What’s wrong with using carbon financing for REDD?

Financing REDD through carbon finance presents serious problems, both for the forests and for addressing runaway climate change. In a presentation in March 2008, Andrew Aulisi, Director of the Markets & Enterprise Program at World Resources Institute, explains why he thinks that carbon finance for REDD is not a good idea.

There are lots of ways of dealing with reduced emissions from deforestation and degradation (REDD), but a lot of people would like to get the CO₂ credits, the carbon finance. For 15 years people have been trying to figure out how to do this at a project level, meaning they’ve got a forest and want to calculate, over time, the CO₂ that’s being sponged out of the atmosphere through sequestration to ultimately come up with a number that says, “Here’s what I should be credited for in terms of sequestered CO₂.”

It’s just very unsettled, and the science on these methods, whether it’s the baselines or whether it’s the sequestration calculation over time, is very unsettled. That’s just one barrier that’s hard to get around. The other, of course, is leakage, meaning that we just protected this forest here, but we own another forest five miles down the road, and we’re cutting that down twice as fast. Further, there’s the issue of permanence, meaning that we’re getting credits for this forest, but then it burns, maybe for natural reasons, and all that CO₂ just goes into the atmosphere.

These three issues have been on the table for ten years, and I don’t know that there’s been any progress in trying to solve them in a satisfactory way. And now the conversation in Bali isn’t just about doing it at a project level, but doing it at a national level. Indonesia is saying that they are going to put in a new federal policy for reducing national deforestation rates, and over time they want to be credited for the reduction of that deforestation. All of these issues still hold with the quantification methods, leakage, and permanence. How do you prove that leakage isn’t happening and how do you ensure the permanence? All of these things still hold, but there’s even added complexity because now, for example, to prove that leakage isn’t happening, you’d actually have to have some global monitoring system that would allow you to show that Indonesia’s efforts to reduce deforestation are not being offset, for example, in Papua New Guinea.

Just to drive this point home, Figure 12 is a calculation of Indonesia’s deforestation rates. The first, or lowest, horizontal line, the conservation forest line, is the millions of hectares of forest in Indonesia that are currently under protection. If you added to that the concessions that Indonesia is given for managed forests, this is the level indicated by the higher horizontal line, the working forest line. About 51 million hectares are protected or managed forest in Indonesia.

They’ve got about 90 million hectares, and their current deforestation rate means they would have nothing left but their preserved forest in something like 50 years. Even if they improve their deforestation rate by 30 percent, meaning they reduce the deforestation rate by 30 percent, they’d still end up having nothing left but their preserved forest, but just 34 years later.

If you were going to credit Indonesia for reducing deforestation and give them tradable carbon commodities, which they would then sell onto the market so that other countries could use them to increase their stack emissions from power plants, etc., what are you really gaining? The answer is not much. What you’ve got to get is some kind of stability – a line like the one in Figure 12 where your deforestation rate goes to zero and everything is managed. At least if you’re doing that on a national or ideally a global basis, then you might actually have some confidence in doing some carbon crediting.

Aulisi’s question “what are you really gaining?” is the right one to be asking. From the climate perspective, the answer must be nothing, if the carbon trade allows pollution elsewhere to continue. Even Aulisi’s ideal situation where deforestation reaches zero at some point in the future, involves the destruction of 40 million hectares of Indonesia’s forests. Trading the carbon stored in the remaining forest as carbon credits, allows greenhouse gas emissions to continue – at a time when reductions are urgently needed.

Aulisi seems to assume that when only protected forest remains the deforestation will stop. The forest destruction over the past 15 years on the island of Sumatra, to make way for oil palm and pulpwood plantations, includes deforestation inside protected areas and clearly indicates that this is very unlikely to happen.