The Eleventh Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) recently concluded in Montreal, Canada. The Ecosystem Marketplace asks Mira Inbar of Forest Trends what changes the meeting held for developing country communities interested in the land-use, land-use change and forestry (LULUCF) sector of the carbon market. Beatrice Ahimbisibwe, an indigenous schoolteacher and farmer who had never before been outside of rural Uganda, stood in front of a captivated audience of diplomats and businessmen in the Montreal Convention Center on November 29, 2005. Describing her community's work planting indigenous hardwood trees on previously degraded land, Ahimbisibwe explained to delegates at the Eleventh Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) how growing trees for carbon sequestration has helped change her life (see From Ugandan Schoolteacher to International Carbon Consultant: A Profile of Beatrice Ahimbisibwe). Over the past two weeks, the city of Montreal played host to the swarm of international delegates, academics and researchers, nongovernmental representatives, and members of the press who are party to the COP. Since the Kyoto Protocol was designed, eight years ago, many cities around the world, from Marrakech to Buenos Aires, have hosted similar meetings, but Montreal's COP has much to make it stand out from the rest. After years of negotiations, deliberations, draft proposals, and bracketed text, the Parties to the UNFCCC had a chance to design a future Kyoto capable of connecting with the rural poor in developing countries. Recognizing the opportunity, Ahimbisibwe and other community leaders were on hand to ask for increased access to the global carbon market. "There is good work being done in Southwestern Uganda by restoring the long ago destroyed natural habitat for carbon sale," says Ahimbisibwe. "I am looking for a market for my community and other communities." To date, the kind of world-changing market that Ahimbisibwe seeks has not been fully realized under the Kyoto Protocol. New signs from Montreal, however, suggest the status quo could be changing.
Roughly a quarter of the world's carbon dioxide emissions come from the land-use, land-use change and forestry (LULUCF) sector. This figure is on par with that of the climate's biggest bad-boy, the United States. Those that remember their photosynthesis and respiration lessons from high school know that trees absorb carbon dioxide and release oxygen when they grow, behaving as figurative lungs for the earth. Through the Kyoto Protocol's Clean Development Mechanism (CDM), rich countries can invest in LULUCF projects in the developing world and claim carbon credits towards their own national registries. The current CDM places a cap of 1% of a country's total reduction level on the amount of credits claimed from this sector and allows for afforestation projects (growing trees on previously unforested land) and reforestation projects (growing trees on previously deforested and degraded lands). LULUCF projects, however, account for just 4% of the total market for carbon credits. Consequently, most of the communities that have benefited from carbon finance to date have done so, not through the CDM, but through other voluntary initiatives between companies and intermediary organizations. The qualification requirements for CDM projects are so strict that the CDM Executive Aboard has approved just three CDM projects to date (see Kyoto's CDM: Frustration Mounts). Additionally, the CDM does not allow for avoided deforestation projects, those that generate carbon credits from conservation of threatened forestland. Importantly, both of these issues received attention during the recent COP in Montreal. On December 7, delegates reached an agreement on a package of measures relating to the CDM Executive Board. Under the draft plan, funding for the board would be increased, certain types of CDM projects would be exempted from pending deadlines, and the board would be tasked with addressing some of the controversial issues surrounding LULUCF projects. Papua New Guinea and Costa Rica, meanwhile, proposed an innovative plan to bring avoided deforestation into a post 2012 regime by allowing developed nations to reap credits in return for paying developing countries not to cut down their rainforests (see Movement in Montreal: Two steps forward and one step back, or is it vice versa?). Consensus was reached in Montreal that avoided deforestation should be revisited and parties were asked to submit proposals on how to address the technical and policy implications of this topic within the UNFCCC treaty. Could these developments help carbon finance better satisfy sustainable development aims in a post-2012 world? We at Forest Trends believe that the answer to this question is yes, as long as the new developments are enacted with lessons learned from work that is underway.
There are some good practical precedents set by LULUCF projects from which architects of a post 2012 Kyoto can learn (see eBay Shoppers and Subsistence Farmers Meet on Virtual Ground). Local communities from Vietnam to Uganda have already begun to receive payments for tree planting and conservation activities and many have seen tenable benefits accrue. In Chiapas, Mexico, for example, farmers can earn up to US $1600 for protecting and restoring forested land. In such cases, carbon finance becomes the incentive for conservation, restoration, and other improved land management activities, which restore or protect local biodiversity. It is a source of supplemental cash which can be used to pay local school tuition, buy farming tools and equipment, or be stowed away for retirement or as a safety net during particularly fallow periods. The key next steps will be to build upon the progress made in Montreal to create a world in which carbon, like coffee, becomes a commodity with varying market values. There could be, as Benoit Bosquet of the World Bank BioCarbon Fund says, "plain vanilla carbon or green free-trade carbon." In other words, the future may hold one price for carbon credits which accrue only climatic benefits and another price for carbon credits which accrue livelihood and biodiversity co-benefits. This is the world for which a post-2012 climate regime should now strive. Mira Inbar is Project Manager at Forest Trends. She may be reached at email@example.com. First posted: December 13, 2005