By Sophie Edwards on November 11, 2016
A new financial mechanism to help combat climate change by getting funds flowing into forest carbon credits is under development and could be launched by spring next year.
Forest deforestation and degradation contributes to approximately 20 percent of global greenhouse gas emissions per year, and so protecting forests has the potential to have one of the largest and most immediate impacts on climate change.
Forest carbon credits hope to provide incentives to do just that. They are generated by initiatives and projects that reduce deforestation, plant new trees and promote carbon-conscious land management — all of which results in a reduction of carbon dioxide emissions. Each ton of CO2 not emitted translates into one carbon credit, which can then be traded on either the voluntary or compliance carbon markets, enabling governments and companies to meet their carbon emission allowances or voluntary targets.
However, forest carbon credits have largely stayed off the table when it comes to climate finance discussions to date and were only officially recognized as a climate change mitigation tool in the Paris agreement which came out of last year’s U.N. COP21 negotiations.
Furthermore, Reducing Emissions from Deforestation and Forest Degradation (REDD+), which offers developing countries financial incentives to reduce emissions from deforestation, is still not yet viewed as a compliance offset by existing carbon markets, and therefore carbon credits produced by REDD+ programs cannot be traded.
Forest credits were rules noneligible for compliance markets under the 1992 Kyoto Protocol, due to a variety of concerns. These included how to accurately measure the amount of carbon stored in forests, a debate about whether forests never targeted for clearing should generate a credit, how to deal with forests that burn down in natural disasters and how to account for when preserving one area of forest simply simply moves deforestation to another area.
The latest State of Forest Carbon Finance report, released last month, revealed that only approximately 20 percent of the $888 million committed to new forest carbon finance actually went to supporting forest conservation projects in developing countries. The majority of the remainder went to projects in California and Australia.
Now the REDD Acceleration Fund is being developed to address these some of these concerns by creating a source of demand for carbon credits generated by REDD+ programs in developing countries.
There is also a wider problem at play, that forest carbon trading as it stands is not working for developing countries.
“This problem boils down to creating the right economic incentives for the protection and restoration of forests,”
according to Lorenzo Bernasconi, senior associate director at the Rockefeller Foundation, which is funding the RAF’s development.
Read the remainder of this article at devex…