BusinessCaseforREDDweb | Reducing Emissions From Deforestation And Forest Degradation | Deforestation

The Business Case for REDD

December 2010

UN-REDD Programme. but these services have been taken for granted without a mechanism to make the market reflect their value1.6 Gt of atmospheric carbon every year. funded by donors such as Norway. not only emits carbon – a staggering 1. the effects of deforestation extend beyond carbon. and the sale of verified REDD+ credits. The UN-REDD programme. The UN created a collaborative initiative in 2008 to help developing countries create national REDD+ regimes. Tanzania. therefore. clear-cutting vast areas for fuel. has three phases: the development of a national strategy for REDD+. REDD and REDD+ Reduced Emissions from Deforestation and Degradation (REDD) is an emerging system for bringing rainforest conservation within the carbon market. deforestation in one area can seriously damage food production and access to clean water for an entire region. forests and other terrestrial carbon sinks play a vital role in preventing runaway climate change. or agricultural land. In addition. Rainforests are also a home and source of income for a huge number of people in Africa. companies can offset their carbon emissions by buying credits from programmes that work with local communities to protect sections of rainforest. soaking up a full 2. Most of the national programmes in these countries have now reached the second phase – implantation using UN-REDD funds. Rainforests provide a wide variety of ecosystems services. “The Value of the World’s Ecosystem Services and Natural Capital.aspx. Indonesia. the implementation of that strategy using UN-REDD funds. Papua New Guinea. Zambia. REDD+. from regulating rainfall to purifying groundwater and keeping fertile soil from eroding. Denmark. sustainable forest management. Bolivia. 1997.” Nature Vol. mining.org/AboutUNREDDProgramme/FAQs/tabid/586/Default. broadens the scope of REDD by incorporating conservation. Costanza et al. Despite this. which severely impairs forests’ capacity to absorb emissions from other sources – but also drastically reduces the amount of forested land available to act as a carbon sink in the future. the system currently under discussion through global climate negotiations. timber. The countries piloting the UN-REDD programme are the Democratic Republic of Congo. economic pressures frequently drive both local communities and national governments in the developing world to exploit these forests in ways that are unsustainable. and Paraguay. forests are being destroyed at a rate of about thirteen million hectares a year and deforestation accounts for an estimated 17 – 20% of all global emissions. “FAQs”.un-redd. Panama. Available online at: http://www. The destruction of forests. and Spain. and the enhancement of forest carbon stock. 2 .2 1 R. 387. last accessed 5 December 2010. Vietnam. The value of global ecosystem services has been estimated at 33 trillion USD each year (almost half of global GDP). However. Asia.What is REDD? Deforestation and Degradation Around the world. and South America.6 Gt a year. Under this system.

and it is expected that REDD credits used to meet the requirements of cap-and-trade schemes will match or beat the price of the credits currently sold in the compliance market. but the cultivation of biofuel crops would remain at a manageable level. Reducing the cost of mitigating climate change REDD projects are able to deliver a substantial. REDD offers particular benefits to business that make investment particularly attractive. For some companies. and South America. and in many cases already are. the destruction of forests poses a serious risk to the supply of materials from rainforest countries. or jatropha. given the relatively low cost of protecting forests. action and results will not solely be delivered through global negotiations and national legislation. with its focus on sustainable forest management and on enhancing forest carbon stock for the future. Dr. Stabilizing the Agricultural Frontier: Leveraging REDD with Biofuels for Sustainable Development (presentation). Companies can invest in REDD projects to help sustain the economic and political stability of the countries where they source materials. Prices will depend heavily on local conditions. et al.starbucks. This is especially true of REDD+. Tim. even for companies that don’t directly use rainforest products. Environmental degradation devastates local economies and frequently triggers violent conflict. 3 Killeen.org/workshops/helsink09/Killeen. restricted enough to prevent the clear-cutting of rainforest for biofuel production and to preserve the forest’s biodiversity.How Businesses Can Benefit from REDD As with all climate change activities. “Tackling Climate Change.” Available online at: http://www.com/responsibility/environment/climate-change. REDD credits developed for the voluntary market have so far proven to cost less than carbon credits from technology projects. These benefits can be specifically targeted towards areas where the company works or sources its materials. and to the companies’ ability to work and sell their products in those countries. preventing damaging disruptions. 2009. Senior Research Fellow at Conservation International. using native species such as oil palm. Businesses.pdf 4 Starbucks Coffee. Tim Killeen. Biofuels for the future Biofuels grown sustainably. suggests that as much as one-fifth of a protected area of rainforest could be devoted to the sustainable production of biofuels. reliable supply of credits for a relatively low price. Starbucks invests in rainforest conservation largely to ensure that these regions can continue to produce coffee sustainably in the future.3 This would give local communities an additional source of income. eucalyptus. the connection between preserving rainforests and protecting supply chains is obvious: for example. Helsinki: Conservation International. Armed conflict has the potential to cripple a company’s supply chain. Supply chain security One crucial business benefit of REDD is that it goes above and beyond reducing carbon emissions in preserving ecosystems and creating economically and environmentally sustainable livelihoods for local rainforest communities in areas such as Indonesia. as competition for dwindling natural resources increases. southern Africa. last accessed 5 December 2010. must. .ieabioenergy-task38. in combination with a forest management programme. can provide a constant source of low-carbon fuel without attracting the criticisms that have been levelled at biofuels that compete with forests or food crops. leading the way in development and investments that will make a significant difference.4 However. Available online at: http://www.

