Thursday, June 25, 2009

Letters from the field

Papua New Guinea is not the only country in the world with a problem with its forest carbon. In other parts of the world such as Liberia and Guyana, there are deals that are causing deep local unease and concern. One carbon trader wrote to me recently about Colombia:

On my last trip to Colombia I was contacted by various "brokers" or "in-betweens" that offered me "500'000 ha of virgin Amazonas forest" or similar areas to "buy oxygen". Prior to these meetings, they had "secured" the "oxygen sales rights" from native people's forests. I tried hard to explain them how things work but the carbon bonanza there seems strong. Other carbon companies in Latin America seem to face the same problems. I understand there was even an MP of the Colombian parliament that referred to oxygen credits (instead of CO2 credits) when proposing draft legislation on climate change."

It is a depressing vision. While politicians at national and local levels wrestle each other for control of the carbon markets in their countries, and argue about how these schemes will work, on the ground, fraudsters are muscling in and buying up sketchy rights to forest which at best could tie up forest carbon deals in legal red tape for years. At the same time, many of the countries that would sell the industrialised world carbon from their forests are struggling to contain illegal forestry, despite the fact that the international community has poured money into this goal for years. If we have not been able to incentivise the prevention of illegal forestry--which costs developing countries tens of millions a year in lost revenue--what hope is there for avoiding deforestation through carbon credits? The World Bank et al. seem to think the answer is better governance. Good luck with that.

Does the international community's checklist for selling REDD credits go like this?:

1. Sort out corruption
2. Establish rule of law
3. Free and fair elections
4. Trade forest carbon

I met earlier today with a forestry analyst, based in the UK. She said something interesting and slightly depressing. The only reason the industrialised world is interested in reducing emissions through deforestation (REDD), she said, was as a cheap way of generating cuts in emissions. But this assumes that REDD can be made to work cheaply, which may not be the case. It may be so costly, with so many rules, that it is almost impossible to implement.

This may leave REDD as a fringe mechanism, only used by a small number of countries and schemes that are able to qualify. Equally, if the rules for REDD are set too weakly, in order to attract more participation, then there is a very real risk that the credits sold through these schemes are valueless.

What happens if REDD falls through? What happens to all these forests that have done deals for the carbon rights? Discussions about REDD have incentivised a green gold rush, with carbon traders investing large amounts of money in financing projects that they expect to make money come a deal on forest carbon trading in Copenhagen this December. If REDD fails, do they try and recoup some of their lost finance by logging? Wouldn't it be hugely and depressingly ironic if discussing a way of avoiding deforestation actually ended up kicking off a global wave of deforestation? The stakes seem very high.