Select Committee on Environmental Audit Sixth Report


87. One of the questions we raised in the press release announcing our inquiry concerned the coherence and certainty of the science underpinning assessments of carbon/GHG gains and losses and general climatic effects from reforestation or afforestation schemes. This question was inspired in part by an awareness of a general deepening of scientific understanding concerning non-carbon GHG emissions—principally methane—from forests but also by recent reports in the general and specialised media about the albedo effect which seemed to cast doubt on the climate benefit of at least some temperate forests. There have also been anxieties expressed about how accurate measurements of carbon stored by new forests can be for the purposes of guaranteeing robust offsets. Beyond the realm of this scientific debate, afforestation and reforestation schemes were often singled out for particular criticism by those unimpressed either by the theory or elements of the practice of carbon offsetting, on account of poor biodiversity or other environmental impacts, land ownership issues, the instability and impermanence of forests as a long-term 'sink' for carbon, and matters connected with the propriety of selling future credits from forest projects to meet current demand. Many of these issues were raised, at least peripherally, in many of the memoranda we received. Several of these issues predominated in memoranda from those involved in forestry projects or offsets, or from those whole-heartedly opposed to offsetting.[93]

88. Interestingly, land-use issues other than those connected with forestry were hardly mentioned at all, despite their continuing importance in terms of climate change. For example, the deterioration of peatlands across the world is currently a great cause for concern, since they store carbon that is now, because of their degradation, being released into the atmosphere: although peatlands cover only 3% of the world's land area they are the largest terrestrial store of biomass carbon. No doubt this lack of profile for non-forestry land-use issues is in part a function of the sort of offset projects currently in place or under preparation, and a function also of the prominence of forestry in international negotiations. It will be interesting to note if peatlands, many of which are currently under threat, see their profile rise and become beneficiaries of carbon finance and a source for offsets in the future.

89. Although the issue of the precise climate benefits of forests is complex and still the object of intense scientific and political debate, we felt that it was necessary to look at it in some detail and try to separate the facts from the propaganda in some of the claims made about forestry offsets. Land use issues (bundled up together under the unlovely acronym of LULUCFland-use, land-use change and forestry) are for good reason currently a focus for international negotiations under the Kyoto Protocol and features prominently in talks about the successor to Kyoto's first phase from 2012 onwards. Many tropical countries are keen to increase the profile for forests in the next international climate change agreement, not least in order to benefit from carbon finance for avoided deforestation. Other countries are more sceptical about this approach: those countries which will benefit most from credits for avoided deforestation are likely to be those which have had poor records in that regard. The CDM has so far also not been flexible or effective in encouraging forestry projects. Sustainable Forestry Management (SFM) Ltd pointed out to us, "to date not a single wholly commercial CDM forestry project has been approved and those projects backed by multi-lateral institutions that have been approved represent less than 1% of all CDM carbon credits".[94] There is growing political pressure for the CDM to incorporate forestry more than it does at the moment. The UK Government is doing a considerable amount to help improve the way in which the CDM Executive Board works and the way in which the CDM operates,[95] and we expect that it will focus within this on the need better to integrate forestry projects into the CDM, and into whatever mechanisms obtain post-2012.[96] Unfortunately, the position of forestry as a point of controversy in international negotiations casts something of a shadow over its place in the voluntary carbon offset market.

Avoided deforestation

90. There is no dissent about the need to keep the forests we have. Recent figures from the Global Canopy Programme's report Forests First in the Fight Against Climate Change have highlighted the massive contribution to GHG emissions from deforestation. The GCP report shows how deforestation accounts for 18-25% of global carbon emissions; and how emissions for deforestation between 2008-2012 are expected to be greater than the total of aviation emissions from the invention of the flying machine until at least 2025.[97] Indonesia has very recently become the third biggest emitter of GHGs largely on account of deforestation there. Brazil is another country whose emissions are massively dominated by those produced by deforestation. The McKinsey Quarterly recently noted that in terms of abatement potential for GHGs by sector by 2030, forestry ranked highest: it went on to suggest that such abatement could be carried out by a balanced combination of forest conservation and new plantation.[98]

91. Slowing and halting the current rate of deforestation is key to the struggle to avert climate change: continuing deforestation on current scales will not only make more difficult the work to move towards accepted targets but will also present the definite possibility that such targets will never be reached. Anything that can be done through the mechanisms of offsetting—in the voluntary or compliance markets—to preserve existing forests, so long as the projects or methods are robustly grounded in good science and good practice, and allowances or credits made available are properly audited, has to be encouraged.

