Forest Carbon is currently acting as lead technical implementer and advisor on this project for eventual certification under the Verified Carbon Standard (VCS) as well as the International Finance Corporation’s Biodiversity and Agricultural Commodities Program.  Forest Carbon is responsible for the development of land cover classification maps through satellite image analysis, baseline emission modeling, and the synthesis of the project design document. Forest Carbon also conducted an in depth legal analysis in order to develop an appropriate strategy to legally house a carbon project within the concession.

Through the submission of a technical proposal on behalf of FFI to the Planet Action Foundation, the project obtained free high resolution satellite imagery for FFI saving the organization over $50,000 in project costs.

The resulting product identified a number of candidate sites and calculated potential revenue flows from selling carbon credits under the Verified Carbon Standard (VCS) within different project scenarios. This project was funded by a grant from the Bill and Melinda Gates Foundation and results will be presented to the District Head as well as the local REDD commission consisting comprised of local government officials responsible for regional planning, community groups, and local and international NGO’s.

The private sector is one of the key actors developing forest carbon projects across several countries in Asia along with government agencies, NGOs, and multilateral and bilateral donor projects. By private sector engagement, we mean projects developed by private enterprises or with private sector investment in the early stages.

The full article can be accessed from here.

Written by Unna Chokkalingam on May 06, 2011

Link to the original article.

Are carbon markets critical for reducing forest carbon emissions and mitigating climate change, or are they risky or even evil propositions? In fact what exactly are forest carbon markets? Differing perceptions, suspected motivations, a language issue…

REDD+ or Reducing Emissions from Deforestation and Forest Degradation has emerged as one of the most advanced yet most contentious issues in the international climate change negotiations. A major point of contention that fuels the REDD+ debate is the business of carbon offsets and markets.

Carbon offsets and markets developed with their inclusion in the international climate change agreement, the Kyoto Protocol, as flexibility mechanisms for achieving cost-effective emissions reductions. What is an offset? Instead of directly reducing their own emissions, polluters can offset or compensate for their greenhouse gas emissions by purchasing credits from forestry and other emission reduction projects elsewhere. Offsetting is now a feature of both the Kyoto Protocol and the voluntary carbon markets that developed in the USA and elsewhere.

Another major market feature is carbon trading. Under the Kyoto Protocol and cap and trade systems such as the EU ETS, emissions are capped at a certain level and polluters (countries/businesses) are granted permitted emissions allowances. If they reduce their emissions below their caps, they can trade the spare allowances to others who are over their limits. Emissions reduction units from offset projects are also commonly traded in the carbon markets.

Why we need markets

A key point cited in favour of market mechanisms is that a large volume of money is needed to protect forests and that markets provide room for substantial private sector investment in REDD+. The private sector is unlikely to invest in larger diffuse national, provincial and district-level REDD+ activities.

Leslie Durschinger of Terra Global Capital as quoted in an article in The Hindu in December 2010, “Markets will enter in the scheme of things, as without them it is hard to catalyse private investment. It would require $17 billion to $33 billion a year to reduce deforestation emission by 50 per cent by 2030 and there would be a funding gap.”

Daniel Nepstad, the International Director of the Amazon Environmental Research Institute (IPAM) as quoted in an Ecosystem Marketplace article in December 2010, “Brazil made an ambitious target of reducing their emissions 36 to 39% by the year 2020 — a short period of time that will require a large sum of money. The size of the investment to do low-emissions development is going to have private investors coming in and the scale of funding that you can really only get with a market mechanism.”

Markets here mainly refer to compliance markets for emissions reductions. Most of the forest carbon activity in the past decade has been in the voluntary carbon markets. However, much voluntary market activity exists in anticipation of emerging compliance cap and trade schemes that can provide more robust demand for REDD and other offsets. The collapse of the voluntary Chicago Climate Exchange with the scrapping of the proposed US cap and trade emissions reduction scheme is a case in point.

