Climate Change and Forestry in Europe 7.3 As more scientific information about global warming accumulates, climate change is emerging as one of the greatest environmental challenges of the twenty-first century. Forests have four major roles in climate change: they currently contribute about one-sixth of global carbon emissions when cleared, overused or degraded; they react sensitively to a changing climate; when managed sustainably, they produce wood-fuels as a benign alternative to fossil fuels; and finally, they have the potential to absorb about one-tenth of global carbon emissions projected for the first half of this century into their biomass, soils and products and store them - in principle in perpetuity (FAO, 2013).
2
CONTENTS 1 Climate change ............................................................................................................................................... 4 1.1 The basics ................................................................................................................................................ 4 1.2 Forests and climate change ..................................................................................................................... 6 1.3 Role of forests: forest sector activities .................................................................................................... 7 2. Carbon markets: one of the answers to counteract Climate Change ........................................................... 9 2.1 Regulated carbon market ...................................................................................................................... 11 2.2 Voluntary carbon market (OTC-Over The Counter) .............................................................................. 15 3. Best practices............................................................................................................................................... 22 4. Forest carbon accounting standards ........................................................................................................... 24 REFERENCES ........................................................................................................................................................ 26
3
Background concepts Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions, or in the distribution of weather around the average conditions (i.e. more or fewer extreme weather events). Climate change is caused by factors such as biotic processes, variations in solar radiation received by Earth, plate tectonics, and volcanic eruptions. Certain human activities have also been identified as significant causes of recent climate change, often referred to as "global warming". Climate change is expected to hit developing countries the hardest. Its effects — higher temperatures, changes in precipitation patterns, rising sea levels, and more frequent weatherrelated disasters — pose risks for agriculture, food, and water supplies. At stake are recent gains in the fight against poverty, hunger and disease, and the lives and livelihoods of billions of people in developing countries. Addressing climate change requires unprecedented global cooperation across borders.
1 Climate change 1.1 The basics Climate change in IPCC usage refers to a change in the state of the climate that can be identified (e.g. using statistical tests) by changes in the mean and/or the variability of its properties, and that persists for an extended period, typically decades or longer. It refers to any change in climate over time, whether due to natural variability or as a result of human activity. This usage differs from that in the United Nations Framework Convention on Climate Change (UNFCCC), where climate change refers to a change of climate that is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and that is in addition to natural climate variability observed over comparable time periods. The Earth's climate has changed throughout history. Just in the last 650,000 years there have been seven cycles of glacial advance and retreat, with the abrupt end of the last ice age about 7,000 years ago marking the beginning of the modern climate era — and of human civilization. Most of these climate changes are attributed to very small variations in Earth’s orbit that change the amount of solar energy our planet receives. The current warming trend is of particular significance because most of it is very likely human-induced and proceeding at a rate that is unprecedented in the past 1,300 years (http://climate.nasa.gov/evidence).
4
Fig. 1 changes in greenhouse gases over the centuries (IPCC, 2007)
Fig. 2 global greenhouse gas emissions by source (IPCC, 2007).
https://www.youtube.com/w atch?v=6yiTZm0y1YA#t=234
5
1.2 Forests and climate change Forests are particularly sensitive to climate change, because the long life-span of trees does not allow for rapid adaptation to environmental changes. Associated with climate change there are several factors affecting forest ecosystems, which can act independently or in combination. Two decades of research have significantly improved our understanding of these basic impact factors (Lindner et al., 2010). Effects of increases in temperature will differ with location, because bioclimatic zones in Europe differ in their limitations for forest production. An increase in temperature alone would be beneficial for boreal (Kellomäki & Wang, 1996) and temperate conditions (Saxe, Cannell, Johnsen, Ryan, & Vourlitis, 2002), but interaction with other climate or site related factors can alter the response. Water limitation is expected to increase from the Temperate Oceanic to the Temperate Continental and the Mediterranean zones. In combination with increases in temperature this could lead to more droughts, especially in the Mediterranean and Temperate Continental zone (Lindner et al., 2010).
