THE BILLION-TON SOLUTION
Europe’s Chance to Lead on Climate Action through
International Mitigation Partnerships
Andreas Dahl-Jørgensen | February 2015
The Billion-Ton Solution | Dahl-Jørgensen
Executive Summary
Never has the momentum for global climate action been stronger. For the first time, a global agreement
is within reach that includes climate action by all countries. China has agreed to peak its carbon
emissions by 2030 at the latest, and also to cap coal use by 2020 and achieve 20% clean energy by
2030. The United States has pledged to reduce emissions 26–28% below 2005 levels by 2025, and the
European Union has agreed to cut its internal emissions by “at least 40%” by 2030. However, though all
three pledges are arguably more ambitious than previous goals, they are still not ambitious enough to
put the international community on a path toward stabilizing the climate.
Given these three pledges, and with reasonable assumptions about the forthcoming pledges from other
key countries, Climate Advisers has estimated that the gap between the collective national pledges and
the emissions level required to limit the global average temperature rise to 2°C relative to the
preindustrial level will likely increase. In fact, the sum of the most ambitious national pledges considered
likely to be included in the Paris global climate agreement next year will only amount to about half the
reductions required to get on a 2°C path.
In contrast to previous climate mitigation pledges, most countries are currently focused purely on
pledging domestic mitigation. But this approach will not enable the numbers to add up. Moreover, it will
miss out on a large portion of the world’s most achievable and cost-effective emission reductions.
Paradoxically, out of mathematical necessity most of these reductions will need to happen in the
developing countries, whose capacity and historical responsibility are lower, but where all the growth in
emissions is currently happening. Leaving the developing countries to take sufficient action by
themselves would not only be unjust; it would also not realistically deliver the needed reductions.
Therefore, it is in the advanced economies’ interest to help the developing countries do more.
This paper argues that the most promising and politically realistic way to further increase climate
ambition in 2015 is for Europe and other advanced economies to make additional pledges for mitigation
that they intend to secure outside their borders. Doing so would reduce more emissions at a lower cost,
unlock large emission cuts in developing countries that would otherwise not occur, help ensure a global
climate agreement, facilitate the linking of regional systems and carbon markets, and deliver significant
development benefits.
The European Union’s goal of at least 40% internal emission reductions was a hard-fought political
compromise at a time of considerable economic difficulty. However, it is not compatible with climate
science. EU leaders should seek an internal agreement to go beyond 40% at home, but this will be
politically challenging. Leaders should also pursue a supplementary strategy: to pledge to reduce
emissions abroad — for example, up to 1 billion tons of CO2 per year in 2020-30 as part of a global effort
to narrow the mitigation gap. By pledging such “dual contributions” that not only highlight what the EU
will do at home but also how much mitigation it would help other nations achieve through international
mitigation partnerships, the EU would again demonstrate global climate leadership.
Through Germany’s chairmanship of the G7 this year Europe has an opportunity to encourage similar
pledges from other developed countries. If this is not feasible, the EU chould make its pledge conditional
on commitments from others in Paris. Once the U.S. EPA’s Clean Power Plant gets finalized just before
Paris, President Obama could be in a position to join a Europe-led initiative and make an international
mitigation pledge. Although he is unlikely to pledge large amounts of finance with a hostile Republican
Congress, he and the next president hold executive authorities that can mobilize U.S. efforts to secure
mitigation abroad. Similarly, Japan’s Prime Minister Abe is looking for new ways to lead on climate
change internationally following the Fukushima nuclear disaster.
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Although the international mitigation pledge should be sector neutral to mobilize innovation in all sectors,
efforts to slow tropical forest loss through payments for verified emission reductions (so-called REDD+)
could meet a large portion of the EU’s international “1 billion tons pledge,” and would be a preferred
option if considering (1) cost-effectiveness, (2) the opportunity to leverage action by other countries and
the private sector, (3) development benefits, and (4) the EU’s own contributions to tropical deforestation
through commodity imports.