The evils and perils of offset markets

Critics argue that carbon trading and offsetting is not good for the climate. Chris Lang writes in REDD-Monitor, a website focused on assessing REDD developments, “We need to reduce greenhouse gas emissions and stop deforestation. We cannot trade off one against the other.” Carbon offsets have now become a popular virtual commodity and engendered a multi-billion dollar new business. The notion of men in suits peddling forest carbon does not sit well with those concerned about the fate of indigenous communities that inhabit and depend on these forests.

The Bolivian president Evo Morales presented a final staunch lone opposition to the climate change agreements in December 2010, stating, “We came to Cancún to save nature, forests, planet Earth. We are not here to convert nature into a commodity. We have not come here to revitalise capitalism with carbon markets.” Brazil, a long-term opponent of market mechanisms to combat deforestation, relented on its use though it still had reservations about offsetting.

Market motivations – the commodification of nature and the focus on the business potential of carbon trading − are often suspected by NGOs and communities. Yes, markets could provide finance for protecting forests and rewarding people for protecting their forests. However, the risk is that such commodification could lead to land grabbing for carbon values and further marginalization of local communities.

Finally some money for environmental services – is it such a bad thing?

Researchers and policy movers have been working for years to get governments and society to move beyond exploitation of forests purely for their timber; and to recognize, protect and pay for the inherent environmental services that forests provide. They conducted pilot and early activities in China, Philippines, Vietnam and elsewhere. It is not only carbon on board but other environmental markets that are developing too, such as for water and biodiversity. There is finally some money, though not as much as is committed is materialising. Can these markets provide real environmental and social benefits? Are the original objectives still valid? Why so much passion and outcry? What changed?

We posed these questions to Meine van Noordwijk from the World Agroforestry Centre Southeast Asia, who led early research and testing on Payments for Environmental Services or PES across Southeast Asia under the RUPES (Rewarding the Upland Poor for Environmental Services) program. “The real objection is to the offsets part of the market, about carbon markets shifting emissions around and not reducing them,” he said. “The moral basis for commodification is weak when people do not see enough global commitment to cutting emissions. Market mechanisms would be more acceptable if they were linked to deep and serious emission reduction commitments. At present the feeling is that they want to pay some money and keep doing what they are doing.”

“PES and markets also underestimated the role of governments and land use issues,” added van Noordwijk. “Implementation becomes difficult at the local scale given unclear tenure. Who can trade with whom? Who can deliver what? There is risk of increased conflict if some parties benefit over others. A lot of investment has to be made in first building tenure and institutions for PES to work on the ground. Under the present conditions, it may be easier for market mechanisms to work at a national scale between countries, rewarding national-level performance.”

van Noordwijk thought that half the problem was with language. “It may be easier for people to view it as a co-investment in a new national development strategy that combines emissions reduction commitments with economic growth, rather than as a carbon market,” he noted.

A different sort of market: national-scale between countries

National-scale country-to-country market? Small-scale private transactions is the traditional concept that jumps to mind when thinking of markets. Versus the one billion dollar REDD+ commitments from the Norwegian Government, and possible future commitments from Germany and other developed countries. Norway’s pledges vastly outshadow the total estimated US$ 149 million forest carbon market from the 1990s to mid-2009.

The difference between fund-based and market approaches is hazy. A more basic definition of market as in Wikipedia: “Sellers offer their goods and services in exchange for legal tender from buyers”, and in NetMBA Business Knowledge Center: “Group of consumers or organizations interested in a product, having the resources to purchase the product, and permitted by law and other regulations to acquire the product”. As per these definitions, national-level voluntary commitments into the Amazon fund and to Indonesia and Guyana for performance-based forest emissions reductions qualify as markets, albeit of a different sort with different motivations.

What these motivations are and whether it will translate into long-term stable financing for REDD+ is unclear. Is it a form of overseas development assistance? Will it be subject to changing government priorities and pre-occupations? Is it early action in anticipation of future compliance targets? Is it an image-boosting tactic for heavily polluting countries?

