We’re at Forest Day 3 today as the Bella Center and COP15 has taken a day of rest. Before we get into Forest Day, I wanted to provide some further clarity on the draft post-Kyoto UN negotiating texts that are being floated around for discussion.

 

On Friday, the 2 UN negotiating tracks released draft texts as a starting point for negotiating a post-Kyoto protocol. While the Kyoto Protocol text (originally referred to as the ‘Danish text’) does provide some clarity on the role of markets, the version released by the other UN negotiating track (the LCA) does not provide any details on how markets would work and states that they need to be ‘further elaborated on.’

We’ll be reviewing each draft in further detail and will update you on the negotiating process this week.

 

Forest Day: In a morning plenary on using REDD as an effective climate change mitigation option, panelists from business, NGO’s and government all hashed out the following recommendations:

·         Inclusiveness: Develop policies that recognize climate benefits from all forest types

·         Localization: REDD policies need to be implemented at the provincial level, after all mitigation is action on the ground

·         Cost: Cost of implementing REDD is reasonable, but still it is a high cost for small farmers and forest people. Therefore REDD should  come without strings attached in order to move all governments towards sustainable forest management

·         Equity: When REDD money arrives, it shouldn’t stay in the hand of the governments.

REDD can achieve all of the above because as stated by Indonesia’s Secretariat National Council on Climate Change it is a) performance-based b) scalable, and c) addresses the fundamental drivers of deforestation.

 

What about effects on agriculture if REDD was implemented on a mass scale successfully? While most agree that the ‘battle to feed the world won’t be fought in the forest,’ there was disagreement on how to reallocate agricultural lands in a sustainable way. Clearly, any market mechanism designed to avoid deforestation must also include methodologies and solutions that also take into account the role of agriculture. 

 

Nicholas Stern spoke at Forest Day to underline why it’s important to take on the challenge of stopping deforestation.  An outline of Stern’s speech is as follows:

Why? If we want to reduce the risks of climate change, the lowest cost option is stopping deforestation. Estimates from the Stern Review halving deforestation will cost around $15 billion per year-but we won’t know the actual number until policies are closer to implementation. 

Issue: leakage.  Leakage is an issue that is universal around the world. Addressing leakage simultaneously can help keep costs down.

Issue: Pricing. At $5-10 per tonne, forestry credits aren't cheap. But prices could be a lot lower if countries around the world act in unison to address leakage.

How can we implement a plan to address the challenge of combating deforestation?

1. Sharing costs is crucial. Forestry policy has to be designed by countries where the trees stand, as local governments understand the situation and structures the best.   But governments that are addressing tropical deforestation should share the costs they incur with developed countries. Developed countries have the responsibility for incurring these costs as well as reducing their demand for timber.

2. Deforestation has to be integrated with development priorities.  

3. Prices-not at the end of this list because it’s minor, but because of the logical structure in the process. We can’t build prices and markets unless the rest of the deforestation regime makes sense. We have to be thinking about the whole development story in order for the market structure to work out. 

Since deforestation is a development issue, public money must be allocated in the early days of a deforestation regime. Over time, private money and carbon markets can be included in the regime.

Ministers of Finance are very cautious about using public money and they are under greater pressure because of the global economic crisis than they have been in a very long time. Therefore, the case for public money has to be made, and made very strongly.  Some of this public money should be debt funding. At Copenhagen, we all need to look very hard for setting aside proper funding to address deforestation.

How much? At least $15 billion by 2015 will be needed to enforce a regime set up to fight deforestation. 

To get this money, we need to look across the board at all of the options available: auctioning of permits, debt instruments, taxation of things which aren’t yet taxed such as aviation and maritime, special drawing rights, transaction taxes. One of outcomes needed to be worked out this week in Copenhagen is a serious finance package. 

Conclusion: Build up markets, make trees more valuable, recognize that investment from public money has to take place and be serious about where it comes from.

 

Later in the day during a different panel, we learned that there is currently around $4 billion around today specifically allocated for REDD+. Of that money, the donor breakdown is as follows:

52%-Norwegian Climate and Forest Initiative (government)

19%-World Bank

15%-Other multilateral banks (e.g.-GEF)

13%-Other government

1%-VCS