3.1 Forestry Opportunities in the Asia-Pacific Region
3.2 Forestry Examples from Other Regions
3.3 Forestry Examples in the Asia-Pacific Region
Forest ecosystems are highly important in the development of climate change mitigation strategies as they can both be sources and sinks of GHGs. Currently the world’s forests are estimated to be a net carbon source, primarily because of deforestation and forest degradation in the tropics. Temperate and boreal forests are both carbon sinks, because many are recovering from past natural and human disturbances and are actively managed.
There are basically three categories of forest management activities that qualify as ERC projects. These are management for conservation, management for storage, and management for substitution. The opportunities for employing these vary from country to country, based on natural resource and climatic as well as social, economic and political characteristics (IPCC, 1996).
· Management for conservation, that is to say to prevent emissions. The goal of conservation management is to maintain and improve existing carbon pools in forests through controlling deforestation, protecting forest reserves, changing harvesting regimes, and mitigating other anthropogenic disturbances such as fire and pest outbreaks. Urban tree planting and maintenance also enter here as the primary carbon benefit is to reduce emissions through energy conservation. As noted earlier, the Kyoto Protocol has raised concern about whether conservation type projects qualify as ERCs.The primary objective of these forest management activities is to foster carbon conservation and sequestration in forests. It is, however, but one of a variety of objectives for forest management that must be balanced with other objectives. Other objectives include sustainable development, industrial wood and fuel production, traditional forest uses, protection of natural resources (e.g., biodiversity, water, and soil), plus recreation, and the rehabilitation of degraded lands. Fortunately, most forestry sector actions that promote carbon conservation and sequestration make good social, economic, and ecological sense, even in the absence of climate change considerations.· Management for storage (short-term measures over the next 50 years of so). Storage management expands the storage of carbon in forest ecosystems by increasing the area and/or carbon density of natural and plantation forests, while increasing storage of durable wood products.
· Management for substitution (long-term measures). The goal of substitution management is to increase the transfer of forest biomass carbon into products (e.g., construction materials and biofuels), rather than using fossil-fuel-based energy products, cement-based products, and other building materials.
In the process of identifying forestry opportunities, countries need to examine existing priorities documented in national forestry plans, and explore priorities in plans and programs from other sectors overlapping with forestry. These include agriculture, energy, and environment. Specifically, forestry mitigation measures must be considered in relation to: national forestry and land-use plans, which would establish geographic priorities for various types of land use as well as land ownership patterns; national environmental plans, which might establish priorities such as creating a system of forest reserves for biodiversity protection or restoring forests in critical watersheds; economic development plans, which usually set goals for industrial wood production through sustainable forest management activities; or national energy plans, which identify priority opportunities for biomass energy production through fast-growing forest plantations (USCSP, 1996).
Biodiversity protection and conservation form an international policy objective given special emphasis in discussions on forestry sector GHG mitigation measures. Fortunately, conservation strategies for protecting biodiversity are usually consistent with forest management activities for promoting carbon storage. For example:
· Protected area strategies in both mature and secondary forests conserve existing carbon pools in forests while also protecting habitats for biodiversity purposes.· Reforestation can be used in landscapes with fragmented forest areas to create corridors between those areas, both creating new carbon sinks and critical habitats for fauna and flora.
· Although the establishment of plantations may be less socially and politically desirable than protected area strategies, plantations can increase local biodiversity through re-establishment of native species in the understorey when they are established on highly degraded lands subject to no further management (IPCC, 1996).
3.1.1 Forest Conservation/Preservation
3.1.2 Forest Rehabilitation and Reforestation
3.1.3 Improved Forest Management/Reduced Impact Logging
3.1.4 Commercial Plantations and Community Forestry
3.1.5 Biomass Energy/Fuelwood
3.1.6 Urban Forestry
The forestry opportunities identified above have possible applications in the Asia-Pacific Region, and may qualify as potential ERC projects. Projects associated with conservation/preservation, rehabilitation/reforestation, and improved forest management and reduced impact logging (RIL) seem to have gained the greatest interest in the region.
The world’s remaining primary forests, both tropical and temperate, represent huge banks of sequestered carbon. Protection of forests that otherwise would be degraded presents an opportunity to immediately impact carbon flows. The avoidance and mitigation of carbon releases from these banks provide the quickest way to slow the accumulation of carbon dioxide in the atmosphere (TEI, 1995). Reforestation and rehabilitation activities have a substantially slower impact, while RIL falls somewhere in between.
