Memorandum submitted by Greenpeace UK
GREENPEACE
Greenpeace UK is the autonomous regional office
of Greenpeace, a campaigning organisation which has as its main
objective the protection of the natural environment. Greenpeace
has regional offices in 40 countries, 2.8 million supporters worldwide
and around 150,000 in the UK. It is independent of governments
and businesses, being funded entirely by individual subscriptions.
Greenpeace was one of the first organisations
to campaign for action to be taken to halt anthropogenic climate
change. It has built up considerable expertise and has access
to independent expertise on, amongst other areas, deforestation,
and the links between energy use and climate change. The expertise
includes scientific knowledge, understanding of the economics
of the energy and carbon markets, analysis of state subsidy, as
well as an understanding of how the development of traditional,
centralised systems of electricity generation can have detrimental
effects on the development of new, cleaner technology to combat
climate change.
INTRODUCTION
1. The reality of climate change continues
to outstrip research projections; it is becoming clear that reaching
the "tipping point" is a far more immediate threat than
climate scientists had imagined and the window of opportunity
for avoiding dangerous runaway climate change is rapidly closing.
2. We now know that an increase in global
temperature of even 1.5°C could lead to irreversible impacts
and 2°C risks triggering catastrophic runaway climate change.
We need a global plan that peaks global temperature rise as soon
as possible and enables us to return atmospheric concentrations
of carbon to below current levels.
3. This year will see an intensive round
of international negotiations, culminating in the Copenhagen Climate
Change Summit in December as governments attempt to finalise a
deal and the details of the next commitment period of the Kyoto
Protocol of the United Nations Framework Convention on Climate
Change (UNFCCC). This 15th Conference of the Parties (COP15) to
the UNFCCC represents the best chance we have of reversing current
emissions trends in time to prevent the worst impacts of climate
change.
4. A "good" deal at COP 15 will
require legally binding emissions reduction obligations for industrialised
countries, as a group, of at least 40% below 1990 levels by 2020,
at least three quarters of which need to be met by domestic action.
There will be no ambitious deal without unprecedented leadership
by developed countries. They must take responsibility for the
problem they have already created and continue to contribute disproportionately
in comparison to the developing countries.1
5. Additionally, industrialised countries
must also pay for their emissions permits in order to generate
adequate and predictable funding, in the order of at least $140
billion annually, to support clean energy and other mitigation
activities, forest protection and adaptation in developing countries.
6. It is unlikely—in political as
well as cyclical financial terms, if no other—that such
large sums will be pledged and channeled annually through national
budgets. Instead, we need mechanisms that generate predictable
funding automatically, independent of national treasuries. The
main fund-generating mechanism should be either the international
auctioning of developed countries' Assigned emissions Amount
Units (AAUs); putting a levy on these emissions permits—or
a combination of both, so that industrialised countries would
have to pay for (a portion of) their emissions allowances in the
future.
7. In this context, the role of the carbon
markets becomes significant, and improvement to the current mechanism
is essential. Of the three existing carbon market mechanisms under
the UNFCCC, only the Clean Development Mechanism (CDM) has generated
significant funds. While the CDM has succeeded in channeling significantly
more funding to developing countries than any of the climate funds
under the UNFCCC, it has disbursed the money to only a few countries
and the projects have delivered very little emissions reductions
or sustainable development.2 In fact, the mechanism has allowed
a net increase in emissions, compared to hypothetical projections
in which the CDM had not been brought into existence. It is clear
that this cannot be a model for the carbon market post 2012.3
8. However, the failure of existing market
mechanisms do not necessarily mean that market mechanisms are
essentially flawed, but rather they need to be carefully designed,
with a sound climate-related outcome being paramount. If new carbon
market mechanisms are to deliver additional emissions reductions
whilst lowering costs they need to go beyond simply offsetting
industrialised country emissions. They must instead incentivise
developing countries' own actions and sustainable development,
through sectoral and national no-lose targets.
9. From 2013 onwards, the CDM or its successor
as a project-based mechanism should be limited to least developed
countries and other developing countries with little capacity
to act. For other, more able developing countries, the post-2012
deal needs to provide new mechanisms, such as no-lose targets,
which incentivise long-term low-carbon development planning on
a sectoral and economy-wide level, deliver additional emissions
reductions and reduce transaction costs. Activities in the covered
sectors should also be supported by capacity building, technological
cooperation and up-front financing by industrialised countries,
where appropriate.
