Memorandum submitted by Helveta
EXECUTIVE SUMMARY
1. This response is from Helveta. We are
an Oxfordshire-based company that provides real time online verification
of legality along the whole of the timber supply chain.
2. Financial mechanisms could have a significant
role to play in helping reduce deforestation and emissions from
land use change. However, there are substantial issues that will
need to be addressed before such mechanisms can be introduced
successfully. These include the need for equity between local
communities, landowners and governments in benefiting from financial
mechanisms; ensuring that financial mechanisms are not acting
to protect forests that would already otherwise be protected (additionality);
ensuring that mechanisms do not just displace deforestation elsewhere
(displacement); and establishing appropriate baselines and criteria
for use of the mechanisms.
3. Technology has a huge role to play in
the verification of land use change credits and in ensuring the
legality and sustainability of logging. However, satellite technology
must be complemented on the ground by sub-canopy verification
if the system is to function effectively. Satellites cannot detect
low-level, sub-canopy deforestation, which is usually how deforestation
in the form of illegal logging or selective land use change begins,
and are therefore unable to identify a potential problem until
it is nearly too late and the canopy has already been subject
to substantial degradation. Real time online verification technology
is already being used at the sub-canopy level by local communities,
NGOs and enforcement bodies around the world with great success.
4. UK Government efforts to procure forestry
products from legal and sustainable sources have been extremely
slow and rest on very weak foundations. There are still, to date,
no EU FLEGT forestry products on the market. FSC accreditation
is a good system but relies on paper-based systems and auditing,
which raises the following issues vis-a"-vis verification:
— Auditors can only be present for
short periods of time, which means violations can take place in
their absence.
— Paper-based systems can never be
as up-to-date and immediate as real time online legality assurance
systems, which are already being successfully deployed around
the world.
5. This is one of the reasons why Friends
of the Earth has withdrawn its support for the FSC accreditation
system. In addition, the Government has no auditing or due diligence
system in place to ensure that suppliers genuinely comply with
the relevant legislation or with standards of certification.
6. The EU FLEGT Action Plan is highly welcome
and a positive step forward. However, progress is painstakingly
slow. There is still no wood, as stated above, on the market that
is EU FLEGT approved. The EU must lean more heavily on the countries
taking part in the process and not hold back from providing strong
directional guidance about the quality and standards that countries
should be observing in implementing the plan. The EU should also
set tight deadlines to prevent certain countries from stalling
on progress and undermining the whole initiative.
7. The European Commission has reviewed
the EU FLEGT action plan and rightly concluded that the plan does
not include sufficient sanctions for those countries that either
are not taking part or are not making sufficient progress. This
is one of the main reasons why the Commission will imminently
be publishing a Draft Framework Regulation to prohibit the import
of illegally logged timber into the EU. This measure is absolutely
vital to stopping the import of illegally felled timber and should
be strongly supported by the UK Government and implemented as
soon as possible.
ABOUT HELVETA
8. Helveta is an Oxfordshire-based company
that provides real time online verification of legality along
the whole of the timber supply chain. Our technology, through
the use of the internet, GPS, RFID and barcode readers, allows
forests to be gazetted, inventorised and monitored in real time
by local people, NGOs and enforcement bodies.
9. All data collated is held in a central
server and all logging activity, and movement of timber through
the supply chain is recorded. All felling of trees, or processing
or movement of timber, which does not possess the correct barcode
reading can be considered de facto illegal and local monitoring
on the ground can stop illegal activity in real time through immediate
alerts to local people, NGOs and enforcement authorities. The
system can also apply the appropriate levels of taxation to legally
felled timber to help host governments recover appropriate revenue.
10. Our software is called CI World. It
is used to manage and track timber assets as they move along the
supply chain. Information is captured in the forest or on the
factory floor using handheld devices through CI Mobile Technology.
CI Mobile combines handheld data entry with data from GPS, RGID
and bar code readers to gather accurate records of how assets
are being managed and processed in the forest or factory.
11. CI Mobile transmits data from the forest
or factory to CI World servers via any available means of internet
connection—from satellite, through Wi-Fi, cellular, and
Bluetooth, to dial-up modem. On receipt of inbound data, CI World
provides immediate visibility on operations. Processed reports
and analysis are available directly from CI World through browser-based
access to authorised users, including enforcement authorities,
NGOs and local stakeholders, anywhere in the world.
12. The CI World rules engine allows data
received from the forest or factory to be analysed on receipt
for compliance with pre-determined rules. For example, the rules
engine monitors the following:
— Logging outside a defined cutting
block or, within a defined legal cutting area, inappropriate logging
contrary to local forest law.
