Global — Carbon market prices could tumble by 75 percent if credits for safeguarding forests are added to markets for industrial emissions, environmental group Greenpeace said on Monday.
A report issued on the sidelines of UN talks in Bonn working on a climate treaty said that a flood of forest carbon credits could also slow the fight against global warming and divert billions of dollars from investments in clean technology.
“Cheap forest credits sound attractive but a closer examination shows they are a dangerous option,” Roman Czebiniak, Greenpeace International political adviser on forests, said of estimates by Kea 3 economic modelling group in New Zealand.
About 175 nations are meeting in Bonn from March 29-April 8 to discuss measures for fighting global warming. Among them are ways to slow tropical deforestation, which accounts for a fifth of all greenhouse gas emissions from human activities.
Trees soak up carbon dioxide, the main greenhouse gas, as they grow and release it when they are burnt or rot. Placing a price on intact trees could help save forests from the Amazon to the Congo basin from logging and land clearance by farmers.
“Including forest protection measures in carbon markets would crash the price of carbon by up to 75 percent and derail global efforts to tackle global warming,” Greenpeace said.
The report projected the 75 percent fall in prices, to 3.9 euros (US$5.16) per tonne by 2020 from a baseline of 16.05 used in the report, under current national policies for limiting emissions.
CLEAN ENERGY INVESTMENTS
“Countries like China, India and Brazil could lose tens of billions of dollars for clean energy investments if forest protection measures are included in an unrestricted carbon market,” it added.
There is so far no agreement on how to put a price on forest carbon under a new treaty. Suggestions range from carbon trading to new taxes in developed nations to raise cash. Governments aim to agree a new UN climate treaty in Copenhagen in December.
A European Commission report last year also said the European Union should not let industry meet its climate goals by funding forest conservation in tropical nations before 2020.
“Allowing companies to buy avoided deforestation credits would result in serious imbalances between supply and demand,” it said. It said deforestation emissions were three times bigger than emissions regulated by the EU emissions trading scheme.
And New Carbon Finance analyst Aimie Parpia estimated in a report earlier this month that unlimited use of forestry could cut carbon offset prices by 40 percent by 2020.
Greenpeace’s own forest proposal is to allow industrialised countries to meet a part of their emissions reduction goals by buying cheaper “tropical deforestation units” as an addition to deep cuts in domestic emissions.
These units, however, would not be tradeable on markets for industrial emissions.