Monday, December 7, 2009

Everything you always wanted to know about forestry carbon credits - A special interview with Paulo Lopes of Carbon Clear

Today the U.N. Climate Change Summit (COP15) gets underway and no matter how optimistic you are about these talks, I think it's an exciting day and I hope the last day will be even more exciting!

One of the issues that will be brought up during these talks is the REDD mechanism, which is supposed to provide monetary incentives to prevent deforestation. We covered this issue several times in the last couple of month (see our 3-part series on the potential and risks of forest-based carbon credits).

Today, just in time for the Copenhagen talks, we have an interview with Paulo Lopes, a Carbon Management Consultant at Carbon Clear, who holds Msc in Environmental Technology at Imperial College London and did his thesis on forestry carbon standards. Paulo is one of the most knowledgeable persons I know on forestry based carbon credits and we thank him for the opportunity to get a better understanding of one of the most interesting issues to be discussed in Copenhagen in the next 12 days.

Hello Paulo. You did your Master's Thesis about Forestry carbon standards (“Review of Forestry Carbon Standards – Development of a tool for organizations to identify the most appropriate carbon credit") - what brought you to write about this issue?
My masters degree had a large focus on climate change policy and the carbon market. To gain a deeper understanding I decided to work with Carbon Clear as a Forest Carbon Offset Analyst and learn from their knowledge and experience.

One would think that all carbon credits are the same, but they are like any other product whereby quality influences price. While researching forestry projects to invest in, I came across a range of carbon credits coming from a multitude of different forestry standards.

This can be confusing, even for people working in the sector. As there were only a limited number of independent reviews about the standards available, I decided to do a research and comparative study of all the forestry standards that are up and running in the world. This helps to understand what makes them different from each other and most importantly which standards are validating high quality carbon credits.

What is the biggest problem we have right now with forestry carbon credits and how it can be solved?
At the moment, the biggest problem is that only tree planting projects are accepted under the Kyoto Protocol. On top of that, the rules to validate these projects are so complex that only less than 0.5% of the carbon projects are forestry ones.

In addition, deforestation accounts for almost 20% of global GHG emissions, and there is no mechanism (such as REDD – Reduce Emissions from Deforestation and Degradation) to reduce it under the Kyoto Protocol. It means that no carbon finance has been invested in projects to stop deforestation.

The voluntary carbon market, which regulates outside the Kyoto Protocol, began to fill the gap for forestry carbon credits and several standards flourished to provide the rules to validate forestry projects. But we are still at a very early stage, most of the standards were only started to validate forestry projects in 2009.

The post-Kyoto agreement is the key to boosting carbon finance in forestry projects. Governments, NGOs and businesses need to work hard to include it in their negotiations. While we are waiting for governments to put their policies into practice, we as consumers and businesses need to provide carbon finance to these projects.

What's your response to the criticism on carbon offsetting and especially on forest-based offsetting schemes, such as Justin Francis of Responsible Travel who stopped using it and says "Carbon offsetting is an ingenious way to avoid genuinely reducing your carbon emissions" (Ethical travel company drops carbon offsetting, Nov 7)?
It’s remarkable that a business promoting Western Australia as its destination of the month is now encouraging its clients not to offset their emissions in an effort to protect the environment. My view is that consumers and businesses must cut their emissions but the technology is just not in place to get this to zero. As nearly all human activity results in carbon emissions, offsets provide a valuable and effective tool in reducing our unavoidable emissions.

Therefore, the question is not whether we should reduce OR offset. What we must do is to reduce AND offset. We do not have the luxury to be fussy about how we reduce the emissions. We must use every solution that is in our hands. More than 350 million tonnes of CO2e have been reduced from offsetting projects in the developing world. These reductions would not have been possible without the money coming from carbon credits.

The offsetting market has evolved significantly in the last few years and is now much more sophisticated. Once an offset project is set up, independent certifiers will visit the project and check if the project meets the criteria and if it is reducing emissions. Every year a certifier will come back to the project and verify the emissions reductions. All the process is documented and available online to anyone.

Forestry projects add complexity to the process. While planting a tree absorbs carbon emissions thus reducing GHG, if the tree dies, the tree will release most of the carbon it has absorbed during its lifetime. One of the requirements to validate a carbon credit is that it should be permanent. All the standards developed solutions to solve this problem.
There are many mechanisms to prevent this, I will only exemplify two solutions:

Another tree must be planted in order to reabsorb the carbon released.
Use a buffer zone. It means that a forestry project can only sell part of the carbon it has reduced. Let’s say, a project uses a 50% buffer zone. It means that it can only sell 50% of the carbon credits. If something happens to some of the trees, it will be able to use the carbon credits from the buffer zone.

When it comes to carbon credits, should we make a difference between conservation (REDD) and reforestation/ afforestation projects or they're just the two sides of the same coin?
REDD and reforestation/afforestation projects are developed differently. A REDD project will prevent a forest to disappear. It means that a project developer will need to find solutions to prevent that illegal logging, diseases, fires or any other risks will occur. If it does occur, the certifier will not validate the carbon credits and the project developer won’t be able to sell the carbon credits.