— Logs failing to move along the supply
chain within a prescribed time frame.
— Conversion rate drop-offs in the
factory.
— Production volume deficiencies at
a particular machine.
13. These problems are identified automatically
by the system and notifications issued automatically to the relevant
stakeholders. This approach provides:
— Full traceability for timber assets
from finished product in the factory all the way back to the original
standing tree in the forest.
— Improved chain of custody management
enabling expedited certification and reducing risk in procurement
for retail and wholesale buyers.
— Full access to all timber data for
all stakeholders from business through government to communities
to NGOs.
14. This approach is already being used
successfully in Cameroon and Liberia, and is in the deployment
phase in hardwood-exporting countries in the Congo and Amazon
basins, and in south-east Asia. It has enormous potential to help
provide the real time verification systems that will be required
under the EU FLEGT Action Plan, for the UK Government's legal
and sustainable procurement policy, and for importers to demonstrate
compliance with the new Draft Framework Regulation prohibiting
the import of illegally logged timber to the EU.
15. This approach also has huge potential
to monitor land use change credits in the future in complementing
other monitoring of land use by satellite on the ground and under
the canopy.
16. Furthermore, it can be implemented very
quickly—only three months were required, for example, from
contract signature to operation of the system under a US-sponsored
initiative in Liberia—and the costs are not high. The technology
and systems already exist and work; it does not need to be created
from scratch. Experience has demonstrated that using established
technology is a far superior, more efficient, and more effective
approach that creating new local systems in each host country.
THE ROLE
FINANCIAL MECHANISMS
MIGHT HAVE
IN HELPING
TO ADDRESS
EMISSIONS FROM
LAND USE
CHANGE
17. The use of real time online verification
of legality technology has enormous potential to address the fundamental
problem that standing forest has no immediate economic value whereas
felled timber and alternative use of land such as agriculture
do have significant short-term economic value.
THE ENVIRONMENTAL
AND SOCIAL
RISKS AND
BENEFITS OF
USING SUCH
FINANCIAL MECHANISMS
18. However, there are considerable issues
to address before such mechanisms can be introduced both successfully
and without unintended consequences. These issues include:
— The need for equity between local
communities, landowners and governments in benefiting from the
financial mechanisms. Local communities, owing to economic necessity,
are often those compelled to resort to logging or alternative
land use. They must be able to benefit from these mechanisms.
— Whilst landowners and governments
will also need additional resources to incentivise them to protect
forest and to enforce that protection effectivity, precaution
must be taken to avoid corruption and inappropriate or wasteful
use of finances.
— What system would be used to ensure
funds are distributed equitably and correctly, and how will this
be verified?
— The need to ensure that the financial
mechanisms are not wasted in protecting forests that would already
otherwise have been protected (additionality); that the mechanisms
do not just displace deforestation elsewhere (displacement); and
that appropriate baselines and criteria are established for use
of the mechanisms.
— That not all deforestation is illegal—forests
can legitimately be cut down to create agricultural land. There
is therefore a need to ensure that the maximum amount of forest
is protected but also to ensure that the process of converting
forest into agricultural use is undertaken as sustainably as possible.
Agricultural sustainability must complement sustainable forestry
management.
THE USE
OF LAND
USE CHANGE
CREDITS IN
CARBON MARKETS
AND IN
MEETING EMISSION
TARGETS
19. No comments at this stage.
THE WORLD
BANK'S
FOREST CARBON
PARTNERSHIP FUND
20. No comments at this stage.
THE ROLE
OF TECHNOLOGIES
SUCH AS
REMOTE SENSING
IN THE
VERIFICATION OF
LAND USE
CHANGE CREDITS
21. Technology has a huge role to play in
the verification of land use change credits and in ensuring the
legality and sustainability of logging. However, satellite technology
must be complemented on the ground by sub-canopy verification
if the system is to work. Satellites cannot detect low-level,
sub-canopy deforestation, which is usually how deforestation in
the form of illegal logging or selective land use change begins.
Satellites are unable to detect a potential problem until it is
nearly too late and the canopy has already been subject to substantial
degradation. Real time online verification technology is already
being used at the sub-canopy level by local communities, NGOs
and enforcement bodies around the world with great success.
THE SUCCESS
OR OTHERWISE
OF GOVERNMENT
EFFORTS IN
REDUCING EMISSIONS
FROM INTERNATIONAL
LAND USE
CHANGE
22. No comments at this stage.
THE CONGO
BASIN FOREST
FUND
23. This has the potential to be a hugely
valuable initiative but it will be important, in the first instance,
to focus on the following nations—Democratic Republic of
Congo, Congo Brazzaville, Cameroon, and the Central African Republic.