org/sites/celb/fmg/articles/Pages/110309_disney_redd. “Disney’s Commitment to REDD”.Engaging with stakeholders Rainforests are a potent symbol of the environment and the battle against climate change as a whole. the first verified REDD project in Brazil. and Biodiversity Alliance will independently verify the projects’ activities.” Available online at: http://www. as they generate a range of social and economic benefits for communities in the developing world. 3 November 2009. while more complicated environmental initiatives can be harder to communicate. 6 . these three projects will prevent 900. are among the earliest investors in REDD and forestry projects.6 5 Marriott Hotel Group. including reducing the company’s impact on ecosystems and water.marriott. The Walt Disney Corporation is currently funding several REDD demonstration projects. The Walt Disney Corporation’s recent investment of 4 million USD in REDD demonstration projects follows this model. and to work alongside project developers and local communities to guide the projects. last accessed at http://www. Disney is providing the funding to develop three projects – the Tayna and Kisimba-Ikobo Community Reserves in the Democratic Republic of Congo and the Alto Mayo conservation area in Peru – to the point where they can generate voluntary carbon credits. Conservation International. The first option is to invest in REDD projects in the early stages. The Voluntary Carbon Standard and the Climate. It is expected that between them. The Marriott Hotel Group has received an overwhelming public response to its own initiative.5 Getting Involved in REDD There are three paths open for companies interested in taking the lead and becoming involved in REDD.conservation. with the aim that these projects will generate credits for sale to the voluntary carbon market in the future. These benefits can be particularly important ways for industries publicly criticised for their impact on the environment to demonstrate their commitment to protecting ecosystems and the people who rely on them. which allows guests to offset their stay in a Marriott hotel by adding their own contributions (at a rate of 1 USD per night) to Marriott’s 2 million USD investment in the Juma Sustainable Development Reserve Project. Unsurprisingly. last accessed 5 December 2010. REDD+ projects have a compelling human element. Wolfson.aspx on 4 December 2010. Andrea. and Sky Broadcasting uses its support for rainforest conservation in South America to engage with its viewers and other stakeholders by creating programming about the rainforests and offering viewers the chance to contribute to the conservation work. and the idea of rainforest conservation immediately resonates with customers and with the public. media groups and customer service companies. “The Centrepiece of Marriott’s Five-Point Environmental Strategy. these projects also represent significant progress towards Disney’s other environmental goals. While its investment will eventually help Disney source the high-quality carbon credits it needs to meet its target of becoming carbon neutral. In addition to reducing carbon emissions and safeguarding vital ecosystem services.com/marriott. Community. whose expertise lies in communicating with the public.mi?pag e=green_protecting.000 tons of carbon emissions over the next five years.

