From the beginning of negotiations the US, Japan, Australia, Canada, New Zealand and Norway were the main proponents of LULUCF. The results suggest that their proactive position was driven by the prospect of lowering their compliance costs. The failure of the EU to support forestry's inclusion can be explained by the fact that it wanted to display a leadership role in terms of the perceived problems of LULUCF, together with a lack of strong interest groups lobbying for its inclusion.5 The resistance of Eastern European countries and Russia is explained by fear that the inclusion of LULUCF would devalue the credits that they were left with after their caps under the Kyoto Protocol exceeded their current emissions.
China, along with the G77 (a coalition of developing countries) opposed the US proposal by raising concerns that a wide inclusion of sinks would enable Annex I countries to comply without making any mitigation effort (Boyd et al., 2008). But China has a massive potential to gain from energy projects and would be a clear loser if these were crowded out by cheaper forestry projects. The opposition by Brazil, even though set to gain from inclusion, is explained by the sovereignty implications of large foreign investment in forestry.
Jung's (2005) analysis suggested a very small role for LULUCF in the CDM given the existence of the cap and the exclusion of deforestation avoided. This prediction has been borne out, as at November 2008 only one forestry project had been registered under the CDM whereas 1190 projects in total had been registered (UNEP Risoe, 2008b). Apart from the high transaction costs, a factor that would undoubtedly play a major part in the tardy development of forestry projects is that carbon sequestration is slow in the first few years after forest establishment.
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