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REDD is the New
Green By: Agus
Sari November 28th, 2007
It should not matter whether Indonesia ranks number three, thirteen, or twenty-three. The fact is that Indonesia contributes significantly to global warming through the release of greenhouse gases from its rapid deforestation, about 0.8, 1.1, to 2 million hectares (ha) per year depending on who to believe, about one-fifth to one-third of the 10 million ha global deforestation, contributing between 1.2 billion and 2 billion tons of emissions on a yearly basis out of about 6 billion tons of global emissions from deforestation. We know that Indonesia has problems with its forests, and therefore it does contribute to global warming through the destruction of its forests. The upcoming Thirteenth Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), serving as the Third Meeting of the Parties to the Kyoto Protocol (COP13/MOP3) in Bali (thus colloquially “the Bali COP”) provides a challenge as well as an opportunity for Indonesia to fix its forest problems. The so-called “reduction of emissions from deforestation and forest degradation” (REDD) to be negotiated then can provide incentives to conserve forests. This article is an attempt to lay out the challenges faced and the opportunities arising for Indonesia in REDD. Specifically, it is an attempt to start a discourse on how to overcome the challenges and capitalize the opportunities to find solutions to Indonesian forest problems while contributing to the solution to climate change. REDD as a Solution to Forest and Climate Problems REDD is a concept in which reduction of emissions from deforestation and forest degradation can be compensated through payment of carbon credits generated from deliberate actions and policies to reduce or avoid deforestation and degradation. When an international mechanism takes place, it is expected that the emissions “reduced” (or carbon conserved) can be certified and transacted in carbon markets. The 1997 Kyoto Protocol, the implementation agreement of the 1992 UNFCCC commits the industrialized countries to limit their emissions, either individually or collaboratively with other countries. They can collaborate with developing countries through the CDM, in which projects in developing countries that lead to reduction of emissions from what otherwise would occur can be certified and then, if transferred to the industrialized countries, used to meet their commitments under the Kyoto Protocol. Unfortunately, only afforestation and reforestation — thus increasing land-based carbon stock through sequestration — are applicable under the CDM, while avoidance or reduction of deforestation is not. It is hoped that starting after 2012, when all the commitments under the Kyoto Protocol need renewal and deepening, REDD can start its own market. When it happens, REDD can provide a sustainable source of financing for forest conservation. As long as the forests keep standing, and carbon content is conserved, money keeps flowing in. In summary, REDD can give incentives to preserving forests. Different landscapes provide different potential incentives, obviously. Pitfalls and Challenges of REDD As money doesn’t grow on trees, so trees don’t grow on money, either. The REDD mechanism is still in the making, and the international community is thriving to define the political agreement through negotiating sessions such as the Bali COP and those after it. The first problem occurs when a forest conserved somewhere leads to increased deforestation elsewhere. This phenomenon is called “leakage” and it may be one of the deal-breakers of any proposal. Secondly, as demonstrated by the debate on what the real rate of deforestation in Indonesia is, accuracy of data appears to be problematic. In order to quantify the amount of carbon “conserved”, and credits duly issued, we need to know with reasonable credibility as to what the “reference” is how the incentives are attributable to changing them. Even when all this is sufficiently addressed, the distribution of the credits, or the payments for the credits, remains a challenge. The central government must play a role in ensuring that leakage doesn’t happen, or at least minimized. This role needs to be recognized and duly remunerated. At the same time, those working at the local or project level must also be remunerated, bearing in mind that there is a rather convoluted working relationships among the local government, the private sector and the financiers, the community, the non-governmental organizations, and the community. Their practical roles in preserving a piece of forests, or reducing the risks from failing to preserve, must also be duly recognized and remunerated. The benefit sharing should be carried out in a way that is reasonably fair, credible, and transparent. Finally, REDD is after all “conservation plus”, and the pitfalls and challenges of conservation programs are applicable to REDD as well. This goes back to the underlying causes of the high rate of deforestation in Indonesia. First, allocation of forestry concessions or other tenurial rights — either for production or conservation purposes — needs to be more secure. Then, conflicting claims on forestlands need to be sufficiently addressed. This is not only among different occupants of the forest: companies, the government, and the local communities as well as