The recent ‘REDD+ Partnership’ conference in Oslo promised much for advocates of reduced emissions from deforestation and forest degradation (REDD) mechanisms. But REDD finance and funding mechanisms seem no closer to getting off the ground, and doubts from recipient countries and NGOs are mounting by the day. Many are asking why nothing has materialised from REDD or REDD+.
The Oslo meeting was the source of many announcements, but most announcements were short on detail. The headline announcement was Indonesia’s USD 1 billion agreement with Norway. The agreement stipulates that a ‘province-wide’ REDD demonstration project be undertaken and calls for a moratorium on new forestry concessions.
The context of the agreement cannot be ignored. At Copenhagen last year, developing countries refused to agree to developed country demands. New bilateral financing arrangements – as per the Indonesia-Norway agreement – circumvent this. There is, however, still room for recipient countries to dictate financing terms. The Norwegian agreement with Brazil, announced last year, did not agree to halt deforestation – simply slow it. Similarly, the agreement stipulated investment in sustainable forest management, but did not mandate FSC forest management standards. This was out of the ordinary for international financing of this kind. Many donor agencies stipulate FSC standards.
Yet the problem remains that the high expectations placed on REDD by its mostly Western advocates ignored and continue to ignore the limitations of what it can achieve. As often pointed out by World Growth, the limitations are myriad:
Despite the overtures made in Oslo, many problems still remain with financing carbon emissions mitigation from developing countries, whether carbon based or otherwise. The Copenhagen Accord document promised USD 30 billion by 2012. Of this, the EU has promised to pledge EUR 2.4 billion annually. However, a recent EU document on the “state of play” in fast track finance is largely devoid of any content, and points to a mere EUR 50 million has been mobilised thus far. Understandably, developing countries are losing patience with the United Nations process, typified by Papua New Guinea’s Prime Minister Sir Michael Somare’s comments at Oslo. Somare stated that “the international mechanisms to deal with REDD+ have largely failed: meeting after meeting, promise after promise, but nothing tangible delivered in our countries. The World Bank and the United Nations tangle us in endless process and conditionality. Therefore, the ‘[Oslo] Interim REDD+ Mechanism’ must break from the past and deliver both finance and results.”
REDD was touted by many (mostly Western) climate and forest advocates as a cheap and simple solution for sequestering carbon from the atmosphere. Consequently it won favour with many reasonably mainstream economists that advocate cheap and simple solutions using market forces to determine prices. Yet as the reality of the cost of REDD emerged – i.e, prohibitively high opportunity costs for developing countries, high transaction costs – the ‘cheap and simple’ story was exposed as nothing less than illusory. This has been underlined by a seemingly terminal decline in the over the counter market for forest-based carbon credits.
Government Emissions Trading
The REDD market concept has relied heavily upon demand from developed nations to commence carbon trading schemes. In a number of countries these schemes are in limbo or many years from being commenced. Of particular note is the recent dumping of Australia’s emissions trading scheme until 2012. The United States carbon trading scheme is currently mired in the US Senate and from initial reports at Bonn will have little to do with an international trading system. The European Union’s ETS continues to exclude forest-based carbon credits. The United Nations Clean Development Mechanism (CDM) sets conditions on forestry projects that make establishment commercially repulsive.
Private Sector Involvement
While advocates will point to an expansion of the private sector carbon market, the reality is that demand for carbon credits – particularly from developing countries – is in a parlous state. Ongoing problems with carbon credits in Liberia and Papua New Guinea have been reported by major financial news outlets. The most recent case in Liberia suggested that there were high levels of corruption involved in the financial transactions involved. Simply, the risk presented by many REDD programs is perceived to be high.
It is a common tactic for many environmental groups to use process to stall large-scale industrial developments. A similar process is taking place with REDD. Many NGOs – particularly Greenpeace — have mounted a case against REDD, claiming the support of many indigenous groups. Others, such as Global Witness, have objected to the ‘unregulated’ nature of the carbon credits market. Some of these claims may be genuine. What the process has demonstrated is the naive attitude among many developed nations that taking control of forests in developed countries will not be subject to political and economic objections.
With these factors in mind, the expectations on REDD or its incarnations need to be re-set, just as expectations of the UNFCCC process was adjusted following Copenhagen. The West’s efforts to conserve forests for political and / or environmental purposes will not alter the clear driver for deforestation in the developing world: poverty. As long as people are hungry, forests will be cleared.
At the recent UNFCCC meeting in Bonn developing countries made it clear it sees ‘carbon protectionism’ on the horizon – and that it needs to be addressed. The statements were made by the Group of 77 (G77) countries and China when addressing social and economic impacts of response measures to climate change. African countries went so far as to call for a specific forum within the UNFCCC to deal with the issue. Brazil and Ecuador went so far as to call for a blanket ban on any carbon-based non-tariff or tariff-based mechanisms.
