Private Sector Finance Eyed For U.N. Forest Projects
Country: SOUTH AFRICA
Author: Agnieszka Flak
Private investors may be allowed to earn carbon credits by paying poor countries to halt the destruction of tropical forests, but a U.N. climate summit failed to agree the details needed to get the ambitious program off the ground.
The felling of trees that capture the heat-trapping gases responsible for global warming accounts for about 20 percent of the planet's greenhouse gas emissions, and studies show an acre (0.4 hectare) of forest is lost every second around the globe.
Rich nations believe paying developing countries to stop the destruction of rainforests is an effective way to fight climate change, yet the Reduced Emissions from Deforestation and Degradation (REDD) has advanced little since it was first discussed in 2007.
Rich states such as Norway, the United States and Australia have pledged nearly $4 billion to help spur pilot projects in Indonesia, Brazil, the Democratic Republic of Congo and others to strengthen the way their forests are managed.
The decision adopted in Durban after day of wrangling said private and public finance, as well as market mechanisms, would be considered for REDD schemes, opening the door to billions of dollars of private sector investments.
"For the private sector interested in long-term reputable investments associated with REDD+ actions, this is a very positive decision," said Andrew Hedges, a partner at the law firm Norton Rose LLP. "It also recognizes that market-based approaches may be developed in coming years."
The text was light on detail and further talks will take place next year to agree on the specific rules that will govern such schemes. Most of the difficult decisions were put off until next year's climate summit and few observers expect to see a REDD market emerge this side of 2020.
Non-governmental groups, however, criticized weak rules on protecting local communities, indigenous peoples and biodiversity from unscrupulous investors seeking to profit from the U.N.-backed scheme.
"Rather than providing guidance on how to best meet the Cancun objective to 'slow, halt and reverse' deforestation in a socially responsible way, the decisions adopted in Durban increased the environmental and social risks associated with REDD," said Roman Czebiniak at Greenpeace.
The limited progress on REDD came as delegates from nearly 200 nations agreed a modest deal on steps to curb soaring carbon pollution.
"The provisions for safeguards in forest conservation are being shredded," said Raja Jarrah, a CARE senior adviser on REDD. "This is bad news for millions of indigenous people and local communities whose livelihoods depend on forests."
Analysts said the weak rules were likely adopted because of pressure from developing countries eager to secure funding but tired of battling with complex and costly donor procedures.
Nils Hermann Ranum, head of policy and campaign division at Rainforest Foundation Norway, said the lack of robust rules may scare off investors who want to ensure projects they invest in do not compromise the rights of communities and are properly monitored.
"There is a clear risk that REDD without a credible system for safeguards will not get sufficient funding, neither from public sources nor from private investors," he said.
Helen Gichohi, president of the African Wildlife Foundation, said this week sub-Saharan Africa had lost nine percent of its forests between 1995 and 2005 at an average loss of 40,000 square kilometers of forest per year.
"Deforestation rates in Africa are already estimated to be four times the world average and are accelerating," she said.
(Editing by Jon Boyle)