Growing Money on Trees
Growing Money on Trees
[Editor's Note: This podcast from Marc Gunther was published in tandem with "Making It More Profitable to Leave a Tree Alone Than to Cut It Down" a profile of Jeff Horowitz and Avoided Deforestation Partners.]
Jeff Horowitz, co-founder of Avoided Deforestation Partners, speaks to GreenBiz.com Senior Writer Marc Gunther about his hope of making it more profitable to preserve forests rather than chop them down.
Avoided Deforestation Partners is a coalition of environmental groups and companies working to find market-driven solutions to save the world's tropical forests and address climate change. Its members represent a range of business interests, from heavy emitters that include American Electric Power, Duke Energy, Pacific Gas and Electric, and El Paso Corp., to consumer-facing companies such as Starbucks, Marriott and Disney.
"Working together we found a common way of moving forward and arriving at positions that we could all support," Horowitz said.
Marc Gunther: This is Marc Gunther for GreenBiz.com. I'm joined by Jeff Horowitz. Jeff is the founder of Avoided Deforestation Partners. That's a coalition of environmental groups and businesses that are working essentially to help save the world's tropical forests, but do so in a market-friendly way. So Jeff, first just tell me what ADP is, how long it's been around, why you started it, and then we'll dig into the issue a little bit.
Jeff Horowitz: Well, thank you for the introduction, and thank you for the opportunity to talk about something that we believe is one of the most important solutions to climate change. Avoided Deforestation Partners was founded three years ago by myself and a group of dedicated environmentalists, people who work in both the for- and non-profit sector, all concerned about the fact that we don't have a framework or policy that would allow for considering reductions from emissions by way of reducing deforestation as part of a serious solution to climate change.
Our group has been meeting with a lot of high-profile people and basically getting both the for- and non-profit communities engaged and actively used as ambassadors for this cause. We --
MG: And who are some of your business and nonprofit members?
JH: Well, our leading for-profit business interests include those people who are the largest emitters in the United States: American Electric Power, Duke Energy, PG&E, El Paso Gas, and several other businesses on that level. We also have businesses that don't have an emissions problem per se but also feel very strongly about the need to reduce global pollution and to try to solve climate change. For example, Marriott and Starbucks and Disney are also signers to our agreement, along with a number of organizations or businesses of that kind.
MG: And the NGO partners?
JH: The NGO partners include the Sierra Club, NRDC, the Nature Conservancy, Conservation International -- groups, as many of our friends would say, would typically be suing the power companies for not doing a good job. We found that working together, we found a common way of moving forward and arriving at positions that we could all support.
MG: So explain, if you can, what it is you've been able to get the Sierra Club, Duke Energy, AEP, not to mention political leaders in both the developed world and in the poorer countries to agree to. Not formally, but what's the goal these folks all share?
JH: Well, I think the easiest way for me to summarize this would be to say that [inaudible] is value inherent in these tropical rainforests in that the carbon that is contained in these forests has tremendous value. And the more that we can define that value in terms of a commodity, the more we may bring ourselves closer to understanding that protecting those forests or protecting something that is a benefit to the world in terms of climate pollution, in terms of biodiversity and, in many respects, the lungs of the planet, the indigenous groups that live in these forests.
And right now, a lot of those forested lands are being sold off at a pittance in order to be converted for other agricultural uses. The lands are slashed, and timber taken out of those places, and then burned and then converted into other ag uses. We need to end that practice, and the groups that are all involved in our coalition are committed toward ending that practice.
MG: So essentially, this involves a mechanism through which either regulated companies or unregulated companies, or governments, can make payments to help prevent deforestation in the global south. That's a fair description, correct?
MG: So why don't you -- let's take several categories of businesses, since this is a business audience, and try to summarize what the business opportunity is for each of these groups, starting with the regulated utilities like AEP and Duke Energy and PG&E. What's the opportunity for that group?
JH: Well, I think it's very clear that these groups understand that pollution is bad, and controlling pollution at the source is very important to them. The technologies are not all there to create the clean coal that people are alluding to, to scrub the power -- smokestacks that create the pollution. And as they get developed, they're expensive, and the costs need to be brought down over time.
Finding an opportunity to invest in forests for those regulated utilities is beneficial in that they are a more affordable solution. While they are affordable, at the same time they are reducing tons and tons of carbon from going into the atmosphere, and a ton of carbon going into the atmosphere from a burning forest is just as detrimental as a ton of carbon going into the atmosphere from a smokestack at a power company.
MG: And you can do them relatively quickly, too, whereas it might take ten years to build a nuclear plant or develop solar technology to the next level.
JH: Well, quickly is one advantage. Not needing new technology, certainly another. And the scalability of this really makes it attractive to everyone who's concerned about global warming, because we do need to have scalable solutions that we can put in place and see real benefits. While those are in place, this buys us time to allow technology to be developed and to be scaled up at the level that needs to be done in order to reduce the problem of climate change.
MG: So then what about that next group of companies, the branded companies like a Marriott, Disney, or Starbucks? Why are they interested in this opportunity?
JH: Well, I think those companies understand that they have a customer base that is concerned about the environment, and that customer base is becoming broader and broader and, frankly, is a real force around the world. People who buy products or use the services of groups like Marriott wanna know that those companies are doing the right thing, that they're being socially responsible, that they care about their environment. And the more that they do as a company, the more attractive they will be to their customer base.
MG: And finally, we talked about a third category of company that is gonna help create this market, and those are the so-called project developers, traders, etc. What's their role here?
JH: Well, as is anything that is important, there are complications in trying to create a system that works, and these projects are simple in concept but take a lot of technical skill and professional skill to put together. There are lots of companies that are being developed as we speak that are project development companies that create these projects, that find those groups that are interested in preserving and protecting their forests, that will pair them with the environmental groups, that will pair them with financial groups that are involved in trading the carbon credits involved.
So there's a whole financial industry that's being set up around project development, project finance, buying and selling carbon credits, and the like. And most of the major investment groups that are around the country are all taking a hard look at this as being an area of interest.
MG: Last question, Jeff. I know you're focused on getting a climate regulation bill through the Senate. One has been passed through the House. What are you doing, and what's your outlook?
JH: Well, it's easy to be pessimistic given the fact that there is a lot on the table right now in terms of the legislative calendar, but we're confident that there are a lot of strong advocates that we have for this in the administration. We still have fierce leaders in the Senate who wanna see a bill passed, and quite possibly on both sides of the aisle, as we continue to work on this.
We are very optimistic that, while we may be in need of a little more time, that this legislation may conceivably get picked up in the middle of year, in advance of the midterm elections. And with due diligence and some hard work, I think that the Senate will come around and realize that we must get something passed.
MG: Great. That was Jeff Horowitz, founder of Avoided Deforestation Partners. Thanks very much, Jeff.
JH: Thank you.