Europe's carbon trading scheme may be used to generate funds to fight deforestation, reports Reuters.
Speaking at a news conference on Friday, EU Environment Commissioner Stavros Dimas said he hoped the EU's emissions trading scheme could reduce gross tropical deforestation by half by 2020 and eliminate net forest loss by 2030.
"We are not going to have effective tackling of global warming if we do not take care of this type of activity," he was quoted assaying by Reuters. "Without stopping deforestation, the biodiversity loss will continue... in 10 square kilometers' of tropical rainforest, there are more species than in the entire EU."
Deforestation and change in land use accounts for about a fifth of total anthropogenic greenhouse gas emissions, or more than the emissions from all the world's cars, trucks, airplanes, and ships combined. As such, emissions from deforestation and land use change have become a central issue in international climate negotiations. A coalition of rainforest nations, a well as a broad spectrum of environmental groups and development agencies, is now pushing for inclusion of forest carbon in mitigating climate change. The World Bank is even providing funding for start-up projects in 14 tropical counties.
Europe has excluded emissions from forestry in its emissions trading scheme (ETS), fearing that such credits would flood the market and undermine carbon prices, thereby reducing the incentive to cut industrial emissions but the comments by Dimas suggest that the EU is reconsidering its position, at least in terms of "testing" the inclusion of deforestation in carbon markets. He told the press that the European Commission wants to establish a Global Forest Carbon Mechanism (GFCM) that would compensate tropical countries for reducing their emissions from deforestation. Under the proposed plan, while forest carbon credits wouldn't become part of the trading system until 2020, a portion of the proceeds from the auctioning of carbon emissions permits would go towards compensation for forest conservation. The EU proposal estimates that a 5 percent share of auction revenue could generate
$2.5 billion per year in 2020.
Presently "avoided deforestation" carbon credits are limited to voluntary markets where they fetch 10-15 percent of the ETS trading price. Nevertheless dozens of avoided deforestation projects have been established around the world in recent months in anticipation of a compliance market that recognizes forest carbon offsets.
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