• Commissioner Dimas does not believe deforestation credits should be used within the ETS - just yet (Photo: EUobserver.com)

Brussels proposes EU anti-deforestation fund

20.10.08 @ 18:34

  1. By Leigh Phillips

The European Commission wants the EU to support international work to cut deforestation around the world by 50 percent by 2020 and ultimately eliminate forest destruction completely by 2030.

To achieve this, environment commissioner Stavros Dimas has proposed in a communication that a percentage of the money raised from the sale of pollution permits under the EU emissions trading scheme, (ETS) be set aside to pay for forest preservation in the third world, where the bulk of deforestation occurs.

Additionally, the commission suggests it work via international negotiations on climate change to achieve the creation of a Global Forest Carbon Mechanism, in which developing countries would be paid for work performed to reduce deforestation and forest degradation.

Last year, Ecuador's leftist president, Rafael Correa, appealed to the international community to pay to protect a region in his country, one of the most biodiverse tropical rainforests and also sitting atop billions of dollars' worth of oil, rather than open it up to oil exploitation. He is hoping that he can raise $350 million per year for 10 years in this way.

Mr Dimas suggests that a major part of funding for such efforts could come from EU ETS allowance proceeds, recommending that five percent of auction revenues - some €1.5 billion to €2.5 billion - be delivered to the Global Forest Carbon Mechanism, (GFCM).

Under the GFCM, the commission also envisages the inclusion of "deforestation credits" - credits for avoided deforestation - within carbon markets, to increase EU government's ability to cut emissions by paying for other people to do the emissions cutting instead.

However, to green groups' relief, the commission has only proposed that deforestation credits be considered after 2020, following a pilot phase to test their inclusion in aiding emissions reduction targets. Emissions from deforestation are currently around three times higher than the amount of emissions regulated under the ETS, meaning that allowing forest credits into carbon markets could crash the price of carbon by almost 50 percent.

The commission recognises that deforestation credits would flood the carbon market, while at the same time it still suggests that the option be explored.

Owen Espley, a forests campaigner with Friends of the Earth in the UK welcomed the decision to avoid deforestation credits: "The commission is right not to introduce forest credits into the Emissions Trading Scheme. Forest carbon credits would create a land grab for forests and would give industry an excuse for failing to reduce their climate-changing emissions."

The Forests and the European Union Resource Network (FERN) and Global Witness, a human rights NGO, went further in response to the commission suggestions, saying they "have real concerns about the ability of carbon markets to halt climate change, the addition of cheap forest carbon credits to the market can only make matters worse."

"Entrusting the future of the planet to the markets, in the light of recent financial turmoil, veers between irresponsible and mad," said Patrick Alley of Global Witness.

"Carbon trading and forest protection are not compatible. Government funding is the most appropriate source of finance to pay for combating deforestation," said Mr Alley.

However, green campaigners would like to see the commission be more ambitious in its goals for funding anti-deforestation efforts, saying five percent of ETS auction revenues is not enough.

By contrast, the European Parliament's environment committee recently proposed that 12.5 percent of auction revenues be allocated to saving forests.

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