The mitigation potential from REDD+ is substantial. Although net forest loss accounts for about 12% of
global emissions, the mitigation potential from simultaneously addressing forest loss and forest
restoration is much larger. In September 2014, the EU endorsed the New York Declaration on Forests,
pledging to “put in place economic incentives commensurate with the challenge”—to halve natural
forest loss by 2020 and eliminate it by 2030, and restore an area the size of India by 2030. Meeting these
goals would reduce 4.5–8.8 billion tons of CO2 per year in 2030, more than the EU’s total emissions
today.
Never before has such a vision seemed feasible. The last year has seen a cascade of private sector
commitments to eliminate commodity-driven deforestation. The Consumer Goods Forum—whose
collective revenues exceed the GDP of France—has called for a climate agreement that includes REDD+
incentives, to help achieve the governance changes in forest-rich countries that are necessary for them
to meet their ambitious corporate pledges. Tropical forest countries are increasingly prepared to foot a
large portion of the bill on their own, as a contribution to global climate mitigation efforts and to pursue
the many local and national benefits. Still, REDD+ incentives, brought to scale, will be key to unlocking
all these forces.
REDD+ incentive payments may be even more cost-effective than previously thought. Rather than
compensating for the forgone profits of individual landowners abstaining from agricultural expansion,
REDD+ payments should be viewed as a “political transition incentive” to mobilize the political will to
implement law enforcement and sustainable land use policies, replicating the success of Brazil. This
lower financial cost, combined with the many development benefits for forest-rich countries, suggests
that the EU should seek ways to avoid overpaying for REDD+ reductions whose price in a global market
would be set at the marginal cost of expensive energy reductions. This could be done by negotiating
bilateral deals—for example, at $5 per ton of CO2—while still finding ways for the European private
sector to pay for the emission reductions.
A separate international mitigation pledge that includes REDD+ on top of the already agreed-on
domestic goal would overcome ideological opposition from nongovernmental organizations that fear
REDD+ would otherwise compromise ambitious domestic action. It could be implemented in ways that
would enable a group of ambitious EU member states to take the lead. It is fully consistent with the
emerging “bottom-up” global climate framework. Most fundamentally, it would make the EU’s climate
policy compatible with a 2°C pathway.
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Contents
Executive Summary ......................................................................................................................................2
Contents .......................................................................................................................................................4
Acknowledgments ........................................................................................................................................4
Introduction ..................................................................................................................................................5
Part I: The Case for a European Pledge for International Mitigation ............................................................5
1. Increasing Momentum – 2015 Is a Critical Year for Climate Action ....................................................5
2. Europe’s Opening Bid .........................................................................................................................6
3. The Widening Climate Ambition Gap ..................................................................................................8
4. Narrowing the Gap ..............................................................................................................................9
5. Europe’s Second Bite of the Apple: An International Mitigation Pledge ...........................................12
6. Conclusion.........................................................................................................................................18
Part II: The Case for International Forest Mitigation ...................................................................................19
1. The Importance of Forest Mitigation .................................................................................................19
2. What Would It Take to Stop Deforestation? ......................................................................................21
3. The Ongoing Supply Chain Revolution .............................................................................................23
4. The Role of REDD+ Payments ..........................................................................................................25
5. Ready for What? The Moving Goalpost of REDD Demand ...............................................................26
6. The EU’s Opportunity to Lead on Forests .........................................................................................27
Part III: Options for Inclusion in the EU’s Policy and Legal Frameworks ...................................................29
Conclusion..................................................................................................................................................31
Bibliography ...............................................................................................................................................32
Acknowledgments
This paper was made possible with the general support of the Blue Moon Fund and the
Climate and Land Use Alliance. Its individual sections have benefited from comments
by several colleagues. At Climate Advisers, I thank Michael Wolosin, Nigel Purvis and
Maria Belenky. Outside Climate Advisers, I thank William Boyd, Jonah Bush, Donna Lee,
Ruben Lubowski, Daniel Nepstad, Frances Seymour, and Charlotte Streck. All views,
and errors, are my own.
