
 | Picture Gallery (click on the image to start)Carbon offsetting companies promise to neutralize greenhouse gas emissions. Does it work? (Photo: Reuters) |
What are the concerns?
Permanence: How to ensure the forest will remain standing for the long-term and that a country has the means to protect that forest from fire or illegal logging.
Baseline: Each country will also need to set a starting point for REDD to report changes to forest cover over time (increase and decrease). The problem is calculating that baseline.
Leakage: How to prevent a halt on logging in one area driving deforestation in another location.
Flood of carbon credits: The European Union fears a flood of cheap REDD credits could overwhelm Europe's emissions trading system. But some researchers dispute this, saying a properly regulated market would allow for a gradual increase in REDD credits over time. The United States also needed to commit to modest emissions cuts as a minimum.
Local communities: Central to REDD is ensuring long-term funding to local communities. But some NGOs fear the commoditization of forests could lead to land disputes and loss of livelihoods for locals by corrupt officials.
Responsibility: Some NGOs also fear the availability of cheap REDD credits could allow rich nations to avoid real and deep emissions cuts at home.
The Way Forward
Governments and the United Nations are studying various payment options and methods of monitoring and verifying REDD projects. Some forest carbon credit options are market-based under the Kyoto Protocol.
But a scheme backed by Norway would side-step the carbon market and instead allow rich nations to buy separate Kyoto emissions allowances, with the proceeds going into approved U.N. funds to reward developing nations' efforts to avoid deforestation.
editor: Reuters
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