Archive for the ‘Carbon Credits’ Category

Brazil Wants Limits on Tropical Trees for CO2 Credits

December 2, 2009

Dec. 2 (Bloomberg) — Brazil, whose Amazonia rainforest is the biggest in the world, wants a new climate agreement to limit the use of forests to slow global warming, putting a crimp on investors hoping to create carbon credits from trees.

South America’s largest economy will make the forestry proposal at next week’s climate summit in Copenhagen, where about 190 countries are trying to establish new reductions in greenhouse-gas emissions, Environment Minister Carlos Minc said.

Brazil will support a United Nations plan to save trees provided industrialized nations agree to use a maximum of 10 percent of their emissions targets to invest in forest projects, Minc told reporters. Otherwise, richer countries may overuse the program at the expense of making carbon cuts at their own factories and power plants, he said.

“After five rounds of negotiations with the governors from the Amazon, we decided to incorporate REDD in our national proposal but under certain conditions,” the minister said yesterday in Brasilia, using the initials for the UN’s “reducing emissions from deforestation and degradation” plan.

Brazilian leaders may even wind up keeping Latin America’s most populous nation largely out of the carbon market. Ecuador, Bolivia and Costa Rica — and not Brazil — may generate the most carbon credits for participants, carbon market analyst Aimie Parpia said yesterday in an interview from London.

“Even though Brazil has the highest physical potential, it always looked unlikely that it will see much project activity,” Parpia said. That’s because the nation didn’t want to join a forest-protection market for credits. “Today’s announcement suggests that that they may be softening their stance.”

Amazon Deforestation

Brazil, with one-third of the world’s tropical forest cover, said last month it would offer to reduce its emissions by 38 percent to 42 percent from current projections for 2020. Slowing deforestation in the Amazon would generate about half of that reduction, it said.

Trees absorb carbon dioxide, the main man-made gas scientists blame for global warming. Removing forests to create pasture or room for mining projects or homes adds to the greenhouse effect that helps warm the planet.

Without Brazil, fewer credits will be offered to utilities such as American Electric Power Co. and PacifiCorp, owned by Warren Buffett’sBerkshire Hathaway Inc., under the plan being negotiated at the climate summit in Copenhagen this month.

Credits from preserving forests are going to be an important “transition” for economies including the U.S. that will likely need to meet CO2 targets without the technology ready in the near-term to do so, said Mark Tercek, a former Goldman, Sachs & Co. partner who heads The Nature Conservancy, which established a REDD project in Bolivia.

California to Bolivia

The Nature Conservancy has worked for a decade with American Electric, BP Plc and PacifiCorp, which owns seven hydroelectric dams on the Klamath River in Oregon and California, to create credits from forests in Bolivia.

The group spent about $11 million to buy out logging concessions, pay for monitoring and enforcement of the ban on logging, and help Bolivians to adapt their use of the forest.

“Forestry is going to be a very important tool in reducing carbon emissions because you can get very significant reductions fairly quickly,” said Melissa McHenry, a spokeswoman for AEP. She said the company aims to use the least expensive option for cutting emissions, including credits from forest protection.

Nations with tropical forests will need $10 billion to $40 billion in annual incentives not to turn their forests over to timber and agriculture industries, New Zealand said in a proposal to the UN Framework Convention on Climate Change, the Bonn-based supervisor of climate-protection treaties.

Preserving Trees

Under the Brazilian plan, only one-tenth of the gas reductions assigned to a developed country under any new climate accord could be covered by preserving trees,.

“If the target is a 30 percent emissions reduction, we propose a limit of 3 percent for the purchase of compensatory REDD credits,” Minc said.

Another condition Brazil will propose is the contribution by developed countries of 0.5 percent to 1 percent of their gross domestic product each year into a global fund to help poorer nations mitigate the effects of climate change.

The UN-sponsored REDD plan, which would reward investors in forest preservation with either aid or tradable carbon credits, will be debated by envoys from about 190 nations in the Danish capital at the negotiations starting Dec. 7.

To contact the reporters on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.netAdriana Brasileiro in Rio de Janeiro at

Last Updated: December 2, 2009 06:37 EST