These strategies are supposed to address the specific drivers of deforestation in each country. According to the Cancún Agreement. Crucially. last accessed 21 January 2011.pdf. but also includes broad provisions for international oversight. companies can choose to work with long-term investors to fund the development of REDD projects.The second option for businesses looking to invest in REDD is to finance a REDD project. and there is speculation that if the EU moves to a higher carbon reduction target for 2020. and it is expected that any national scheme will eventually follow suit. and gender issues (a critical part of managing forests: in most cultures. The Cancún Agreement gives national governments in the developing world a fair amount of control over the implementation of REDD+. and explicitly tied REDD+ to the overall goal of keeping global warming below 2°C. REDD credits may be admitted into the EU-ETS as well. This is particularly relevant to companies working in areas where current or emerging cap-and-trade schemes are likely to allow the use of REDD credits at some point soon. with the option to buy carbon credits in the future to meet compliance requirements. such as collecting wood for fuel. to ensure that REDD+ programmes are effective and fair. but are far less likely to own the land they work). women are much more likely than men to be involved in certain aspects of forestry.int/files/meetings/cop_16/application/pdf/cop16_lca. to communicate their environmental commitment to their stakeholders. as well as reduce emissions). and on how governments will be held accountable for putting them in place. with the understanding that the details of these arrangements will be revisited at the Durban COP in 2011. In the US. unprotected part of the country’s forests). The Cancún Agreement sends a strong signal to prospective investors and project developers that REDD+ will be central to international efforts to combat climate change. land rights.7 The Agreement also asks the governments of developing countries to set up “robust and transparent” monitoring systems. those with a stake in the REDD+ process – including local communities and indigenous peoples – should be allowed to participate fully and effectively in developing their country’s strategy. REDD Today After Cancún At the UN Framework Convention on Climate Change’s 2010 Conference of the Parties (COP) in Cancún. which will help show governments the value of allowing REDD credits to be used in compliance schemes. The next stage of REDD+ is taking definite shape.” Available online at: http://unfccc. to address a number of environmental impacts of their business. “Outcome of the Work of the Ad Hoc Working Group on Long-Term Cooperative Action Under the Convention. forest governance. These safeguards include protections for biodiversity. the compliance market is expected to supply the bulk of the demand for REDD credits. as well as measures to ensure that REDD+ programmes help countries develop sustainably and adapt to the effects of climate change. This path allows companies to help shape the future of the REDD market. Finally. Australia’s proposed carbon reduction scheme would allow for the use of REDD+ credits. Ibid. the next round of climate negotiations will need to agree on the details of these safeguards. A number of emerging national cap-and-trade schemes in Asia may allow REDD credits. which should also provide information to the international community on how the national governments are dealing with key safeguards. and the rights of indigenous peoples. ecosystems services. from the degradation of ecosystems to water use. 8 . Ultimately. the safeguards also include ensuring that REDD+ programmes protect against reversal and leakage (displacing deforestation to another. the assembled governments confirmed their commitment to REDD+ (specifically citing the need to enhance and sustainably manage forest carbon stocks. Developing countries are to create their own national strategies for carrying out REDD+ activities. and Japan has announced that it will incorporate REDD+ into its strategy to meet its carbon reduction targets for 2020. 7 United Nations Framework Convention on Climate Change.8 However. California’s state-wide cap-and-trade scheme includes REDD credits. and to demonstrate compellingly that there is a business case for investing in REDD.