Forest conservation for carbon sequestration purposes basically takes two forms: direct and indirect. Direct interventions require the “locking up” of land resources into natural parks or preserves. Indirect conservation covers a wider range of strategies. These include increasing agricultural productivity, presumably lowering the need for slash-and-burn cropping, plus the development of local agroforestry-forestry to meet fuelwood needs.
Protecting natural forests can prevent emissions of up to 300 tons per hectare
Proposals to prevent deforestation are often complex and controversial, since they have direct effects on the determinants of a particular region’s poverty, population, and economic growth (TEI, 1995). Economic development and growth patterns that create pressures to cut or convert existing forests often stem from government policies. As such, the potential use of ERC proposals that challenge or seek to change such policies are often perceived, in developing countries, as either patronizing or as an affront to national sovereignty. This perception has limited the use of “debt for nature swaps” as a conservation tool. It has also created an awareness among potential investors that ERC project proposals which would “lock up” natural resources are likely to meet significant resistance by host country governments and local communities. Too few people are yet convinced that such strategies are valid over the long term.
Projecting the baseline of GHG emissions is more difficult in preservation-based ERC projects. Deforestation and forest degradation have a wide range of causes, including shifting agriculture, permanent land clearing for grazing, infrastructure development, and industrial timber extraction. Each requires different analytic tools to determine projected GHG releases to use as a baseline. This situation is further complicated when the makeup of the local forest resource is considered. Basically, project developers must establish:
1) the carbon content of the forest;Despite these difficulties, direct forest conservation activities form an integral part of several robust ERC projects. Proposals incorporating conservation activities should not automatically be dismissed as unworkable. Conservation can be an important component of projects with multiple environmental and developmental agendas. Due to the immediate GHG benefits from conservation, its inclusion can dramatically increase the GHG cost-competitiveness of an investment package. This framework is quite similar to the basic outlines of several USIJI projects, such as the Rio Bravo project in Belize (see 3.2.1).
2) the area of standing forest ultimately to be protected through financial intervention;
3) the type of degradation avoided; and
4) the local carbon coefficient for that particular type of forest degradation.
In areas substantially affected by conventional industrial logging, the use of enrichment planting techniques may be appropriate. Failure to apply some type of treatment will likely cause regeneration of lower-value pioneer species. It will also cause decreasing carbon sequestration while increasing the risks of forest fire and agricultural conversion. However, little economic incentive yet exists for forest rehabilitation due to short duration concessions and unenforced legislation.
ERC investment can help pay for such rehabilitation, which can take many forms. For example, there is an ongoing carbon offset-driven rehabilitation project in Sabah, Malaysia, planting high value dipterocarps and fruit trees in areas of logging disturbance. Other proposals suggest using rattan as part of the rehabilitation effort. While low in biomass and carbon value, the economic activity generated by rattan would likely take pressure off potential forest conversion areas. Lastly, the ongoing research regarding grasslands rehabilitation clearly has applicability to ERC financing.
In the Asia-Pacific Region vast areas of historically forested Imperata grassland exist that offer promising opportunities for reforestation. Significant research has taught us much about how to convert such grasslands to productive forestland. A number of projects, or even a regional program, could conceivably be designed to convert these areas to forests.
Restoring degraded forests can increase carbon storage by about 120 tons per hectare
As an alternative to locking up forests in strict conservation regimes or restricting industrial logging, there is increasing interest in using carbon offset financing to carry out more environmentally sound forest management, particularly when related to harvesting in the tropics. Conventional tropical logging practices release much GHGs through the rapid decay of trees, other vegetation, and soils damaged or disturbed during logging operations. Research by Putz and Pinard (1995) suggests that conventional tropical logging operations damage up to 70% of the residual trees in logging “coupes” or harvest areas.
RIL is an integrated forest treatment to reduce the incidental damage and soil displacement which accompany most industrial logging. Applying RIL techniques lessens the immediate releases of CO2 and methane from the decay of dead biomass and soil carbon. Over the long term, RIL-treated forests could also regenerate more quickly after selective logging. This, in turn, contributes to the overall GHG benefits generated by RIL.