A reforestation/afforestation project needs another type of expertise. Trees need to be planted and a full management system must make sure that the project will run for decades. In addition, it should absorb as much carbon emissions as possible in order to produce more carbon credits. If a tree dies, the carbon released must be discounted accordingly.

Carbon credits will always have one point in common: they have reduced one tonne of carbon emissions. Then, you can find out where it is coming from, whether it be REDD or reforestation/afforestation.

Do you believe providing monetary incentives to discourage deforestation is possible on global level? can we really overcome issues such as additionality or leakage?
We have no choice at this stage. We have to work to make this possible.

We have seen that most of the policies in place do not stop deforestation. The evidence is that in the last 30 years an area equivalent to the size of Texas has been felled down in the Brazilian Amazon. This does not account for all the deforestation in Central Africa and Indonesia. Only a few countries such as Costa Rica managed to protect their tropical forests thanks to government intervention and the financial returns from the tourism industry and the resources from the forest itself.

The only way to really avoid leakage is to monitor all the forests in a country. It is actually relatively inexpensive to monitor all the forests thanks to the use of imaging satellites and aerial photography in addition to ground monitoring. Brazil is working hard to develop such a system, however poorer countries may find this difficult to implement and manage without outside help.

Will the REDD mechanism be included in the next global protocol? and if so, do you believe it can be done without badly compromising it during the process?
It is very likely that REDD will be included in the next protocol. Negotiations between countries/ industries/ NGOs always end up in compromises. From a climate change perspective, compromise is not enough. We should follow what the scientific community is telling us which is that we need to reduce the levels of carbon in the atmosphere dramatically.

The key point for the success of any cap and trade scheme is that the cap should be set in accordance to the science and not to politics. The caps are too high at the moment which makes the price of carbon too low. An increase on the price of carbon will help the world to evolve to a low carbon economy much faster. If the price of carbon is high enough you will start to see thousands of organisations protecting forests and standing in opposition against illegal logging because it makes economic sense for them to do so.

You analyzed in your research several seven voluntary standards - why do we have so many standards? is there a chance they can be merged into one or two main standards?
It is unfortunate that we have so many standards, but this is a new market and until recently nobody knew how to calculate the carbon and address all the issues surrounding forestry projects. Several organizations started to take initiative independently and provide the tools to make it happen.

The positive aspect is that the standards are competing against each other which brings innovation and lowers costs. However, this is not sustainable and nobody in the market wants to deal with so many standards, therefore it is very likely that only a few of them will survive. It’s up to the market and governments to decide which will remain.

You used 12 criteria to compare these standards - What do you think is the most important criteria among them and what criteria was found to be the biggest differentiator between the best standards and the inferior ones?
The most important criteria for any standard are:

Additionality: provide evidence that a project would not have been possible without carbon finance.

Permanence: ensure that if a tree is destroyed (fire, disease, illegal logging…), there are mechanisms to replace the carbon released.

Leakage: provide evidence that by stopping deforestation in a project, the logging activity has not been displaced to another forest.

Registry: each carbon credit must have a serial number; this means that a carbon credit is traceable back to its origin and is unique.

Transparency: when buying a carbon credit, the buyer should be able to have access to all the documentation of that carbon project (project documentation, validation report, monitoring report, stakeholder consultations, pictures…)

All the standards take into account these criteria, but only a few of them address these points properly. If I want to buy a forestry carbon credit for my personal offsets, I would buy from Voluntary Carbon Standard & CCBS or CarbonFix.

Finally, what's your advice to a business or an individual who want to minimize their environmental impact and their carbon emissions and just get more confused with all of this data - what they should do? where to start?
The first step is to take advice from experts such as reputable carbon management companies. There is a lot of misunderstanding around carbon credits/ offsets/ carbon management and a simple phone call can help to clarify these issues.

To find a good carbon management company, you should look for the ICROA logo on their website. A carbon management company can only become a member of ICROA, if it follows the code of best practice. Among many aspects, it means that a member can only provide high quality carbon credits (VCS, Gold Standard and CDM/JI) and uses the best practice methodologies to reduce carbon emissions.

Regarding minimizing the environmental impact, there is a simple rule to follow:

Measure. Reduce. Offset.

Measure: the first step is to measure your impact, determine the carbon footprint. We need to understand the problem before we can reduce emissions. Most of your emissions may come from your travel, your energy consumption or your waste for example.

Reduce: after identifying where the carbon emissions come from, we need to reduce them as much as possible by setting up a plan and objectives, looking for solutions and put them into practice.

Offset: after putting in place an emission reduction plan, you need to offset the remaining ones. We will always have an impact, no matter how green we are and we need to take action to offset that impact. On top of that, you are providing finance to people in developing countries to grow sustainably.

Thank you Paulo!

Raz @ Eco-Libris

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*photos credit: Paulo Lopes and SHI accordingly