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Introduction
This paper makes the case that the European Union should lead the world in an effort to raise global
climate ambition further by announcing a commitment to international climate mitigation on top of its
internal climate mitigation target. Part I takes stock of the recent climate goals announced by the EU,
China, and the United States and examines the expected global mitigation gap that will remain after all
the major economies have announced their post-2020 goals for reducing carbon emissions. It discusses
options for narrowing this gap, and lays out the benefits of a European pledge to reduce emissions
abroad.
Part II examines the potential to reduce emissions in the forest sector, arguing that international
mitigation through payments for reduced forest emissions in developing countries (REDD+) offers a
unique opportunity to deliver a large amount of mitigation at a relatively low cost, and that it thus should
be a core part of an EU international mitigation pledge.
Finally, part III presents a range of options for incorporating an international mitigation pledge into
European policy frameworks. It focuses particularly on those options that will allow the most ambitious
European nations to take on most of the new pledge.
Part I: The Case for a European Pledge for International
Mitigation
1. Increasing Momentum – 2015 Is a Critical Year for Climate Action
Never before has the momentum been stronger for global climate action. Climate science is more
conclusive than ever. News coverage of the climate issue is on the rise, and a majority of people in most
countries now strongly favor increased climate action. The cost of renewable energy is falling faster than
experts had predicted, despite weak climate policies. New technology and business models for solar
power, battery technology, energy storage, and energy efficiency are making a low-carbon future seem
more feasible than ever before. Despite weak or lacking policy signals in most economies, companies
are increasingly coming forward with ambitious climate actions voluntarily, and many are pricing in more
stringent climate regulations as part of their financial planning and investment decisions. New evidence
shows that climate action will be cheaper than previously thought, and only have a negligible additional
investment cost over business as usual. In addition, climate action brings substantial co-benefits beyond
avoided climate damages, such as improved public health, increased fuel savings, and strengthened
energy security.1 However, thus far most national climate policies have been insufficiently stringent to
ensure that this growing momentum is brought to bear at a scale that adequately addresses the problem
of climate change. This is even truer for global climate policy, which tends to reflect rather than influence
the ambition of national climate policies.
The next few months will set the global climate ambition for the next 10 to 15 years. By mid-2015,
in preparation for the new climate agreement to be adopted later this year at the UN climate change
conference in Paris and to take effect starting in 2020, all countries that are “ready to do so” are
supposed to put forward their climate goals for the period starting in 2020. Some countries have already
1
Global Commission on the Economy and Climate, Better Growth, Better Climate (London: Global Commission on the Economy and Climate, 2014). 5
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come forward with their targets. In October 2014, European leaders were the first ones to do so, as they
finally reached a compromise on the European Climate and Energy Package, which aims to cut the EU’s
internal emissions by at least 40% below 1990 levels by 2030.2 Then, in a landmark joint announcement
by presidents Xi and Obama, China agreed for the first time to peak its emissions by a specific date—by
2030 at the latest, while seeking to do so sooner. It also announced that it would cap its coal use by
2020, and have 20% clean energy by 2030. Of these three goals, the coal use peak seems to be the
most ambitious. Analysts indicate that meeting the coal peak goal by 2020 implies peaking emissions by
2025 at the latest.3 At the same time, the United States pledged to reduce its emissions 26–28% below
2005 levels by 2025, doubling the annual de-carbonization rate compared with the period before 2020.4
All three pledges are more ambitious than previous goals. Yet, as described further below, they are still
not ambitious enough to put the world on a path to avoid dangerous climate change.
