The End of REDD Projects?
Thursday, February 25th
By Jacob Olander
The Climate Change Conference in Bali held in December of 2007 unleashed a boom of interest in REDD projects. For the first time, a consensus was reached in international negotiations regarding the importance of financing, on a large scale and as part of the larger climate change agreement, the reduction of emissions caused by deforestation in tropical countries. There was consensus that a roadmap was needed to reach definitive norms in Copenhagen last December.
With this green light - or at least yellow - NGOs, investors, and others saw a real possibility of financing that could tip the scales in favor of forest preservation. They began to design projects all over the world. There is no exact data on how many projects are currently under development and awaiting financing from the carbon markets. The numbers, however, are in the dozens if not hundreds.
While some tend to think of REDD as a mechanism based on projects and the carbon markets, the future of REDD projects becomes less clear each day. The initial enthusiasm has obviously diminished somewhat after the scarcity of results in Copenhagen but other trends also undermine the outlook for such projects.
In international negotiations and diverse national proposals, there is more and more emphasis being placed on models that involve the use of public funds with the addition of market mechanisms in the more distant future, after 2015 or beyond. Possibly due to the governmental nature of the negotiators, the focus of these models is on the importance of investments that create capabilities and actions developed by governmental entities - programs and policies on a national or local scale (states, provinces, or departments.)
What does this focus mean for projects? The answer is not clear but there does seem to be a consensus reflected in recent decisions made by the CMCCC, in legislative proposals in the US, and in the state of California. The consensus appears to be that, in order to be included, the projects must be linked in some way to accounting models for the reduction of emissions on a local or national level. In principal, this would give more integrity to emissions accounting of the reductions and limit the risk of “leakage”.
However, this also involves huge challenges and a complicated gap, given that the capability of some projects is far ahead of national governments' capability for monitoring, reporting and verification. Can we give ourselves the luxury of waiting until some undefined future phase, as suggested by a recent decision from the Climate Change Conference in Copenhagen, to evolve toward evidence-based practices? While countries are developing their national capabilities in order to produce results, we continue to lose more than 100,000 square kilometers of forest per year.
If these trends continue, will there be space and financing for these projects? It can be a very discouraging panorama for investment. National programs and policies are indispensable to the development of distinct development models with less deforestation. But these projects - local initiatives that allow for the development of innovative endeavors - are a key contact point between financing and action, being both tangible and attractive for private investment. Mechanisms must be sought that can coordinate local and national efforts.
The voluntary carbon market would appear to be an alternative, since it apparently does not depend on the complex international and government norms. Nevertheless, the voluntary market is changing, gearing itself more and more toward investments that hope to be recognized under eventual regulated models ("pre-compliance) and a lower percentage toward the purchase of credits that are exclusively motivated by environmental consciousnesses or social responsibility. It is undeniable that in order to truly have the type of large impact needed to confront deforestation, this would require going a step further than the voluntary funding that moved US$37 million in 2008, while facing REDD needs that could run anywhere between US$10 billion and US$30 billion per year.
It is becoming increasingly necessary for those who are developing these projects as well as investors to think beyond project limits if they hope to have credibility and feasibility. Projects as isolated efforts will have increasingly fewer possibilities for success. The urgent task at hand is for projects and regional authorities to share the work of developing technical, legal, and financial mechanisms that allow for links between projects, national models and diverse sources of international financing. These links are necessary if the projects wish to remain viable and if the efforts of REDD are to generate results.
Initiatives undertaken by the state governments of the Brazilian Amazon, the state of California, and the processes that have begun to take place in some departments in Peru, among others, are steps in the right direction.