10. Carbon markets can be designed to reduce
energy-related emissions under certain conditions (see paragraphs
8/9), but the particular nature of emissions from forest destruction
and their reduction is best served by strong public control. Forests
are not only carbon sinks, but are also global centres of biodiversity
which provide homes and livelihoods for millions of people. Furthermore,
there are many technical problems associated with the monitoring,
calculating and accounting of emissions from deforestation. Public
control over forest protection measures and funding is necessary
to ensure that emissions reductions go hand in hand with protecting
biodiversity and forest dependent peoples' rights. Greenpeace
urges governments to reject the use of simplistic market-based
mechanisms to reduce emissions from deforestation in developing
countries.
11. Approximately one fifth of all greenhouse
emissions come from deforestation. As Sir Nicholas Stern said
"curbing deforestation is a highly cost-effective way to
reduce greenhouse gas emissions." There is a near international
consensus on the need to reduce emissions from deforestation and
degradation (REDD), but no concurrence over how this should best
occur. One of the critical questions in relation to proposals
for REDD is the extent to which forest credits should be allowed
into carbon markets in general and the European Emissions Trading
Scheme (ETS) in particular.
12. An essential part of the Copenhagen
deal will be a funding mechanism for ending gross deforestation
and associated emissions in all developing countries by 2020,
and achieving zero deforestation by 2015 in priority areas, such
as the Amazon, the Congo Basin, and the Paradise forests of Indonesia.
These emission reductions must be in addition to the cuts in emissions
as described in paragraph 1. Priority protection should be given
to areas with high conservation value and those areas which are
important for the livelihoods of indigenous peoples and forest
communities.
13. The fundamental justification for carbon
markets is that they provide a mechanism for cutting emissions
in an economically efficient way. In relation to forests in particular,
the central argument is that large sums of money can be raised
for rainforests through allowing rich countries to buy forest
credits and trade them in the carbon market. The UK Government
is committed to reducing emissions by 80% by 2050, but has not
established whether these reductions will take place at home or
abroad and in what proportions, leaving open the possibility of
heavy reliance on offsets, including forest credits. Greenpeace
of course supports the proposition that emissions should be reduced
as efficiently as possible. However, market mechanisms that are
not fit for purpose or inappropriately structured will not lead
to greater efficiencies.
14. REDD presumes that developing countries
willing and able to reduce emissions from deforestation should
be financially compensated for doing so. If REDD is to be included
in a post-2012 framework, a decision about what the mechanism
will entail needs to be agreed at COP15 in Copenhagen.
15. On 4 February 2009 the minimum standards
necessary for REDD to be efficient and effective were set out
in a joint letter from Friends of the Earth, Greenpeace UK, RSPB,
WWF-UK, the Rainforest Foundation UK and FERN to Joan Ruddock.[42]
As set out in this NGO letter, at a minimum REDD must:
— provide sufficient, reliable funding
to tackle deforestation and forest degradation;
— ensure that reducing deforestation is
additional to industrialized nations actions to reduce their own
emissions;
— encourage involvement of all developing
countries with forests;
— protect the rights and livelihoods of
indigenous peoples and local communities;
— protect Biodiversity values as well as
maintaining carbon values; and
— protect against leakage via national-level
reductions in deforestation
Above all of course, REDD must be effective
in contributing to an overall reduction in global emissions.
PROBLEMS WITH
ALLOWING FOREST
CREDITS INTO
CARBON MARKETS
16. Rich developed economies need to start
demonstrating that a low-carbon economy is possible and compatible
with economic prosperity in order to gain developing country commitment
to long-term emissions reductions. Developed states must drive
the technologies and energy efficiency improvements which will
make a low-carbon economy possible. They can only do this by employing
measures which drive down emissions in rich developed economies
rather than relying solely on purchased credits. An over-reliance
on markets mechanisms will mean that developed countries will
lack incentives to make the shift to low-carbon technology, leading
to lock-in of high-carbon infrastructure, such as unabated coal
fired power stations.
17. By 2050 the scope to achieve radical
reductions via purchased credits is likely to be very limited
because mitigation will require all countries to be limiting their
emissions to well below current developed country levels. A policy
of relying too much on purchased credits now could make 2050 domestic
targets unachievable. In metaphorical terms, we cannot afford
to pick all of the low-hanging fruit too quickly at a cost of
delaying on tackling that which is higher up and harder to reach.
