21 March 2016 | WASHINGTON, D.C. | Carbon offsets are increasingly seen as a tool to support Sustainable Development Goals (SDGs), as well as mitigate climate change, according to a new report from Forest Trends’ Ecosystem Marketplace, Not So Niche: Co-benefits at the Intersection of Forest Carbon and Sustainable Development.
The report was based on responses to EM’s 2015 survey of forest carbon project developers from across the globe, 81 of whom reported on these multiple benefits. Collectively, these initiatives delivered the following impacts in 2014:
16 March 2016 | Allie Goldstein of Ecosystem Marketplace spent a month avoiding the “big four” agricultural drivers of deforestation – palm oil, soy, beef, and pulp & paper – in a consumption experiment that was documented in The Washington Post. The article, which you can read here, concludes that the onus to break the link between everyday products and deforestation should not be on consumers; it should fall on companies that make the stuff and the governments that regulate them. In this Q&A, Goldstein talks with Scott Poynton, founder of TFT (The Forest Trust), who works with major companies to do just that.
Allie Goldstein: Tell me a little about your background and why you decided to found TFT.
Scott Poynton: I was part of a research project in Vietnam trying to find the best ways to reforest areas of the Mekong Delta and we were doing all of this interesting research to determine the best species to plant, where to plant them. A Taiwanese company came in with vast amounts of money and convinced the province that they should give them a huge area of land to plant eucalyptus. So I watched them plow up this land, they pumped all this acid into the waterways and it killed all the fish, and of course two years later all the trees were dead anyway. It just made me realize that businesses can be really stupid, but what a good force they could be if they had done it in a different way.
AG: You say on your website that TFT’s framework is to get companies to define their own goals that align with their own values, and then meet those goals. So you don’t come with a prescriptive idea about what the goals should be, necessarily.
SP: That’s right. We believe people are generally good. Negative consequences do happen due to the way companies run their business, but once you help them understand those negative consequences and how they can be avoided – in fact how they can be turned into positive things – our experience is that most companies go for that. I think if you help people understand what the possible paths look like, they generally pick the one that’s responsible.
AG: How does no or low deforestation come up in those conversations?
SP: One example is our work with Nestlé. When Greenpeace campaigned against Nestlé, they reacted very strongly saying, ‘We don’t want to kill orangutans, that’s not who we are.’ And so we said, ‘Okay, if you don’t want to be responsible for killing orangutans, you better make sure that the palm oil you buy is not linked to deforestation.’ My book [Beyond Certification, available for free download here] describes how that sort of values-based approach leads to a lot of innovation.
AG: Where does the title of your book come from?
SP: I’ve seen so many people say, ‘If not certification, then what?’ It’s very clear to me that we need to start thinking about the ‘then what?’ because certification isn’t transforming the industries it was set up to transform. We’re facing six degrees [Celsuis] of climate change, and if we’re going to rely on this tool, which after 20 years actually hasn’t achieved what people had hoped, we’re not going to make it. So we need to go beyond certification and look at a different way of working.
AG: It struck me when doing this consumption experiment over the last month that it was very hard to find products that were labeled in a way that meant no deforestation. RSPO (Roundtable on Sustainable Palm Oil) doesn’t necessarily mean no deforestation, so that label didn’t help me. But even if there were a clear certification system, I wonder why you even have the option to buy something that contributes to tropical deforestation?
SP: Well, exactly. This is one of the arguments put forward by the people who put forward so much effort to grow organic food. Why do they have to spend all the money to prove they’re not putting pesticides on plants? It’s one of those things where people are going to look back in 50 or 100 years’ time and say, ‘What the hell were we thinking?’
AG: Do you see consumer pressure as an important part of pushing companies towards sustainability in their supply chains?
SP: A bit, and growing, but from a low base. I think companies are concerned about their reputation, and they don’t want to be linked to deforestation but it’s really because they don’t want Greenpeace or some other NGO like RAN [Rainforest Action Network] hanging off a building or running a campaign against them. I don’t think, especially in the States, that [companies are] getting a lot of pressure from consumers.
AG: Traceability is much easier said than done. Can you describe step-by-step the process by which a company actually goes about tackling that for palm oil?
SP: They know who they buy from, and they go and talk to them and say, ‘Who do you buy from?’ And sometimes [the suppliers] don’t know. And so [the buyers] say, ‘Well, you need to know.’ You’ve basically got to work step-by-step back up into your supply chain. And if you’ve got a supplier who says ‘I don’t know,’ they’ve got to work it out. People are changing the way they buy palm oil so that they can do traceability. What’s happening now is that the traders are now getting asked by everyone, so they’re having to change their systems.
