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Brazil Says No To Rain Forest Credits

Brazil, home to about 40 percent of the world's remaining rain forest, is not a country you'd expect to oppose a scheme that would pay developing countries large sums of money simply to leave their trees intact. But that's exactly what Brazil's delegates are doing at this week's international climate talks in Poznan, Poland, where they have come out against the EU's proposal to allow companies in Europe to meet their emissions targets with carbon credits earned by preventing deforestation. This credit system would be an extension of the existing Clean Development Mechanism, which allows companies in rich "Annex I" countries that have carbon caps under the Kyoto Protocol to pay for projects that reduce emissions in the developing world in lieu of reducing emissions from their own operations.

Brazil's opposition means that the proposal will have a hard time getting off the ground, and that's probably a good thing. The Clean Development Mechanism (CDM) is a great idea in principle—cut emissions cheaply! transfer money to the developing world!—that hasn't worked out  so well during the three years it's been in action. (The GAO just published a new report detailing the flaws in the existing CDM.) Nearly half of the credits that have entered the system have been created by destroying hydroflourocarbons, industrial gases that cause thousands of times as much global warming per unit as carbon dioxide and therefore offer the opportunity to earn lots of emissions credits by doing very little. China has become the biggest player in this market, raking in billions of dollars from the countries of the European Union for cheap factory retrofits that it might have put in anyway with a minimal amount of arm-twisting.

Therein lies the real problem with the CDM or other emissions-credit schemes: figuring out whether a project earning credits marks a real departure from what otherwise would have happened. Did that tree you planted make a real difference, or would some other tree have grown there anyway? This counterfactual exercise becomes even more elaborate once you start issuing credits for the absence of some undesired action. It's hard to know whether an acre of rain forest would have been cut—or just left alone—if its owners weren't earning credits for its preservation. It's even tougher to know whether protecting one stretch of rain forest causes a net reduction in deforestation, or whether it simply causes loggers and soybean farmers to move to a slightly different location.

Instead of a system of carbon credits for prevented deforestation, Brazil is proposing that the governments of Annex I countries invest directly in rain forest-preservation projects. And even if forestry-related carbon credits are a questionable way for companies to meet their emissions targets, some sort of effort to preserve forests in the developing world does make good economic sense. A recent study by the Woods Hole Research Center estimated that the opportunity cost—in foregone revenue from cattle and soybean farming—of preventing deforestation-related emissions from the Brazilian Amazon comes to about $1.50 per ton of CO2. Outside of improvements to energy efficiency—which often save money over the long run—it'd be hard to find a cheaper way to reduce emissions.

--Rob Inglis, High Country News