Financial Risks in CDM Forest Project Development

Carbon credits may provide the extra returns needed to make A R projects profitable. This is illustrated in a list of draft PDDs provided by Neeff and The seller may choose to forego the sale (retire) lCERs to avoid their replacement after harvest. R Project Registration V1-V4 Project Verification E Project end + Quantity of lCERs + Lifetime of lCERs The seller may choose to forego the sale (retire) lCERs to avoid their replacement after harvest. R Project Registration V1-V4 Project...

Indirect Effects of a US Cap and Trade Scheme

McCarl et al. (2002) forecast that biofuel and cap and trade policies divert land away from food crops to forestry and biofuel feedstocks. US agricultural producers will gain but US consumers lose as agricultural commodity prices increase, particularly as CO2e prices rise above 50 per tonne. The catch-22 is that increasing access to forestry and agricultural offsets allows cuts to be made in emissions at a lower cost, but with higher food prices. As with all such heavy policy interventions, the...

The Way Ahead

It cannot be emphasized enough that satellite data, no matter how accurate in resolution, must be linked to ground-based estimates of the forest carbon stocks in areas prior to their deforestation or degradation. This information would be available if carbon stock data had been recorded in plots established in forested and deforested areas or, if ground-based data were available, for similar strata. It is unlikely that there is sufficient time to gather a great deal more field inventory data...

How the Issue of Permanence is Dealt With in Different Schemes

The Kyoto Protocol deals with the issue of permanence of A R projects by assuming that all carbon credits generated by forestry are temporary. In the Clean Development Mechanism (CDM), CERs are either long-term (lCER) or short-term (tCER). Both types must be replaced by Kyoto units at expiry (see note 2). While this rule guarantees that forestry CERs are of similar value to other Kyoto units, it also adds complexity to the process of registering a CDM project. (Chapter 2 provides a more...

Incentives And Markets

William Nordhaus (2007 20) provides salutary advice ' I t is unrealistic to hope that major reductions in emissions can be achieved by hope, trust, responsible citizenship, environmental ethics, or guilt alone.' Climate change mitigation requires finance just reducing deforestation will cost billions of dollars every year for the foreseeable future. Who is going to put up this kind of money The solution that has most promise is to harness the market. Creating a demand for allowances to emit...

Growing New Forests for Biofuels

Analysis by the author suggests that unharvested plantations are much more effective in saving GHG emissions over a 34-year period than if they are harvested for ethanol production. Using the carbon sequestration model of the Australian Government (2007) the comparison was made between the amount of CO2 removed from the atmosphere by a hectare of hoop pine (Araucaria cunninghamii) grown in north Queensland and the carbon dioxide savings of a plantation that was clear felled, with the resulting...

Clearing Enabled Australia To Be On Its Kyoto Target

In contrast to many Annex I countries, Australia is likely to meet its Kyoto target of an increase in emissions in 2008-2012 over and above 1990 levels of 108 percent. This achievement will come about not by the adoption by the Australian government of successful greenhouse abatement strategies but rather by the actions of the states of New South Wales and Queensland, which banned large-scale clearing of native vegetation on conservation grounds (Hunt, 2004). In most countries LUCF was a net...

The Social Costs Of Increases In Biofuel Production

High food prices led to violent riots in 21 countries and non-violent riots in 44 countries according to the International Food Policy Research Institute 2000- 2001- 2002- 2003- 2004 2005- 2006- 2007- 2008-Jan Jan Jan Jan Jan Jan Jan Jan Jan 2000- 2001- 2002- 2003- 2004 2005- 2006- 2007- 2008-Jan Jan Jan Jan Jan Jan Jan Jan Jan (IFPRI) (von Braun, 2008). Figure 6.5 charts the IMF's commodity food price index since 2000. The World Bank has highlighted the problem of rising food prices 'Based on...

Is A Tonne Of Co2e A Tonne Of Co2e

Emission allowances to countries, and to emitters within countries, are in terms of carbon dioxide (CO2) equivalent. The major greenhouse gases are rated for their global warming potential and converted to CO2e, which is the commodity traded in the world's carbon markets. The workings of the markets for emission allowances and the role and potential for forestry in those markets are analyzed in Chapter 1. In assessing the potential role and importance of forestry the chapter finds that there is...