Although domestic political processes and pressure are the most important factors determining national
climate ambitions, the international process can help at the margin. For the first time, a global agreement
is within reach that will apply equally to all countries. The agreed-on timeline for putting forward national
climate targets will mobilize new commitments from some countries that have not previously had
national climate goals. Although the UN principle of “common but differentiated responsibilities and
respective capabilities” will still apply, it will now be up to each country to define for itself what climate
mitigation contribution it deems adequate and equitable, given its domestic politics and level of
development. Despite what some countries and most environmentalists would prefer, the national
targets will likely not be legally binding internationally but will instead be reflected in nonbinding national
annexes to the international agreement. Only the procedural elements, such as an obligation to regularly
update national climate goals and policies and to report on climate action, seem likely to become
internationally binding. There will likely be a very light-touch review by the international community of the
national offers, but it seems unlikely at this stage that agreement can be reached on a clear process for
closing the mitigation gap to limit global average warming to 2°C.
2. Europe’s Opening Bid
The European Union has a proud legacy of global climate leadership. Through its participation in the
Kyoto Protocol, the EU adopted an internationally legally binding climate target through 2012 (and later
extended until 2020). In Copenhagen in 2009, the EU took a leadership position by pledging to reduce
emissions 20% below 1990 levels by 2020 regardless of other countries’ efforts, and by offering to
increase its pledge to 30% in the context of an ambitious agreement. It put in place ambitious policies to
meet its 2020 goal, with the flagship EU Emissions Trading Scheme (ETS) at the core (covering about
half the EU’s emissions), complemented with separate targets for renewable energy deployment and
energy efficiency.
Recently, however, the EU’s leadership has been subsiding. The lack of an ambitious and binding
global climate agreement in Copenhagen in 2009 made it politically impossible for the EU to raise its
2020 target to 30%, as it had planned to do, and it got stuck with the 20% target even as circumstances
changed. The worldwide economic recession reduced the EU’s energy consumption and emissions,
making it easier and cheaper than anticipated to meet the 20% target. According to the European
2
See http://ec.europa.eu/clima/policies/2030/index_en.htm. See http://switchboard.nrdc.org/blogs/jschmidt/china_evolving_to_coal_consump.html. 4
White House, “President to Attend Copenhagen Climate Talks,” http://www.whitehouse.gov/the-­‐press-­‐office/president-­‐
attend-­‐copenhagen-­‐climate-­‐talks. 3
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Commission’s own analysis in 2013, the EU is on track to reach 24% by 2020 without new policies, and
to reach 32% by 2030.5 The ETS suffered from a large oversupply of allowances driven by the recession
and mandatory energy targets for renewables. As a consequence, the price signal created by the ETS
became too weak to change investment decisions. One could make the case that the market worked
exactly as intentioned, and that the plummeting carbon price might have been necessary for the ETS to
survive the politics of a recession, in a way a fixed carbon tax could actually not have been. But the
sustained low carbon price – currently trading at about €7 per ton CO2 – is evidence that Europe could
pursue more ambitious targets at an affordable cost. The EU failed to adapt to these changing
circumstances by tightening its climate policies. (At the moment, the EU Parliament is discussing options
for reducing the oversupply through a market stability reserve to start sometime between 2017 and
2021). Although this may help avoid similar mistakes in the future and increase the European carbon
price in the medium term, it is unlikely to help much in the short term.)
In recent years, the United States has reduced its emissions more rapidly than the EU. This is
partly due to the shale gas revolution in the United States, which Europe has—at least so far—chosen
not to replicate at scale. Also, because Europe started taking serious climate action decades earlier, the
United States still has almost twice the emissions per capita as the EU, and therefore a much bigger
reduction potential today.
The EU’s new goal of a 40% reduction by 2030 is an important first step. It is slightly more
ambitious than the current path. The implied annual de-carbonization rate through 2030 (1.9%) is higher
than the U.S. annual rate through 2025 (1.6%).6 More important, the 2030 goal is an important sign of
political will at a time when many EU countries are in the midst of economic hardship. Getting a clear
and early policy signal for European business through 2030 was in itself an achievement. By being the
first out of the gate to set a goal for the post-2020 period, and by leaving room for this goal to be
strengthened before Paris, Europe also set an example. China and the United States did follow suit just
weeks later, though not as a consequence of the European announcement. (Indeed, the political
establishment in both China and the United States increasingly view the climate problem as a “Group of
Two” issue.) However, though the EU may not have triggered commitments from China and the United
States, a lack of leadership from the EU, as the traditional climate leader, would have had a negative
influence on other key countries.
