The Birth—and death—of forest carbon
Protecting forests as a climate mitigation strategy has a history in the United States. American power companies—including American Electric Power (AEP), PacificCorp, BP Amoco, and others—spent millions of dollars in the 1990s to protect at-risk forests in Belize, Bolivia, and Brazil in hopes of getting early-action credit for "offsetting" their greenhouse gas emissions by preventing deforestation.
The Noel Kempff Mercado Climate Action Project, as the Bolivian initiative was known, would become model for "avoided deforestation." Project designers carefully calculated a baseline deforestation rate using business-as-usual scenarios; set up monitoring and verification systems; accounted for leakage—deforestation that would be displaced to other areas by the protected status of the park; and set up a system of incentives for people in and around the protected area.
Tia Nelson, daughter of the late Gaylord Nelson, the governor and senator who founded Earth Day, is now co-chairwoman of the Governor's Task Force on Global Warming and executive secretary of the Wisconsin Board of Commissioners of Public Lands. She was a key participant in the development of early forest-protection mechanisms as a deputy director of the Climate Change Program at the Nature Conservancy (TNC), a conservation group based in Washington D.C., which provided technical and scientific support for the projects.
"I was fascinated by the idea that companies would pay to conserve forests as a climate change mitigation strategy," she said. "Noel Kempff was particularly well-designed."
But the utility of Noel Kempff and other forest conservation projects was limited by the exclusion of forest conservation from the climate agreement reached in Kyoto in 1997. For many environmental groups, forest carbon was at best a distraction from the key issues of Kyoto, and at worst an insidious way for polluting industries to continue emitting greenhouse gases by paying poor countries to reduce their own emissions. When the United States pushed for inclusion in the Protocol of carbon sinks like forests, opponents saw it as an attempt by the world's largest polluter to avoid emissions cuts.
Rainforest in Borneo (April 2008). Photos by Rhett A. Butler.
Rainforest in Borneo (April 2008). Photos by Rhett A. Butler.
Stuart Eizenstat, a prominent attorney at Covington & Burling, former U.S. ambassador to the European Union, and the lead U.S. negotiator during the Kyoto talks, said that while justifications for conserving forests seemed strong, bigger concerns loomed over Kyoto, including emissions trading and contributions of developing countries to mitigation.
"We pushed for sinks because we were looking for every conceivable way to both engage developing countries and reduce costs. We knew that cost was going to be the most critical issue as it is today," Eizenstat said.
In the end, the rancor over offsets led to the exclusion of forest conservation from Kyoto. Forests were included in the Clean Development Mechanism (CDM)—Kyoto's attempt to involve developing countries in a climate solution. CDM allowed for afforestation (planting of new lands) and reforestation projects, but not for "avoided deforestation," although the provision was short-lived. Afforestation and reforestation was relegated to temporary credits in the Marrakesh Accords in 2001 and completely excluded from the Emissions Trading System (ETS), the European Union's compliance market for carbon. All this greatly limited the value of forestry credits.
Deforestation-induced erosion in Madagascar (October 2004).
Nelson said the decision not to include forest conservation in Kyoto came as a disappointment, but not a surprise. A lot of environmentalists argued that offsets were not a solution to reducing industrial emissions, a sentiment that remains strong today.
"It was a pretty lonely battle at the time," Nelson said. "I was hopeful that we had a good case but there were only a few voices arguing for avoided deforestation then."
The decision to exclude forests from Kyoto was a controversial one, producing shouting matches and bitter rifts between environmental groups. It would also prove costly to tropical forests and their inhabitants.
Oil palm plantations and logged over forest in Malaysian Borneo (April 2008). While much of the forest land converted for oil palm plantations in Malaysia has been logged or otherwise been zoned for logging, expansion at the expense of natural and protected forest does occur in the country. Reserve borders are sometimes redrawn to facilitate logging and conversion to plantations. Photo by Rhett Butler.
The years following Kyoto saw a surge in deforestation, particularly in two countries with the most extensive forest cover: Brazil and Indonesia. In Brazil, deforestation increased nearly year by year between 1997 and 2004, peaking at 10,600 square miles in 2004, an area the size of Massachusetts. The story in Indonesia was even worse. The collapse of the Suharto regime in 1997 ushered in a period of chaos, resulting in unprecedented destruction of forests. Loggers and oil palm plantation developers cleared and burned vast areas, facilitated by one of the strongest el Niño events on record. When the smoke cleared, more than 25,000 square miles had burned in Indonesian Borneo alone, unleashing upward of 2 billion tons of carbon. All told, since Kyoto's exclusion, the two countries have lost more than 160,000 square miles of forest, an area nearly the size of California, releasing billions of tons of carbon into the atmosphere and placing the two countries among the top emitters in the world—a position far outpacing their industrial output.
