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FRONTLINE/World http://www.centerforinvestigativereporting.org/ Carbon Watch
FRONTLINE/World,Carbon Watch

Map: Dealing with Deforestation

Is the carbon market the best way to preserve the world's forests?

May 11, 2010BY Matthew Vree
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Indonesia: The Ulu Masen Project
Project Size: 1.85 million acres (750,000 hectares)
Estimated Emissions Reduction: 3.369 metric tons carbon dioxide equivalent (MtCO2) per year, or more than 100 MtCO2 over project's 30-year timeframe
Summary: The project turns the Ulu Masen peatland forest into a reserve, saving it from being converted into pulpwood and palm oil plantations, the largest source of deforestation and emissions in Indonesia. It was started with a $9 million pledge from Merrill Lynch and developed by the NGO Flora & Fauna International (FFI), the carbon trading firm Carbon Conservation, and the Aceh government. The project developers estimated that it will generate $26 million in carbon credits in the first five years, and its estimated emissions reductions were verified by the Rainforest Alliance Climate, Community & Biodiversity (CCB) standards.

In a paper written for the scientific journal Environmental Research Letters, however, landscape ecologist David Gaveau, of the United Kingdom's University of Kent and the Wildlife Conservation Society Indonesia Program, asserted that the Ulu Masen Project would fail to significantly reduce deforestation on its own. "A large amount of forest inside the project area is protected de facto by being inaccessible, while [neighboring] lowland forests will remain exposed to the combined expansion of high-revenue plantations and road networks," he writes.

In addition, the matter of who owns the carbon credits is still unclear. Joe Heffernan, FFI project design specialist, in an interview responding to Gaveau's report, told Chris Lang of REDD-Monitor that ownership is "complex," citing "ongoing discussions between local communities, provincial agencies, and national governments on this issue." Merrill Lynch's Martin Berg told a panel at the climate conference in Poznan, Poland, in 2008, that no country in the world has any experience in proving legally that a seller has the right to sell carbon from forests. "It's highly speculative to get involved," he said.

Indonesia: Central Kalimantan Peatland Project
Project Size: 1.235 million acres (500,000 hectares)
Estimated Emissions Reduction: NA
Summary: The CKPP conserves and restores a large swath of Indonesia's peatland forests -- which are essentially swamp forests filled with decomposing plant matter called "peat." The peat stores vast amounts of carbon, and Indonesia's greatest source of carbon emissions comes from the practice of draining peatland forests to clear them for agricultural use. Controlled burns are often used to clear the dry peat, which causes additional emissions and risks of wildfire. (In 1997-98, a particularly dry year, fires intentionally set to clear land for palm oil and rice plantations got out of control, causing massive wildfires that, according to some estimates, were responsible for up to 40 percent of the total global carbon emissions for the period.) The CKPP is an example in which the 'degradation' aspect of REDD is addressed. (hyperlink REDD FAQ). The draining of the forest is considered degradation rather than deforestation because the peat decomposes when drained, which causes the emissions. Therefore, much of the project is devoted to "re-wetting" these peatland forests to restore them.

The project was developed with financial support from the Dutch Ministry of Foreign Affairs. While REDD mechanisms are not yet in place, a recent report from the CKPP management team estimated that, once REDD is implemented by the United Nations, carbon credit revenues, based on a carbon price of $8 per ton, could reach $400 million a year over the next decade.

Madagascar: Ankeniheny-Zahamena-Mantadia Biodiversity Conservation Corridor and Restoration Project
Project Size: 1.05 million acres (450,000 hectares)
Estimated Emissions Reduction: 4 million tons CO2 by 2017
Summary: The project reforests approximately 3,000 hectares of forest that will link together the fragmented remains of the Malagasy Rainforest, which constitutes the additional 425,000 hectares that will be protected from deforestation. (The rainforest at one point ran almost 300 kilometers from north to south, but slash-and-burn cultivation has claimed most of Madagascar's forests.) In addition to reducing emissions, the project also preserves the disappearing habitat of the endangered indri and black-and-white ruffed lemurs.

