Oil Report

Australia wants forest CO2 trade in Copenhagen pact

NEW YORK, March 27 (Reuters) - Australia has submitted a proposal to U.N. climate negotiators that outlines a scheme to use carbon credits to protect rain forests, Climate Change Minister Penny Wong said on Friday.

The submission will be circulated to negotiators meeting next week in Bonn, Germany, to discuss a new U.N. climate treaty that world leaders hope to agree to in Copenhagen in December 2009.

“We think a post-2012 agreement will need to include forests in some way,” Wong told Reuters in an interview in New York after addressing U.N. diplomats at the International Peace Institute, a think tank devoted to peace and security.

“Currently too many developing nations have an economic imperative to cut down forests. What we need to put in place is a mechanism that means instead of an economic imperative to cut down forests, we have an economic imperative to protect them.”

The United Nations has backed a scheme called REDD, or reduced emissions from deforestation and degradation, in which developing nations such as Brazil and Indonesia could potentially earn billions of dollars from selling carbon credits in return for saving their forests.

But the scheme is in its infancy and regulations are needed to guide how REDD projects will work, to credibly monitor how much carbon they will save and sequester and set out how money from selling the credits will flow to local communities.

Wong said deforestation and forest degradation account for around 18 to 20 percent of greenhouse gas emissions.

“What Australia is putting forward is a proposal for a forest carbon market mechanism that essentially will try to provide this economic incentive,” she said.

She said there was much work to be done on negotiating the details before the Copenhagen summit, and there would have to be public sector financing, especially in the early stages.

Wong said the economic downturn must not derail strong action on climate change because when world economies emerge from the downturn, “climate change will still be there.”

“We can’t keep delaying, deferring and avoiding action on climate change,” she said.


Wong has presented draft legislation for a cap-and-trade system targeting emissions cuts of between 5 and 15 percent of 2000 levels by 2020, with the higher amount dependent on a broader global U.N. climate pact being agreed in Copenhagen.

But the legislation faces a tough passage in Australia’s Senate.

The center-left government controls the lower house but needs the support of the opposition conservatives, or the backing of five Green senators and two independents, to pass laws through the upper house.

Climate change action was a central part of Prime Minister Kevin Rudd’s election campaign and the gridlock in parliament has led to speculation of an early election.

The Greens have said they will not accept a reduction of less than 40 percent in emissions.

Wong said a 15 percent emissions cut would already be “challenging,” though achievable, given Australia’s huge reliance on cheap coal for power and other industries.

“We’re not in the business of putting targets on the table that we don’t think we can achieve,” she said.

Asked whether the planned July 2010 start of the cap-and-trade system could slip if the legislation is not passed quickly, Wong said that was in the hands of the Senate.

“If they’re prepared to block legislation which will ensure Australia commences to reduce its emissions, all they’ll be doing is pushing the problem off into future years,” she said.

Wong said it was vital for the United States and other developed countries to show leadership and a willingness to cut their emissions in order to build trust before Copenhagen.

“The United States at this point in history, under this administration, has a unique opportunity to provide leadership and to give momentum to the negotiations,” said Wong. (Additional reporting by Tim Gardner, editing by Michelle Nichols and Vicki Allen)