Large-scale financing commitments impact private sector markets

Scott Stanley, Managing Director of Forest Carbon, a technical consulting firm based in Indonesia, believes that all possible mechanisms are needed to raise money for maximum effect – private and public sector investments through market and non-market mechanisms. “Recent large top-down government-to-government agreements have all but killed the private sector forest carbon markets in Indonesia,” he says. “Focus and priorities have shifted to building national level processes and institutions while efforts to support the voluntary markets have come to a standstill.”

He suggests that bilateral and multilateral funding could instead be gainfully used to support both national-level policies and planning, and facilitate private sector actions through available voluntary market standards. “Both are critical”, he notes, “national-level activities to set the scene and account for leakage, and project-level activities to provide rigorous ground-based performance.”

“REDD+ methodologies are not easy to develop and project-based activities have some advantages in this regard. They tend to be flexible and quick, and voluntary carbon standards and projects have acted as an incubator for innovative ideas and solutions. Projects also provide room for other actors including communities and NGOs to directly initiate and benefit from forest carbon activities,” observes Gabriel Eickhoff, GIZ REDD technical advisor in Lao PDR.

Yes, forest carbon projects are easier to start on sites where tenure is not an issue, or tenure and institutions have already been built by earlier research and development activities in the area. However, the private sector, NGOs and development agencies have also been investing in land use planning, and tenure and institution building on sites as a pre-requisite for setting up or piloting REDD+ activities on the ground.

In conclusion

The definition of a forest carbon market appears to be wider and more fluid than commonly thought of. Much of the needed financing for forest carbon or REDD+ activities at present is linked to some form of market mechanism − compliance or voluntary, public or private sector, for national or project level performance. They could well be viewed and designed as co-investment strategies or partnerships to reduce forest-based emissions rather than as carbon markets.

Responses from a wide range of actors including grassroots NGOs working with local communities suggests interest in directly linking to and benefitting from forest carbon activities and markets. What needs to be put in place is safeguards to ensure that local communities can indeed participate and benefit equitably.

If some level of offsetting through forest carbon activities is allowed in any future climate change agreement, it will need to be linked to serious and deep global emissions reduction commitments to make it credible as a potential climate change mitigation measure, to offset the perception that it is a mere distraction.

Forest Carbon’s Scott Stanley consulted with The Borneo Initiative’s partners in the Netherlands and Indonesia during the evaluation and The Borneo Initiative is currently implementing the recommendations from his study.

The Lao-German CliPAD project is seeking to develop two VCS projects for the voluntary carbon market that can avoid emissions from deforestation and degradation and provide additional funding for the management of two National Protected Areas in Laos, Nam Phui NPA and Nam Et Phou Louey NPA. As part of this work, CliPAD is investigating pioneering research into the development of a new methodology to measure GHG emissions from forest fires in national protected areas emerging from shifting cultivation practices.

Forest Carbon is leading the development of the methodology with GIZ and has begun working on a multi-phased process to assess the viability of such a methodology and bring it into practice. Such a methodology has never been developed, worldwide.

Laos is a particularly difficult country for undertaking forest cover classifications from remotely sensed data. Highly sloping mountains, hilly terrain and mixed-deciduous forest types make typical forest cover classifications highly difficult. eCognition offers many new techniques and solutions for rapidly assessing and editing forest cover classification types using satellite imagery that can balance out the effects of hills and minutely different forest classes.

This week, Forest Carbon’s Scott Stanley headed to Laos to begin a feasibility study for a new project in Lao PDR with the German Agency for International Cooperation (GIZ)’s Climate Protection through Avoided Deforestation (CliPAD) Project. Forest Carbon will be undertaking the first initial assessment of putting together a new VCS level methodology targeting the measurement of greenhouse gas (GHG) emissions from agricultural and forest fires in the mountainous region of northern Laos, in the province of Sayabouri, for CliPAD’s Nam Phui Landscape VCS REDD project.