The reforestation portion of the project complies with standards of the Kyoto Protocol and can thus sell its carbon credits on the regulated international market. The World Bank's BioCarbon Fund is helping to implement a REDD methodology to earn carbon credits and will purchase a percentage of the emissions reductions it earns. (The World Bank estimates that the Kyoto-compliant reforestation component is expected to sequester 350,000 tons of CO2 by 2017, while the non-Kyoto-compliant avoided deforestation component would sequester 4 million tons of CO2.) The Madagascar government largely funds the project and has signed agreements with landholders to distribute revenues from the sale of carbon offset credits.

Madagascar: Makira Forest Area Conservation Project
Project Size: 865,000 acres (350,000 hectares)
Estimated Emissions Reduction: 9.5 million tons of CO2 over 30 years
Summary: The project, intended to demonstrate how avoided-deforestation credits could provide long-term funding for nature reserves, was financed through the sale of emissions offsets on the voluntary carbon market, with such notable credit buyers as Mitsubishi, Johnson & Johnson, and the rock bands Dixie Chicks and Pearl Jam. Pearl Jam guitarist Stone Gossard said on the band's website: "We are constantly moving, using carbon-dependent forms of transportation and a great deal of energy. Since 2003, we have elected to mitigate our carbon output by tracking and calculating our emissions and contributing money to projects that strategically work to improve the environment."

Between 2004 and 2007, the Makira project generated approximately 320,000 tons of CO2 emissions reductions by preserving approximately 246 hectares from deforestation. A report prepared by the United States Agency for International Development (USAID) has categorized the reductions credits from this project "ex-post," because they are sold based on actual demonstrated reductions during the first few years of the project. They are contrasted with less reliable "ex-ante" credits, which are sold in advance of any actual reductions and based on estimates of emissions reductions for the remaining 25-year lifetime of the project. ("Ex-ante" credits also feature in complicated options contracts to hedge against price volatility in the carbon markets, described in detail on page 37 of the USAID report.)

Bolivia: Noel Kempff Climate Action Project (NKCAP)
Project Size: 1.6 million acres (642,500 hectares)
Estimated Emissions Reduction: 5.8 million tons over 30 years
Summary: In late 1996, three American energy companies -- American Electric Power (AEP), BP America, and PacifiCorp -- pledged $9.5 million to work with the Bolivian government and the Nature Conservancy on a REDD project to keep almost 1.6 million acres free from logging for 30 years. According to a report by ƉcoRessources, 51 percent of the carbon credits generated by the project will go to the investors -- AEP, BP, and PacifiCorp; 20 percent will go to the National Protected Areas Fiduciary Fund that maintains the project; and 29 percent will go to the Bolivia government to fund other sustainable development activities.

NKCAP has been touted as a model for future REDD projects and used to promote the idea of forest offsets in international climate talks, but in December 2009, Greenpeace released a report, Carbon Scam, which called into question the project's effectiveness. The report highlighted some of the common concerns with REDD that are evident in NKCAP, including additionality, leakage, permanence, and questionable community benefits. The report also challenges how sound the statistics are behind estimated emissions reductions. Since 1997, the estimated reductions from the project have dropped by nearly 90 percent, from 55 million tons of CO2 to 5.8 million tons. Had a REDD mechanism been in place in 1997, the project would have earned and sold credits on that initial inflated number of estimated sequestered carbon.

Peru: Madre de Dios Amazon REDD Project
Project Size: 247,000 acres (100,000 hectares)
Estimated Emissions Reductions: 27.3 million tons of CO2 over 40 years
Summary: The Madre de Dios project was created in response to the completion of a trans-Amazonian road connecting Brazil with the ocean ports of Peru, with the protected area beginning less than 50 kilometers from the road. Developers of the REDD project argue that the area is under threat, as the new road will bring in settlers who subsist on the agricultural and livestock economies that create deforestation. They estimate that, within ten years the project will generate 11 million tons of carbon credits. Read more in the State of the Forests Carbon Markets Report 2009.

The project was developed by Greenoxx, a carbon developer and NGO, who retains the rights to the carbon credits generated, and was verified by Scientific Certification Systems. The project also went to great lengths to comply with other carbon offset verification standards worldwide, among them, a "Gold Level" validation from the Climate, Community & Biodiversity Standards (CCB). Compliance with multiple voluntary carbon market standards is intended to facilitate a quick and easy validation in an internationally regulated market, should REDD be accepted at the next climate conference in Mexico in December 2010, or should the United States institute its own cap and trade system.

