Proposals For Redd Accounting

Deforestation is already accounted for under the Kyoto Protocol for the industrialized Annex I countries. Where deforestation was a net source of emissions in 1990, then the deforestation in the first commitment period 2008-12 is measured against the 1990 level. This is termed 'net-net' accounting. In applying REDD to developing countries the same net-net principle can apply of measuring emissions from deforestation or degradation for an accounting period against a previous base period.

One of the major obstacles to the inclusion of REDD in the Clean Development Mechanism of the Kyoto Protocol was the problem of being certain about how much deforestation has been avoided. Baselines are a tool to assess performance in REDD and to determine target levels that go beyond what would have been achieved. Deforestation rates may already be declining in a country and may go on declining as the areas of forest available for profitable agriculture decline. There is a very real risk in this situation that the baseline will be set too high and REDD will be rewarded for reductions in emissions that would have taken place anyway. In Costa Rica, according to Karousakis (2007), deforestation rates were already on the decline in the 1990s, which casts doubt on the validity of payments for environmental services in that country.

The base periods need to be set over a period long enough to minimize the problems of using remote sensing due to cloud cover and inter-annual variation in deforestation rates. Over the last 15 years Amazonian annual deforestation rates have varied from 1 million to 3 million hectares (Instituto Nacional de Pesquisas Espaciais, 2005). Radar remote sensing can be used in areas with frequent cloud cover to verify annual forest stocks. In all cases it is preferable to couple remote sensing with field data, as was emphasized in Chapter 5.

Given the inter-year variability of deforestation within countries, the baseline suggested by Mollicone et al. (2007) is 1990 to 2005 with the average conversion rate per year derived from the satellite imagery survey at the start (1990) and the end (2005) of the period. This proposal provides incentives only if the rate of global deforestation in the accounting period is less than the rate in the baseline period. Here 'global' refers to the sum of the participating countries or all countries. The baseline is lowered for successive accounting periods.

If a country has a deforestation rate higher than half the global rate during the baseline period then it is a high conversion rate country. If this country has a reduced conversion rate (conversion rate in accounting period less than conversion rate in baseline period) then it has preserved carbon calculated according to forest type (humid tropical, dry tropic) and forest category (intact, non-intact). If a country has a conversion rate less than half the global rate then it is a low conversion country and its reduced deforestation rate is the difference between the global rate and the national rate during the accounting period. These two situations are compared in Figures 8.4a and 8.4b.

The Mollicone et al. (2007) approach prevents countries receiving incentives when global deforestation rates are above the baseline. The net global incentive is apportioned among countries according to their performance.

In a different approach by Santilli et al. (2005) an incremental increase in deforestation rate in a country in the accounting period above baseline would be transferred to the next commitment period.28 In heavily logged regions such as Kalimantan, Sumatra and Sulawesi, for example, where much of the lowland forest has been removed after logging to make way for oil palm plantations, crediting for increase in carbon stocks in a commitment period could include reforestation or regrowth. In the case of countries with substantial forests but very little deforestation, for example Peru and Bolivia, the approach is to allow baselines higher than their recent deforestation rates as an inducement to participate and avoid future increases.29

Schlamadinger et al. (2005) emphasize the crucial importance of setting targets against which future emissions are assessed that, on the one hand, are not so low as to allow a country to claim credits simply by following a business-as-usual approach and, on the other, are not set so high as to be unachievable. The authors also ask the crucial question 'should non-achievement of targets lead to penalties?' (Schlamadinger et al., 2005: 57), given that such penalties may deter countries from participating in the REDD scheme. The Schlamadinger et al. (2005) proposal rejects penalties and instead opts for graduated incentives for achieving REDD within a band which encompasses achievable targets based on projected emissions rather than historical levels. If emissions from REDD are below the lower threshold the country can claim full credit for each tonne of CO2e reduced. Emissions below the upper band would be discounted, the discount rate

GC/2

Credit

Baseline Accounting

(b) •

Conversion rate

J Credit

GC/2

-►

Baseline Accounting

Baseline Accounting

Notes:

(a) country with conversion rate of forest above half the global rate (GC/2) in the baseline period is credited with a reduction below its baseline in the accounting period

(b) country with conversion of forest below half the global rate (GC/2) in the baseline period is credited for staying below GC/2 in the accounting period

Source: After Mollicone et al. (2007: Figure 5).

Figure 8.4 Comparison of countries with conversion rates offorest above and below half the global rate

Upper target of target band

Credits

Lower target of target band

Time

Note: Expected emissions are the basis for setting the upper and lower targets of the target band (dotted lines). The smaller graph shows the changing fraction of each tonne of emissions avoided that can be sold as a credit. In achieving the lower target all credits are sold, while at the upper target level no credits can be sold.

Source: After Schlamadinger et al. (2005: Figure 1).

Figure 8.5 Credit allocation for achieving REDD targets decreasing as emission levels approach the lower threshold. How discounts would apply to credits in the target band is illustrated in Figure 8.5.

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