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Climate Change, Global Warming, and Forests

Álvaro Vallejo
CATIE

The Context

There is now enough evidence to know for sure that Earth’s climate is changing. A suite of observations supports this conclusion and provides insight about the rapidity of those changes.

According to The Intergovernmental Panel on Climate Change (IPCC), established by the World Meteorological Organisation (WMO) and the United Nations Environment Programme (UNEP) in 1988, the global average surface temperature has increased by one degree Fahrenheit since the late 19th century, and the regional patterns of the warming that occurred in the early part of the 20th century were different than those that occurred in the latter part. The most recent period of warming (1976 to date) has been almost global, but the largest increases in temperature have occurred over the mid- and high latitudes of the continents in the Northern Hemisphere.

The cause of this global warming, scientists agree, is a thickening layer of carbon dioxide pollution, mostly from power plants and automobiles, that traps heat in the atmosphere (the greenhouse effect). The IPCC states that "most of the observed increase in globally averaged temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations", because of varied human activities.

Scientific consensus has identified carbon dioxide as the dominant "greenhouse gas"; methane and nitrous oxide are also major contributors to the greenhouse effect (Kyoto Protocol of the United Nations Framework Convention on Climate Change). IPCC attributes greenhouse gas emissions to eight main economic sectors, of which the largest contributors are power stations (many of which burn coal or other fossil fuels), industrial processes (among which cement production is a dominant contributor), transportation fuels (mainly fossil fuels), and agricultural byproducts (mainly methane from enteric fermentation and nitrous oxide from fertilizer use).

While 66% of anthropogenic CO2 emissions over the last 250 years have resulted from burning fossil fuels, 33% have resulted from changes in land use, primarily deforestation. Deforestation both reduces the amount of carbon dioxide absorbed by forested regions and releases greenhouse gases directly, through biomass burning that frequently accompanies it.

Worldwide, livestock production occupies 70% of all land used for agriculture, or 30% of the land surface of the Earth. Scientists attribute more than 18% of anthropogenic greenhouse gas emissions to livestock and livestock-related activities such as deforestation and increasingly fuel-intensive farming practices (IPCC 2001).

Scientists say that unless global warming emissions are reduced, average global temperatures could rise another 3 to 9 Celsius degrees by the end of the century -- with far-reaching effects. Sea levels will (and have already begun to) rise, flooding coastal areas. Heat waves will be more frequent and more intense. Droughts and wildfires will occur more often. Disease-carrying mosquitoes will expand their range. And species will be pushed to extinction. As this page shows, many of these changes have already begun.

The Role of Forests in Climate Change

Climate change, land use change and the world’s forests are inextricably linked. Forests cover about 4 billion hectares of the Earth’s land surface area and play a significant role in the global carbon cycle. Forest plants and soils drive the global carbon cycle by sequestering carbon dioxide through photosynthesis and releasing it through respiration. Although carbon uptake by photosynthesis eventually declines as trees age, many mature forests continue to sequester carbon in their soils (Schultze 2000, Percy et al. 2003).

Forests absorb approximately one third of recent anthropogenic emissions of carbon dioxide (CO2) to the atmosphere, acting as carbon sinks. However, our activities in the forest have also been a source of carbon emitted to the atmosphere, with deforestation (primarily in the tropics) contributing about one fifth or one fourth of the annual anthropogenic emissions. Of great concern is the uncertainty over whether forests will be sinks for carbon in the future. In addition, as the world mobilizes to address the issue of climate change, forest management is being used to increase sequestration of carbon in the biosphere in the short to medium term through reforestation and afforestation. This attention on forests and forestry has increased the demand for detailed knowledge of forest functioning and accurate information about the state of the world’s forests (Schimel et al. 2001, IPCC 2001).

Carbon Markets - The Mandatory Market

The international community negotiated the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol with the objective of confronting the trend of rising GHG concentrations in the atmosphere and ultimately reversing it. The two treaties provide a negotiation platform, an institutional framework, and the technical infrastructure necessary to define international solutions to climate change. However, neither the UNFCCC nor the Kyoto Protocol went far enough to bring about a substantial reversal in emission trends. The UNFCCC formulates the ultimate objective of stabilizing GHGs in the atmosphere, but does not mandate any binding action as to how to achieve that goal. The Kyoto Protocol imposes only moderate targets on industrialized countries for the limitation of emissions for the period from 2008 to 2012, the so called first commitment period (Streck and Scholtz 2006).

The Kyoto Protocol established three mechanisms to achieve the goal of stabilizing GHGs in the atmosphere. These mechanisms allow industrialized countries with emissions targets to implement projects that reduce emissions in developing and transition countries(1). Once these reductions are quantified, measured and verified by environmental auditors, they can be credited towards the emission targets of the investor country. The Clean Development Mechanism (CDM) is the instrument that involves developing countries by allowing the transfer of ‘certified emission reductions’ from activities in developing countries to industrialized countries. Joint Implementation (JI) is the mechanism that defines a similar crediting tool for projects implemented mostly in east European transition economies.

