Reduce Emissions From Deforestation And Degradation

WHAT IS DOES 'REDD' MEAN?

Because forest destruction and degradation are major causes of global warming, and because forests can help lessen the impact of climate change, it has become clear that we need to slow deforestation and forest degradation and maintain healthy old growth forest systems. This has led to the idea of 'reducing emissions from deforestation and forest degradation', a idea which involves simply trying to stop forests being cut down or degraded and thereby reducing the amount of CO2 that is released into the air. At its simplest, this is all that 'redd' is. However this idea has been adopted by governments and inter-governmental bodies and agencies and has been developed into a more specific idea, which involves developed countries paying developing countries large amounts of money in order to stop forest destruction and degradation in developing countries. This set of policy ideas we refer to as Reducing Emissions from Deforestation and Forest Degradation in developing countries – REDD (in capital letters).

REDD is a very new idea, which is promoted by several Northern and Southern governments and large conservation NGOs. There are several different proposals for REDD mechanisms which differ mainly in how the finances for paying for REDD would be organized. All these proposals are based on the idea that developed countries would pay developing countries to reduce rates of deforestation or degradation by implementing various policies and projects. REDD is not yet part of the global agreement on Climate Change (Kyoto Protocol), but it is proposed to be included in the new agreement which will be discussed at the Conference of Parties in Copenhagen in December 2009. In the meantime, pilot schemes on REDD are being undertaken and funding mechanisms are being set up by UN agencies like UNDP, UNEP, FAO or international financial institutions like the World Bank, and also by private companies, governments and conservation groups. They all expect that REDD will be included in the new Climate Change agreement to be negotiated in Copenhagen.

HOW DOES REDD WORK?

The Basic Principle

The basic principle underlying all proposed REDD mechanisms is: Funds are provided to developing countries for reducing emissions from deforestation or forest degradation. The respective countries have to implement policies and programs which reduce deforestation and forest degradation. Any approach that reduces deforestation and degradation could in theory be applied. Some possible examples for such measures are: governments strengthen law enforcements, have better fire management and practice sustainable forest management or change laws to stop large-scale logging or forest conversion activities like plantations. What this means is that under REDD schemes new kinds of "carbon protected areas" would be created over large areas of forests, with the main objective to cut CO2 emissions by avoiding deforestation and degradation of these forests.

Different ways to finance REDD

The question is: how will REDD be financed? This is at present being hotly debated. Basically, there are two positions in this debate, supporting two different proposals on how the money to pay for forest protection under REDD is supposed to be generated: through the establishment of funds and through market mechanisms.

1. Financing through market mechanisms

The carbon market is the key mechanism by which the countries who signed the Kyoto Protocol seek to lower the impact of climate change. It works like this: each country is allowed to emit a certain amount of carbon each year. If they emit less, they have “extra carbon credit” which they can sell to other countries; if they emit more they have to buy credit from other countries. One carbon credit is equal to one ton of carbon. So carbon credits are traded between “buyer” countries, or companies, and “seller countries”, or companies, just like any other goods. Market mechanisms could be regulated under the UN system or via voluntary carbon markets using their own informal standards and verification procedures.

There are new companies that have been created just to trade with carbon credits. If a country or company engages in an activity that is sequestering (absorbing carbon from the atmosphere) instead of emitting carbon, like through planting trees, they create carbon credits. And if they prevent the emission of carbon, like when protecting a forest from being logged or turned into a plantation, they also create carbon credit. So the idea is to finance REDD project by selling carbon credits that are created when protecting forests. A large percentage, some 36%, of the carbon credit traded on the voluntary market comes from projects in reforestation and afforestation projects. But credits traded from avoided deforestation are so far only few, about 3% of the voluntary market. The carbon credit market system has been criticized because it allows industrialized countries to buy carbon credits in other countries, especially the developed countries, which may be cheaper than reducing their own carbon emission. It would therefore allow these countries to continue polluting the atmosphere at the same level as long as they can buy carbon credits to compensate their carbon emission. It is buying the right to keep polluting.

2. Financing through funds

A fund is a mechanism by which different people, companies or governments pool money in order to jointly finance a program, project, a business or an institution (like a school, an orphanage etc.). The money of a fund is kept in a bank account, and there are people who are in charge of managing the fund, i.e. to see to that the money is used for the purpose the fund was created for. Funds for REDD could be created at the global or regional level (like for Asia, for Africa etc.). For example, the government of Tuvalu, as small island state in the Pacific Ocean, proposed the foundation of an International Forest Retention Fund. Governments would pay money from taxes on activities that are harmful for the climate (like for air traffic, for fuel that powers the engine of a ship or aircraft etc.) to this fund. This money would then be used to pay for forest conservation. This proposal includes compensation to communities for protecting and sustainably using forests. Governments would report every year to the UNFCCC COP on the progress of their forest conservation work supported by the fund. Important to note is that under this system it is not possible for any government, in particular the industrialized countries, to “offset” emissions which they are causing themselves, like under the carbon credit market system.

Some industrialized countries have already set up their own funds or programs, through which they among others intend to support REDD. They provide this funding either directly to a country, or through agencies or programs of the United Nations, like the World Bank, or the UN REDD. Norway has launched its Climate Change Forest Initiative and will provide $600M annually for the next 6 years to support the United Nations UN-REDD programme and other projects. Norway believes both market and fund-based approach to a REDD regime are needed. Australia has pledged to provide US$185M funding for the next 5 years mainly for Indonesia, Papua New Guinea and the FCPF of the World Bank. Aside from the multilateral and bilateral funds and programs, there is an steadily increasing number of projects by the private sector, which means: by conservation agencies, private foundations and companies. Examples are the Nature Conservancy, Conservation International, WWF US, Environmental Defense Fund, Woods Hole Research Center, CIFOR, Winrock International, Wildlife Conservation Society. Examples for private foundations supporting activities related to REDD are the Rainforest Project, launched by Prince Charles, which is funded by 12 big companies such as the mining company Rio Tinto, or banks like Morgan Stanley, Goldman Sachs, Deutsche Bank. Another example for a large joint initiative is the Noel Kempff Climate Action Project in Bolivia by TNC, Fundaci?n Amigos de la Naturaleza (FAN), the Bolivian government, and three energy companies (American Electric Power, PacifiCorp, and BP Amoco).

The US Bank Merrill Lynch is funding the Ulu Masen project in Sumatra, and Marriot Hotels is involved in the Juma Sustainable Development Reserve in Brazil. Several foundations have programs on deforestation and are now supporting activities related to REDD. Among these foundations are the Gordon and Betty Moore Foundation in the Amazon and the David and Lucile Packard Foundation in Brazil; or the Rockefeller Foundation which is supporting the Clinton Climate Initiative to develop forests projects in tropical countries.

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