When you think about the causes of global warming, coal plants or SUVs come to mind. But deforestation generates between 20% to 25% of global greenhouse gas emissions, scientists say. That's why Indonesia and Brazil rank No. 3 and 4 (behind the U.S. and China) among global carbon emitters. They are cutting down or burning millions of trees each year, for fuel or timber or cattle grazing or even to grow biofuels (which is nutty, but that's another story).
Markets and poverty help cause deforestation. Can markets help save forests and alleviate poverty? Some environmentalists think so. (So do Pearl Jam and the Dixie Chicks, as you'll see.) They are looking for ways to pay people in poor countries either to stop cutting down trees or to plant new ones. Conservation International, for example, is raising money from companies that want to offset their own carbon emissions to finance reforestation (i.e., plant trees) in southwest China or prevent deforestation (i.e., save trees) in Madagascar.
More broadly, many environmentalists argue, forestry projects need to be part of any cap-and-trade scheme to reduce carbon emissions in the U.S., and they need to become part of Europe's carbon trading market. The EU's trading scheme currently excludes forestry projects, while allowing other international offsets. By contrast, The Lieberman-Warner climate change bill in the Senate prohibits international offsets but makes an exception for a limited number of forestry projects.
If you, like me, haven't paid close attention to carbon emissions trading, you need to know that there's lots of money sloshing around the carbon markets-about $60 billion last year, some of which flows from the industrial north to the global south to reduce carbon emissions, according to this new report from Point Carbon. Nearly all of that is in the Kyoto-regulated compliance market.
Last week, I met with Toby Janson-Smith and Joanna Durbin of CI to talk about how carbon markets can save forests. The challenge, they explained, is coming up with rules, and ways to enforce them, so that forestry projects can generate carbon emissions credits. How do you know how many trees have been planted? How can you be sure they won't be cut down later? How do you prevent environmentally harmful forestry projects, like vast monocultures of palm trees, from getting credits? And can you really come up with a way to pay people not to do something, i.e., not to cut down a tree?
They say all these problems can be solved, so that polluters in the developed world can offset their emissions by buying credits from forestry projects. "We would like the see the carbon markets support high quality forest restoration and preservation projects," Toby said. But he acknowledged that "it's a hot potato, to allow forestry in," he said.
Other activists-notably Wangari Muta Maathai, the Kenyan Nobel prizewinner --have argued that keeping forestry credits out of carbon markets amounts to an unfair trade barrier. They say the global south has a commodity to sell, i.e., the ability to reduce carbon emissions, and that Europeans are unfairly refusing to by it. "Sub-Saharan Africa won't be able to participate in the carbon markets unless forestry is allowed in," said Joanna.
To show how forestry projects can reduce GHG, a group of six companies and seven NGOS including CI, The Nature Conservancy, Rainforest Alliance, Intel, S.C. Johnson and Weyerhauser have come up with standards. The group is called The Climate, Community and Biodiversity Alliance and its standards are designed to reduce emissions, help communities, conserve biodiversity and insure that the projects generate credible offsets. (Dozens of standards have been put forth for voluntary offset projects; no one standard has yet emerged.)
One of the first projects developed under the climate, community and biodiversity (CCB) standards is a reforestation project [PDF, download] in the Tengchong region of southwest China. Conservation International, The Nature Conservancy, local NGOS and the Chinese government up a pilot program to plant native species in five different villages. They are creating a buffer forest around a nature preserve-it is creating jobs, it will permit slow harvesting of wood for firewood or construction, it will preserve biodiversity and become a storehouse for carbon. The project developers say it will generate about 167,000 tons of carbon benefits over 30 years, and that they can sell those offsets for about $7 to $10 a ton. The major buyer, in this case, is a U.S. company called NavTeq-they're the company that makes digital maps, was recently acquired by Nokia and has been run by Judson Green, a member of Conservation International's board, gifted jazz pianist and all-around good guy who use to oversee theme parks for Disney. Another backer is S.C. Johnson, the family-owned Wisconsin firm whose brands include Windex, Ziploc and Pledge. (Fisk Johnson, its CEO, will speak at Fortune's Brainstorm GREEN conference on Earth Day.)
Another CCB-approved project in Madagascar will preserve an existing rainforest, known as the Makira Forest, which has been threatened by slash-and-burn agricultural practices. Buyers of carbon offsets will help finance alternative livelihoods (such as more sustainable agriculture, irrigation projects and eco-tourism) for local people so they do not have to cut down trees. Mitsubishi, S.C. Johnson and the musical groups The Dixie Chicks and Pearl Jam are among the project's supporters.
Yes, it seems like an odd idea-paying people to stop them from cutting down trees-and you can imagine that the regulatory and compliance issues are complex. So is the debate over offsets-some say they are a way of putting off the hard work of decarbonizing the economies of the U.S., Europe and Japan, i.e., doing something about those coal plants and SUVs. This New Yorker cartoon about offsets was published in 1989.
But U.S. companies that want to become carbon neutral-companies like Yahoo and News Corp.-like saving forests, because it gives them a good story to tell, not to mention a pretty picture for the cover of the sustainability report. So there's momentum behind the desire to get this emerging business right.