But deforestation wasn't limited to Brazil and Indonesia. With no incentives to keep forests standing, deforestation accelerated around the planet, especially in primary forests, the richest biologically and most carbon-dense form of forest and the most irreplaceable. Centuries-old rainforests were cleared for cattle pasture, oil palm plantations, mechanized soy farms, and industrial pulpwood. Environmentalists continued to sound the alarm, perhaps failing to realize their own role in the rising carnage. Meanwhile, supporters of avoided deforestation regrouped, expanded their reach, and explored new ways to include forests in a global climate deal. To be workable, a proposal would need to overcome serious technical, political, and ideological obstacles.
Rebirth of the forest initiative
A breakthrough came from an unlikely source: an academic paper. A team of American and Brazilian researchers analyzed the issues that kept forests out of the Kyoto Protocol and came up with a solution that addressed the most pressing concern, "leakage"—the idea that project-based schemes like CDM couldn't guarantee that shutting down deforestation in one area wouldn't simply shift it to another. The authors, including Márcio Santilli, Paulo Moutinho, Stephan Schwartzman, Daniel Nepstad, and Carlos Nobre, proposed a system of national accounting, meaning that countries would have to commit to national-level, rather than project-level, reductions in deforestation. The concept suggested a mechanism that would look a lot like trading between two capped systems, rather than just offsetting emissions.
Pastureland and transition forest in Mato Grosso, Brazil (April 2009). Since 2003 Brazil has set aside 523,592 square kilometers of protected areas, accounting for 74 percent of the total land area protected worldwide during that period. Photo by Rhett Butler.
"The publication of ‘Tropical deforestation and the Kyoto Protocol" was a very important development because it created a scientific space—and a policy space—where you could actually talk about reducing emissions from deforestation and put the leakage question to one side. It didn't completely resolve the leakage question but it greatly tempered it." Annie Petsonk, a policy expert at the Environmental Defense Fund (EDF), said.
A crucial parallel development was the emergence of a negotiating block—later to become known as the Coalition for Rainforest Nations—that would enable developing countries to participate meaningfully in reducing emissions and would help quiet complaints that Kyoto didn't do enough to include all countries.
In 2005 Papua New Guinea joined forces with other forest countries to form the Coalition of Rainforest Nations with Kevin Conrad as executive director. A key member of the coalition was Costa Rica, a country lauded by the international community for transforming itself from a high deforester to a model of conservation.
"One of my first official delegations was to Costa Rica to find out how they turned their deforestation rate around," Conrad said. "They said, 'Yes, we did it, but we've been taxing ourselves. No one's been helping us with it.' Well, we knew Costa Rica might be able to do that but for most of us, there was no way. We would need a source of funding."
The Coalition went to the U.N. Conference of the Parties (COP) meeting in Montreal in 2005 and immediately met opposition from the United States, which was content doing nothing on climate. The U.S. delegation told Conrad it would kill the Coalition's proposal, fearing that if developing countries put forth a plan committing to robust and meaningful reductions in greenhouse gases, the United States would no longer have an excuse not to take action on climate.
"The U.S. was going to block us simply for that," Conrad said.
Conrad engineered a strategy for delaying U.S. action during the Montreal talks, persuading dozens of countries supportive of the proposal to push their voting buttons ahead of the United States.
"If the U.S. went first, all the naysayers would pile on," he said. "But if they were fortieth following a long trail of positives I was hoping they wouldn't be able to kill the proposal."
Sure enough the United States agreed to give the proposal two years, sending it out to committee with the expectation that it would collapse under the technical challenges of measuring, verifying, and monitoring emissions from deforestation. Should the proposal make it to COP 13 in Bali in December 2007, the U.S. delegation promised to kill the measure then.
History took a different turn, though.
The Coalition for Rainforest Nations
The Coalition for Rainforest Nations was born out of a conflict between the World Bank and Papua New Guinea (PNG), a country better known for its cultural diversity (more than 800 languages are spoken across its rugged mountainous terrain) than its political acumen. But the dispute over a $50 million payment could someday lead to billions of dollars in payments for protecting global rainforests. PNG could be one of the largest beneficiaries.
In 2001 the World Bank came to PNG with a loan proposal: around $50 million over 10 years for the country to cease all logging and transition to sustainable forest management. But PNG turned it down, arguing that the offer was too low to meet the needs of the forest communities that had signed the logging contracts. The loan rejection triggered a standoff between PNG and the bank, leading to damaging accusations and an ugly fight.
"These communities want to save the forests, which are the basis for society and culture in New Guinea," said Kevin Conrad, an American born to parents living in Papua New Guinea and now a lead climate negotiator for the G-77 and China. "But at the same time these communities need schools, health and access to markets to develop."
Conrad went to graduate school at Columbia University with the intention is exploring ways for PNG to capitalize on its forests without destroying them. In New York he met with the World Bank and was surprised to find that it was the world's largest carbon trader. He asked the bank how one of its departments could be demanding that New Guinea stop logging, while another was trading carbon.
"I asked the World Bank, 'Why not put your efforts together and give us something we can work with?'"
The World Bank told Conrad the idea was a non-starter because the Kyoto Protocol didn't allow forest conservation projects.
"So I asked, 'what if we change the Kyoto Protocol?'
The World Bank told him that if he changed the Kyoto Protocol then all options would be open.
"So that was the basis of our submission in 2005."