The EU must go beyond 40% to do its fair share of an effort to limit global warming to 2°C. Clearly,
the 2030 goal of at least 40% domestic reductions was a hard-fought and carefully crafted political
compromise between ambitious countries (mostly Western European ones) on one hand, and coaldependent, less affluent Eastern European countries on the other hand. This internal battle for ambition
is continuing. German chancellor Angela Markel was quoted as saying that the compromise provides
flexibility to increase the EU’s ambition in Paris.7 The UK had advocated a 50% reduction target. 8 The
UK took the lead in creating a powerful coalition of 14 EU countries, called the “Green Growth Group,”
had also called for deeper targets. The members of this group—which comprises the EU’s 7 largest
5
European Union, “EU Energy, Transport and GHG Emissions: Trends to 2050, Reference Scenario 2013,” 2013, http://ec.europa.eu/clima/policies/2030/docs/eu_trends_2050_en.pdf. 6
Michael Wolosin and Maria Belenky, “Gap Analysis with Paris Pledges,” 2014, http://www.climateadvisers.com/wp-­‐
content/uploads/2014/12/Climate-­‐Advisers-­‐Paris-­‐Analysis-­‐Mind-­‐the-­‐Gap.pdf. 7
This comment was not reported widely, but was picked up by the journalist Dave Keating (@Dave Keating) on Twitter on October 23, 2014. 8
See https://www.gov.uk/government/speeches/written-­‐ministerial-­‐statement-­‐by-­‐edward-­‐davey-­‐uk-­‐negotiating-­‐position-­‐on-­‐
the-­‐eu-­‐2030-­‐climate-­‐and-­‐energy-­‐framework 7
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economies and represents 88% of its GDP and 76% of its population—are still seeking even more
ambitious climate action. Following the Lima climate talks in December 2014, they stated:
We should be ready to consider raising the ambition of the [greenhouse gas] reduction
target and the level of EU action, including through the use of international carbon
market mechanisms, in the context of securing an ambitious, global and comprehensive
international climate agreement at the Paris Conference.9
There is a clear opening for the EU to increase its ambition before Paris. It is worth emphasizing the
difference between the EU’s 2020 and 2030 pledges. Before the Copenhagen climate talks in 2009, the
EU pledged to reduce emissions by 20% below 1990 levels by 2020, or 30% as part of an ambitious
climate agreement, with both targets including the use of international offsets. This time, learning the
lesson from Copenhagen, the EU has started out with an internal-only goal, leaving the door open to
increase its ambition in Paris either by strengthening its internal goal and/or through international
mitigation on top of its 40% (or more) reduction at home. European negotiators are advocating that the
new climate agreement include provisions for international carbon markets and partnerships, a clear sign
that they are at least considering the option of adding an international mitigation pledge.10
In the emerging bottom-up international framework, whereby pledges are nationally determined rather
than globally negotiated, this strategy makes sense. Several elements of this framework go against longstanding European positions. For example, the EU has favored legally binding national targets
negotiated in a top-down fashion guided by science, with punishment for non-compliance. Yet, the EU is
widely expected to go along with the less-binding, bottom-up framework, given that this is the only
solution likely to maximize participation from key polluters like the United States, China, and India. It is
indeed in the EU’s interest to accept a relatively weaker legal agreement in order to make some
progress, and to focus its efforts on increasing global ambition over time within this politically feasible
international framework. Its primary tool for doing so is through the strategic design of the EU’s own
mitigation pledge. After describing the widening global ambition gap, the next sections propose how this
can be done.
