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CNN: Can Forests Thrive In The World Of Carbon Trading?

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  • CNN: Can Forests Thrive In The World Of Carbon Trading?

    CAN FORESTS THRIVE IN THE WORLD OF CARBON TRADING?
    By Lara Farrar

    CNN
    http://edition.cnn.com/2010/WORLD/euro pe/04/23/eco.tree.carbontrading/?hpt=Mid
    April 26 2010

    CNN -- So few forests remain in the tiny country of Armenia that the
    World Bank has warned it could one day become a desert.

    For more than 15 years the Massachusetts-based Armenian Tree Project
    has been replanting the country's forests lost during its energy
    crisis in the early 1990s.

    Recently the group, like many similar organizations, has considered
    raising funds by selling carbon credits.

    But questions persist over whether applying carbon finance to forestry
    projects can be good for the environment as well as for the communities
    where the trees are planted.

    "The thing about forestry and carbon, obviously it is very new,
    and it is complicated," said Jason Sohigian, deputy director of the
    Armenian Tree Project.

    "The reason why people want to invest in it is they understand trees
    and carbon have a relationship, so it is easy for the public to make
    an association between climate change and trees."

    Deforestation is responsible for up to 20 percent of greenhouse gas
    emissions worldwide, according to the United Nations. Yet forests
    also absorb huge amounts of planet-warming carbon dioxide, which can
    be quantified and bought as credits by companies and countries to
    offset their pollution.

    Currently carbon offsets purchased from reforestation projects
    represent only a fraction of global carbon markets.

    A reason for this is that few projects have gained approval by the
    Clean Development Mechanism, an arrangement under the Kyoto Protocol
    that allows industrialized countries to buy carbon credits from
    projects in developing countries.

    "The verification process is quite rigorous to go through and
    satisfy the questions, especially on how you measure emissions,"
    said Alexander Rau of the Helsinki-based Climate Wedge, a carbon
    management and investment advisory firm.

    The European Union's Emissions Trading System also has a ban on buying
    forestry offsets from developing countries.

    Growth of forest offsets now largely depends on whether the U.S.

    passes legislation prioritizing forestry as part of a federal
    cap-and-trade market. And while climate negotiations in Copenhagen
    last December did not result in a legally-binding global pact to cut
    greenhouse gases, there was significant political and financial support
    of a UN plan to reduce emissions from deforestation and degradation
    (REDD).

    Costing the Earth

    However, for small non-profits like the Armenian Tree Project, the
    cost of even becoming certified on voluntary markets is prohibitive.

    "That is one of the problems with forests," Sohigian said. "With most
    systems, you don't get the money until after you sequester the carbon.

    So how do you even get off the ground without the money up front?"

    Once a project is certified, revenue generation can still be
    difficult. For one, the price of offsets in voluntary markets is
    significantly lower than those traded in regulated markets, which
    means more trees will have to be planted to make money.

    Projects will often sell credits in advance based upon the projected
    amount of carbon the trees will absorb over time but "the risk is very
    big," said Jutta Kill of FERN, a Brussels-based environmental group.

    "You have a lot of obligations for a very uncertain return of
    revenues," said Kill. "Some involve signing a very long-term contract,
    guaranteeing your trees will be standing for the next 100 years."

    If something happens to the trees, the communities and organizations
    that have planted them will sometimes be responsible for replanting
    them or will have to buy offset credits from other projects to supplant
    what was lost, said Kill. This possibility adds more cost concerns.

    "Most of the contracts are not public, which puts a lot of the
    communities at a disadvantage," Kill told CNN. "They have no way to
    know whether they are being offered a fair deal."

    "When you have a project that involves local communities, it is
    interesting to see if it would benefit or if it would suffer from
    presenting itself as a carbon project," Kill said.

    Sohigian said the Armenian Tree Project has worked hard to engage the
    support of villages in their endeavor, starting poverty alleviation
    programs and environmental education initiatives in combination with
    their efforts to replant trees across the country.

    Becoming an offset project could mean they have to refocus their
    efforts to measuring the carbon absorbed by the forests, diverting
    attention away from the people who will be crucial to ensuring the
    trees are not cut down in the future.

    "If you are helping families and reducing poverty, that reduces
    pressure on forests and increases the likelihood the forests will be
    able to survive," Sohigian said.

    An article published in "Science" in early April warned REDD could
    place forest management in the hands of governments, reducing the
    rights and responsibilities of local communities charged with managing
    the trees.

    Some critics of the forestry and carbon offset schemes suggest that
    because voluntary markets are unregulated, such projects also are
    susceptible to fraud.

    "I call it the Wild West mentality of carbon offsets," said Scott
    Jones, executive director of the Forest Landowners Association,
    a U.S.-based group that lobbies for private landowners rights.

    "There are no rules right now, so if you can figure out a way to go
    make money and show social responsibility, then go ahead."

    Others are more optimistic about the future of carbon offsetting
    and forestry.

    "This is an evolving market and mistakes will be made," said Jim Lyons,
    a lecturer at Yale University's School of Forestry and Environmental
    Studies and former under secretary for natural resources and the
    environment in the Clinton administration.

    "I feel confident smart people can work out the details, and the
    market will evolve into a market that will prove much more viable
    than the existing market for cutting down trees," Lyons said.
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