Fig. 3 : annual change in forest area by region, 1990 – 2010 (FAO, 2010)
The world’s total forest area is just over 4 billion hectares, which corresponds to an average of 0.6 ha per capita. The five most forest-rich countries (the Russian Federation, Brazil, Canada, the United States of America and China) account for more than half of the total forest area. Ten countries or areas have no forest at all and an additional 54 have forest on less than 10 percent of their total land area (FAO, 2010). Deforestation – mainly the conversion of tropical forest to agricultural land – shows signs of decreasing in several countries, but continues at a high rate in others. Around 13 million hectares of forest were converted to other uses or lost through natural causes each year in the last decade compared with 16 million hectares per year in the 1990s. Both Brazil and Indonesia, which had the highest net loss of forest in the 1990s, have significantly reduced their rate of loss, while in 6
Australia, severe drought and forest fires have exacerbated the loss of forest since 2000 (FAO, 2010). Afforestation and natural expansion of forests in some countries and regions have reduced the net loss of forest area significantly at the global level. The net change in forest area in the period 2000–2010 is estimated at -5.2 million hectares per year (an area about the size of Costa Rica), down from -8.3 million hectares per year in the period 1990–2000 (FAO, 2010). Quality matters…
Is it really better??
1.3 Role of forests: forest sector activities Forests act both as sources and sinks of greenhouse gases (GHGs), through which they exert significant influence on the earth’s climate. Forests can contribute to the mitigation of climate change, but under the existing global climate policy frame this alone will not be enough to halt climate change (European Forest Institute, 2008). Emissions or sequestration of CO2 can occur as land uses change. For example, CO2 is exchanged between the atmosphere and the plants and soils on land as former cropland is converted into grassland, as new areas are cultivated and become cropland, or as forests grow (www.epa.gov). o Afforestation / Reforestation (A/R) additional sequestration; o Improved Forest Management (IFM) additional sequestration and/or avoided emissions (harvesting level and silvicultural treatments); o Reducing Emissions from Deforestation and Forest Degradation (REDD+) avoidance of a business-as-usual scenario that would have produced higher emissions; o Agro-forestry agricultural and forestry strategies additional sequestration and/or avoided emissions;
7
o Increasing CO2 stock in off-site wood products (CHWP) ďƒ additional sequestration and avoid emissions from fossil fuels; o Fossil fuel substitution and energy efficiency ďƒ avoided emissions.
8
2. Carbon markets: one of the answers to counteract Climate Change On July 2, 2003, the European Council formally adopted the Emissions Trading Directive. The Directive laid out the framework for the European Emissions Trading Scheme (the 'European ETS'), aimed at reducing Greenhouse Gas emissions generated through certain industries in Europe, which together account for 45% of all of Europe's emissions. The scheme works on a 'Cap & Trade' Basis; Governments put a 'Cap' on the amount of CO2 a company can emit, and if the company produces less than the cap, it can sell the surplus. Governments across the 'EU 25' member states are required to set emissions limitations for all obligated installations in their country. o Regulated/Institutional market: Kyoto based market, big, well structure with shared and agreed rules and roles; o Voluntary carbon market: small, dynamic, innovative and not always serious.
9
There are two main types of carbon trading systems: In a cap-and-trade system, (the largest is the EU-ETS) an overall emissions cap is set, for example 20% below 1990 emissions. Countries or companies are given emission allowances that correspond with that emissions cap. Each allowance allows them to emit one tonne of CO2e. Covered entities a must meet their targets within by: o o o
Reducing their own emissions Trading emissions allowances with countries that have a surplus of allowances Meeting their targets by purchasing carbon credits.
