If the global community is to solve the challenge of climate change, we are going to need to make the most of every opportunity available to us. Among these opportunities, Australia believes that forests rank as an important and unique way to tackle the challenge.
Unfortunately, global forest cover is declining. This means the world’s forests are a large source of greenhouse gas emissions when they could be actively absorbing and storing emissions.
Addressing this issue is commonly known as reducing emissions from deforestation and forest degradation in developing countries, or REDD.
REDD is critically important. Deforestation of approximately 13 million hectares per year—around one-quarter the size of France—accounts for approximately 18 per cent of global greenhouse gas emissions, the bulk of which come from developing countries. This is more than the world’s transport emissions put together.
Developed countries like Australia have a crucial role to play in helping developing countries to reduce their forest carbon emissions. However, this is not simply a matter of helping them to stop cutting down trees. The challenge is ensuring that developing countries can meet a number of requirements essential to the effectiveness of any post 2012 climate change outcome, such as being able to demonstrate the extent to which forest carbon emissions reductions have actually been achieved.
While public funding is vital to build this capacity, it is simply not feasible to expect that such funding alone can meet the financial scale of the challenge at hand. Estimates suggest that to halve deforestation, an investment in the order of US$5–15 billion per year is necessary. Australia believes that, ultimately, markets are the only mechanism capable of providing the financial incentives necessary to reduce forest carbon emissions at scale.
Forests have a pivotal role in the social, cultural and environmental livelihoods of many countries. Because of these linkages, it is essential that development of a REDD mechanism does not create new problems when trying to solve old ones. For example, Australia would not support a REDD mechanism which promoted the replacement of native forests with plantation forests. Native forests are important for biodiversity and local people who may depend on the forest for their food and shelter. Therefore, a REDD mechanism must have environmental and social integrity, and avoid these sorts of perverse outcomes.
Australia strongly believes that REDD should be designed to maximise the benefits that can flow to local, Indigenous and forest-dependent communities. To reach an equitable outcome, Australia believes these communities need to be involved in the development of REDD policies.
More information can be found in our submission on a forest carbon market mechanism made to the UNFCCC in March 2009.
Designing an effective forest carbon market mechanism
As markets are the only mechanism capable of providing the scale of financial incentives necessary to reduce forest carbon emissions, we must work hard to ensure that investors have confidence and certainty in practices and approaches to reduce emissions from deforestation and forest degradation in developing countries (known as REDD). At the same time, countries will still need to meet standards which ensure the social and environmental integrity of REDD.
Any successful market requires investor confidence and certainty. A country, for example, must be certain that when they buy one tonne of Australian goods,one tonne of Australian goods will be delivered. The same theory applies to forest carbon.
The greatest challenge in designing a workable forest carbon market mechanism rests on how to address the problems of permanence, additionality and leakage:
- permanence means forested areas that are preserved through REDD remain intact over time
- additionality means that carbon emissions reductions (or removals) would not have occurred without a carbon payment through a REDD mechanism
- leakage means reduced deforestation in one region does not result in increased deforestation in another (and therefore no net gain to the atmosphere).
These issues can be addressed by ensuring that forest carbon monitoring systems are in place at a national level and that the international and national rules and transactions are transparent and clear.