AG: How do they change their systems?
SP: They have to stop buying on the spot, they have to stop buying just on paper. They have to have a much closer relationship with the companies they buy from, and actually physically know where the [palm] oil comes from. And that’s the difference.
We’ve seen a Nestlé buyer pick up the phone and call a trader and say, ‘Okay, I’m moving my [palm] oil away from company X for three months, can you pick up this volume? But if you pick it up, I need to know where it comes from. Can you do that?’ A $5 million transaction in 30 seconds. So if the companies really, really want to know and are putting their policies into practice, money speaks.
AG: Can you point to an example of a company that you think has really transformed its sourcing to reduce deforestation?
SP: On the brand side, I think Ferrero Russia who make Nutella have done an exceptional job. I think Nestlé are doing a great job. On the trading and the growing side, I think Wilmar are doing very well. Golden Agri-Resources, we suspended them last year, but they responded to that very strongly and they’re really accelerating their program now.
AG: What do you think has allowed certain companies to be successful?
SP: I think it’s their determination. The leaders of the company banging their fists on the table and saying, ‘No, we don’t want to be linked to these bad things. Get out there and sort it out.’ That is the absolute key.
AG: So once you do all this traceability stuff and you find out where your palm or your soy or whatever it is comes from, what do you see as the major ways that you actually make sure that you’re not clearing tropical forests to produce those products?
SP: We talk about values first, then transparency, then transformation. You’ve got to get engaged with your suppliers. You start giving businesses increased orders because you’ve found that they’re not deforesting and they’ve got good relationships with communities. You don’t take away all the business from the non-compliant suppliers because then you’ve got no leverage. [Instead] you say, ‘We need you to change your behavior, we can give you a bit of support. And we’ll keep an eye on that, and if we find you’re making progress, we’ll increase your orders.’ And it’s working. Heaven forbid I wish it were going a lot faster, but we find our members are making genuine progress.
AG: Unilever and Marks & Spencer recently made an announcement that they would prioritize sourcing from states and jurisdictions that have strong no-deforestation policies in place. It was celebrated as scaling up and sending a signal at a larger political scale. Is that a strategy that you’re looking at? Do you think it’s a potentially effective one?
SP: I think it could be. It’s not straightforward. There are a lot of political jurisdictions out there, states, provinces, who want development. They get taxes from areas of palm oil, they get money paid to them as incentives to give out palm oil licenses. So it’s a nice announcement, but implementing it is going to be a challenge. I’m very cynical about some of these announcements.
AG: Companies tend to get press at the time when they make the commitment, but five years later when they’re supposed to have met that commitment, there’s no one necessarily following up and saying, ‘Hey, you didn’t meet this commitment that you got all this positive attention for.’
SP: I agree. We’re trying to get our suppliers to give an update every quarter on how it’s going. That’s a challenge, companies don’t like it. But we’re saying, that’s the only way. You’ve got to tell the world where you’re buying your palm oil from and let people judge. If you say to the community, ‘Look we’ve set this target, but we’re having challenges to reach it because of X, Y, and Z,’ some bright person may have solved X, Y and Z, and they might tell you [how they did it]. By sharing information, you have a greater chance of actually reaching your goals.
AG: I think that’s a really interesting point, because as a consumer, I’m actually more interested in the story and if you’ve made a mistake, understanding why it happened. I’m interested in the long-term plan and vision.
SP: Yes, cheap headlines aren’t very helpful. We want to know, how are you going on the journey?
AG: So, this no deforestation experiment was very difficult. I had to avoid whole categories of food, and I switched over all my soaps, and on and on and on. I couldn’t find a single laundry detergent that didn’t have palm oil. Do you envision a point in the near or far future when an experiment like mine would be much easier?
SP: I hope so. It’s difficult to put a date on when that could be. I suspect that you probably could have bought more products that aren’t linked to deforestation, but at the moment the challenge is to give you that information at the point of sale. I think you’ve got to get to a situation where you buy on the basis of brand. [As a consumer] you could say, ‘Well I know that company X is working on this, I understand that this company is moving in that direction.’ And then you need NGOs to keep them on their toes, to be asking the right questions, to be pushing them. Because consumers can’t take that responsibility. The companies that we’re working with are going as fast as they can, they’re going 100 miles an hour.