Offsetting mechanisms do not set a cap. For each offset project that reduces emissions, offset credits are issued. These can then be sold for compliance to entities that are covered under a capand-trade system. The Kyoto Protocol established two offsetting mechanisms, the so-called ‘Flexible Mechanisms’: the Clean Development Mechanism (CDM) – (No Annex I) and Joint Implementation (JI) – (Annex I).
http://vimeo.com /32995647
10
2.1 Regulated carbon market
UNFCCC 1994 (United Nations Framework Convention on Climate Change) o Rio Summit (1992) => UNFCCC (1994) The United Nations Framework Convention on Climate Change (UNFCCC or FCCC) is an international environmental treaty negotiated at the United Nations Conference on Environment and Development (UNCED), informally known as the Earth Summit, held in Rio de Janeiro from 3 to 14 June 1992. The objective of the treaty is to "stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system". In total the parties are 196 nowadays (http://unfccc.int/essential_background/convention/status_of_ratification/items/2631.php) o 154 Nations signed the United Nations Framework Convention on Climate Change
11
Fig. 4 Signing nations. Source UNFCCC website: http://unfccc.int/2860.php
Kyoto Protocol 2005 The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change, which commits its Parties by setting internationally binding emission reduction targets. Recognizing that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity, the Protocol places a heavier burden on developed nations under the principle of "common but differentiated responsibilities." The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. The detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakesh, Morocco, in 2001, and are referred to as the "Marrakesh Accords." Its first commitment period started in 2008 and ended in 2012. Main points: o common but differentiate responsibilities: Annex 1 Countries Vs non Annex 1 o voluntary THUS binding commitments List of Annex I and Non-Annex I countries: http://unfccc.int/parties_and_observers/parties/annex_i/items/2774.php http://unfccc.int/parties_and_observers/parties/non_annex_i/items/2833.php ďƒ° Annex 1: reduction of 5.2% emissions between 2008-2012 period with reference to 1990 (Post 2012: AWG-KP) ďƒ° different reductions by state (e.g. Italy = - 6.5%, Island = +10%, Europe = - 8% )
12
Kyoto Protocol mechanisms o Emission Trading (ET) Trade of credits between two Annex I countries In Europa UE-Emission Trading System (EU-ETS); o Joint Implementation (JI) An Annex I Country may implement an emission-reducing project or a project that enhances removals by sinks in the territory of another Annex I Party and count the resulting emission reduction units (ERUs) towards meeting its own Kyoto target; o Clean Development Mechanism (CDM) Annex I countries pay for credits generated in a project in a non- Annex I country, to meet their emissions targets.
More information at the link: http://unfccc.int/kyoto_protocol/mechanisms/items/ 1673.php
Role of forests
13
Clean Development Mechanism (CDM): how it works 15 types of sector activities: solvent use, metal production; mining ; transport; construction; afforestation and reforestation; o etc. o o o o o o
To calculate the amount of carbon credits there are methodologies, specific for each project type. However, Annex I Parties are limited in how much they may use CERs from such activities towards their targets (up to 1% of the Party’s emissions in its base year) for each of the five years of the commitment period. CDM methodologies: http://cdm.unfccc.int/methodologies/index.html CDM Afforestation and Reforestation So far A/R CDM projects make up only 0.61% of the entire number of CDM projects (7331). => Difficulties in developing A/R due to strict rules and non-permanent validity of certificates.
In addition most of the projects are using nonnative fast growing species!
14
2.2 Voluntary carbon market (OTC-Over The Counter) Market in which enterprises, governs, organizations, individuals etc. may voluntary do an offset and buying carbon credits. o Small but dynamic o Forest sector accounts for 34% of the total voluntary offset market o 2012: 148 billion US$ o It is subjected to fluctuations
Some numbers
State of the voluntary carbon market: http://www.foresttrends.org/documents/files/doc_3846.pdf State of the voluntary forest carbon market: http://www.forest-trends.org/documents/files/SOFCMfull-report.pdf
Voluntary market in the forest sector: bigger volume
In 2012, the global markets for agriculture, forest or land-use (AFOLU) offsets transacted 28 MtCO2e, a 9% increase from 2011. Voluntary buyers drove 95% of all market activity (27 MtCO2e), as corporate buyers sought offsets from forestry to renew or pursue new climate targets‌The majority (71%) of forestry offsets transacted in 2012 were sold to purely voluntary buyers, while the remainder were sought by businesses complying with or preparing for regulation. The private sector remained the largest pool of buyers, responsible for at least 19.7 MtCO2e or 70% of offsets 15
transacted in 2012, a significant increase from 12.3 MtCO2e in 2011 (Ecosystem Marketplace, 2013).