Compared to reforestation/rehabilitation opportunities, RIL is an attractive carbon offset option because approximately half of the eventual GHG benefits are realized over the first few years. In addition, RIL maintains many biodiversity values, reduces fire risks, and protects topsoils. A basic attraction of RIL, however, particularly for governments seeking both economic and environmental improvements, is that forests continue to provide economic potential through timber production.
Conventional logging operations can release substantial amounts of carbon
While RIL has positive effects on the value of future forest resources, the average concessionaire receives no downstream economic benefits from undertaking such costs during the lifetime of their logging contract. Thus, there is no immediate incentive to utilize such techniques. However, for governments looking for ways to maintain the long-term viability of forest resources, while also gaining the economic benefits of logging, ERC RIL offers a viable model. In an ERC RIL scenario, investor funds help cover the costs for both training and incremental implementation for a variety of site specific techniques. These techniques, as practiced in a Sabah, Malaysia, pilot program, include the following (Chan and Garcia, 1998):
· climber and liana cutting;Improved forest management and reduced impact logging techniques such as cable yarding has gained much interest as carbon offset options
· improved design of roads and skid trails;
· pre-selection and marking of marketable timber;
· directional felling;
· improved road construction;
· pre-planning of skid trails;
· improved skidding and lower skid trail density;
· removal of stream obstructions and drainage of skid trails;
· rehabilitation of landings; and
· maintenance of riparian buffer strips.
As with any ERC project, RIL requires both commitment and capacity from project personnel. RIL techniques are cost intensive. They must be taught and, if paid for with carbon offset money, their implementation must be closely monitored. Though RIL increases long-term resource values by improving the forest’s regenerative capacity, this positive effect will likely create little monetary incentives for forest concessionaires to invest in RIL. This is largely due to the uncertainty that concession holders, whose rights to the concession do not extend as long as a typical 60-100 year timber-rotation, will be able to obtain the benefits associated with RIL’s incremental investment. This is slowly changing due to increasing public and consumer demands for products derived from sustainably managed forests. Currently, however, there is both need and opportunity to identify other investors to help cover the incremental costs of RIL techniques. Lastly, RIL timber should be able to meet the most stringent guidelines for sustainably produced timber. As the industry prepares to deal with more substantive production guidelines under the ITTO 2000 initiative, this quality performance is an additional secondary output, which should not be overlooked.
Large-scale, monoculture plantations to sequester atmospheric carbon is a concept that has been computer simulated under a variety of scenarios. The lack of comprehensive emission reduction policies has meant that there are no economic incentives to implement such “carbon farm” plantations. There are no examples of carbon-dedicated plantations, or even commercial forest plantations with ERC components built in. But as GHG emission regulations become more stringent, traditional forest management players with plantation experience will design more sophisticated investments, with integrated greenhouse sequestration options.
Extensive areas of degraded and low productivity lands are available for reforestation
Plantations of various scales could play a larger role as GHG regulations become more stringent. It is now generally recognized that the wood industry must increase its reliance on planted forests to meet the demand for fiber. Studies indicate that current plantation operations meet only a fraction of projected needs. Projections indicate there may be insufficient investment to relieve future market pressures on dwindling primary forests.
Commercial plantation developments are difficult to classify within the ERC context because they are responses to market forces for wood fiber. Many ERC national programs, such as USIJI, discourage monoculture plantations because of the negative effects of single species plantations versus the obvious biodiversity benefits of ecological restoration and conservation projects. The economic challenges of plantations, which generally do not achieve a positive cash flow for 5-10 years, however, as yet inhibits wider-scale implementation. The high capital costs and delayed returns leads to favoring the monoculture of high-yielding species, short rotations, and minimal-cost policies, all of which are usually environmentally problematic.
Plantations could play a larger role as greenhouse gas emission regulations become more stringent
By including ERC finance to supplement capital flows, commercial forestry plantations should overcome some of these biases. ERC investments can, theoretically, make lower growth areas financially viable, or at least make it possible to choose longer rotations of more mixed species plantation, thus replacing a portion of the monoculture of the eucalyptus, pines, acacias and teak that predominate plantation investments in the tropics today (FAO, 1992). Since the overall investments in an ERC plantation project could be quite large and equity-driven, it is possible that the ERC project participant might become a joint venture partner in such a project, claiming a portion of downstream revenue as well as GHG benefits (Jones, 1996).
