Forests and climate change: How relevant are REDD+ projects?
"Our house is burning, and we are looking elsewhere" is the famous quote by Jacques Chirac in 2002 during the Earth Summit and recently taken up by the emblematic Greta Thunberg. If it aims to raise awareness of the challenges imposed by global warming, it can easily be transposed to the worrying situation of forests worldwide. Siberia, the Amazon, Australia, the United States, Indonesia, Angola, and Zambia are all geographical areas that have appeared in the headlines of the world's newspapers for their large and uncontrollable forest fires. Shocking public opinion on many occasions, these natural disasters have only increased the importance of forests, which have gradually become the symbol of the fight against climate change.
The Kyoto Protocol signed in 1997 had a clear objective: to bring to climate change, a global problem, a global response by reducing greenhouse gas emissions (184 countries ratified the protocol) within this convention. This international environmental negotiation defines the first approaches that would be the subject of more specific development at the next "Conference of the Parties" (COP). One of the developments that we highlight here is the REDD+ (Reducing Emissions from Deforestation and Forest Degradation) program of the 2008 world summit.
Let us take the definition published by the United Nations (UN): "Reducing emissions from deforestation and forest degradation (REDD+) is a mechanism developed by Parties to the United Nations Framework Convention on Climate Change (UNFCCC). It creates a financial value for the carbon stored in forests by offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development. Developing countries would receive results-based payments for results-based actions. REDD+ goes beyond simply deforestation and forest degradation and includes the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks" (UN-REDD, 2020).
Our analysis aims to understand the interest represented by these REDD+ projects in the fight against global warming, state their limits, and see what elements of response could be provided by ClimateSeed.
1. Protect the carbon sinks: the emergence of REDD+ projects
Beyond being a symbol, forests are first and foremost carbon sinks, as they allow massive sequestration of greenhouse gases. "Global forests play a major role in regulating the carbon cycle and atmospheric CO2 concentration. They contain 53% of the carbon accumulated in terrestrial ecosystems" (Boulier, Laurent, 2010). Their disappearance is detrimental. These carbon sinks will see their carbon-sequestration potential decrease, further aggravating pre-existing global warming, in addition to accentuating the destruction of ecosystems and the decline of biodiversity. In other words, the fight against global warming can only be achieved by protecting forests.
This pragmatic approach makes it possible to understand the context in which REDD+ projects began to emerge. REDD+ projects are historically located in "Southern countries". Today, there are more than 450 of them (Wunder, 2018). If we add the Kyoto Protocol's conclusions, the Northern economies would have to help the countries of the South achieve a more low-carbon economic development. The underlying idea is linked to the historical role that Northern countries have played in anthropogenic emissions since the industrial revolution, and the fact that they are mainly responsible for the current situation.
Nevertheless, the development of the Southern economies would increase the rate of carbon present in the atmosphere tenfold and significantly affect the global community. Once they made this statement, the common objective was clear: limit the carbon present in the atmosphere by taking advantage of developed economies to help the less advanced nations. Therefore, the voluntary carbon market and the creation of REDD+ projects appeared as a solution to provide financing to Southern countries to preserve carbon sinks that could be threatened by these countries' significant economic development. Figure 1 allows to highlight the importance of providing financing to Southern countries, but also to the BRICS (Brazil, Russia, India, China, and South Africa) where the carbon cost of their economies is very high. "If these figures are spectacular, they are in line with the real carbon emissions of national industrial networks: an average level of carbon release per unit of wealth released says nothing about the total wealth of the country or its total carbon emissions. The global volumes of carbon released into the atmosphere can thus remain considerable despite relative control of industrial processes (especially in the United States and Canada)" (Boulier, Laurent, 2010).
While we have seen that these projects have emerged to meet the Kyoto Protocol's GHG reduction commitments by protecting the existing carbon sinks represented by forests, they also have a social and economic dimension. Indeed, they have multiple impacts on local communities that meet the United Nations' Sustainable Development Goals. Various standards will emerge to label and estimate the positive impact of these projects on local communities. "Recognizing the increased awareness at the global and national levels of the need for effective social and environmental safeguards (SES), the REDD+ SES initiative aims to define and support higher level social and environmental performance for REDD+ programs" (REDD+ SES, 2012).
2. Key Projects for voluntary carbon offsetting: a massive amount of credits for an affordable price
The environmental but also social and economic dimension of these projects attract many actors who wish to contribute to them. These REDD+ projects are large, often covering thousands of hectares and storing up to several million tons of CO2. This large quantity makes it possible to offer a lower unit price per ton of carbon. It is a simple calculation of economies of scale. Moreover, being located in Southern countries, the workforce, an essential cost in developing a project, is generally lower than in Northern countries.