Role of the formal “commitments” The private sector is the source of 86% of global investment, and therefore has a key role to play within climate finance. Business involvement is critical in getting the large-scale investment and emissions reductions needed to address climate change. However, to utilize private sector funds, a strong commitment from the public policy sphere is needed (Ernst&Young, 2012). o Policy commitments: “Cities for Climate Protection” 150 cities with commitments on emission reduction from 5 to 10%; o Corporate Commitments: AES, BP Amoco, MAZDA, AVIS, Dupont, Shell International, Interface, Duch Electricity Generating Board (FACE Foundation),… reduction till 10%.
https://www.youtube.co m/watch?v=znw7t9aqrf4
16
Demand motivations: going green or making green business? Markets for forest carbon offsets have evolved at breakneck speed, with new project types, methodologies, and locations ever-emerging in response to buyer and policy-maker signals. Below a list of the motivations that underlie the voluntary carbon market: • Corporate responsibility/environmental ethics • Public relations/branding • Sales of carbon neutral products • Seller advertising/green marketing • Anticipation of Institutional carbon market and regulation (e.g. Agenda 21 or Energy plans for local communities and municipalities) • Climate change-influenced business model (e.g. re-insurance agencies or ski-companies) • Investment • Resale speculations Project activities: voluntary market
Fig. 5 Transacted Offset Volumes by Project Type, All Markets, Historical
Across all years, voluntary demand for offsets from A/R projects has outpaced volumes transacted from other forest project activities, as the translation from philanthropic tree planting to carbon mitigation projects is fairly straightforward. In 2012, transacted volumes from A/R projects remained high but fell significantly from 2011, as the sector did not see a repeat of the significant compliance demand from Kyoto member countries reported in 2011 (Ecosystem Marketplace, 2013).
17
Supply Between the various types of forest carbon project developers, that constitute the supply inside the carbon market, we can identify the following: o o o o o o
NGOs Private companies Governments Land owners Local communities Etc.
Example:
http://www.ourcli mate.com/
Certification process An organization wants to obtain a Certification.
Contacts an independent an competent Certification Body. To validate the project design upon selected Standards. 5 years! To verify carbon credits upon selected standards.
The Certification Body is accredited by the standard setter!
Certificate is issued and credits are listed in Registries.
The quality of the credits is based in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project. This is reflected in their 18
price; voluntary units typically have less value than the units sold through the rigorously validated Clean Development Mechanism. Registries Registries for carbon credits are useful especially to avoid double counting inside the voluntary market and between voluntary and compliance. Example:
Brokers, resellers and aggregators A carbon credits broker is a service agency, operating in the voluntary market for carbon credits that acts as an intermediary between those who propose projects to offset the emissions of pollutants (such as the project of creating forests to offset the CO2) and those who want to join precisely to offset the greenhouse gases produced. This is accomplished through the purchase, by the project sponsors, of "carbon credits", corresponding to the "tot" of CO2 to be compensated. Brokers are important for the contacts, but they often add a cost, that usually is quite high.
http://www.brokerscarbon.com /
http://www.evomarkets.com/envir onment/carbon_markets/traiders
19
Transaction costs
38 euro t/CO2!