3. The Widening Climate Ambition Gap
The EU and the rest of the international community have endorsed the global scientific consensus on the
need to limit global warming to at most 2°C relative to the preindustrial level to avoid unmanageable
climate impacts.11 The EU and all industrialized countries have also jointly recognized that meeting the
2°C goal will require a 50% reduction in global emissions and an 80% reduction in emissions from
developed nations by 2050.12 The EU aims to reach 80–95% reductions by 2050, and President Obama
has endorsed the 80% reduction goal for the United States.13
Unfortunately, even if implemented fully, the domestic climate plans that nations have put forward so far
for the period up to 2020 only total about 40% of the climate action needed to place the world on a
9 See https://www.gov.uk/government/news/green-­‐growth-­‐group-­‐ministers-­‐statement-­‐on-­‐2030-­‐energy-­‐climate-­‐policy-­‐
framework. 10
See http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/envir/145508.pdf. 11
See http://unfccc.int/key_steps/cancun_agreements/items/6132.php. 12
See http://www.g8italia2009.it/static/G8_Allegato/G8_Declaration_08_07_09_final,0.pdf. 13
See http://elections.nytimes.com/2008/president/issues/climate.html and http://www.whitehouse.gov/the-­‐press-­‐
office/president-­‐attend-­‐copenhagen-­‐climate-­‐talks. 8
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trajectory to limit global warming to 2°C.14 Regrettably, the gap between what science requires and what
nations plan is soon likely to grow even larger. By the first half of 2015, most major economies will have
followed the example of the EU, China, and the United States and have instituted new climate goals for
the period starting in 2020. Based on what is known today about the new emission reduction pledges,
and based on best estimates of upcoming pledges from others, Climate Advisers estimates that the
emissions mitigation gap will likely continue to grow through 2030 in absolute terms, and that even
pledges at the stronger end of what is expected would only deliver 50% of the mitigation required (see
figure 1).15 In short, though nations are finally poised to take stronger climate action than ever before,
they are not moving quickly enough to achieve the 2°C goal.
Figure 1. Expected Mitigation Gap Based on Known and Expected National Pledges
Source: Michael Wolosin and Maria Belenky, “Paris Analysis: Mind the Gap,” 2014,
www.climateadvisers.com/mindthegap.
14
United Nations Environment Program, The Emissions Gap Report 2013: A UNEP Synthesis Report (New York: United Nations Environment Program, 2013), http://www.unep.org/publications/ebooks/emissionsgapreport2013/. 15
Michael Wolosin and Maria Belenky, “Paris Analysis: Mind the Gap,” 2014, www.climateadvisers.com/mindthegap. 9
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4. Narrowing the Gap
The primary objective of international climate diplomacy should be to eliminate or at least
significantly narrow the global mitigation gap by 2030, rather than locking in a scenario that
would actually make it larger and the climate crisis more unmanageable. At the moment, neither
international nor European climate policy is aligned with this goal. As figure 2 shows, the developed
countries’ emissions may already have peaked and begun declining, though this progress is the
combined result of both policy action and economic contraction, and thus is fragile and potentially
reversible. In contrast, the developing countries’ emissions are increasing rapidly, making up all the
current and future growth in global annual emissions. Even if rich countries brought their emissions to
zero, the world would still exceed 2°C warming without significant new climate action by developing
countries. In order to limit warming to 2°C, global emissions will need to peak in the next few years,
plummet 40–70% from 2010 levels by 2050, reach net zero by 2055–70, and become negative by
2100.16
Figure 2. Global Emissions by Region
Source: United Nations Environment Program, The Emissions Gap Report 2014: A UNEP Synthesis Report (New
York: United Nations Environment Program, 2014), http://www.unep.org/publications/ebooks/emissionsgapreport2014/portals/50268/pdf/EGR2014_LOWRE
S.pdf.