The calls follow a continued push in the EU to levy carbon tariffs on imports if other countries do not match European cuts in emissions. There is similar thinking in the US Congress in respect of any US Emissions Trading Scheme.
Similarly, G77 and China also pushed back against calls by developed countries to have poor countries report on their emissions levels more frequently – more frequently than their developed counterparts.
REDD+ negotiations continued to attract much attention at Bonn. Papua New Guinea, which was one of the initiators of the REDD concept in 2005 and vocal critic of the role forestry plays in emissions, shifted ground by conceding that most forestry emissions come from outside of the forestry sector.
The latest data from the UN has significantly revised Indonesian deforestation rates downwards, demolishing ENGO claims that Indonesia has the world’s highest deforestation rates.
In 2005 the United Nations Food and Agriculture Organization’s (FAO) Forest Resources Assessment reported that there were 88.5 million hectares of forested land in Indonesia, and an annual deforestation rate of 1.8 million hectares or 2 per cent per year between 2000 and 2005. The release of the new Indonesian country report produced as a part of the 2010 version has dramatically revised those figures down.
The FAO now states that between 2000 and 2005 the Indonesian rate of deforestation was 0.31 million hectares per year – or a 0.3 per cent reduction per year.
For the decade between 2000 and 2010, the Indonesian rate of deforestation was 0.5 per cent – compared with 1.7 per cent in the 1990s.
This dramatic reduction in deforestation demolishes claims by Greenpeace that Indonesia has the highest rate of deforestation of any country in the world, as well as the specious claims that the equivalent of 300 football fields are cut down every minute.
While these figures are regularly re-calibrated based on new data, it is clear that the environmental campaigns against development based on claims of ‘rampant deforestation’ are grossly overstated.
Will environmental campaigners acknowledge the new data? The numbers have a significant impact on many of the claims made in the campaigns against Indonesian forestry and agriculture, the key one being that Indonesia is the world’s third-largest greenhouse gas emitter.
Canada’s forest industry association and a coalition of environmental NGOs have called a truce. Under a new Agreement signed last month, the industry will suspend new logging for 3 years on 29 million hectares of boreal forest. In return, ENGOs will suspend the “Do Not Buy” campaigns while the Agreement is being implemented.
The Agreement also commits the development of sustainable forest management standards and a “full life cycle approach to forest carbon management.”
The agreement makes no reference to forest certification standards and gives no preference for an FSC standard. Furthermore, WWF was not involved in the negotiation of the agreement and has been noticeably silent on the agreement following its release.
However there has been a considerable amount of recent attention focused on the detail of the agreement. The Canadian media has reported that a leaked copy of the deal shows that logging will be “deferred” on no more than 72,205 hectares of land, as other areas in the caribou range were not scheduled to be logged until after the cessation of the moratorium in 2012.
A leaked Greenpeace conference call that appeared on the Vancouver Media Co-Op website following the announcement of the deal revealed Greenpeace’s strategy in signing the agreement. A Greenpeace executive stated that the agreement was a “strategic decision” aimed at making it “harder, now that we get into the work, for the forest company to withdraw.”
Does Greenpeace therefore consider the agreement a tool to ensnare the forestry industry, rather than a truce?
A highly respected Japanese environmental think-tank has found that the Indonesian Ecolabelling Institute (LEI) community-based forest standard is comparable with the Forest Stewardship Council (FSC) group labelling standard.
The Japan-based Institute for Global Environmental Strategies undertook a study of the two certification standards and found that “LEI provides more specific guidance to forest managers and auditors than the FSC generic forest management standard.”
IGES found that although FSC had higher market recognition, primarily due to pressure from western ENGOs, it was not necessarily the best standard.
Using the Forest Certification Assessment Guide (FCAG) developed by the World Wide Fund for Nature (WWF) / World Bank Global Forest Alliance, IGES found that both certification standards meet most requirements.
In particular, IGES found that while the LEI standard was designed for Indonesia, there was no endorsed FSC scheme for Indonesia and as a result the interim standards adopted for FSC are not be as finely tuned for the realities of Indonesian forestry as LEI. Further, IGES found that LEI provided greater guidance to certification bodies and avoids the disputes caused by standards which were not applicable to the local environment.
The IGES Report is a clear indication to consumers and purchasers of forest products that while FSC is the political favourite of environmental campaigners, it may not have the most environmental outcomes depending on the circumstances.
However, this has not stopped FSC’s determination to press on in Indonesia, despite clear indications that many forest companies find FSC certification economically untenable. A leaked document from The Borneo Initiative (TBI) – a brainchild of WWF – indicates that they are prepared to ‘buy off’ LEI’s endorsement in Indonesia to the tune of USD 9 million. TBI also stated they may be prepared to alter their rules on forest plantation establishment in order to gain a foothold in the Indonesian market. Will this mean a new set of rules for forest plantations globally? Given the arbitrary nature of FSC’s standard setting, it’s highly unlikely.