The bulk of carbon market has been made for projects that reduce industrial GHGs and landfill methane. Other projects include energy efficiency, biomass energy, wind energy, and some small- or medium-scale hydropower. Agricultural land-use change (the improved management of croplands and grazing land) is not eligible for the CDM.

The CDM mechanism also includes afforestation and reforestation, but during negotiations on the Kyoto Protocol and further negotiations on a framework for forestry projects, parties did not reach consensus on how to integrate forestry-related carbon fluxes into the protocol. Negotiators underestimated the importance of the role of forestry in achieving a political agreement in Kyoto. Scientific knowledge was limited and negotiators were poorly informed (Trines 2004). How to account for forestry removals and emissions became chronically controversial. As a result, the reference to forestry activities in the Kyoto Protocol is limited to a number of accounting rules and the possibility of implementing forestry projects under the protocol’s flexible mechanisms.

On the other hand, improved forest management and forest preservation are not included. Thus no incentives were created to preserve forests rich in biodiversity and important for watersheds and erosion control, despite the fact that deforestation contributes to about a third of global GHG emissions. What remains for agriculture in developing countries is primarily the production of biomass to offset the use of fossil fuels. Even in this area, benefits are limited by the complex methodology and requirements to be met for a biomass energy project to gain credits under the CDM (Knudsen 2006).

Forestry activities eligible for the CDM may include afforestation or reforestation (AR) of degraded lands, conversion of agricultural land to agro-forestry systems, and commercial plantations, among others. AR-CDM project activities are subject to the specific and complex modalities and procedures of the CDM. They have the potential of improving livelihoods and the environment in impoverished rural areas of developing countries by leveraging investments in the forestry sector that would not occur in absence of the possibility of selling CERs (Certified Emission Reductions) (OECD; IEA 2003).

 

Carbon Markets - The Voluntary Market

Parallel with the CDM market, there has emerged a voluntary market for carbon offsets. The voluntary market consists of companies, governments, organisations, organisers of international events, and individuals, taking responsibility for their carbon emissions by voluntarily purchasing carbon offsets. These voluntary offsets are often bought from retailers or organisations that invest in a portfolio of offset projects and sell slices of the resulting emissions reductions to customers in relatively small quantities. As retailers generally sell to the voluntary market, the projects in which they invest do not necessarily have to follow the CDM process. Free of the stringent guidelines, lengthy paper work, and high transaction costs, project developers have more freedom to invest in small-scale community based projects. The co-benefits of these projects, in terms of, for example, local economic development or biodiversity, are often a key selling point (Taiyab 2006).

In contrast to the rather strict rules set out for the mandatory market, the voluntary market provides companies with different options to acquire emissions reductions. A solution, comparable with those developed for the mandatory market, has been developed for the voluntary market, the Verified Emission Reductions (VER). This measure has the great advantage that the projects/activities are managed according to the quality standards set out for CDM/JI projects but the certificates provided are not registered by the governments of the host countries or the Executive Board of the UNO. As such, high quality VERs can be acquired at lower costs for the same project quality. However, at present VERs cannot be used in the mandatory market.

Avoided Deforestation

Emissions from land use change contribute 10% to 25% of greenhouse gas emissions to the atmosphere. The majority of these emissions come from deforestation and forest degradation in tropical countries. Positive incentives for avoiding deforestation and improving forest management are excluded from the United Nations Framework Convention on Climate Change. Only individually managed projects based on afforestation / reforestation are eligible in the Clean Development Mechanism (CDM).

The reasons for excluding deforestation avoidance were several and included:

* Difficulties in establishing that a project-sized area was truly at  risk of clearing (baseline) and that the project did not simply displace deforestation elsewhere (leakage).

* Concern that huge amounts of cheap carbon credits would be created, thereby reducing the incentive to reduce domestic greenhouse gas emissions in Annex 1 countries (dilution of commitments).

* Potential host countries feared effective loss of sovereignty of large tracts of forest.

The Carbon Footprint and Carbon Neutrality

A carbon footprint is the total amount of CO2 and other greenhouse gases, emitted over the full life cycle of a product or service. It is expressed as grams of CO2 equivalents, which accounts for the different global warming effects of different greenhouse gases (Parliamentary Office of Science and Technology (POST), 2006).

Carbon neutrality can refer to the practice of balancing carbon dioxide released into the atmosphere from burning fossil fuels, with renewable energy that creates a similar amount of useful energy, so that the net carbon emissions are zero, or alternatively using only renewable energy. It is also used to describe the practice of carbon offsetting, by paying others to remove 100% of the carbon dioxide emitted to the atmosphere, for example by planting trees, or by funding 'carbon projects' that should lead to the prevention of future greenhouse gas emissions, or by buying carbon credits to remove them through carbon trading.

