4.1 Increasing Receptivity toward ERC Projects in the Region
4.2 Forestry Sector Challenges
Governments, private industry, and NGOs in the Asia-Pacific Region are presently showing an increasing receptivity toward ERC projects. To gain more experience, some governments have expressed interest in supporting the development of ERC pilot projects. They are particularly interested in learning whether they can actually provide the local development and environmental benefits that most developing countries want. Information gained from experience with ERCs – the ultimate purpose of AIJ – is helping to determine the next steps toward the creation of a more formalized international system for trading GHG emission credits. This new openness toward ERC projects does not suggest, however, that governmental concerns on such issues as commitments by developed countries to reduce their own GHG emissions and eco-colonialism will easily be overcome. It does suggest that these countries are more willing than before to explore ERC opportunities and to experiment with pilot projects. Many countries will likely want to develop their own domestic programs first to ensure they can guide pilot ERC projects to meet their own national priorities.
As general interest in ERC projects grows, a couple of challenges are emerging specific to the forestry sector. First, as ERC proposals in the forestry sector receive substantial attention, NGOs are likely to raise eco-colonialism concerns. The intense interest of domestic and international NGOs in the forestry sector – particularly in the Region’s tropical rainforests – requires careful consideration. This, in turn, could make forestry projects more complex and problematic than projects in other sectors. Second, proponents of energy sector projects are promoting energy efficiency and renewable energy projects as mechanisms to gain not only CO2 credits, but returns on investments as well.
Indonesia’s approval, in January 1997, of the Region’s first forestry sector USIJI proposal indicates a policy shift toward ERC projects, both in that country and probably the Region as a whole. Further indications were apparent in India recently when the Government of India approved several ERC projects, including a fruit tree plantation project submitted to USIJI. Other countries as diverse as The Philippines, Vietnam, Thailand, and Sri Lanka, made public statements in support of ERC projects recently.
All these countries have recognized the opportunities in their forestry sectors, consistent with the potential benefits discussed above. Often, however, their principal focus was on forest conservation/preservation and reforestation/rehabilitation. For example, in a paper, entitled “Expectations and Opportunities for AIJ Projects in Sri Lanka”, presented at the New Delhi conference, Sri Lankan officials recognized the opportunities through ERC for local entrepreneurs to partner with foreign investors. Partnerships would help fund forestry activities which otherwise might not be undertaken as they were financially unattractive. The paper cited, especially, reforestation of low productivity lands; conservation of natural forests; conservation of forest soils; harvesting with minimum disturbance of degraded agriculture land to improve soil carbon content; management of plantations and forests to optimize sequestration; and training of forest officers in preventing and controlling forest fires.
The paper also discussed opportunities for timber utilization or increased use of wood products as substitutes for concrete in construction: “Hence, replacing concrete structures with timber could achieve a double saving, reducing CO2 during cement manufacture and sequestering carbon in the timber. While these projects by themselves may not appear to be economically viable, ERC investments could convert them into viable projects.”
In his opening address at the Delhi meeting, Dr. S. Venugopalachari, India’s Minister of State for Power and Non-Conventional Energy Sources, called it the “first conference on AIJ for developing countries,” and noted that the forestry sector was an important area for AIJ activities in India. “Forests offer an ideal opportunity for investments and direct mitigation initiatives,” he said. He also noted other social and environmental benefits of forestry projects.
The New Delhi conference focused on developing country ERC project perspectives and included many participants from the Asia-Pacific Region, plus representatives from developed country programs and private investors interested in promoting ERC projects in the Region. The conference statement, endorsed by all participants, outlines the ERC concept by recognizing the need for “urgent action to accelerate implementation of agreements already reached by Parties [under the FCCC] and for evolution of cooperative mechanisms at the international level to encourage development activities that also serve to mitigate climate change.”
It also noted the relatively small number of ERC projects, about 40, since inception of the pilot phase and the need for more experience and empirical information as the basis for rational decisions on how, or even whether, to move forward beyond the pilot phase. The statement suggested, however, that there is a “growing optimism and interest in testing AIJ through partnerships on the ground.” This was based on the increasing number of ERC projects in various parts of the developing world, a trend also evident in the Asia-Pacific Region.
Among the nine conclusions reached at the Delhi conference, two were particularly stressed:
· Far more AIJ projects are needed during the pilot phase, in different sectors and countries, to provide for the post pilot phase regime; and· Developing countries should establish policy frameworks that give them a proactive edge in establishing national AIJ programs and in developing project proposals.
4.2.1 NGO Environmental Concerns
4.2.2 Bias Toward Energy Sector Proposals
Interest in ERC projects in the Asia-Pacific Region is growing, including the forestry sector. The forestry sector ERC projects, however, face challenges not related to this region alone.
As noted above, early discussions on FCCC characterized forestry sector ERC projects as relatively low-cost, no regrets activities – such as reforestation, improved forest management, and forest conservation – that provide environmental, economic, and social benefits which make sense regardless of their GHG benefits. Recently some NGOs have raised issues worth noting. Developing countries and environmental NGOs are concerned over issues related to eco-colonialism. They point out that developed countries seek to offset their own GHG emissions by simply investing in forestry activities in developing countries, thus essentially locking up forests as carbon sinks and restricting their use for development purposes, and deriving low-cost GHG benefits for themselves alone. Other concerns addressed were potential “leakage”, or the possibility that GHG impacts addressed by a project, such as deforestation, are transferred somewhere else, beyond the project’s boundary. Another concern is based on one of the aspects that makes forestry projects attractive as ERC projects – their ability to integrate economic, environmental, and social benefits. This ability to integrate has become a focal point of the environmental NGOs because of a history of exploitation of forest resources under sustainable forestry experiments that attempted to address broad concerns but yet failed.
A central NGO concern is that ERC projects – despite declared intentions to improve the global environment while providing environmental and economic benefits to local people – will become just another failed experiment and mechanism for further degradation of the environment. These NGOs support the careful preparation of principles and methodologies for ERC in the forestry sector that focus on sustainable forest management and build on guidelines already developed by the International Tropical Timber Organization (ITTO) and the Forest Stewardship Council (FSC). NGOs also are strongly concerned about the rights of indigenous people and the need to ensure that they receive a fair share of project benefits. These concerns make it more difficult to develop projects in the forestry sector relative to other sectors. However, these issues are not specific to ERC projects.
It is important that developing countries develop ERC project criteria that are consistent with the economic, social and environmental parameters of their national development priorities and plans. As mentioned earlier, ERC projects, by definition, require approval from the developing country government, presumably ensuring that any ERC project would be socially responsible, environmentally sustainable and economically viable.
Another emerging challenge for forestry projects in the Asia-Pacific Region, as well as elsewhere, is the bias toward developing energy sector projects. Attention of both governmental officials and private-sector investors on potential ERC projects seems mainly to focus on the energy sector, as this is where the largest current and future policy issues related to GHG emissions are invariably located. Advocates for forestry sector projects continue to stress the opportunity for low-cost, no regrets actions. Yet there is a need to go further and to address the comparative advantages of forestry projects relative to energy sector projects. One way to do this is to differentiate between forestry and energy sector projects in terms of time frame, scale, cost, and other benefits, and then to discuss how projects in the two sectors are compatible from a policy perspective. Officials in Mexico, for example, discuss how there are significant low-cost opportunities for project development and investment in the forestry sector, which could sequester or reduce significant GHG emissions, while also providing other social and environmental benefits. Such projects could be carried out in the short term while the policy framework and necessary technologies for larger actions in the energy sector are put in place.
