Trading carbon credits on an international market may be the solution to global warming
6/09/2009
By Luke Hunt
Bangkok Post
Scientists have stepped up efforts to save what is left of Southeast Asia's disappearing rainforests with a report that portrays carbon trading as a serious weapon in preserving what's left of the world's natural habitat.
Not that long ago, the prospect of carbon trading on global financial markets had raised the hackles of environmentalists and a few laughs in the boardrooms of broking houses in Bangkok and elsewhere.
However, a new study recently published in Conservation Letters says that selling carbon credits linked to rainforests could prove just as profitable as clearing the land for rice, rubber or palm oil plantations.
It also indicates that forests in Thailand and across the region may have been sold to loggers at fire-sale prices in recent decades, putting the reputation of past politicians at the mercy of generations to come.
Oscar Venter, a conservationist and biologist with the University of Queensland in Australia, and the study's lead author, says the time has come for governments to re-write policy to incorporate the latest scientific findings.
"I think it could go a long way to protect these forests. I mean whether it's going to protect all forests so no more forests are going to be cleared is doubtful," he said.
"But from our results, from our carbon prices, I think certainly in some areas the reduced emissions from the deforestation and degradation carbon scheme will be able to protect forests."
The United Nations has endorsed a plan that would compensate countries for protecting the rich bio-diversity of their forests, which soak up vast amounts of the carbon dioxide emitted into the atmosphere each year.
Environmental activists hope the plan will be included in a new global agreement later this year on reducing greenhouse gas emissions, such as carbon dioxide, which many scientists think contributes to global warming.
The UN hopes that agreement will be reached at a summit in December in Copenhagen.
Compensation would be achieved through direct financial assistance or credits to countries that can be sold on an international carbon market to companies that exceed their allotted carbon limits.
Secondary markets would emerge in much the same way as they have on stock markets, and the forests would be entitled to the same legal protection as any other corporate asset.
Ideally, values would be dictated by an informed market operating on a transparent trading platform, and given the nature of such assets a futures market would follow. Derivatives spawned by call and put options would be a comfortable fit.
According to Mr Venter's study in Kalimantan, a rainforest would be worth more than a palm oil plantation if carbon credits were priced between US$10 and $33 a tonne (375 to 1,240 baht).
New Carbon Finance, a London-based investment adviser that tracks the market, predicts the world carbon trading market will reach US$3 trillion by 2020.
Mr Venter said Thailand had 28% remaining forest cover, though much of this is likely to be forestry plantations, and had reported only 65,000 hectares per year of de-forestation from 2000 to 2005.
As a result, Thailand would not be a major global player.
"People are really looking at Brazil and Indonesia because they are clearing so much forest every year, the thought is 'get them on board and you've gone a long way to dealing with the problem'."
Despite this, authorities claim Thailand would reap great benefits but the country had lagged in positioning itself ahead of the conference in Copenhagen.
Countries in the region such as China, the Philippines, Malaysia, Bangladesh, India and Indonesia had been faster to implement programmes that promote carbon trading.
Anat Prapasawad, managing director of the Advance Energy Plus Co, recently said this was a pity since Thailand has the potential to greatly expand the business.
"Thailand is one of the global leaders in renewable energy development, which is a key industry that could make more revenue from carbon trading through the United Nations tool," he said.
He said other countries were encouraging local business operators with tax holidays, soft loans and other facilities. Thailand had yet to offer strong incentives to attract operators.
It's a point not lost on David Ashwell, a consultant for the US-based Centre for Clean Air Policy. He sees a day when rainforests are protected national assets that enable carbon trading on a local stock market.
He also said there were many developing countries, including Thailand and Cambodia, with small plots of rainforests, and by working as a bloc their value would increase and so would their voting power in the international system. "Everybody is on a learning curve," he said, "[but] it could really work."
Erik Meijaard, a senior ecologist with the US-based Nature Conservancy, also contributed to the study and says putting a fiscal value on a natural habitat is a modern reality.
"We talk a lot about social values, we talk about environmental values, we talk about opportunities for economic development, but in the end it's pretty much all about money."
He says Southeast Asian governments will need five to 10 years before a viable carbon trading market can be established.
First, he said, a carbon accounting system, the financial framework and good governance procedures need to be established that would allow carbon trading to move beyond the "pet project stage" where it now sits. "Only then will investors trust the system enough to put their money in," he said.
"Once people start paying for actually keeping the forests then there can be a balance between the forests that are used and the forests that are being kept for the reduction of carbon."
If that balance can be found, countries will be rewarded for maintaining their rainforests.
But if the value of a rainforest is greater than the value of the crops that the same land can produce, what does that mean for Thailand's future environmental landscape?
6/09/2009
By Luke Hunt
Bangkok Post
Scientists have stepped up efforts to save what is left of Southeast Asia's disappearing rainforests with a report that portrays carbon trading as a serious weapon in preserving what's left of the world's natural habitat.
