Efforts at protecting rainforests could wither on the vine unless governments increase backing for REDD scheme
Destruction of the world’s forests is likely to increase because market-based efforts aimed at protecting trees are failing to attract investment from the private sector, a new report has warned.
The UN-backed Interim Forest Finance project, which is funded by the Norwegian Agency for Development Cooperation, said immediate action by governments is needed to spur demand for forest offset credits or else efforts to protect the world’s rainforests will wither away.
Deforestation and land use change accounts for 10-15% of global greenhouse gas emissions, according to various estimates.
Measures that reduce damage and destruction to the world’s forests are co-ordinated by a UN-backed scheme called REDD+ (Reducing emissions from deforestation and forest degradation), through which governments and companies agree to pay people in developing countries not to cut or burn down their trees.
“This problem seriously threatens the successful implementation of REDD+, because without interim demand, there will be little or no incentive for forest countries to participate and redirect resources towards REDD+, or for the private sector to invest,” the Forest Finance partnership said in its report.
But a lack of demand from carbon markets and uncertainty about how many credits could be used as part of future global emissions cuts has scared off many private sector investors.
Carbon offset markets have fallen out of fashion among policymakers, as the EU has ruled out the use of credits to meet a greenhouse gas reduction target of 40% by 2030 as it attempts to shore up its domestic carbon market and reduce oversupply.
That means that supply of forest carbon credits may outnumber potential demand by a ratio of 40 to 1, the report said, which may mean that some countries start to ditch efforts to slow deforestation.
“There is currently no source of demand that will pay for medium to long-term emission reductions from REDD+ in the period between 2015 and 2020,” the report said.
UN climate talks have so far failed to agree a role for a forestry-based carbon market in a future carbon reduction treaty, meaning private sector investors have very little idea of financial returns from projects that save trees.
The report urged policymakers to increase funding through World Bank-run forest funds or use the UN-run Green Climate Fund to help protect rainforest.
Governments including UK, Norway, Germany and Australia has so far pledged $3 billion of funding for forestry projects, but donor countries would need to double that figure in order to increase demand and make the protection of trees financially viable for private sector investors, the report added.
With the EU highly unlikely to use offsets unless government agrees to deepen a proposed carbon reduction target beyond 40% , the main source of demand for forest offsets in the short term might be restricted to California’s carbon reduction scheme and the voluntary carbon market.
Efforts at reducing greenhouse gases from the global aviation industry might mean that airlines buy offsets, including forestry credits, to offset emissions from 2020.
Many green groups and poorer countries claim that developed countries will use the credits to avoid making big emissions cuts at home.
Putting a financial value on trees that could otherwise be cut down is viewed with deep suspicion by campaigners, who warn of land grabs and fraudulent accounting in host countries.
But supporters of REDD say funding for the measurement and monitoring of forestry projects will help prevent the creation of bogus credits and reassure policymakers concerned about potential corruption.
They also contend that forestry credits are the only viable tool to prevent the destruction of forests for lumber and agriculture.
The failure of market-based efforts to slow deforestation would be another huge blow to global carbon markets following the collapse in prices of credits generated through the Kyoto Protocol’s Clean Development Mechanism, a scheme that was also plagued by doubts about its environmental integrity.