REDD it again – cant see the wood, cant see the trees….

Further unexpurgated sage remarks drawn down from Linkdin. I’m treating it a bit like attending a conference on the crisis. I am the self appointed minuting secretary – though it also feels a bit like running an illicit still and drawing out the spirits of the contributions.

So, once more, take it away, Michael:

Michael Dutschke

Interesting point, Chris. CEL would be equivalent to a worldwide upstream carbon levy, including for fossil fuels. This is an idea dismissed in the Kyoto negotiations, which installed a downstream system, but still extremely reasonable. It might even be acceptable to petrol-exporting countries, because it would treat all carbon on equal footing. On the forestry side, it would mean full carbon accounting, which is technically challenging. A quick fix could be to compensate temporary emissions (biomass sources) with temporary credits (from A/R). In Brazil, and for other purposes, this has been existing for years, and it is called “Reposicao Florestal”. Pizzerias and steak houses that use fuelwood have to pay a certain fee per cubic meter for reforestation.

So you would end up with a fossil carbon market, which would slowly be regulated down and a biomass sector that would only be allowed to burn as much as is being restored. The only sector not involved in carbon trading would be renewable energies from wind, sunlight, water and waste.

I have been giving up inputting this type of systemic new ideas, as long as Kyoto was the game in town. As we see it eroding, perhaps this is a good time to start discussing principles again…

Me again

Thanks, Michael, and I so agree with your last point.

From the top, though:

1 – No way do I see this as a replacement for the existing carbon economy as Cap and Trade aims to reduce use and maximise efficiency of use. That should continue.

2 – If it’s applied evenly then I see every reson to agree with yopur assertion that it “might be acceptable to petrol exporting countries”. Also gas and coal exporting countries, I would hope.

3 – Already no tree should be harvested without its replacement which should require the planting of many more than just one sapling.

4 – How to draw nuclear energy into the equation I am not sure – but I imagine we could!

Michael Dutschke

Thanks for your comments Chris. Two amendments:

– I agree, it is not about swapping a full-grown tree for a seedling on a 1:1 basis. If you look at the Brazilian scheme, it also aims at increasing the forest cover.

– Nuclear energy cannot be captured in carbon terms, even though it clearly embodies GHG emissions in its footprint. I think the real issue is government backing. Had energy utilities to cover full risks on their own, in all geographical and temporal extension, they would never have started nuclear energy in the first place. Only by legally limiting liability nukes become economically viable.

And, coming back to forestry: The way to clean up the nuclear mess in places where it did go wrong is permanent conservation. Make the polluters pay!

Stephen Dickey

In my opinion there is only one way to prevent further deforestation and increase reforestation and that is to alter respective values. While I can buy a solid teak table and 6 chairs for $199 at my local hardware superstore we are never going to succeed. While palm oil delivers a higher value per hectare than any other use of the land we are never going to succeed. While poverty remains rampant and slash and burn the only feasible way of surviving for local comunities etc. etc.

So, we need to value the standing forests properly. We need to value forest products properly and we we need to provide alternative incomes to the communities that rely on the forests. Nobody will disagree with me here.

A carbon value gets us some way along the path. I believe we must have good MRV, work from a a baseline and it must be additional. However, it must NOT have to be permanent. We have 25 years to turn around climate change after which whatever we do will be of minimal value except adaptation. If we can stop deforestation for 25 years we have to trust that the cost of renewed deforestation then will be prohibitive. Again, if it is not we will have failed in every other respect (or we will have won!).

Sustainable forestry helps (though I have seen precious few examples – shame on the FSC) and is essential. Tariffs or levies on forest products would be useful but in the end we have make the forest – existing or potential – have REAL asset value. Until we do your arguments and your and my efforts are probably spurious.

Carlo Castellani

Again Stephen I see your position as too simplistic: one medicine solves all problems. I agree with you that valuing and building market values on forests, that is increasing their value as forests, contributes to their conservation by decreasing the convenience to their conversion, but history shows that nothing has been preserved thanks to that mechanism alone, forests the least. Further a great amount does not stay in the market because of uncertain ownership and tenure, lawless or poorly regulated conditions, remoteness, lack of information, etc. Attributing values to those forests won’t act quick enough to save them. On the contrary a huge amount of forests worldwide survives thanks to conservation efforts and authorities enforcing protection measures.

The two forces must act together: carrot and stick.

Stephen Dickey

Carlo I don’t mean to imply that there is a simple solution; far from it. We need multiple carrots and sticks. Of course we must have effective conservation and policy with stringent enforcement but this is stating the obvious. It will take many initiatives beyond policy to raise the value of forests.

I put this to you; we have policy in many countries, Myanmar, Brazil, Vietnam and Indonesia included (four of the worst deforesters) but the policies have only had a minimal impact on deforestation so far.

