Climate Change Mitigation Projects in India – Policy Issues

The 1997 Kyoto Protocol rightly recognises land use change and forestry as both part of the problem and part of the solution to greenhouse gas reductions.

Forestry provides significant opportunities for carbon sequestration COP-6 decided to give the go-ahead to ‘sinks’ though the concept remains somewhat flawed. COP-7 went on to define ‘sinks’ as the afforestation and reforestation of degraded lands prior to 1990;

Standards or protocols for monitoring, verification, legal contracts, trade documentation etc. are not yet in place. Markets for GHG-emissions trading are emerging around the world despite uncertainties regarding the Kyoto Protocol

At the 2000 World Economic Forum, participants identified climate change as one of the most important future variables for business. Perhaps 200 million tons of CO2e have been traded in the past five years

This opportunity to profit in the emissions- trading market (by selling emission credits to those entities who find it less costly to outsource part of their emission- mitigation commitment) provides a new source of funding for activities that will also protect biological species.

In the offset market, companies will get credit for emission reductions at home by developing-or buying credits for – offsetting projects abroad. These will generate Certified Emissions Reductions (CERs). The goal is to make CERs and ERUs (Emission Reduction Units) readily tradable financial instruments.

In some countries, governments are even promoting the creation of markets where none existed before. A major deal was signed between the Govt. of Costa Rica (through the National Biodiversity Institute) and Merck Pharmaceuticals that covered payments for the collection of species samples and sometimes for refining them, and to provide royalty payments on any products that might be developed from such samples.

Norway negotiated the capture and fixation of tons of carbon and paid $2 million dollars to Costa Rica which issued Certified Tradable Offsets(CTO). The country assumed the commitment to provide the service of sequestration of carbon by 25 years in a area of approximately 142 sq kms. Costa Rica, through this mechanism recover part of the hct. Of degraded lands. This was funded thro public-private partnership.

The World Bank supported Costa Rica’s ‘Ecomarkets’ project, landowners in rural areas receive a payment (provided for in Costa Rica’s forestry law) for conserving and managing forests that provide four key services: water capture, biodiversity protection, scenic beauty and carbon sequestration. The payment is currently set at $40.00 ha-1 yr-1. Initially, these payments were financed through a tax on gasoline. The Ecomarkets project aims at developing a true market in which consumers of these four environmental services pay for them through a government intermediary.

“clean-development mechanism (CDM),” refers to projects in developing countries, for instance, replacing kerosene lamps in India with solar panels. The offset market could provide a powerful incentive to replace dirty power with clean technology.

CDM enhances opportunities for sustainable forest management including afforestation, reforestation, revegetation etc.. McCarl & Schneider (2001) calculate that a carbon price of $50 per tonne could prompt nearly 5 million hect of afforestation efforts in the U.S.

Potential of various land management activities to mitigate global emissions of CO2 by increasing carbon sink potential (IPCC Assement) Tropical afforestation: 15% Tropical agroforestry: 6% Tropical regeneration: 18% Slowing deforestation: 14% Temperate afforestation: 13% Temperate agroforestry: 1% Agricultural management: 33%

Foresters and farmers can not only sell a new “crop” in the international carbon market through agro-forestry, they can also help solve a problem that threatens their own livelihood. It is likely that in future, relative prices may favour carbon sequestration over food production.

Financing and management of protected areas remain the responsibility of the public sector; however, severe cutbacks in the availability of public resources has undermined the effectiveness of such strategies. Given the lack of public funding, biodiversity conservation must start to pay for itself, otherwise biodiversity and perhaps even the human race, are in jeopardy.

Market mechanisms can encourage environmental protection and promote greater economic efficiency while saving tax payers money. Need to take advantage of opportunities for biodiversity conservation that might arise from ‘free-market’ approaches to sustainable land use and management.

Many natural forests are both major stores of carbon and areas of valuable biodiversity Conserving these areas will yield both carbon and biodiversity benefits. However, biodiversity enhancement is not always a corollary of carbon sequestration, as the later involves planting of biodiversity poor monocultures.

Concerns Crediting for A&R projects in CDM raises the prospect of net negative impacts to biodiversity by increasing the financial attractiveness of plantations relative to maintaining or restoring native forests.

Whether CDM crediting for A&R will act as an incentive to clear natural forests for the purposes of establishing carbon plantations Indeed, precedents exist in which timber companies have pursued plans to clear native vegetation and establish timber plantations that generate carbon credits.

Plantations established on degraded lands and managed according to internationally recognized certification standards can provide both environmental and social co benefits. But there is potential for carbon premiums to accelerate deforestation by financing the clearing of forests to be replaced with plantation monocultures.

a carbon market could fuel deforestation in developing countries through CDM A&R projects. Acceleration of forest degradation and deforestation by enhancing incentives through carbon financing strongly suggests that Parties should act to eliminate these incentives.

Conservation of natural forests is not included in the Kyoto Protocol’s definition of sinks. Instead, the creation of sinks through the establishment of fast growing monocultures –may lead to biodiversity losses if natural forests and degraded lands are cleared

Forest harvesting and management have also been omitted for now, but may still get included by later COPs.

The potential scale of impacts to native forests and biodiversity in developing countries is not clear.

To strike a balance between carbon sequestration and biodiversity conservation, we need to have a clear understanding of potential synergies among UNFCCC, UNCBD, UNCCD, UNFF and also among other international trade and economic agreements such as WTO

The other biodiversity related conventions have not gained the same level of global political and private sector interest as the UNFCCC. UNFCCC’s much higher international profile may provide the much needed economic incentives for conservation.

Need to ensure that biodiversity issues are fully mainstreamed into discussions relating to the accounting methods, mitigation frameworks, definitions and implementation, occurring under the Kyoto Protocol.

Capacity building at national level to tackle and manage these synergies ‘on the ground’. This would involve identifying areas that are of both high biodiversity and high carbon value. Projects and activities aimed at maximising both objectives could then be targeted specifically within such areas.