Rainforests Nations Want To Be Rewarded For Saving Their Trees — Now

The Honduran government is emphasizing clean energy and the environment when addressing poverty in the country. It is thus moving to protect its ecosystem and rainforest — a proposition that necessitates an $8 million increase in its environmental budget. Indeed, it covets its rainforest, which covers 56% of the country and houses 91 national parks and protected areas.

But like a lot of emerging countries, it needs jobs and food. And therein is the paradox that Honduras and other rainforest nations in Asia and Africa face: the forests are the most effective way to suck heat-trapping emissions out of the air. But the same trees could also be harvested for wood, or the land could be farmed. Developing nations are pushing those countries to keep their trees. But they have value, the opportunity cost of what they would otherwise create.

The United Nations Framework Convention on Climate Change in Bonn, Germany spotlighted the topic last week. In a nutshell, the UN needs to adopt a financial mechanism to compensate those countries for keeping their trees — to make them worth more alive than dead. To do that, the 2015 Paris climate agreement approved ’Reducing Emissions from Deforestation and Forest Degradation,’ or REDD+. It rewards a country for saving its forests and is a nature-based solution.

“Seventy percent of our population is in poverty,” says Malcom B. Stufkens, deputy minister for energy, environment, and mines for Honduras, in a conversation with this reporter in Bonn. “People need to live. They need money and food. We need to come out with mechanisms. Otherwise, they sell their land or forest. “We must pay them not to cut. The people will have money in their pockets and have other livelihoods. It will prevent migration. The need is urgent.”

The rainforest nations have undergone a rigorous process of certifying their forests. The UN reviews their data — before and after a detailed plan has been activated. If the numbers are legitimate and the strategy is approved, credits can be issued. They can then be purchased by corporations or governments. But only governments need to comply with the Paris agreement. Almost all of the money is then distributed.

But those “sovereign credits” issued by rainforest nations compete with “voluntary credits” that do not undergo the same level of scrutiny. In other words, it’s hard to determine what gets preserved and where the money goes. Honduras has a moratorium on voluntary credits. It endorses REDD+.

An Open Ear

But at last November’s COP meeting in Glasgow, the Americans and Brits chose to open the door for voluntary credits to be part of the Paris agreement. REDD+ got sidelined, however, companies can still purchase sovereign credits. The problem is that the credits have been devalued.

“We are here to listen,” says Ambassador Wael Abo Elmagd, special representative of COP 27’s president-designate in Bonn, where this reporter asked questions. “Help us listen to you. Now is the time for implementation. We are signaling to everyone that you matter. We are about making progress across the board in a balanced manner.”

Papua New Guinea has also placed a moratorium on voluntary credits. It is one of the largest rainforest regions in the world — behind Brazil and the Congo. Seventy-to-eighty percent of its forest is untouched.

Unlike Brazil, China, and India, the country does not have major industries that can provide revenue. It relies on its rainforest, which can be harvested for timber or farmed. But it can also be saved. For that to happen, a value has to be placed on the trees — worth as much as the alternatives.

The voluntary system shortchanges rainforest nations. The corporations may buy the credits, but the accounting is often murky. Voluntary markets also sell on the promise of limiting — future — deforestation. REDD+ credits are issued on prior achievements. Many companies buy credits to save rainforests or to plant trees. But they may not understand the nuances between the competing credits. AmazonAMZN
, Delta Airlines, Google, MicrosoftMSFT
, and Royal Dutch Shell are buyers.

“When are we going to benefit?” asks Eunice Dus, senior REDD+ policy analyst for Papua New Guinea, in an interview with this writer. “But in the voluntary world, there is no oversight — just reports from landowners. Government is not even in the picture. So our government has empowered the ministry of environment. We want to save the rainforest. It gives us the power to enforce the provisions in this process. We cannot allow credits that are outside of this process. We are in the Paris agreement.”

The Inequities

Every country’s REDD+ credits have been available for sale to countries — not corporations — since 2005. The challenge now is to get developed nations and corporations to buy them at scale. Germany, Norway, and the United Kingdom are the most active countries in the market. S&P Global’s IHS MarkitINFO
created a trading platform where this happens.

Gabon in Central Africa is one of the best examples of a country preserving its rainforest: About 88% of it is still intact, and it only loses 0.05% a year. It says that its forest absorbs 1 billion tons a year of CO2. Its government manages the process, and Norway buys credits from it.

To be fair, Gabon is a leading oil-producing nation in Africa. That industry provides jobs and prosperity. But Tanguy Gahouma, special advisor for the Gabonese government in charge of climate change, says that production is dwindling. Therefore, the country’s forests must become an economic engine — one that can provide career opportunities for its overwhelmingly young population.

The Central American country of Belize epitomizes the inequity of the current system — the one that shuns “sovereign national credits” and permits “voluntary credits” that apply to specific regions or projects. For example, voluntary credits have been issued to protect Belize’s national parks and jaguars. However, the projects receive little of that money — revenues that would protect the forests and hire workers. Such deals are privately negotiated, and the government has no control over them.

“Belize, which is like most other countries, tries to be Paris agreement compliant,” says Lennox Gladden, chief climate change officer, for Belize, in a talk with this writer. “We implore corporate buyers to purchase sovereign credits instead of acquiring credits on the voluntary carbon market.”

Creating Wealth

The goal of the Paris climate agreement is climate neutrality by 2050 — to ensure that emissions and removals offset each other. The roughly 50 gigatonnes of annual CO2 emissions are now partially offset. But rainforest nations have offset 9 gigatonnes of CO2 between 2005 and today. These emissions reductions are becoming available to countries, corporations, and consumers as credits.

Rainforest nations need an estimated $100 billion to ensure the survival of their lands. The carbon markets will raise some of that money. But the trading system must be accredited and go through the UN approval process. Right now, the auditor Ernst & Young is working to make REDD+ more robust, reliable, and predictable. It is also trying to make accurate revenue forecasts and income distribution more transparent.

If negotiators strengthen sovereign credits at the climate conference in Egypt in November, that will create much-needed revenue for rainforest nations. Emilio Sempris, Panama’s former energy minister from 2015 to 2017, explained that his country would earn $6 billion by 2034 — money that would restore land lost to ranching. “We expect thousands of jobs in rural areas due to the incentive law.”

“It’s all about implementation and action,” adds Federica Bietta, managing director of the Coalition for Rainforest Nations, which devised REDD+. “We only have a limited time to act. Forests are part of that equation. Without the forests, we cannot limit temperature increases and achieve the 1.5 degrees Celsius goal.”

The time for talk has come to an end. It’s time to activate REDD+ at this year’s meeting. It will save trees, mitigate CO2 pollution, and reward rainforest nations, providing wealth that will generate economic expansion. Indeed, rainforests are a cost-effective solution to climate change and should be revered as much as renewables.