Mr. Stanley, in association with Gabriel Eickhoff, will undertake field work in Sayabouri villages this week that will look at linking ground-based data on fire burn scar areas and new satellite imagery (Rapid Eye, Quickbird and SPOT). A previous study undertaken by GIZ Laos on the use of MODIS satellite imagery for MRV purposes showed several deficiencies in a MODIS-only approach. Forest Carbon’s work with GIZ will builds on that previous work to combine MODIS data with extensive field-level forest fire burn area sampling, a modified fire behavior and fuel load model from the US Forest Service, and a new collaboration with Gernot Rücker from Munich-based ZEBRIS Consulting on new remote sensing techniques from the highly anticipated FireBIRD satellite.

“If successful, this would have enormous potential not just for the GIZ project in Laos, and Laos as a whole, but much of southeast Asia and similar countries in Latin America and central Africa where forest fires contribute significant amounts of greenhouse gases. It would be a game changer for projects with low deforestation rates, but high incidences of forest fires that drive large scale degradation. We’re really excited about this new collaboration and opportunity to work with GIZ in Laos.” said Mr. Stanley.

The cooperation may also include contributions and participation from a new EU initiative of 14 European Academic Institutions working on research for the implementation of REDD (IREDD) in Laos.

Phase-I of the work will look at overall feasibility, initial ground surveys and the building and adapting of the USGS fire model for Laotian conditions. Results are expected by the end of May when Phase-II would begin and incorporate additional data from ZEBRIS and other collaborators.

About Forest Carbon

Forest Carbon is a vertically integrated firm based in Indonesia capable of providing services for carbon baseline measurement, REDD project design and implementation, and forest monitoring for the voluntary and compliance markets. Forest Carbon’s experts are specialized in a number of core disciplines including tropical ecology, silviculture, GIS/remote sensing, social policy and environmental policy.

For media enquiries, please contact:
Jeffrey Chatellier (Email)
+6281288321660
+14016800744

Forest Carbon has begun supporting a major new independent online REDD news initiative, ForestCarbonAsia.org, started up by Dr. Unna Chokkalingam, based in Vientiane Lao PDR and S. Anuradha Vanniarachchy based in Sri Lanka. One of PT Forest Carbon Indonesia’s Directors, Gabriel Eickhoff, will contribute regular submissions to the website regarding carbon market projects, sustainable carbon entrepreneurship and private sector opportunities for investment and credit acquisition in the forest carbon sector globally.

Forest Carbon Director, Gabriel Eickhoff, commented on the new partnership, “For us at Forest Carbon, which is a private sector company dedicated to helping public and private project developers build robust and well designed projects, we’ve seen time and time again that a huge part of [our client's] success comes from fully understanding the context, policies and players within the countries that they choose to develop projects. However, that information is often hard to find and usually exists only with the technicians and experts who work day-to-day on REDD+ projects in various countries and very rarely makes it out into an easily accessible forum. So we see this is a way that we can contribute to delivering insight to the carbon forestry community that comes directly from the people who are actually on the ground, every day, working to build REDD+ policy systems, work with communities and design projects on the ground.”

The website aims to serve as an information and resource hub for forest carbon/REDD+ in Asia− providing current news and views from the media, a categorized library of relevant publications, vacancy and event announcements, directories of forest carbon players and links to other useful resources for convenient reference and networking. It also provides regularly-updated synopses of the science, current global policy and financing developments, projects on the ground and quality standards.

Other main features of ForestCarbonAsia.org are up to date country profiles, in–house articles, and research briefs and reports which will provide country overviews, delve into the key issues and cover important developments in the region. Readers can interact online and contribute their own information and material for posting. The website seeks to promote open and free information sharing among forest carbon players across and beyond the Asian region.

ForestCarbonAsia.org’s mission is to raise awareness and understanding about forest carbon-related issues, and promote sustainable forest carbon/REDD+ activities and investments in Asia that are also good for the environment and the local communities. “Through this platform, we hope to engender a healthy and critical debate and move talks and action forward in a positive manner.” says Dr. Chokkalingam.