To meet sustainable development priorities and to address existing land tenure issues in some countries, community forestry options can be structured to provide GHG benefits as a by-product. In most situations involving communities, forestry projects must be structured to fit the cultural and institutional framework, while providing direct economic benefits to the local people. Alternative forestry projects include improved forest management, plantations, and more productive agroforestry systems. Because of the land tenure systems in most communities, the scale of projects and potential for GHG benefits will generally be less attractive to investors if their primary objective is to obtain low-cost carbon. If, however, developing and demonstrating innovative approaches to ERC projects is a goal, community-based projects should be quite attractive.
Using wood and other types of biomass for fuel can slow the buildup of carbon dioxide in the atmosphere. Assuming wood used for fuel is replaced by new forest growth, a carbon cycle is created and there is no net increase in the amount of carbon dioxide released. To the extent that woody biomass replaced by new growth is substituted for fossil fuels, there is a net reduction in the amount of carbon dioxide emitted into the atmosphere as the carbon in the displaced fossil fuel remains in storage (Rinebolt 1996).
Of particular note for the Asia-Pacific Region, wood waste of sawmills can constitute as much as 50% of all raw timber that enters a mill. Typically, this waste is burned, used for landfill, or dumped in rivers or the ocean. Sawmills in the Region typically use diesel generation systems – that are often subsidized by governments – to supply their on-site captive electrical power because most milling operations are in remote locations with no local power grid. The timber processing industry requires reliable power, so that even when grid connections are available, a plant must have full backup capability. Yet the wood waste, already available at the site and essentially free, represents a potential power source, not only for the wood products industry but also for adjacent rural communities.
For example, a 1987 USAID funded feasibility study of the potential for such systems in Indonesia concluded that: 1) Wood waste currently produced at Indonesian sawmills and plywood plants is sufficient to power 1,000 MW in small-scale biomass power plants; and 2) even with a 50% subsidy of diesel fuel, small integrated standardized wood waste-fired power plants would be economically attractive. Based on a survey of 21 plywood plant owners, the 1987 study concluded that many owners are interested in small-scale wood-waste biomass burners. However, to make investment decisions, they require authoritative information for these units, including: installed capital costs, projected operation and maintenance costs, maintenance requirements relative to present operations, after tax rate of return on equity, financial payback time, and equipment performance and plant life. A 1994 update of the 1987 study suggested that the situation in Indonesia was increasingly favorable for waste-wood power systems. It states: In the six years since this study was conducted, diesel price subsidies have decreased substantially and the Government of Indonesia, now a net importer of diesel fuel, is actively supporting environmentally sustainable means to decreasing diesel fuel use.
A number of countries are exploring biomass energy projects for their national climate change action plans, and as possible ERC proposals. In some, the key interest is to provide a new and renewable energy source; in others, it is to substitute woody biomass for fossil fuels, particularly coal. One of the major challenges to successfully developing and carrying out a biomass energy project is the need for close coordination between the energy and forestry sectors in particular countries.
Urban forestry has emerged in recent years as a powerful tool for urban planning and for improving the quality of life in metropolitan areas. The carbon benefits of urban forestry stem not only from sequestration in woody biomass, but even more so from energy conservation through shading. Assessment and planning tools now exist that inform local policy makers and citizens about their urban ecosystem and how to improve urban environmental quality through strategic tree planting. Geographic information system (GIS) models quantify existing benefits from vegetative cover and project the costs and benefits associated with different future scenarios. Current models can assess the following environmental parameters in urban areas:
· Storm Water Control: Trees reduce the amount and flow of storm water in urban areas and thus reduce the need for management infrastructure.The carbon benefits of urban forestry stem not only from sequestration in woody biomass, but even more so from energy conservation through shading· Ambient Temperature Control can mitigate the heat island effect that drives urban temperatures up to 12 degrees higher than surrounding areas.
· Energy Conservation: By lowering temperatures and strategically shading buildings with vegetation, less energy is needed for air-conditioning.
· Carbon Sequestration: The ecosystem analysis can measure and predict carbon sequestration in urban trees.
· Air Quality: Urban trees filter pollutants as part of their transpiration process, and lower temperatures also reduce smog.
To date, there have been few urban forestry projects in the Region associated with GHG mitigation or carbon offsets. There has, however, been a growing interest in the new technologies of urban forestry which help existing cities to alleviate urban pressures and the planning of new cities with rapidly growing populations and economies. To structure an urban forestry project as an ERC project, however, it is critical to focus on the energy conservation benefits obtainable through strategic tree planting.