the customary communities. The conflicts also occur among different sectors: forestry, mining, etc. Some observers also point out the weak and non-transparent governance as another underlying cause. This leads sometimes to excessive issuance of permits to deforest as well as to unchecked illegal logging and illegal conversion of forests. The conflicting rules and regulations as well as practices by some individuals within the regulatory bodies, including those within the Ministry of Forestry, have led to illegal practices such as illegal logging, illegal exports of logs, and illegal conversion of forestland into agribusiness. Additionally, maintenance of protected areas including national parks have been extremely underfunded even after non-government organizations have stepped up with additional resources and efforts. In all these weaknesses, however, availability of funds may not be the underlying factor, at least not the main one. While REDD is first and foremost to increase the sustainability of funding, it needs to be designed as such that it addresses the underlying problems sufficiently. In effect, the payments need to contribute to increased tenurial security, to increase governance, and to allow for the local communities benefit sustainably from REDD. Fair distribution will lead to reduction of executional risks of REDD. As conservation is already complex, no one should have any illusion that REDD is simple, because it is not. The Market for REDD Credits The market for REDD remains unclear as the decisions from the negotiation process remains to be seen. As of now, however, the voluntary market for carbon credits is actually picking up. A number of large multinational companies have started to become carbon neutral as a part of their strategy for corporate social responsibility. Companies like Dell, Google, Nike, Shell, Yahoo, and others have been buying carbon offsets already. It is estimated that the market for voluntary credits reach more than $90 million in 2006, and is expected to double next year. The emergence of the US domestic markets for carbon credits could increase the size of the market significantly. REDD has been considered rather unanimously to be a part of post-2012 climate agreement architecture, and a mandatory market is expected to emerge in 2013. The size of this post-2012 market depends on the demand for carbon credits. Already, the European Union has announced the deepening of their commitment to 20 percent reduction unilaterally or 30 percent multilaterally, adding significant demands for carbon credits. Prior to 2012, however, donor countries are and will start financing some pilot projects. While the architecture of REDD — especially the arrangements between national and project-based designs — remains a work in progress, pilot projects will be designed and executed starting next year. Say, the market can absorb about $2 per ton of carbon, and that halving Indonesia’s deforestation can reduce the emissions to 0.6 – 1 billion tons per year, there is at least the potential to gain between $1.2 billion and $2 billion per year. This is obviously a significant amount of money to reduce deforestation. With multiple markets like this, the challenge is to have reasonably reliable registry system in Indonesia so that the same project cannot be registered and therefore get paid in more than one market, thus avoiding double counting. Similarly, there is a challenge as to whether carbon credits can “move” from one market to another (e.g., whether a project that was originally developed for voluntary markets can be transferred to mandatory markets). REDD in Bali Hosting among the most significant COPs, Indonesia also happens to be the most rapidly deforesting country. It is only natural that deforestation and forest degradation will be on the spotlight. Some observers even coin this upcoming COP13 as “the REDD COP”. Indeed, the concept of REDD has been intensively negotiated at the latest intersessional meeting in Bonn, Germany, in May earlier this year. In Bali, an advanced decision will be adopted as a part of the arrangement for post-2012. The negotiation on post-2012 arrangement is a far more complex one compared with that on REDD, unfortunately. Therefore the decision of post-2012 arrangement that will include REDD will not be completely finalized in Bali. But while the Bali COP may not put it to conclusion, it will be advanced enough to warrant actions. REDD was first tabled by Papua New Guinea at the 2005 “Seminar of Governmental Experts” in Bonn, Germany. The proposal gained momentum when Costa Rica joined PNG to table REDD in the formal negotiation. Soon enough, the Coalition of Rainforest Nations, led by Papua New Guinea, was established and emerged to become a strong negotiating bloc. Indonesia, while not a part of this coalition, is considered “a good friend” and shares quite a lot of its mission. Indonesia is currently developing its preparedness for REDD, and the negotiating position will be tabled at COP. The initiative by the Ministry of Forestry in the last months to increase Indonesia’s preparedness has been very fruitful. With all these on the table at Bali, Indonesia should be able to capitalize this opportunity and do something to its forests. If green is the new black, then REDD is definitely the new green. http://cop13news.com/?p=52 |
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