We have the time we have, Carlo. A shortage of time is no reason not to instigate commercial changes that result in a permanent solution based on solid commercial reasons. The tree in your garden is worth only what you need for it. If you are desperate to feed your family to survive and can plant a crop there then that value won’t be high. On the other hand if you already derive an income from its ongoing existence then your price will be much higher.

Michael Dutschke • Talking about weak carbon markets…

http://www.redd-monitor.org/2012/12/13/worst-fortnight-ever-for-carbon-markets/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Redd-monitor+%28REDD-Monitor%29

Which is reproduced  at the end of this discussion

Rob Carlow

Thank you Michael, probably the most depressing article I have seen for a while. In the words of the welsh band Stereophonics “you gotta go there to come back”. Will we look back at Doha as the final missed opportunity? Sadly the most depressing news here is not the mass fraud but the lack of leadership shown by our nations leaders. Is anyone able to add some balance to this and post a link that documents the positive outcomes from the latest COP? There is a challenge!

Michael Dutschke

Here’s a piece of innocent logics:

1. If we are really going for 4 degrees Celsius instead of 2, vegetation will change dramatically.

2. Under this condition, forest carbon will become a lottery.

3. Still, sustainable forestry and forest conservation will be the most effective large-scale adaptation measures.

4. Mix lottery and land-use adaptation, and you may get an insurance policy.

5. Polluters pay and the higher the forest cover of the insured country, the higher the coverage against climate damages.      …just a thought………

Andrew Steel

Fantastic discussion and I think as we all know there are many ways to skin a cat and the topic can spin off in some many directions.

I have to agree with Joseph though that tightening the cap is a simple market economic forces that should drive the price up. At this point it is simply too complex and too expensive to release the revenue at the moment. However Carbon Fix I thought were doing a good job in simplifying the process as VCS was also looking to be complex and stringent. I am not saying that MRV should be lax, just that we need a simpler system and CFS I thought were some way towards achieving that without the need to worry too much about complex baseline calculations.

We recently stopped all carbon work on a project in the northern part of Thailand simply as the client wished for more revenue to be directed towards actual reforestation rather than the promise of revenue which could in turn have been used to plant more trees and create a sustainable revenue stream as well as the additional costs for auditing and verification start to kill the argument as to why do it in the first place. It seems that certain entities have a stranglehold on this area and its not cost effective for villagers to engage international companies to ensure that they don’t have numerous CAR on their project – its a bit of a misnomer at the moment.

I also agree that REDD+ is so far away and to boot millions of USD spent and will it really be attractive for villagers not to cut trees to simply feed themselves. I don’t believe at this stage the economics in the long term stack up when you consider how much a villager will actually receive over the long term versus the value of a 60 year old teak tree that he can feed his family off for a month or two.

At this stage the only winners are the UN staff and consultants that are pushing the REDD agenda at the countless meetings around the world and when a country pledges a Billion dollars to a government to protect its forests and that figure in reality is only a fraction of what they make in Oil palm revenue taxes – then its an uphill struggle.

However going back to the original point, I don’t think we can move away from carbon but more so need to broaden the spectrum with PES being an additional inclusive element but above all it has to be simple and be able to be achieved by the masses to have any chance of slowing down the rate of deforestation or making it attractive to actually put the trees back.

Its not an easy task …. 🙂

Stephen Dickey

If we are so like minded we don’t we (and more like us) merge? I suspect it is because, if we are honest, we are trying to make a buck while doing good and there is a warning here; the major NGO’s have and are suffering because they do NOT consider joining forces. I once suggested Oxfam and WWF merge (I worked for both). The suggestion was met with incredulity but, in fact, they are very complimentary with much synergy and, combined would be a far more powerful voice. Sad, isn’t it? I recommend the paper “The 21st Century NGO” as sober reading on this subject.

The tougher and tighter this field gets at sub-national, national and international level the more likely disparate and fragmented participants will fall. I have seen too many claims from small players that they work “with” governments and international bodies. Maybe, but to what ends? None of any lasting benefit or weight in the bigger arena. If COP 18 has taught us anything it is that we do not have the power to influence. In the oil industry the voices of the big four carry enormous weight and when Exxon and Mobil joined forces in 1999 their sphere and depth of influence grew exponentially.

Why, then, do we persevere with the SME model in a game where big power is so very necessary. Governments are not threatened by minnows. Commercial loggers, minors and other corporate giants do not fear us (though they do fear Greenpeace – just ask Nestle).

I work in Burma only, am very small and am on the home straight of my career span. You youngsters should join forces and swallow your ego’s, pride or greed if you really want to tackle the problem and not take any comfort in getting the odd commission or project successfully under wraps. On that note how many of us have actually taken a project from inception to completion?

The same applies to the standards. The VCS is, in my opinion, fine and only because of their stringency and forced disciplines did I and my team learn so much in Tasmania which was a tiny project anyway but a damn good learning experience. My suggestion to all is to persuade Carbon Fix and others to join forces with VCS even if that creates a broad church, and leverage the power of size to become a true force (not that I think it will happen).

