SINGAPORE (Reuters) - A carbon accounting technique aimed at saving tropical forests has passed a key hurdle, strengthening chances it could underpin development of a potential multi-billion dollar market for forest carbon offsets.
U.S. firm Terra Global Capital said the method had passed the first of two formal audits the benchmark Voluntary Carbon Standard (VCS) requires. When fully verified, it could be used in a U.N.-backed carbon-cutting scheme known as reduced emissions from deforestation and degradation (REDD).
“The methodology is expected to be broadly applicable where mosaic patterns of deforestation occur throughout Southeast Asia and Africa,” Leslie Durschinger, founder and managing director of Terra Global Capital, said in a statement. Her firm offers finance and advisory services for REDD projects.
REDD aims to give developing countries funds to preserve remaining tracts of forest that soak up huge amounts of planet-warming carbon dioxide, but it is still in its infancy.
Its success will rely on rigorous carbon accounting and monitoring to ensure forests remain intact, are rehabilitated and lock away CO2.
Such accounting steps underpin the value of the carbon offsets that will be the currency of REDD projects, with rich governments and companies buying the credits to the benefit of local communities in poorer nations.
Mosaic REDD covers projects to save forests from threats such as logging, fuel wood collection, fires and conversion to farmland.
To succeed, these projects need to be designed to work with local communities and allow carbon reductions to be measured and reported so as to reassure investors.
Terra Global Capital said the process was designed for its Cambodia REDD project in northwestern Oddar Meanchey province, which involves 13 community forest groups and 58 villages.
The government-backed project aims to protect nearly 70,000 hectares of forest and generate 7.1 million carbon offsets over 30 years. Community forest members in return get legal tenure to the land and at least half the net income from the sale of the credits as well as employment.
Dozens of REDD projects have been started in developing nations, with more than a dozen in Indonesia, where the Australian government has committed at least A$70 million to spread REDD in its northern neighbor.
But to issue valuable offsets, the projects need to meet rigorous standards under the VCS and none have yet issued REDD credits after double VCS validation or approval under the other standard from the Climate, Community and Biodiversity Alliance.
The Washington-based VCS sets tough global standards to make carbon offset programs credible and transparent to investors.
Wealthy nations, including Norway, the United States and Japan have earmarked billions of dollars to help develop REDD, key among them Norway’s recent $1-billion forest deal with Indonesia. The aim is for REDD to become part of a broader global climate pact from 2013.
An Australian carbon services firm has also signed a deal to certify REDD offsets from a group of tribal leaders on the Indonesian island of Halmahera in the Moluccas.
Shift2Neutral, which last week announced a similar deal with tribal leaders in Sarawak, Malaysia, said it covered certification of credits from 159,000 hectares of forest land owned by a group of 10 villages and involving 163,000 people.
The deal provides for half the proceeds from future carbon offset sales to go to improving livelihoods.
“The logging issue is paramount as the area is under threat and the villages need to have an alternative, plus a major mining group is there and will be held to account to ensure the environment is not jeopardized,” Shift2Neutral Chairman Brett Goldsworthy told Reuters.
Editing by Manash Goswami