These are the nations where the greatest gains can be made in
promoting sustainable forestry.
24. We are currently involved in taking
this initiative forward, which will provide an excellent example
of how real time, technologically-enabled local monitoring in
collaboration with local communities and NGOs can help to record
and monitor forests.
THE INTERACTION
OF CARBON
FINANCE MECHANISMS
WITH THE
TIMBER TRADE
25. No comments at this stage.
GOVERNMENT PROGRESS
ON TACKLING
ILLEGAL TIMBER
SINCE THE
EAC 2006 REPORT ON
SUSTAINABLE TIMBER
AND
GOVERNMENT SUSTAINABLE
PROCUREMENT OF
FOREST PRODUCTS
26. WWF has estimated that the UK is the
world's third largest importer of illegally harvested or traded
timber and wood products (3.2 million cubic metres RWE). WWF adds
that, in terms of overall share of imports, the UK has the second
highest illegal share—estimated at 7.2%. The WWF report
further states that the UK spends an estimated £712 million
on illegal timber and wood products per year—equivalent
to £11.76 per person in the UK. This is clearly unacceptable
for a nation that is committed to tackling climate change and
deforestation.
27. UK Government efforts to procure forestry
products from legal and sustainable sources have been extremely
slow and rest on very weak foundations. CPET relies on two sources
of legal and / or sustainable timber—EU FLEGT-approved or
FSC. However, there are currently no EU FLEGT forestry products
available on the market.
28. Meanwhile, FSC accreditation is an effective
system but one that relies on paper-based systems and auditing.
There is therefore, with auditors only present for short periods
of time, little means to ensure that violations of the system
do not take place in their absence, which contrasts to the reliability
of the real time online legality assurance systems, which are
already being successfully implemented around the world. This
is one of the reasons why Friends of the Earth has withdrawn its
support for the FSC accreditation system.
29. In addition, the UK Government does
not have any auditing or due diligence system in place to ensure
that suppliers genuinely comply with FSC. This should be remedied
by introducing the whistleblower scheme proposed by Barry Gardiner
MP in his Private Member's Bill, whereby third parties could scrutinise
timber suppliers and report them to the Government, and/or a thorough
UK Government audit of suppliers to ensure that all timber is
verified as legal and sustainable. These recommendations are corroborated
by the finding from WWF that the CPET process has yet to demonstrate
that it has had any impact on the timber trade whatsoever.
THE SUCCESS
OR OTHERWISE
OF THE
EU FLEGT ACTION PLAN,
AND GOVERNMENT
SUPPORT FOR
IT
30. The EU FLEGT action plan is highly welcome
and a positive step forward. However, progress is painstakingly
slow. There is still no wood, as stated above, on the market that
is EU FLEGT approved. The EU must lean more heavily on the countries
taking part in the process and not hold back from providing strong
directional guidance about the quality and standards that countries
should be observing in implementing the plan. The EU should also
set tight deadlines to prevent certain countries from stalling
on progress and undermining the whole initiative.
31. There is currently wide variation in
the success of those countries pursuing EU FLEGT VPAs. Ghana,
for example, is moving in the right direction to introduce a national
online tracking and verification system. Indonesia, however, is
making little progress and there is substantial evidence of a
lack of appetite beneath the upper echelons of that country's
leadership to move rapidly enough and achieve real change.
32. The risk is that vested interests that
have benefited from the established ways of operating and may
have, directly or indirectly, benefited from illegal logging will
either seek to undermine or stop the process altogether. For example,
we have been contracted by EuropeAid to deliver an online timber
legality assurance system in Indonesia similar to one we have
deployed in Liberia. However, in start contrast to the rapid deployment
that has taken place in Liberia, there has been no movement—fourteen
months after the original contract was signed—to deploy
the same working solution for timber tracking and verification
in Indonesia.
33. These vested interests need to be challenged,
clear direction and deadlines need to be introduced about what
constitute acceptable standards for the new systems, and clear
incentives and disincentives on trade need to be applied.
34. The European Commission has reviewed
the EU FLEGT action plan and rightly concluded that the plan does
not include sufficient sanctions for those countries that either
are not taking part or are not making sufficient progress. This
is one of the main reasons why the Commission will imminently
be publishing a Draft Framework Regulation to prohibit the import
of illegally logged timber into the EU. This measure is absolutely
vital to stopping the import of illegally felled timber and should
be strongly supported by the UK Government and implemented as
soon as possible.
October 2008
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