Editor’s note: TFT recently launched a transparency hub that provides information about their members’ progress. You can also keep tabs at Supply-Change.org, a project of Forest Trends and our partners.
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9 March 2016 | The Tropical Forest Alliance is holding its general assembly in Jakarta this week, and it’s hard to imagine a more appropriate setting.
After all, Indonesia recently surpassed Brazil as the deforestation capital of the world, and the country consistently ranks among the world’s five largest emitters of greenhouse-gases – mostly because palm-oil manufacturers in the “land of a thousand islands” have been chopping the archipelago’s peat forests to make way for plantations.
That’s especially bad for the climate, because drained peat exposes centuries’ worth of half-decayed plants, releasing two greenhouse gasses: carbon dioxide and methane. It’s a double-whammy that contributes several times as much to the greenhouse effect as does normal deforestation, and it’s also harder to calculate than are emissions from most deforestation – yet such calculations are critical if Indonesia is to manage its climate-change impacts.
Towards that end, the country is building the Indonesian National Carbon Accounting System (INCAS), which aims to track the “carbon flux” across all land-use types – forests, farms, and fields – with 95% accuracy by 2018. That’s the level needed to receive payments for emission reductions that are rigorous enough to be transferred as carbon credits*.
INCAS wrapped up the first of four development phases late last year, and it’s now able to deliver that 95% accuracy when measuring carbon flows into and out of the country’s forests. But peatlands are the stickiest problem, and INCAS can’t yet offer top-tier accuracy for those.
The reasons are myriad: for one, peat bogs vary widely in depth and dampness, which effect emissions, but man’s impacts are also difficult to track there for historical reasons. The country’s governance system has roots in diverse traditional societies that are spread over hundreds of islands, and it evolved as the country transitioned through colonial, dictatorial, and – finally – democratic rule. The central government has surprisingly little authority, especially when it comes to land-use issues, and often has to negotiate with local regents to prevent exploitative practices, while competing agencies often have jurisdiction over the same piece of land.
The Ministry of Environment and Forestry (MoEF) is currently working with other agencies to deepen its accounting of peatlands and expand into farms and fields, with the system fully-functional by 2018, but it faces obstacles that are scientific, societal, and structural.
INCAS began germinating six years ago, when Indonesia built its initial climate-change strategy on tackling deforestation.
The country aimed to fund its efforts through carbon finance initiatives that slow climate change by saving endangered forests and Reducing Emissions from Deforestation and Degradation (REDD), coupled with programs that promote sustainable forest management and climate-smart agriculture (REDD+). To jump-start those efforts, Norway pledged $200 million to build a “REDD+ regime” that included a stand-alone REDD+ Agency that reported directly to the president, with $800 million more following when verified emission-reductions.
Those verified emission-reductions, however, haven’t yet materialized, and the REDD+ Agency became a casualty of the 2014 presidential election. The new president, Joko “Jokowi” Widodo, merged the previously competing ministries of environment and forestry into one entity, the MoEF, in which the Directorate General of Climate Change (DG CC) now resides.
Late last year, DG CC surprised the world by shifting its emission-reduction strategy from forest emissions to industrial emissions, with forest management now categorized as an adaptation (as opposed to mitigation) strategy. The new climate action plan described REDD+ as a primarily domestic mechanism that would funnel income from a growing industrial base to sustainable land-use strategies, while leaving a door open to international funding for REDD+ as well.
Then, with fires raging on the eve of the Paris climate summit, the country signaled a revival of forest protection as part of its mitigation (as opposed to adaptation) strategy, and last month, the Norwegians pledged $50 million to support peatland restoration.
The MoEF picked up where the REDD+ Agency left off, working with the Australian government and the Center for International Forestry Research (CIFOR) to scale the province of Central Kalimantan’s REDD+ pilot program up into what is now INCAS.
The ultimate goal is to provide “Tier 3” accounting of carbon flows due to changes in land-use across the entire landscape.
Tier 3 is the highest level of accounting recognized by the IPCC, and it offers estimates that are 95% certain but it requires the taking of thousands of random measurements of tree-circumference and peat depth across the landscape – literally dropping teams of technicians into remote areas with measuring tapes and depth-sticks – coupled with exhaustive documentation of changes in land-use, as forests are converted to fields and fields are converted to forests.