Therefore, players in the voluntary carbon market are willing to find and contribute to these affordable projects. This contribution is generally linked to a carbon footprint (e.g. the annual organization footprint, a product, an event…). The quantities to be offset for some organizations can sometimes reach several million tons of CO2 for the largest companies. It is unlikely that such a company would be able to offset all of its emissions in Northern countries, firstly because the price would be very high (for instance, the average price of a project developed in France under the Low-Carbon Label ranges from 30 to 50 euros, which is between 6 and 10 times as much as the average price of a ton of carbon proposed by a REDD+ project). However, above all, because such an offer simply does not exist, there would not be sufficient credits available. It is crucial to keep in mind that carbon storage location does not matter in this reasoning of a fight against a global problem. The most important thing is to store and avoid the maximum quantity of greenhouse gas emissions.
It is in this sense that REDD+ projects are essential in the fight against global warming. They make it possible to avoid large amounts of carbon at a relatively low cost. This map (Figure 2) shows the considerable amount that can be stored and preserved by the carbon stocks present largely in the South, with very significant potential in Africa and South America. At ClimateSeed, we are well aware of the interest of organizations in contributing to these REDD+ projects that enable preserving ecosystems and endangered species, but also to participate in improving the economic and social conditions of local populations, and to allow the storage of a large amount of carbon at a low cost.
3. REDD+ projects limits : an estimation challenge
As we have seen above, these projects have many advantages. However, they do have certain limits.
The first problem lies in the complexity of the definition of a forest, and therefore the potential for storing carbon. "Several studies (Arnould, 2006; Boulier, Simon, 2009) have already highlighted the relativity of data concerning the world's forest area both in terms of the definition of the forest itself and in terms of assessment methods. Thus, the main inventories lead to divergent results both at the global level (4 billion hectares for Fao against 3.3 for the IPCC) and at the national level. Thus, for example, Australia's forest area varies from a simple - 163 million hectares for the Fao, 2005, 196 for the Global Land Cover Facilities classification - to double - 328 million hectares for the International Geosphere-Biosphere Programme, 2005" (Boulier, Simon, 2010). This highlights that the carbon quantities estimated for a given forest can vary considerably depending on the methodologies used. Consequently, the development of REDD+ projects will be affected by this complex definition implied by the definition of a forest.
No single methodology seems to be unanimously agreed upon or is authoritative, resulting in an analysis that can be truncated depending on the organizations' solicited. These estimates are nevertheless essential to keep as they assess the capture capacity of forest carbon sinks. While this discrepancy has been shown at the national level, it is just as explicit at the global level. "The orders of magnitude often cited in the literature indicate a carbon reservoir in forest ecosystems of between 950 Gigaton carbon (GtC) (Fao, Unasylva, 1996) and 1120/1240 GtC (IPCC, 2001)" (Boulier, Simon, 2010). However, both the IPCC and the FAO are transnational organizations that enjoy a strong legitimacy, but which, due to their differences in modeling and calculation, lead to relatively different results.
A second point concerns the transcription at the national level, which may have posed specific problems, " the strengthening of national governance structures as part of the REDD+ policy edifice and specific regulatory frameworks for development. "(BNC REDD+, 2020). Indeed, REDD+ projects have the property of being established according to reference scenarios. The difference between the reference scenario and the scenario with the existence of the project makes it possible to estimate the protection of carbon sinks and estimate the associated carbon quantities that can be sold on the voluntary carbon market. Estimates may have been imprecise either unintentionally or voluntarily. Different factors can affect the estimation of carbon quantities associated with a REDD+ project. REDD+ projects are often located in countries with weak political and public structures, which complicates the analysis of reference scenarios. To define a reference scenario, multiple questions can be asked: "What reference date should be adopted to measure deforestation reduction? Which parameters should be taken into consideration: deforestation alone or also forest degradation? In this case, how then to evaluate? On what economic basis should the price of avoided emissions be calculated?" (Tsayem Demaze, 2010).
Laura Brimont, a researcher at ISDIR (Institute for Sustainable Development and International Relations), titled her article "REDD+ project performance: predicting the worst and promising the best?". "The more pessimistic the baseline scenario, the more significant the project’s opportunities for deforestation reduction. There is therefore a strong temptation to overestimate a project’s ability to curb deforestation in order to increase the financial gain from the sale of more credits. In economics this type of perverse incentive is typically called a “moral hazard” (Brimont, 2016).
In response to this problem, international labels have been developed to analyze these projects, such as VCS or CCBA (Climate, Community, and Biodiversity Alliance). However, even so, loopholes have been detected (for example, a Madagascar project and a project in the Democratic Republic of Congo). The issue with the DRC project is linked to the application of a national rate as the reference scenario. In contrast, the project is located in an area with a much lower deforestation rate. The project increased the gap between the reference scenario and the project's scenario, resulting in the generation of more credits than it should. This example shows the importance of choosing the right reference scenario. We will see this later, but ClimateSeed has brought additional guarantees to these labels to ensure these projects' effectiveness.