Biodiversity benefits of reforestation and avoiding deforestation

The term biodiversity encompasses the variety of life on earth, at the genetic, species, habitat and ecosystem levels. As well as such variation, biodiversity includes abundance the number of genes carried by individuals and populations in different places at different times. Also encompassed is the diversity of interactions between components of biodiversity such as pollination by birds and insects and predator-prey interactions. Biodiversity has evolved over the last 3.5 billion years of the...

Developers Choice Between tCERs and lCERs

Temporary CERs are issued for five-year periods. As the forest grows, each five-year period will yield more CERs, except where there is a fluctuation in sequestered carbon due to harvest or other factors. No liability is LCERs expire at the end of the crediting period and must be replaced. LCERs expire at the end of the crediting period and must be replaced. Source After Locatelli and Pedroni (2006 Figure 3). Figure 2.5b Long-term CERs (lCERs) in afforestation and reforestation incurred by the...

Types Of Biofuels

The most common type of biofuel is bioethanol, made by fermentation and distillation of sugar and starch. No engine modifications are needed in cars for blends of petrol and 10 percent ethanol. In the US the main feedstock is corn, in the EU sugar beet, feed wheat and barley, while in Brazil it is sugarcane. While biodiesel makes up only 5 percent of biofuel production it is important in Europe where diesel is in increasingly short supply and where increasing the diesel gasoline ratio is costly...

Postkyoto Policies And Rules For Forestry In Developed Countries

This brief review of domestic climate change policies has served to highlight the potential of forestry but also to raise questions concerning the extent of forestry's role. Should there be free rein on forestry credits, and if so what will be the indirect effects of induced land-use change This question must be addressed by further research. The current rules for land use, land-use change and forestry under the Kyoto Protocol relate almost specifically to developed countries. The LULUCF rules...

Is Greenhouse Gas Abatement Achieved By Biofuels

A major benefit claimed for the replacement of fossil fuels by biofuels is their potential to reduce (GHG) emissions. This claim needs to be subject to rigorous analysis because GHG savings depend on whether a simple life-cycle approach is taken to their estimation or a wider approach that recognizes the fact that the markets for biofuels are global. This analysis divides GHG emissions from biofuels into direct the savings incurred by replacing fossil fuels by growing and processing crops to...

References

Australian Government (2007), The national carbon accounting toolbox and data viewer, Canberra, Australia Department of Environment and Heritage and Australian Greenhouse Office. Bush, G. (2007), 'State of the Union Address', available at http www.whitehouse. gov stateoftheunion 2007 index.html. BP (British Petroleum) (2008), 'Historical data', available at http www.bp.com Collins, K. (2007), 'The new world of biofuels implications for agriculture and energy', presentation to EIA Energy...

The Opportunity Costs of Afforestationreforestation

In land-rich countries such as Canada, Australia and the US, existing forests are generally under government control. Increases in afforestation and reforestation therefore need to take place on private land. But the question needs to be asked whether landowners would be willing to afforest or reforest in order to gain carbon credits. A study in western Canada by van Kooten et al. (2002) found that 23 per cent of farmers were not interested in planting trees under any circumstances. Conclusions...

Policies for reducing emissions from deforestation and forest degradation REDD

The first part of this chapter discusses the mechanisms that have been put forward to account for the reduction in deforestation and forest degradation (REDD) in developing countries and to reduce the risk associated with the impermanence of forests and the leakage of deforestation to other locations. It also reviews funding mechanisms that are being considered. The second part takes a hard look at REDD, examining the political economy in which deforestation is embedded, the socioeconomic...

Preface

Nothing pleases me more than to look down on a primary tropical rainforest, the greenness interrupted here and there by a tree in flower, the canopy punctuated by great emergents and knowing that the whole teems with life. It is also satisfying to look across the landscape to where a dark line of a thriving plantation provides a contrast to the grassland in the foreground. While one can romanticize about forests, I have set out to be realistic in assessing their role in augmenting and...