26 November 2015
If negotiators at the Paris climate summit want to scale up investment in forestry, they could look to the West coast of the US for a positive example, says MaryKate Bullen
Forests have a significant role to play in addressing climate change. A global climate agreement in Paris can harness this role by encouraging emissions reductions from forests as well as increased carbon storage and sequestration.
While substantial funding and climate pledges over the past half-decade have helped address critical needs for Reducing Emissions from Deforestation and forest Degradation (REDD+) readiness in forest governance, private capital is required at scale in order to halt and reverse global forest loss.
As we head into COP21, negotiators can look to California's cap-and-trade programme as an example of how carbon markets can drive investment to support positive forest management.
Forests are the largest source of offsets to the California market, with more than 60% of the system's offsets originating from US forests.
Private capital is required at scale in order to halt and reverse global forest loss
California allows businesses to meet up to 8% of their compliance obligations with eligible offsets, such as those from forestry projects in reforestation, improved forest management, and avoided conversion of natural forests.
In less than three years, the California offset system has registered more than 3% of privately held timberland in the US. These projects include important ecosystems, such as Californian coastal redwoods and bottomland hardwoods in the US South.
This is a remarkable success in terms of not only climate abatement but also the positive social and environmental impacts that are supported by sustainable forest projects.
What's made the California forestry programme a success where the other regulatory systems, like the Kyoto Protocol, EU emissions trading system (ETS), New Zealand ETS, and various Australian efforts, have faltered?
Forests have been integral to the development of the California compliance programme since inception.
In less than three years, the California offset system has registered more than 3% of privately held timberland in the US
Politically and environmentally, there was consensus that land use and forest management is an important part of the climate solution. This supported a productive, open process of creating rigorous but practical rules that recognise good past management of forests and also clearly incentivise future carbon sequestration and storage over time.
California's approach uses a straightforward performance baseline that reflects real-world practice rather than relying on complex, project-specific baselines. The carbon accounting and verification methods are technically sound, providing assurance both to carbon offset buyers and to stakeholders.
Lastly, the forestry programme operates as a core part of the compliance-based California ETS, subject to consistent, known rules and part of a market with a stable, predictable price.
California is tracking well on its emission reduction goals, and investment into new carbon offset projects is growing. Since launching in 2012, New Forests' investment programme, Forest Carbon Partners, has generated more than 2 million tonnes of carbon offsets and is one of the leading suppliers to the market.
Institutional investment in timberland has reached $100 billion and will continue to rise
Forest Carbon Partners has also partnered with owners of more than 280,000 acres of private and family forests and Native American tribal lands, committing these forestlands to long-term sustainable stewardship and increased carbon storage.
New Forests now sees institutional investors becoming interested in scaling carbon opportunities within US forests. Globally, institutional investment in timberland has reached $100 billion and will continue to rise with new conservation finance opportunities like carbon and biodiversity offsets. This aligns with a wider investment trend towards responsible investment and a desire from investors to understand the environmental and social impacts of their investments.
Paris COP21 comes at an opportune time, where we have now seen functioning carbon markets drive responsible forest management and in which more investors are seeking to make environmentally-themed, sustainable investments.
Forestry investors are willing to invest when the rules are clear and the private sector is incentivised to reduce emissions
Forestry investors are ready to support emissions reductions in REDD+ countries as well as in the forest sectors of developed countries. Experience shows us that forestry investors are willing to invest when the rules are clear and the private sector is incentivised to reduce emissions.
Earlier this year, the Bonn negotiations provided a rule book that can support private sector involvement in REDD+. With rules in place and institutional investment supportive of responsible forestry investment, the Paris agreement has the potential to build exponentially on the early successes of California's forestry programme, and set a path for forest carbon investment on a global scale.
MaryKate Bullen is a Singapore-based associate director for sustainability and communications at New Forests Pty Ltd.