Another aspect to be taken into account within REDD+ projects' limits is the conflict with local interests. "In Indonesia, mechanisms to reduce deforestation are hampered by various parameters that are difficult to control, such as the high level of income from illegal timber trade (the country is one of the hubs of this trade, particularly to China) and the profitability of oil palm crops, whose recent expansion has resulted in massive deforestation" (Boulier, Simon, 2010). The large forest areas make their control by the authorities conflicted by major economic interest for a country that is catching up economically. How can a REDD+ project be effectively remunerated to prevent such practices that bring in so much revenue to the planet's detriment? The same problem is present in Brazil, where the agro-food sector represents nearly 25% of the GDP (Abis, 2019). It is a real struggle that operates between the forestry sector and the agricultural sector. "The income per hectare of a soybean field in 2009 was 150 euros per hectare (after having experienced higher returns of around 400 to 500 euros per hectare in 2006)” (Boulier, Simon, 2010). With such revenues from farming, it is easy to understand the underlying conflict with the establishment of REDD+ projects and the temptation to replace forests with agricultural land. Setting a higher price for the carbon credits related to the REDD+ projects would be an incentive for the local community to keep the forest instead of replacing them by agricultural fields.
These factors together provide an understanding of the challenges REDD+ projects have to face, and the potential for accusations regarding their effectiveness in combating global warming.
4. The ClimateSeed’s approach: environmental expertise for a detailed analysis of projects
What is ClimateSeed's approach to REDD+ projects? ClimateSeed has chosen to integrate REDD+ projects in its catalog of projects available on its platform. As we have previously seen, REDD+ projects are an essential part of the carbon credit supply on the voluntary carbon market. They have an economic, social, and above all, environmental impact that ClimateSeed could not ignore.
To make their project marketable on our platform, project developers must submit their project to our three strict selection levels. The first level consists of proposing a project certified by a major international standard (such as VCS or Gold Standard). As we have seen, these organizations certify projects, estimate and issue the carbon credits that can be sold on the voluntary carbon market. In addition to this carbon dimension, they also make it possible to estimate the co-benefits associated with the project, whether economic, social, or environmental. There is also additional certification from the CCBA, which conducts a more in-depth analysis of the environmental impact on local ecosystems.
The second step that ClimateSeed applies to projects is a practice inherited from the banking world: a KYC-AML (Know Your Customer and Anti-Money Laundering) analysis. The objective is to learn more about the project developer, the local actors, the actual beneficiaries, the shareholder structure, and the financial arrangements. This practice ensures that the financial contributions obtained in exchange for the credits are indeed intended for the project's development and that the money obtained is not used for terrorism or money laundering. This second filter is essential because it avoids collaboration with fraudulent project developers, whose financial revenues would not be used for the desired purposes.
Lastly, the third step is submitting the project to our sustainability committee, composed of carbon and sustainable development experts. These experts conduct a detailed analysis of the documentation provided, the project's relevance, and its co-benefits. The experts will be able to request additional documentation, discuss it with the project developers if necessary. Once this analysis has been carried out, a vote is taken. If most experts vote in favor of the project, it will be integrated into the platform. Otherwise, it will be rejected and will receive the conditions of its refusal. This multi-filter approach is essential to ensure the relevance of projects. ClimateSeed thus makes it possible to work with REDD+ project developers who have proven their effectiveness. Today, REDD+ projects on the ClimateSeed platform have made significant contributions and have stored a significant amount of CO2.
The paramount importance that characterizes forests is highlighted throughout this analysis. They are threatened carbon sinks that must be protected. REDD+ projects are, therefore, an obvious way to preserve these threatened areas. They have a key role in the fight against global warming. In that case, there are nevertheless notable limits and challenges to overcome: at the level of evaluating the quantities stored, at the level of project monitoring when public structures are unstable and when local economic and social stakes go against the preservation of these forests. These limitations do not, however, render these projects ineffective.
As a Social Business, ClimateSeed's mission is to have the best possible environmental, social, and economic impact. In this sense, by their specificity and attractiveness, REDD+ projects have their place on the ClimateSeed platform. However, to face the limits mentioned above, its 3-level analysis is essential to ensure the projects' relevance to the final clients.
Discover below (figure 3), a recapitulation, through a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), of the main challenges and issues of REDD+ projects mentioned throughout this article.
- Abis, Sébastien. Brésil : où va la puissance agro-alimentaire avec Bolsonaro ? IRIS. Avril 2019. [Online] https://www.iris-france.org/135783-bresil-ou-va-la-puissance-agro-alimentaire-avec-bolsonaro/
- Wunder Sven, Duchelle Amy E., Sassi Claudio de, Sills Erin O., Simonet Gabriela, Sunderlin William D. REDD+ in Theory and Practice: How Lessons From Local Projects Can Inform Jurisdictional Approaches. Frontiers in Forests and Global Change. Volume 3. 2020.