3.2.1 Rio Bravo (Belize)
3.2.2 Scolel Té (Mexico)
This section discusses two forestry ERC projects from Latin America, developed as AIJ projects. Both received approval through the USIJI. These projects are successful examples of efforts to develop new initiatives in the forestry sector. Countries in the Asia-Pacific Region could replicate elements of these efforts.
The Rio Bravo Conservation and Management Area (RBCMA) Carbon Sequestration Pilot Project, located in north-west Belize, Central America, combines land acquisition and a sustainable forestry program to achieve carbon mitigation. The Wisconsin Electric Power Company (WEPCO) and other US utility companies, plus The Nature Conservancy (TNC), are the US participants in this project. The host country partner is the Program for Belize (PfB).
The project has two components: Component A involves the purchase of a parcel of endangered forestland, thereby expanding RBCMA’s existing protected forest areas. Component B involves the development of a sustainable forest management program to increase the level and rate of carbon sequestered within a portion of the RBCMA, including the purchased parcel. The remaining RBCMA lands will be left undisturbed as controls, as well as for conservation and research purposes. Once sustainable forest management practices prove successful, the participants plan to extend the project beyond the present RBCMA boundaries. The project’s objective is to demonstrate an optimal balance between cost-effective carbon dioxide sequestration, economically sustainable forest yield, and environmental protection. The sustainable development component is central to ensuring that this objective is achieved on a long-term basis.
The RBCMA project was developed from the outset in cooperation with an electric utility, WEPCO. After screening more than twenty potential projects being planned by TNC’s Latin American and Caribbean partner organizations, WEPCO and TNC agreed that the Rio Bravo was the most promising. Together they approached PfB to sign a Memorandum of Understanding “to develop a joint proposal for a pilot carbon sequestration project” for submission to the USIJI. On October 17, 1994, in response to the Rio Bravo Pilot Project, the Government of Belize ratified the FCCC, and issued a letter to US Undersecretary of State Tim Wirth endorsing the project and the concept of carbon offset trading (USIJI, 1995).
In addition to GHG benefits, the project will generate a number of other benefits. These include the protection of biodiversity and wildlife habitat, improvements in soil stability, water and air quality, the creation of local jobs, and long-term improvements in the local economy through the development of non-timber forest product industries.
The Scolel Té project is a pilot-level demonstration of sustainable forestry combined with agroforestry (tree/crop system). It covers management practices in nine indigenous Mayan communities, in the humid lowlands and drier hill forest-croplands of northeast Chiapas. About 2,400 hectares of individual and communal farmlands have been identified by the villagers themselves as suitable for improved practices to be funded through the farmers’ own rural agricultural credit union. Plans call for a 3-year start-up phase, followed by 27 years of social, economic, environmental, and carbon benefits. If fully funded and implemented, these should total 230,000 metric tons of carbon. Scolel Té seeks to develop a model for delivering technical assistance from the project coalition, plus income from investors seeking potential GHG reduction benefits, thus increasing farmers’ carbon sequestration. Through its strong research and monitoring components, it is also drawing up protocols for the administration, monitoring, and evaluation of larger-scale land-use sequestration programs for low-productivity lands in southern Mexico. Project activities should help conserve biodiversity, and reduce human migration to the critical Lacandon forest frontier affected by deforestation. Several project strategies exist to sequester carbon:
· Tree plantations can be established on pastures, increasing carbon storage by approximately 120 tons per hectare;Organizational partners in the Scolel Té project include the University of Edinburgh, Union de Credito Pajal, El Colegio de la Frontera Sur, Counterpart International, American Forests, and Econergy International. These organizations play complementary roles in the development, marketing, and implementation of the project. The project has been particularly innovative in designing and testing mechanisms to facilitate investor dollars for carbon benefits and such funds will be distributed to farmers committed to improved management regimes for their lands.· Agroforestry projects will intersperse timber and fruit trees with annual and perennial crops, sequestering about 70 tons per hectare;
· Restoring degraded forests can increase storage by about 120 tons per hectare, and protecting threatened forests can prevent emissions of up to 300 tons per hectare.
