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Developing countries trapped in collapsing carbon market

Our Bureau New Delhi | Updated on September 08, 2019 Published on September 08, 2019

Representative image

All the talk about reversing climate change is far from reality. Developed countries are not doing as much as they had promised to help Africa and Asia tackle climate change.

A Centre for Science and Environment (CSE) study presented at United Nation’s Conference of Parties 14, currently assembled to discuss desertification of land, has revealed that Reducing Emissions from Deforestation and Forest Degradation (REDD+) — an initiative which helps developing countries sell carbon credits and lets developed countries invest in helping communities conserve their forests — is not working well.

One of the reasons is lower funding than promised. “International REDD+ finance much lower than the estimated costs — most conservative estimates suggested $5 billion annually but actual flow averaged just $796 million from 2010-2014,” said Chandra Bhushan, Deputy Director General of CSE.

Bhushan’s team studied five projects in India, Kenya and Tanzania and concluded that REDD+ was not performing well. In 2007, REDD+ was formalised to incentivise forest conservation in tropical developing countries by providing them funds and allowing them to sell carbon credits to the developed countries.

Carbon credits

But Bhushan said that carbon credits were not obtaining an optimum value in the market and were being sold at much cheaper rate than what was affordable to these indigenous communities.

For example, in East Khasi Hills of North-east India the REDD+ project involved impressing upon people not to cut wood to use it as cooking fuel. “In absence of alternatives, there were leakages. Communities were getting fuel wood from the non-project forest area to meet daily needs,” said Bhushan.

The project encourages local communities to sell carbon credits, these being a tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas. The indigenous communities can earn credits by not cutting trees for fuel, and trading the credits they have earned, on the carbon stock exchange.

Bhushan said that carbon revenue, thus earned, was inconsistent and unpredictable, affecting the long-term project sustainability.

“Total potential Emission Reduction (ER) from fuelwood replacement is estimated to be 381 million tonnes of carbon dioxide. While average price of REDD+ credit in voluntary carbon markets from 2012-2016 was $4.5 per tonne of carbon dioxide, it needs to be at least $22.6 (₹1,582) per tonne to make the deal sustainable for people. The increase in supply but very less demand is the reason that this model is not working,” he said.

In Mjumita REDD+project of Tanzania, Bhushan said that the community did not manage to sell a single credit after five years of initial funding support from Norway.

In Kasigau project of Kenya, community benefit projects were stalled in lean seasons of sale. In Chyulu Hills of Kenya, few partner organisations were not even physically present in project area but allocated a share for their technical and marketing expertise.

Bhushan further concluded that Global Carbon market is thus failing to materialise and doubts prevail over international REDD+ finance commitments. “A market-based approach cannot pay for this, we have to ensure REDD+ is a fund-based mechanism — partnership between community, national governments and bilateral as well as multilateral funding,” he said.

Published on September 08, 2019
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