Not that long ago, the prospect of carbon trading on global financial markets had raised the hackles of environmentalists and a few laughs in the boardrooms of broking houses in Bangkok and elsewhere.
However, a new study recently published in Conservation Letters says that selling carbon credits linked to rainforests could prove just as profitable as clearing the land for rice, rubber or palm oil plantations.
It also indicates that forests in Thailand and across the region may have been sold to loggers at fire-sale prices in recent decades, putting the reputation of past politicians at the mercy of generations to come.
Oscar Venter, a conservationist and biologist with the University of Queensland in Australia, and the study's lead author, says the time has come for governments to re-write policy to incorporate the latest scientific findings.
"I think it could go a long way to protect these forests. I mean whether it's going to protect all forests so no more forests are going to be cleared is doubtful," he said.
"But from our results, from our carbon prices, I think certainly in some areas the reduced emissions from the deforestation and degradation carbon scheme will be able to protect forests."
The United Nations has endorsed a plan that would compensate countries for protecting the rich bio-diversity of their forests, which soak up vast amounts of the carbon dioxide emitted into the atmosphere each year.
Environmental activists hope the plan will be included in a new global agreement later this year on reducing greenhouse gas emissions, such as carbon dioxide, which many scientists think contributes to global warming.
The UN hopes that agreement will be reached at a summit in December in Copenhagen.
Compensation would be achieved through direct financial assistance or credits to countries that can be sold on an international carbon market to companies that exceed their allotted carbon limits.
Secondary markets would emerge in much the same way as they have on stock markets, and the forests would be entitled to the same legal protection as any other corporate asset.
Ideally, values would be dictated by an informed market operating on a transparent trading platform, and given the nature of such assets a futures market would follow. Derivatives spawned by call and put options would be a comfortable fit.
According to Mr Venter's study in Kalimantan, a rainforest would be worth more than a palm oil plantation if carbon credits were priced between US$10 and $33 a tonne (375 to 1,240 baht).
New Carbon Finance, a London-based investment adviser that tracks the market, predicts the world carbon trading market will reach US$3 trillion by 2020.
Mr Venter said Thailand had 28% remaining forest cover, though much of this is likely to be forestry plantations, and had reported only 65,000 hectares per year of de-forestation from 2000 to 2005.
As a result, Thailand would not be a major global player.
"People are really looking at Brazil and Indonesia because they are clearing so much forest every year, the thought is 'get them on board and you've gone a long way to dealing with the problem'."
Despite this, authorities claim Thailand would reap great benefits but the country had lagged in positioning itself ahead of the conference in Copenhagen.
Countries in the region such as China, the Philippines, Malaysia, Bangladesh, India and Indonesia had been faster to implement programmes that promote carbon trading.
Anat Prapasawad, managing director of the Advance Energy Plus Co, recently said this was a pity since Thailand has the potential to greatly expand the business.
"Thailand is one of the global leaders in renewable energy development, which is a key industry that could make more revenue from carbon trading through the United Nations tool," he said.
He said other countries were encouraging local business operators with tax holidays, soft loans and other facilities. Thailand had yet to offer strong incentives to attract operators.
It's a point not lost on David Ashwell, a consultant for the US-based Centre for Clean Air Policy. He sees a day when rainforests are protected national assets that enable carbon trading on a local stock market.
He also said there were many developing countries, including Thailand and Cambodia, with small plots of rainforests, and by working as a bloc their value would increase and so would their voting power in the international system. "Everybody is on a learning curve," he said, "[but] it could really work."
Erik Meijaard, a senior ecologist with the US-based Nature Conservancy, also contributed to the study and says putting a fiscal value on a natural habitat is a modern reality.
"We talk a lot about social values, we talk about environmental values, we talk about opportunities for economic development, but in the end it's pretty much all about money."
He says Southeast Asian governments will need five to 10 years before a viable carbon trading market can be established.
First, he said, a carbon accounting system, the financial framework and good governance procedures need to be established that would allow carbon trading to move beyond the "pet project stage" where it now sits. "Only then will investors trust the system enough to put their money in," he said.
"Once people start paying for actually keeping the forests then there can be a balance between the forests that are used and the forests that are being kept for the reduction of carbon."
If that balance can be found, countries will be rewarded for maintaining their rainforests.
But if the value of a rainforest is greater than the value of the crops that the same land can produce, what does that mean for Thailand's future environmental landscape?
2 comments:
There are some things that need to be addressed before this new scheme works to REALLY protect the forest. A study by a Khmer scientist and his co-author explained the existing problems (see link below).
Cambodia needs to be WELL prepared in order to gain maximum benefits from the new agreements.
I think it is time for compensate to those country which preserved the forest, especially Cambodia.
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