3.3.1 Indonesia: Reduced Impact Logging
3.3.2 Malaysia: Tropical Forest Rehabilitation
3.3.3 Malaysia: Reduced Impact Logging
3.3.4 Fiji: Community Forestry Pine Plantations and Sustainable Forest Management
3.3.5 Solomon Islands: Natural Forest Management
3.3.6 Papua New Guinea: Integrated Conservation and Development
3.3.7 Vanuatu
There are few examples of forestry sector carbon offset projects in this region. So far, only one has been approved by USIJI – a RIL project in Indonesia. Besides the Indonesian project, at least four other forestry sector proposals have been submitted to USIJI from the South Pacific. Two proposals came from Fiji, one from the Solomon Islands, and the other from Papua New Guinea (PNG). All these proposals are viable in their own right, and also provide examples for other efforts. In addition, there are two forestry projects in the Region being carried out through an ERC approach: a forest rehabilitation project in Sabah, Malaysia, supported by the FACE Foundation; and a RIL project in Sabah, supported by New England Electric Systems (NEES).
A major barrier to such projects in the Region has been the lack of host country support for ERC concepts. Without host country endorsement, there is little chance a project will be approved by an international program such as USIJI. Without such approval, there is an even smaller chance that a project will receive investments. To date, the Indonesian RIL proposal and a PNG proposal have been the only ones to receive host country approval. Another challenge for such projects is the difficulty in calculating carbon emission baselines. The PNG project, for example, had to hire an outside consultant from Australia to establish some estimation parameters for a baseline. Still another challenge relates to the level of commitment of project developers to fully develop these proposals as carbon offsets. The basic problem is that implementer groups are reluctant to provide scarce resources and energy for such proposals unless convinced that investors can be found. On the other hand, investors are only attracted to solid project proposals with credible, committed project developers and implementer groups, with proven marketing ability. A final issue for individual countries is regional politics, which further delay ERC activities. This makes it difficult for individual countries – even if enthusiastic about ERC projects – to break from regional positions.
The Indonesia Reduced Impact Logging Project is the first forestry sector proposal in the Asia-Pacific Region to receive approval from the USIJI. As such, it succeeded in overcoming a number of challenges. In many respects, this project replicates the Sabah, Malaysia, RIL project (see 3.3.3) and is especially interesting as it represents a “South-South” technology transfer, reflecting the training and transfer of RIL techniques between Malaysia and Indonesia.
The project will use RIL techniques to reduce GHG emissions associated with logging practices in East Kalimantan, Indonesia. RIL will be introduced on 600 hectares within the Kiani Lestari (private) and Inhutani II (parastatal) logging concessions in East Kalimantan. These lowland dipterocarp rain forests have not been previously harvested. Nor are they densely populated. The project will include guidelines and procedures for RIL techniques, on-site training in directional felling, and other RIL techniques. It is estimated that logging damage to the remaining biomass can be reduced by as much as 50% through pre-cutting vines, directional felling, and planned extraction of timber on properly constructed skid rails. Project developers believe this project will generate savings of 56,400 tons of carbon over its projected 40-year period.
Concessionaires in Indonesia fully understand that their harvesting standards must improve considerably to meet the ITTO 2000 guidelines. The project will allow private concessionaires to gain further experience in sustainable forest management. Without outside financing for lower impact logging, however, the incentive to expend resources on improved management is minimal. A carbon investment would provide training as well as pay for various RIL activities such as better planning, mapping, road construction and so on. The project also has public relations value both for the concessionaire and potential investors. Project developers hope the experience will clearly demonstrate that RIL makes good economic sense.
Organizational partners in the project include COPEC, Counterpart International, the Center for International Forestry Research (CIFOR), the Association of Indonesian Forest Concession Holders (APHI), and the Kiani Lestari and Inhutani II concessionaires.
The Forests Absorbing C02 Emissions (FACE) Foundation focuses on reforestation in the tropics, Eastern Europe and Holland with 85% of its capital committed to tropical projects. In Sabah, Malaysia, FACE is currently funding a tropical forest rehabilitation project (Innoprise-FACE Foundation Rainforest Rehabilitation Project) involving enrichment planting with indigenous dipterocarp species on 5,000 hectares of logged-over land to help restore the forests’ original structure. This area may be extended to cover 25,000 hectares. The rights to the downstream timber belong to Innoprise Corporation, the concessionaire, and the carbon benefits belong to FACE. When Innoprise harvests trees, it is obliged to use RIL techniques to maintain the integrity of the carbon pool.