Greenwashing, or "green sheen�, is a form of spin in which green PR or green marketing is deceptively used to promote the perception that an organization's products, aims and/or policies are environmentally friendly. Greenwashing efforts can range from changing the name or label of a product to evoke the natural environment on a product that contains harmful chemicals to multimillion dollar advertising campaigns portraying highly polluting energy companies as ecofriendly. Critics of the practice suggest that the rise of greenwashing, paired with ineffective regulation, contributes to consumer skepticism of all green claims, and diminishes the power of the consumer in driving companies toward greener solutions for manufacturing processes and business operations.
20
What is an offset standard Definition: an offset standard is set of rules, methodologies, etc., that a project developer decide to comply with in order to ensure quality in the design and management of a GHGs removals/reductions project. Forest carbon standards serve assurers’ for forest projects and credits. They reduce information asymmetries over the quality of carbon credits otherwise exist between project developers and buyers. Therefore, they facilitate efficient exchange through the reduction of transaction costs, the risks of moral hazard selection Standards serve also as a minimum quality and credibility insurance mechanism on which buyers may base their decisions to purchase forest carbon credits (Merger, 2010).
Main forest carbon standards
For example the CCB Standards identify land-based projects that are designed and implemented using best practices to deliver robust and credible greenhouse gas reductions while also delivering net positive benefits to local communities and biodiversity. They can be applied to any land-based carbon projects including activities that reduce emissions from deforestation and forest degradation (REDD) and contribute to conservation, sustainable management of forests and enhancement of forest carbon stocks (REDD+), agricultural land management and avoided degradation of non-forest ecosystems (http://www.climate-standards.org/ccb-standards/). 21
Note that Carbon Fix has now been replaced (http://www.goldstandard.org/luf/luf_certification-process)
by
The
Gold
Standard
3. Best practices There are different standards and methodologies on the market that have in turn different requirements, but there are some key elements of forest carbon projects which should be considered: o
o
Project boundaries: shall include all anthropogenic GHG emissions that are significant and reasonably attributable to the project. Physically, they are related to project activities, location and scale. Instruments used: GPS, Maps, Remote sensing, sat. Images, Participatory Rural Appraisal;
Carbon rights: unfortunately there is no clear legislation on carbon ownership, especially when dealing with uncertain land ownership;
http://www.foresttrends.org/documents/files/ doc_2555.pdf
http://www.foresttrends.org/documents/files/doc_ 2558.pdf
22
Eligibility: requirements to be suitable (E.g: No wetland, no protected area etc. E.g.: A/R CDM: “No forest at project start�, Afforestation: no forest since 50 years, Reforestation: no forest on 31 Dec 1989), Demonstrate land use at project start (forest, agricultural land etc.), Demonstrate historic land use, Information sources (Sat. Imagery maps, ground surveys, Participatory Rural Appraisal (PRA);
o
o
o
o
o
Baseline scenario: the scenario that reasonably represents the anthropogenic emissions that would occur in the absence of the proposed project activity, that can be defined through historical data and deforestation and forest degradation drivers analysis (best practices: 5-10 years historical information, Re-calculate baseline every 5 years, Choose a conservative scenario);
Additionality: a project activity is additional if emission are reduced below those that would have occurred in the absence of the project activity (best practices: use of additionality tests: Legal test (the project is request by law?), Common practice test (project activities are typical?), Financial test (have the project been done without carbon payments?); Leakage: leakage are emissions that occur due to a shift of activities of a project area to the outside of a project area. The agent of deforestation moves to an area outside of the project boundary and continues their deforesting activities elsewhere (E.g.: stop grazing in an area simply will move the problem in another); Permanence: the project can be destroyed : fire, human actions, pathologies, insects etc. (best practices: Guarantee factors: legal, financial, ownership, management; Buffer zone: carbon stock reserve 20 – 30%); Environmental impacts: potential environmental benefits (biodiversity conservation, soil conservation, quality/regulation of water, possibility of complementary activities);
23
o
Socio-economic impacts: understanding socio-economic impacts due to the project activities and how to mitigate potential negative impacts (potential socio-economic benefits: Economic benefits, Long-term revenues for local population, Job creation, Capacity building, Potential of complementary activities: sustainable forest managment, ecoturism; environmental conservation. Social risks: Conflicts due to new arranges of land ownership, Risk of unequal access to resources and unequal distribution of benefits, Not fair or abusive contracts, Reduct land access= increase of food/commodities prices.