Ultimately there is a need for an overall global reduction of
carbon emissions and a market mechanism that is not accompanied
by appropriate caps on overall emissions applied at a national
level will not achieve that end.
18. Offset credits are essentially a bookkeeping
device, rather than a form of emission reduction. And even in
bookkeeping terms, there are inherent methodological uncertainties
associated with mapping, measuring and governance in relation
to measuring carbon emissions and sequestration in the context
of deforestation. Any system of credits for reduction against
a hypothetical business-as-usual scenario is inherently less robust
than a cap and trade system where reductions are required in the
certifiable total of all emissions. In lay terms, it is more of
a gamble.
19. In addition, if "cheaper"
(in relative terms) forest credits are traded in carbon markets
with more expensive carbon credits from other sectors, it may
well depress the price of carbon. Crucially, even at current levels,
the price of carbon is too low to drive investment in clean technologies.
The EU Commission for example acknowledges that allowing forest
credits to be tradeable within the ETS could depress the carbon
price and argues against such a measure being taken in the short
term.4 One recent study quoted by the Commission shows that including
forest credits in the ETS could depress the carbon price by 50%.5
20. Even assuming that the market mechanism
will eventually mature to deliver adequate funds, it will take
far too long for the money to become available from carbon markets.
The Eliasch Report strongly argues that even if markets do eventually
function to provide finance to tackle deforestation, with the
comparatively modest target of just halving the rate of deforestation
by 2020, there will still be what he terms a "funding gap"
of around $11-19 billion per year.6 The significance of this finding
cannot be understated: it is Eliasch's clear conclusion that in
the vital next decade markets simply cannot deliver the level
of finance necessary to slow and halt deforestation.
21. Finally, there are very serious conceptual
and practical difficulties with introducing carbon credits for
forests in nations with significant capacity problems. Markets
are constituted by states. As the current global financial crisis
makes abundantly clear, in order to function effectively, markets
require effective structuring and regulation. Accordingly, an
over-reliance on markets mechanisms could lead to nations which
are not market-ready being effectively precluded from full participation
in REDD.
REFERENCES1 While
emissions in some developing countries have been growing rapidly
in recent years, per capita emissions of industrialised countries
are still much higher than those of developing countries, definitely
if one takes into account the historical emissions of greenhouse
gases.
2 Clean Development Mechanism, CDM, enables industrialised
countries to avoid emission reductions at home by financing emission
reduction projects in developing countries. Other existing market
mechanisms under the UNFCCC are Joint Implementation (JI), where
an Annex I country can acquire credits by implementing/funding
emission reductions in other Annex I countries (economies in transition)
and International Emission Trading (IET), through which Annex
I countries likely to exceed their quotas could buy AAUs from
countries who are overachieving their quotas (practically countries
in transition). JI and IET have not, and are not likely to play
a big role in the first commitment period, and are likely to have
an even smaller role in the second commitment period.
3 Schneider L 2007: Is the CDM fulfilling its
environmental and sustainable development objectives? An evaluation
of the CDM and options for improvement. Öko-Institut/WWF
(www.oekoinstitut.de/oekodoc/622/2007-162-en.pdf); and: Wara M.
2006: Measuring the Clean Development Mechanism's performance
and potential. Stanford University. Program on Energy and Sustainable
Development.
(http://iis-db.stanford.edu/pubs/21211/Wara—CDM.pdf)
4 "If forestry credits were to be allowed
unrestricted into the EU ETS, and if the only demand came from
the EU (ie unilateral case of reducing EU emissions by 20% in
2020 compared to 1990) together with the anticipated inflow of
credits from other CDM/JI4 projects, the magnitude of the supply
of emission reduction credits could cause a significant drop in
the carbon price": Communication From The Commission To The
European Parliament, The Council, The European Economic And Social
Committee And The Committee Of The Regions: Addressing the challenges
of deforestation and forest degradation to tackle climate change
and biodiversity loss. IMPACT ASSESSMENT 2008—p 43
http://ec.europa.eu/environment/forests/pdf/sec—2008—2619.pdf
5 Reducing deforestation and trading emissions
: "Economic implications for the post-Kyoto Carbon Market",
N Anger and J Sathaye, (2008) p 23
ftp://ftp.zew.de/pub/zew-docs/dp/dp08016.pdf
6 http://www.occ.gov.uk/activities/eliasch/Full—report—eliasch—review(1).pdf,
p.xix.
March 2009
42 Not printed. Back
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