A rolling contractual relationship between the Massachusetts-based New England Power (NEP), and Innoprise Corporation in Sabah, a Malaysian timber concern, is interesting, as it is the first project to be renegotiated for continuance beyond the experimental phase. While NEP is still substantially involved, the project’s expansion is now officially sponsored through the EEI’s Utility Forest Carbon Management Program.
NEP/EEI have agreed to pay for the assessed incremental cost in implementing RIL on an allocated portion of the concession’s annual harvest area. The pilot stage of this project lasted three years and covered a test area of 1400 hectares. The calculated GHG benefit results were sufficiently positive to warrant extending the contract between NEP and the concession for up to 9000 hectares of RIL over the coming three years. For 1996, NEP placed the project into the EEI Utilitree consortium, which will pay for performing RIL on 1000 hectares. The approximate cost, based upon GHG savings, is around US$ 1.40 per ton of CO2.
The project is notable because of the innovative monitoring, evaluation, reporting and verification system. An interesting component of the NEP-Innoprise system is the independent Environmental Auditing Committee (EAC), which “grades” the concession on adherence to RIL techniques. This helps guarantee NEP-EEI that the performance contracting they are paying for is true to agreed specifications.
Innoprise is a subsidiary of the Sabah Foundation, created by the Sabah state government and charged with promoting the sustainable development of the state. Thus, Innoprise is different from other private concessions operating in Sabah in that it has more of a social and sustainable development mission. Innoprise was more receptive to introducing RIL techniques on their concession because of that very mission. The concession, the state government, and indeed the investor, have all reaped significant public relations benefits. Adequate financing has allowed the concession to test the RIL concept in a relatively small area. More importantly the ERC investment has led to impressive improvements in the logging standards throughout the concession.
Fiji Pine Ltd. (FPL) and the Department of Energy collectively submitted a proposal to expand FPL’s community forestry extension program of planting small pine plantations. The project, traditionally financed through a combination of Fijian government funds and external funding, uses Fiji Pine’s capital resources. The USIJI submission proposed approximately 400 hectares of distributed plantings every year. Since the initial proposal, the proponents have decided to upscale the proposal to approximately 1,000 hectares a year to accomplish more economies of scale and to make the project more attractive to potential additional investors. If formal governmental approval can be received, this proposal will eventually be recast for further investment review.
Also in Fiji, the Native Land Trust Board (NLTB) has recognized that carbon offset funding could be used for preservation of the Sovi Basin, on Viti Levu. Sovi Basin is an enclosed amphitheater formation of approximately 20,000 hectares of forests at the center of a logging dispute for nearly twenty years. Local landowners have at times appeared willing to forego logging the Basin, if they can be guaranteed a comparable stream of income from alternative sources. While there are a number of possibilities in this regard – including eco-tourism – a trust fund based on the carbon content of Sovi Basin could be an innovative carbon offset project. The ERC component of this project remains “on hold” while negotiations between landowners and NLTB continue.
The UNDP/FAO South Pacific Forestry Development Program and the Solomon Islands’ Department of Forestry proposed that a carbon offset funding component be built into a proposed natural forest management program. This project was designed to implement RIL and to quantify the GHG savings in typical Melanesian forests. As a forest management proposal, this project was advanced. It has floundered as a carbon offset project, because of difficulties in identifying the official ERC project or FCCC point of contact within the government.
The PNG Department of Environment and Conservation, in conjunction with the GEF-supported Biodiversity Conservation and Resource Management Program, put forth a proposal for carbon offset financing as part of an Integrated Conservation and Development Program in Lak, New Ireland. This proposal combined elements of preservation, forest rehabilitation, plantations and low impact logging of primary forests, as well as some value-added timber processing not formally part of the carbon offset prospectus. This is by far the most sophisticated South Pacific USIJI submission to date and seemed likely to have achieved both acceptance and even investment, had on-the-ground difficulties not forced the project proponents to re-evaluate their position and choose to withdraw support. Stuart and Sekhran (1996) describe and discuss the project in a recent UNDP publication.
The Department of Forestry of the Republic of Vanuatu has expressed interest in ERC, mainly because its government views them as a promising source of funding. The Forest Department, accordingly, has proposed five ERC project ideas. Progress toward fully developing the proposals for submission to USIJI has been slow for two reasons: first, designing a proposal requires substantial resources, currently unavailable; and, second, the government has yet to establish a point of contact and position for ERC project related activities.