Forestry projects in the voluntary market

92. While forestry's place in international efforts to avert climate change is becoming more and more prominent in climate change negotiations, the voluntary offset market is seeing something of a shift away from forestry projects towards renewable energy projects or other areas of carbon saving. Most major offset companies (many smaller companies still rely exclusively on forestry credits) now retail portfolios of credits of which frequently no more than 20% are drawn from forestry schemes. Additionally, many of those establishing projects or schemes relying on forestry now as a matter of course plant more than they need to to allow for losses or insure against under-performance.[99] If this trend continues, perversely, an increasing proportion of CERs in the future may represent forestry savings while a decreasing proportion of VERs might do so.

93. Undoubtedly there has been bad publicity—and bad practice—concerning a number of forestry based offset schemes or the way in which they were sold. The Advertising Standards Authority had cause in October 2006 to order the cessation of the offset claims made by the Scottish and Southern Energy Group (SSE) about its tree-planting schemes.[100] Much press coverage has also centred on the Coldplay-promoted project in Karnataka, India, where for various reasons the number of mango trees that should have been planted were not, and many of those that were planted died through lack of water.[101] Clearly, the message has got out that forestry projects are unreliable, while being supposedly inexpensive, superficially attractive to consumers, and thus a 'quick earner' for unscrupulous companies. Concerned individuals or commercial bodies interested in offsetting may as a result be seeking to avoid this sector of the market in favour of renewable energy or energy efficiency projects. Offset companies themselves, aware of this perception, and themselves anxious about other aspects of forestry projects (such as costs and permanence), may continue to develop more and more alternative, non-forestry, projects as a result.

94. Many of these suspicions raised about forestry projects are unfair. For example, the most recent uncertainties expressed in the general media about the merits of forests in mitigating climate change have been founded upon an imprecise understanding of the scientific studies into the balance of GHG and climatic impacts from temperate forests. None of the science for the relationship between forests and climate is simple, but the current state of research unequivocally indicates that, despite methane emissions, tropical forests store more GHGs than they emit. This is also the case for temperate forests, although the figures are less pronounced, partly on account of trees storing carbon more slowly in colder climes.

95. Recent studies for temperate forests have revealed that, due to what is known as the albedo effect, some forests in climes where there is otherwise ample snowfall end up storing more heat than the land around them and thus produce local warming.[102] In essence the issue is not one of the balance between methane emissions and carbon retention but of the reflectivity of light from snowfields as opposed to its non-reflectivity from forests. The greater the area of unforested zones where there is a high prevalence of snow cover the greater the amount of light and heat reflected: the greater the area forested in such zones the more heat is stored and climate change subtly encouraged. The afforestation or reforestation of land currently unforested and thus open to snow cover might have deleterious climatic effects, although no-one appears yet to be encouraging the deforestation of those northern temperate zones where snow abounds in order to encourage greater reflectivity and local cooling. While the overall effect is seen as marginal (and temperate forests in such colder areas evidently have other benign effects from which this possible, marginal impact should not detract), uncertainty has been thrown up in the minds of many of those who purchase or consider offsets since the extensive reporting of this scientific information began at the beginning of the year.

96. Other issues of uncertainty over the exact magnitude of the carbon or GHG benefits from forests (rather than their existence) are certainly more real than concerns over the albedo effect. Carbon credits need to represent definite amounts of carbon stored or saved in order to be the sort of commodity which companies and individuals will want to purchase, in which financial and other bodies will want to invest, and which will be acceptable within an international framework for meeting national GHG targets. Methodologies for measurements of carbon saved by or stored in forests are complex and there is clearly a lot of unease about how precise the calculation is of the number of credits produced by forestry schemes really is. Although there are CDM methodologies available which some voluntary schemes or projects can decide to follow, voluntary offset schemes often follow their own, proprietary methodologies: not all of these can be considered sufficiently robust to create and maintain the confidence that the voluntary offset market needs to prosper. In evidence to us, Mitch Feierstein of Cheyne Capital Management Ltd. said that at present his company did not invest in any forestry credits, but would consider so doing once it was convinced about the solidity of the methodologies and audit processes involved. Some of those connected with offsets do not seem to consider imprecision in the measurement of GHG savings from forestry (or other schemes) a problems since they believe that some people offset in the same way in which they give to charitable body - they are not concerned for precise measurement but for general benefit.[103]

97. While the absence of rigorous methodologies plays a part in anxieties about the validity of credits from trees and forestry offsets in general, there is perhaps greatest concern over the impermanence of forests. Clearly, a forest can only act as a carbon sink for as long as it exists. While the carbon locked in the tree may be preserved if the timber is felled and the wood used in buildings, furniture or other goods, and a successor tree may continue to store carbon, trees are often razed and then disposed of and their carbon released back into the atmosphere and no successor tree planted. This is particularly the case with tropical forests, although it is not a phenomenon exclusive to the tropics, nor within the tropics is it an issue only in countries with high profile forest loss, such as Brazil and Indonesia.