“REDD+ could mark a decisive new chapter in humanity’s sustainable management of its nature-based resources. He added. UN representatives are enthusiastic about the results of the Cancún negotiations on REDD+. (Between them. Plan Vivo. “From Copenhagen to Cancún: Forests and REDD. and the American Carbon Registry have all developed standards and methodologies for REDD and avoided deforestation projects. Community. the UNFCCC will spend 2011 researching these options further. As expected.org/NewsCentre/COP16_Press_Release_en/tabid/6595/Default. Florence.” Helen Clark.” UN-REDD Programme. in the absence of a decision on global finance for REDD+.aspx. the critical question of funding for REDD+ remains open. called the new provisions on REDD+ “an important building block towards a successful.org/stories/2010/05/copenhagen-cancun-forests-and-redd. but the VCS standard has been proposed for use in emerging cap-and-trade schemes. 9 10 Ibid. . 11 . Available online at: http://www. Indigenous Peoples. such as whether offsets should be calculated at the national or local level (the Agreement asks developing countries to establish a national baseline to measure deforestation against.un-redd. although it allows local baselines as an interim measure). Current donations amount almost five billion USD.The negotiations made some progress on the technical issues surrounding REDD+.10 The Cancún negotiations did not decide whether there should be a dedicated fund to finance REDD+ projects. 11 December 2010.9 However. Meanwhile. Administrator of the UN Development Programme. last accessed 5 December 2010. CAR and VCS account for a full two-thirds of the voluntary market. Executive Director of the UN Environment Programme. 17 May 2010. while the Climate.wri. Available online at http://www. and local communities in the success of REDD+. as well as the centrality of of good governance and the role of women. said that the Cancún Agreement “recognizes the critical role of forests in the global effort to tackle climate change. last accessed 21 January 2011. only CAR’s standard is currently accepted by an existing compliance scheme. the Voluntary Carbon Standard (VCS). the UN-REDD Programme continues to rely on donations from individual governments in the developed world.) Two standards also exist for measuring the co-benefits of REDD projects: the Social Carbon standard assesses projects against a set of sustainable development indicators. many methodological issues have been deferred until the Durban COP. while opening up Green Economy opportunities. “UN-REDD Programme Applauds the COP16 Agreement on REDD Reached in Cancún. and Biodiversity Alliance verifies the community and biodiversity benefits of the project. Achim Steiner. comprehensive global climate agreement in South Africa in 2011”. The UN-REDD Programme expects that the progress made on REDD+ at Cancún will encourage further government investment. having committed 31 million USD the programme in 2010 alone. the Norwegian government still leads the way.” World Resources Institute.”11 Methodologies The Climate Action Reserve (CAR). and is the most well-developed and viable standard in the voluntary carbon market. or whether the funding should come from the carbon market. Of these. Daviet.

Available online at: http://unfccc. Businesses looking to optimise their compliance activities. We work with more than 500 businesses in 32 countries to develop offset inclusive carbon reduction programmes which enable companies to increase revenue. REDD and REDD+ offer a compelling combination of carbon. . and strengthening environmental monitoring and control. Brazil – an area that is coming under severe pressure to cut down its rainforests. in the case of the Juma project. reputation or supply chain protection. CarbonNeutral® is the registered trademark of The CarbonNeutral Company and is a global standard to certify that businesses have measured and reduced their CO2 emissions to net zero for their company. proactively build reputation. products. “The Costs of REDD: Lessons from Amazonas. The reserve covers almost 600. develop investments for the future. and the first in the world to earn the highest possible score in the CCBA’s Gold category. which provides leadership and a unified voice in advocating for rigorous offset industry standards. et al. and Biodiversity Alliance.pdf.” International Institute for Environment and Development. last accessed 6 December 2010. community development. About The CarbonNeutral Company The CarbonNeutral Company is a world-leading provider of carbon reduction solutions. please email us or call: EU +44 (0) 207 833 6000. and has helped refine existing methodologies for monitoring and community involvement.000 hectares of rainforest in the state of Amazonas. community and biodiversity benefits. 12 Viana.int/files/methods_science/redd/application/pdf/costs_of_redd_lesson_from_amazonas. manage costs and engage stakeholders. 2009.6 million tonnes of greenhouse gas emissions by 2016. pre-compliance. Since 1997. We have offices in London. signifying exceptional environmental and social benefits. and education. The Juma Sustainable Development Reserve is the first REDD project in Brazil to be validated by the Climate. Virgilio M. we have purchased carbon credits from more than 200 projects in 24 countries. The project is expected to avert roughly 3. these benefits include promoting sustainable local businesses. US +1-646-367-5800 or Singapore +65 688 44465. the Juma project was among the first to demonstrate that REDD credits can compete with other carbon credits on price. Community. operations or services in accordance with The CarbonNeutral Protocol. To find out more about how an offset inclusive carbon management programme can benefit your business.12 Conclusions Whether it’s compliance. or ensure supply chain security do not need to wait for an air-tight global structure to take advantage of these opportunities now. Most significantly.Sample project: REDD in the Amazon One of the most compelling – and useful – examples of current REDD projects is the project in which the Marriott Hotel Group has chosen to invest: the Juma Sustainable Development Reserve. New York and Singapore and are a founding member of The International Carbon Reduction and Offset Alliance (ICROA).

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