Tier 1 accounting, by contrast, is built on average carbon content by land-use type, while Tier 2 is built on national or regional averages. These lower tiers are far less accurate than Tier 3, especially when it comes to peat, which varies by depth.
The challenge is compounded when it comes to identifying changes in land-use, especially in an archipelago like Indonesia, with its legacy land-use regimes.
“Data about peat and peatland management is maintained by numerous national and subnational agencies, research organizations and private companies,” says INCAS Technical Team Leader Haruni Krisnawati. “It is anticipated that greater collaboration between these organizations could yield substantial improvements in input data, and potentially the development of Indonesia-specific peat models that would improve GHG emissions estimates for Indonesian peatlands.”
It’s a challenge that the REDD+ Agency also struggled with before being dissolved.
“Right now, the Ministry of Industry has one classification for our land, and the Ministry of Agriculture has another, while the Ministry of Forestry has another,” REDD+ Agency head Heru Prasetyo told Ecosystem Marketplace in 2014. “Then you have different conflicting concessions and licenses on the land, some overlapping, and each with a different expiration date.”
For now, says Krisnawati, the peat estimates for Indonesia generated using a combination of Tier 3, 2 and 1 methods and data – averaging out to Tier 2, but progressing to Tier 3 as the project progresses.
“The INCAS is designed to use higher level methods when suitable data and models become available and scientifically tested,” she says.
INCAS is just now embarking on the second phase of a four-phased development program that generated the system’s first national level data results last year. In addition to deepening its accounting for peat, Phase Two is an expansion period to incorporate emissions and removals from the agriculture sector. It also involves bringing in more agency partners and ramping up technical training.
The INCAS Roadmap, a guide developed by the MoEF to map out the system’s long-term evolution, offers an ambitious timeline for completing Phase Four in 2018. At that point, the system will produce complete emissions accounts for Indonesia’s entire Agriculture, Forestry and Other Land Use (AFOLU) sector but will remain flexible to adapt to improved methods as they develop.
INCAS aims to streamline and simplify the Measurement, Reporting, and Verification (MRV) requirements needed to develop REDD initiatives – either at the project level or the jurisdictional level. The roadmap describes one national platform that all REDD+ stakeholders can use, which it says will drastically reduce the need for provinces, districts and other REDD+ proponents to develop and maintain their own GHG accounting systems which will reduce monitoring and transaction costs, timeframes and ensure consistency which should ultimately lead to an increased uptake of REDD+ activities in Indonesia.
Kriswanati says the platform uses an event-driven system that measures both the impact of an activity and the impact of its avoidance, which allows for alternative project scenarios and management practices.
And the INCAS will eventually increase its use of local knowledge and data and generate emissions reports for subnational jurisdictions, including the REDD level project, Kriswanati says. This will both better inform the national account and, ensure that subnational accounting is on par with national standards.
There is also potential for the INCAS to create a digital interface for REDD projects that links to the INCAS. Developers of registered REDD projects and jurisdictional programs could log on and gain access to national datasets, methodologies and tools and generate their own subnational GHG inventories and projections.
This, however, is a Phase-Three feature, and an aspirational one at that, says Krisnawati, who points out that several nuts-and-bolts issues must first be resolved – such as whether a web-based GIS-system for INCAS spatial data is even feasible.
Collaboration isn’t just needed to assess peatlands as the Director General of the INCAS partnering organization CIFOR, Peter Holmgren, says broad support is critical.
“Unless the processes and systems are truly owned by the government of each country, we will never be able to pull together good information for the world on forests or emissions,” he says.
The roadmap stresses the importance of knowledge and expertise-sharing among different land agencies, and the importance of transitioning INCAS from a research and development status into an operational government system, which will open the door to human and financial resources.
The INCAS will need to tap into a new source of funding as it’s currently – and temporarily – financed largely by the Australian government. As a government system, it would have access to more finance allocations.
But in order for the INCAS to increase its financial capacity and expand its team, the MoEF must endorse the INCAS legally. The ministry did endorse the system last year, but that essentially initiated the administrative process to officially implement the endorsement. Such processes take time, however, and often depend on available resources.
* CLARIFICATION: This sentence was altered after publication to differentiate between readiness payments, payments for performance, and payments that result in emission reductions that can be transferred as carbon credits or offsets. Tier 3 accounting is not required for payments for performance, but it is required for market-based payments that result in a transfer of emission reductions. For a detailed explainer, see “Results-Based Finance: Breakthrough Or Backslide?”
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