98. For some, the impermanence of such carbon sinks is an absolute bar to the acceptability of the offsets which they provide.[104] Those opposed in principle to offsets argue that it is unfeasible to prove, or assure, permanence without which carbon sinks are more dangerous than useful and their funding a waste of money. While marginal losses to forests by small-scale illegal logging, natural disasters, poor growth, and such may be able to be dealt with by insuring the forest, by planting more trees than needed for the offsets claimed, or by other means, the issue of assuring permanence over longer periods of time, especially in developing countries where the political climate can be volatile, is much more difficult.

99. Another problematic aspect of forestry or land-use offsets is connected to future value accounting or future reductions. In the CDM, offsets can only be sold to be retired when the carbon savings they represent have already taken place—in other words when their value is verified and their effect certified. In the voluntary market, for schemes and offsets that do not adhere to CDM methodologies or practices, offsets can be sold for retirement before the savings they represent have actually occurred. While such offsets may represent a minimum of current forestry offsets, and are certainly not characteristic of the way in which VERs are used, it is an important issue. A company which quantifies the carbon savings, say, over ten years from a newly planted forest and then retails such credits for retirement, receives often the full value for something that has not yet happened and allows present emissions to be "offset" by a future saving that in fact may not eventuate. Even if all future emissions thus sold and retired did eventuate, it would still represent a problem for the way in which such offsetting works—because the timescale for mitigation is thus stretched out dangerously. There has to be clarity here. In relation to forestry offset projects, it is essential that no credits should be retired which do not represent carbon savings already made. Credits should all be vintage marked and while future credits may be sold on to others they should not be retired until that vintage date is reached.

The importance of forestry offset projects to the climate

100. Without any pressing need urgently to deal with the imminent risk of major climate change these difficulties with forestry offsets might be more persuasive, and an effective counsel for caution. Unfortunately, as two of our witnesses in particular made clear, so urgent is the need to act in whatever way possible to preserve forests, soak up more carbon, and fund and invest in the longevity of new and existing forests, that ensuring support for planting of sustainable forestry and the preservation of existing forests is more persuasive. [105] The Stern Report was very particular about the importance of forestry and land use to the climate debate and to climate change mitigation.[106] Forestry schemes must be intended to provide offsets are properly sustainable, do not over-ride the claims of those local to them, are properly measured and audited. Beyond that, forestry schemes may also provide many other benefits to local communities above and beyond the global carbon benefit they provide. All possible attempts must be made to ensure the longevity and/or permanence of forests. Benign, well thought-out and effective forestry schemes are not an inexpensive source of offsets: the sort of monoculture, plantation style schemes which often rode roughshod over local claims to land or ecosystem services, and which often underperformed significantly or failed to last, are hopefully a thing of the past.

101. It has to be admitted that the very large-scale forestry schemes which will make most difference in the fight to avert climate change require significant amounts of funding and political support. It has also to be admitted that at the moment neither of these things appears to be widely available. However, inside the CDM and outside it there are signs of progress towards the realisation that a great deal can be done quickly to ensure that contributions to climate change from changes in forest cover can be minimised, and that some progress can be made in reversing the recent trend in deforestation. International agreements need to be sought quickly, either within the UNFCC framework or elsewhere, to guarantee countries' co-operation and progressive activity in this area.

93   For example, the memoranda from Sustainable Forestry Management (SFM) Ltd., Ev98-107; from Forest Carbon, Ev209-10, from FERN Ev57-61, and from Carbon Trade Watch, Ev185-9. Back

94   Ev101, para 9  Back

95   Q425 Back

96   Qq437-8 Back

97   Global Canopy Programme, "Forests First in the Fight against Climate Change", May 2007 Back

98   The McKinsey Quarterly No 1 2007 Back

99   Q161 Back

100   The Carbon Neutral Myth, Carbon Trade Watch, February 2007, chapter 3  Back

101   Ev188-9, paras 15-19 Back

102   For example, the research recently carried out by Govindasamy Bala of the Lawrence Livermore National Laboratory, which can be found in the 9-13 April online edition of the Proceedings of the National Academy of Sciences. Back

103   Qq144-5 Back

104   Ev18-19, paras 6-15 (evidence from The Corner House) Back

105   Q243-4 (RSPB) and Q146 (SFM Ltd) Back

106   The Stern Review on the Economics of Climate Change, Part VI, Chapter 25 Back

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