The emerging market of carbon neutrality is often related to afforestation and reforestation projects. Many companies around the world have begun to offset GHGs emissions through these kind of projects. A number of schemes are currently operating which offer individuals and organisations the opportunity to have trees planted on their behalf with the aim of offsetting emissions of GHGs. An estimate is made of the carbon sequestered over the life time of the woodland and this is marketed as a carbon credit to offset emissions resulting from specified activities of an individual or organisation.

Concerns have been raised over schemes that award credits in advance of the carbon being sequestered. There is also a question mark over the long-term future of woodlands created for this purpose, because of uncertainties over future land management or the occurrence of natural events such as storms and droughts or the effects of climate change itself.

The Future of Carbon Forestry Projects

During the last fifteen years, forestry-based carbon offsets have evolved from a theoretical idea towards being a market-based instrument for accomplishing the global environmental objective of the Climate Change Convention. The first transactions for CO2 emission mitigation took place in the early 1990s. These were voluntary in nature, since there were few legislative requirements for polluters to reduce GHG emissions. Projects were established in anticipation of changes in environmental legislation, while capitalizing on the public relations value of environmental stewardship. This voluntary aspect was somewhat reflected in the assumed price paid for carbon sequestration, which averaged US$ 0.19 per t-C. Later, with the ratification of the Kyoto Protocol, the establishment of binding commitments led to a more substantial demand for offsets, resulting in an immediate rise in the level of investment, and in the price paid for carbon credits, which reached up to US$ 20-25 per t-C, although these prices have only been achieved in the EU, not the U.S. (Neef and Henders 2007).

The recent market developments indicate that there will also be a substantial market potential for CERs from forestry CDM projects. As of yet, the market for forestry CERs is dormant but is expected to speed up, with the first four projects being under validation at present (October 2006). These projects are expected to be validated by the end of 2006. An additional reason, apart from the exclusion, until now, from the EU ETS, is that many potential buyers still struggle with policy uncertainties regarding temporary CERs. For example, some European governments are still considering how and if they should deal with the potential liability that the purchase of temporary CERs could pose them with, considering that these CERs have to be replaced upon expiry. Similarly, Japanese industry buyers do not know yet how the Japanese government will deal with temporary CERs in the voluntary Japanese trading system (Neef and Henders 2007).

Footnotes

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(1): These countries are listed in Annex I of the UNFCCC. The emission targets are formulated in Annex B of the Kyoto Protocol. Most commonly the parties with emission targets are referred to as ‘Annex I’ countries.

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References

IPCC. 2000. Land Use, Land-Use Change, and Forestry: IPCC Special Report (eds. Watson R.T., Noble I.R., Bolin B., Ravindranath N.H., Verardo D.J., Dokken D.J.) Cambridge University Press, Cambridge.

IPCC. 2001. Technical Summary. In Climate Change 2001: Mitigation. Contribution of Working Group III to the Third Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press: Cambridge, United Kingdom and New York, NY, USA.

Knudsen, Odin. 2006. Bioenergy and agriculture: promises and challenges for food, agriculture and the environment. Potential of Carbon Payments for Bioenergy. Focus 14. Brief 5 of 12. December 2006. http://www.ifpri.org/2020/focus/focus14/focus14_05.pdf

Neeff, Till; Henders, Sabine.  2007. Guidebook to markets and commercialization of forestry CDM projects. Turrialba, C.R : CATIE. 42p. (Serie técnica. Manual técnico / CATIE ; no. 65).  http://www.proyectoforma.com/Documentos/GuidebooktoMarketsandCommercializationofCDMforestryProjects.pdf

Parliamentary Office of Science and Technology POST (2006). Carbon footprint of electricity generation. October 2006, Number 268.

Percy, K.E.; JANDL, R.; HALL, J.P.  AND LAVIGNE, M. 2003. The Role of Forests in Carbon Cycles, Sequestration, and Storage. Issue 1: Forests and the Global Carbon Cycle: Sources and Sinks. IUFRO Newsletter No.1.

OECD; IEA. 2003. Forestry projects: lessons learned and implications for CDM modalities. http://iea.org/textbase/papers/2003/forestry.pdf.

Schimel, D.S. et al. 2001. Recent patterns and mechanisms of carbon exchange by terrestrial ecosystems. Nature 414: 169-172.
 
Schulze, E.-D., C. Wirth, and M. Heimann. 2000. Climate Change: Managing Forests After Kyoto. 289: 2058-2059.

Streck, Charlotte; Scholtz, Sebastian. 2006. The role of forests in global climate change: whence we come and where we go. International Affairs 82:5.

Taiyab, Nadaa. 2006. Exploring the market for voluntary carbon offsets. International Institute for Environment and Development, London. http://www.iied.org/SM/eep/documents/MES8.pdf

Trines, E. 2004. ‘Possible role of land use, land-use change and forestry in future climate regimes: an inventory of some options’. Study commissioned by the Ministry of Agriculture, Nature and Food Quality of The Netherlands, 2004, http://www.rainforestcoalition.org/documents/EUFinalReport9November2004.pdf

Posted 4 September 2007

Updated 30 September 2007