Brazil: GuaraqueƧaba Environmental Protection Area
Project Size: 50,000 acres (20,240 hectares)
Estimated Emissions Reductions: 47 million tons over 40 years
Summary: In a deal brokered by the Nature Conservancy, the American companies GM, Chevron, and American Electric Power, invested a total of $18 million in the Brazilian Atlantic forest reserve to preserve the land and generate carbon credits. A Brazilian NGO dedicated to environmental issues, SPVS, was brought in on the Nature Conservancy's behalf to purchase the land, primarily from buffalo ranchers who cleared the forest to create grazing land, and to manage the project. For a more in-depth report on the project, see the FRONTLINE/World story "Brazil: The Money Tree," in which reporter Mark Schapiro travels into the reserve to see how this type of project affects the people living there. There has been deep unease among people dwelling in and around the three reserves, who now find that they can no longer gain access to the forestlands from which they had long drawn their livelihood.

Brazil: Juma Reserve REDD Project
Project Size: 1.45 million acres (590,000 hectares)
Estimated Emissions Reductions: 190 million tons of C02 over 50 years
Summary: The Juma Reserve is the result of an initial investment of $2 million from Marriott International, and is administered by the Amazonas Sustainability Foundation. Marriot controls the rights to the carbon credits generated, which will be sold on the voluntary carbon market. (The hotel chain currently invites guests to offset their carbon footprint at Marriott by contributing $1 per night.) The company which validated the project's emission reduction potential, the German firm Tuv Sud, was recently suspended by the United Nations, which cited the company's lack of auditing expertise and over-estimation of emission reductions in an array of projects proposed for the UN's Clean Development Mechanism; its suspension by the UN, however, does not extend to its ability to validate projects in the voluntary market.

The project also falls under the umbrella of the much larger Bolsa Floresta program, which pays people from traditional communities directly for preserving trees. In exchange for taking a two-day seminar and making a pledge not to cut down the forest, residents are given $30 a month. For more on the Juma Reserve, see the FRONTLINE story "The Carbon Hunters."

Australia: Protecting a Native Forest in Tasmania
Project Size: 3500 acres (1434 hectares)
Estimated Emissions Reductions: 179,050 tons of CO2
The project developer, REDD Forests, purchased the logging and carbon sequestration rights to this small parcel of land from private landowners who have traditionally logged their land selectively for income. The intention was to demonstrate the possibility of providing alternatives to clear cutting for generating income from these old-growth eucalypt forests, and it was Australia's first REDD project to meet CCB Standards. It was recently discovered that eucalypt forests like these are more valuable on the carbon market than was originally expected, as they store more carbon per acre than tropical rainforests.

While REDD was originally created to protect tropical forests in developing countries, this is one of its first projects in a developed country, and it hopes to create enough similar projects to protect more than 1 million acres within five years. A significant wrench was thrown into the expansion plans, though, when Australia's Carbon Pollution Reduction Scheme, a government-introduced cap and trade system of emissions trading set to be opened in 2010, was delayed due to political opposition.

Guatemala: Maya Biosphere Reserve (MBR)
Project Size: 988,000 acres (400,000 hectares)
Estimated Emissions Reductions: 0.8 million tons per year, or 16 million tons over the 20-year project timeline
Summary: The Guatemalan government and UNESCO established the Maya Biosphere Reserve in 1990 to protect both the diverse plant and animal life there and the hundreds of Mayan ruins. The reserve covers more than 10 percent of the country's total land area, and a new project called "Payment for Environmental Services Project in the MBR," or GauteCarbon for short, is attempting to implement REDD methodology to receive funding for improved forest management that it says would reduce deforestation.

The project brings up the question of additionality, and whether an existing forest reserve can earn carbon credits for avoided deforestation in addition to the funding it already received for its creation. In the MBR, because of its size and a lack of consistent monitoring, deforestation still takes place, despite its status as a forest reserve. In fact, 13 percent of the reserve has been deforested since it was created in 1990. However, a recent report from the Rainforest Alliance, which has conducted forest stewardship training in the reserve since 1996, says that increased training and certification by the Forest Stewardship Council actually does reduce deforestation. The project's developers propose that improved forest management should generate REDD funding because it can measurably reduce deforestation.