1. Limitations in sequestering carbon in forests By Promode Kant Indian Forest Service

2. Annual addition to atmospheric carbon-di-oxide Atmosphere gives 2 Gt C to surface ocean and 3 Gt C to terrestrial ecosystems annually thru photosynthesis Atmosphere receives 1.5-2 Gt C from deforestation Atmosphere receives 6.5 Gt C from fossil fuel use and cement production

3. The possibilities in forestry NEP – Net Ecosystem Production is the net accumulation of organic matter by an ecosystem, NEP = Net Primary Production – heterotrophic respiration (losses caused by herbivory and by decomposition of debris in soil biota). Global Estimation at 10 GtC/yr Net Biome Production (NBP) is the net production of organic matter in a region containing many ecosystems and includes other anthropogenic and natural causes of respiration also like harvesting, fires forest clearances, etc. Global estimate at 10% of NEP.

4. THE REALITY – only 1 approved CDM project yet in forestry sector

5. Afforestation/Reforestation projects under CDM 20 project methodologies proposed 11 rejected or withdrawn Changes suggested in 4 2 under examination Only 1 approved in China – 33K tCO2/year

6. Why? Difficulties in establishing additionality Difficulties in assessing leakages Difficulties in baseline assessment Conflict with biodiversity conservation

7. Why? Issue of non-permanence of carbon sequestered – temporary CERs – heavy discount on tCERs Leading to low economic viability of the projects Carbon credits not enhancing economic returns over simple plantation projects also makes additionality difficult to establish

8. Does the recent approval in China signify progress? 4000 ha AR project in two sites, deforested since 1950, in Pearl River Basin in southern China – 33 K CO 2 per annum, 30 yrs crediting period, about 1M t CO 2 total Existing vegetation has remained degraded with <20% crown density over last many years Reforestation with 5 species including eucalyptus – to enhance productivity Leakages on account of removal by people has been considered negligible Leakages considered only on account of N 2 O emission thru fertilizer use and in transportation of harvested timber by using fossil fuel – much easier to assess

9. Does the recent approval in China signify progress? Return on investment without CER 8.4% and with CER 15.7% Norm in China for agricultural investment is 12%, hence it was presumed that without CERs this project would not have been taken up. Hence additional Large gap between required investment and availability of funding among local communities and low chances of obtaining loans from commercial banks taken as barrier to investments. Hence additional as financial barriers would have prevented the project otherwise

10. The replicability of Chinese methodology Without project local farmers would have had no access to quality planting material. Hence additional Also there were no existing skills in forest management which are now being brought in. Hence additional Additionality tests appear to have become reasonable, hence it should help other projects in future But leakage assumptions may not hold for other tropical countries like India with large dependency on forests by local people Also biodiversity conservation requirements may not hold in more warmer and humid conditions as the species mix would be far more complex

11. The replicability of Chinese methodology Land opportunity costs are usually prohibitive unlike the Chinese case where lands were considered unattractive for other uses Transaction costs for monitoring, measurements etc elsewhere may be prohibitively high unlike in Chinese case, with the central govt being a participant, where the resources of the Chinese Academy of Forestry are being utilized at operational costs alone Reforestation projects may continue to encounter difficulties

12. Is agro-forestry a better option? Yes, easier to assess and manage leakages in private holdings, lower transaction costs, sharing of costs with agricultural operations, lowered costs of ensuring biodiversity conservation and sustainable development, no difficulty of obtaining stakeholders’ consent But definition chosen by most countries for forests may pose biggest problem

13. National Forest definitions Minimum crown cover: 10-30% Minimum area: 0,05 ha - 1ha Minimum height: 2- 5 m China200.0672 Costa Rica301.0005 Congo301.0005 Honduras301.0005 India300.0505 Nicaragua201.0004 Uganda301.0005 Vietnam300.5003 Yemen300.5003

14. Is agro-forestry a better option? Except for China & Nicaragua these definitions favour reforestation of degraded areas as all degraded lands <30% crown cover eligible for reforestation under CDM But unfavorable to agriforests as farmers would be required to create a crown cover of minimum 30% density to claim C credits – excessive shade - not possible with most agricultural crops small minimum land area requirement is not of help as it enhances transaction costs

15. The real options in forestry Heavy discounts on temporary CERs, high transaction & monitoring costs, higher risks limit A&R Forests as source of renewable energy for replacing fossil fuel, both wood and seeds, – leading to permanent CERs, easier to cross additionality tests and leakage assessments, show much greater promise

16. THANKS