In the real world it is common to buy out competition or at least to work together in co-opetition (dreadful word). I see little or no evidence of it in the Environmental Services world and, as a result, we all see little or no progress.

(To be continued…….)

Addendum –  lifted from REDD watch.

Worst fortnight ever for carbon markets?

By Chris Lang, 13th December 2012

During the first week of the negotiations at COP18 in Doha, Martin Hession, a vice-chair of the Clean Development Mechanism (CDM), said that the main issue is, “[W]hat are the targets going to be in the future and what instruments are going to deliver on those targets.”

Hession’s wrong. The main issue is how we’re going to start leaving fossil fuels underground. But he’s right when he says that “The CDM is in a difficult situation at the moment.” Hession’s interest in is bailing out the carbon markets: “The problem is that there is no demand so the biggest challenge is to address how we can get that.”

Governments failed to negotiate new emissions reduction targets in Doha and carbon markets were left high and dry. The past two weeks may be the worst ever for carbon markets. Ken Newcombe helped create carbon markets through his work at the World Bank. He left the World Bank to make his fortune as a carbon trader, working at Climate Change Capital and Goldman Sachs before setting up his own firm, C-Quest Capital. He is now watching traders leave the carbon markets. He recently spoke to RenewEconomy:

“With very few exceptions, investment banks, commercial banks, commodity based hedge funds and specialised carbon funds with exposure to the CDM have either closed shop and laid off their deal teams or appointed caretakers to manage portfolios of assets with residual value.

“Those business still active in the CDM are the ‘walking dead’ of the carbon market. They are living on deals done at higher prices years back and are living on borrowed time, if not borrowed money.”

Here are some of the highlights of the worst fortnight ever for carbon markets:

  1. 4 December 2012: City of London Police arrested 11 people after an investigation into “fraudulent” investment firms selling carbon credits: Hudson Forbes, CT Carbon and Burlington Energy Markets were the companies involved. Detective Inspector Matthew Bradford, of City of London Police, said,
  • “Carbon credits are the latest in a growing list of products marketed by fraudsters as a sure fire way to make maximum profits with minimal risks. They exploit people’s misguided belief that environmental investments cannot fail, and then use teams of cold callers to seal the deals, often bullying victims into handing over their savings against their better judgement.
  • “Carbon credits are designed for companies and small businesses to offset their carbon emissions, and definitely not for the individual investor looking to buy and sell.”
  1. 5 December 2012: The carbon trading exchange BlueNext closed. BlueNext is owned by NYSE Euronext and Groupe Caisse des Dépôts, a state-owned French investment vehicle. In April 2012, NYSE Euronext closed its Asian and US carbon operations. Duncan Niederauer, NYSE Euronext chief executive, said,
  • “This is not a verdict on the environmental space — simply a recognition that the development of this market will take longer than we or our shareholders are willing to wait”
  1. 8 December 2012: While Doha agreed to a second Kyoto period, running until 2020, the countries bound by the second period account for only 15% of global emissions. Meanwhile, negotiators in Doha allowed around 7 billion surplus Assigned Amount Units (AAUs), so-called “hot air”, from the first commitment period to be carried over to the second period. Australia, the EU, Japan, Liechtenstein, Monaco, Norway and Switzerland announced they would not buy the AAUs. Negotiators failed to agree reform measures for the Clean Development Mechanism that may have increased demand for and reduced supply of carbon credits.
  1. 11 December 2012: First Climate, a German carbon asset management company, closed its sales and trading department. The company blamed low carbon prices and “a lack of ambitious international carbon reduction goals”.
  1. 12 December 2012: 500 police officers raided Deutsche Bank, arresting five staff suspected of being linked to a value added tax (VAT) scam involving the trading of carbon permits. The police are investigating a further 20 bank employees on suspicion of serious tax evasion, money laundering and attempted obstruction of justice. In 2011, a German court jailed six men involved in a €300 million fraud selling carbon permits through Deutsche Bank.
  • In 2009 and 2010, the EU carbon markets were hit by “carousel fraud”, in which traders bought emissions permits in one country without paying VAT, then sold the permits in another country with VAT and pocketed the difference. Europol, the European Police Agency, estimates that VAT fraud cost EU states about €5 billion in lost taxes.
  1. 12 December 2012: The price of U.N. offsets crashed to a record low of 31 cents. The price of Certified Emissions Reductions was dragged down by the price of Emission Reduction Units (ERUs) which reached their own record low of 15 cents.
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About greencentre

Non grant supported hence independent scientist, green activist, writer and forest planter.
This entry was posted in Additionality, Carbon market, Development issues, Green politics,, Land use, New forests and woodland, REDD+. Bookmark the permalink.

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