4. Forest carbon accounting standards Definitions
o 1 credit = 1 t CO2 eq o eq = the global warming of all Green House Gases (CO2, CH4, N2O, HFC, PFC and SF6) are translated into CO2 equivalent o 1 tC = 3,66 t CO2 o offset = implementing somewhere else the action of reducing emissions/increasing carbon stock o methodology: way of calculating climate benefits
Quantification of GHGs removals o Carbon pools and emission sources o Project scenario o Baseline scenario o Leakage o Project Emission
24
It is essential to evaluate if the GHG reduction or sequestration goals set out in the project design phase have really been achieved by the project. Given the uncertainties of carbon measurement and calculation, verification should involve an assessment of the monitoring plans applied by the project proponent organisation and should take into account ongoing improvements in these methods (WWF, 2010). Registration of carbon credits Normally carbon credits are placed in accounts, from which they can then be transferred from sellers to buyers. Registration methods mainly include the provision of serial numbers and other means of ensuring the safe handling of accounts. In order to avoid double counting most standard systems prohibit the issuance of credits in countries where a cap on emissions has been established by law (i.e. all Annex 1 countries under the Kyoto Protocol). This should generally be respected by standard systems in order to avoid double counting in voluntary and ‘cap-and-trade’ markets. This requirement can only be waived if it is ensured that reductions sourced from the projects are not accounted for in the national GHG balance in these countries. Due diligence should be applied by the standard systems to avoid sales of the credits from the same project to various buyers. A publicly available list of registered projects can support such controls by the standard system itself but also by the interested public. Sanctions should be foreseen for projects which do not adhere to these rules for avoidance of double counting (WWF, 2010). Information box o IPCC 2003 and 2006 methodologies for agriculture and forestry www.ipcc-nggip.iges.or.jp/public/2006gl/vol4.html o Example of projects www.forestcarbonportal.com o Carbon stock of in specific projects www.carbonstock.cifor.cgiar.org/index.php/documentation o Tropical trees database (ecology and products use) www.worldagroforestrycentre.org/our_products/databases o Methodology for land use change analysis www.gofcgold.wur.nl/redd/index.php
25
REFERENCES Ecosystem Marketplace. (2013). Covering New Ground - State of the Forest Carbon Markets 2013. Ernst&Young. (2012). The future of global carbon markets. The prospect of an international agreement and its impact on business. European Forest Institute. (2008). Impacts of Climate Change on European Forests and Options for Adaptation. FAO. (2010). Global Forest Resource Assessment 2010, 378. IPCC. (2007). Climate Change 2007 : An Assessment of the Intergovernmental Panel on Climate Change, (November). Kellomäki, S., & Wang, K. Y. (1996). Photosynthetic responses to needle water potentials in Scots pine after a four-year exposure to elevated CO(2) and temperature. Tree physiology, 16(9), 765–72. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/14871683 Lindner, M., Maroschek, M., Netherer, S., Kremer, A., Barbati, A., Garcia-Gonzalo, J., … Marchetti, M. (2010). Climate change impacts, adaptive capacity, and vulnerability of European forest ecosystems. Forest Ecology and Management, 259(4), 698–709. doi:10.1016/j.foreco.2009.09.023 Merger, E. (2010). Status and Future of the Afforestation and Reforestation (A/R) Carbon Sector, (August). Saxe, H., Cannell, M. G. R., Johnsen, Ø., Ryan, M. G., & Vourlitis, G. (2002). Tree and forest functioning in response to global warming. New Phytologist, 149(3), 369–399. doi:10.1046/j.14698137.2001.00057.x WWF. (2010). Forest Carbon Standards.
26