16
Intergovernmental Panel on Climate Change (IPCC), Fifth Assessment Report: Summary for Policymakers (Cambridge: Cambridge University Press, 2014), https://www.google.com/?gws_rd=ssl#q=IPCC+AR5+%282014%29%2C+Summary+for+Policy-­‐Makers; United Nations Environment Program, The Emissions Gap Report 2014: A UNEP Synthesis Report (New York: United Nations Environment Program, 2014), http://www.unep.org/publications/ebooks/emissionsgapreport2014/portals/50268/pdf/EGR2014_LOWRES.pdf. 10
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Deepening countries’ pledges to get on this trajectory will be extremely challenging. In simple
conceptual terms, as sketched in figure 3, there are three ways to narrow the global gap: (1) The
developed countries could pledge to do more at home; (2) the developing countries could pledge to do
more on their own; or (3) the developed and developing countries could pledge to do more together
through international partnerships and mechanisms whereby the developing nations would agree to do
more as long as the developed nations were willing to shoulder a portion of the additional costs.
Figure 3. Three Ways to Reduce the Global Emissions Gap
Source: Climate Advisers analysis.
Few countries are expected to deepen their domestic post-2020 goals in the next year before Paris. The
EU may be the best candidate to do so, given the way it formulated its current goal, and the clear signal
from key European leaders that they would consider doing so. Both the United States and China
signaled that they would try to overdeliver, but it is unclear whether this would be reflected in deeper
targets. The United States could, for example, say that it would aim for the higher end of its announced
26–28% goal, while China could pledge to move its peak year forward to 2025 to be consistent with its
2020 coal peak year. It should be noted that the United States has signaled clearly that it does not
intend to increase its target before Paris, and has encouraged all nations to put forward their best bid
this year, rather than expecting international pressure to increase national ambitions.
It seems possible that some countries could be able to increase their post-2020 ambitions by modest
amounts over the next five years, as the current momentum in the real economy continues and lowcarbon opportunities continue to seem more feasible, and political pressure for climaet action increases.
But given the large mitigation gap, it is unrealistic to expect that the pledges would be strengthened
sufficiently to get on a 2°C pathway. Securing significantly deeper and faster emission reduction pledges
from the developed countries could be costly, and politically very challenging. With the right policy tools,
some additional reductions seem possible at a moderate cost. Going much deeper would in some cases
require explicit or implicit carbon pricing up to and beyond $100 per ton of CO2, far beyond the current
political will.
Similarly, expecting the developing countries to unilaterally pledge do more than they will have already
determined is in their self-interest and to assume responsibility for a dramatically larger share of global
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emission reductions seems unrealistic, given their level of development, limited capacity for action, and
still relatively lower (though rapidly increasing) historical emissions. This would be politically unrealistic in
any case, but even more so in the absence of far deeper pledges from the rich countries.
The most politically realistic way to significantly narrow the gap in the near to medium term,
therefore, is through international partnerships, in which rich countries see that it is in their selfinterest to help reduce emissions in poor and emerging economies, where emissions are growing
and low-cost mitigation opportunities are abundant. The EU’s climate policy and diplomacy need to
be aligned with this insight in order to ensure that the world and the EU are doing what needs to be done
over the next decades.
5. Europe’s Second Bite of the Apple: An International Mitigation
Pledge
As stated above, the EU has two ways to increase its climate mitigation ambition and to align its climate
policy with the global 2°C goal. It could seek to reach an agreement among its leaders in 2015 to go
beyond 40% internally. The EU can and should do even more than 40% at home, and could potentially
do so at limited additional cost. 17 Given the political horse-trading that preceded the “at least 40%”
compromise, however, it will be challenging to deliver more than a few additional percentage points
before Paris.
As a complimentary and additional strategy – on top of whatever mitigation ambition EU member
states can agree to do internally – the EU should commit to reduce up to 1 billion tons of CO2 per
year outside its borders in 2020-30. Increasing mitigation ambition through such a “dual commitment”
could be politically more realistic, especially if it could be done in a way that allows the most ambitious
EU member states take on more of the additional ambition. It is not a question of either or, but of
maximizing European political will on both fronts.
Why 1 billion tons? This number is suggested as a reasonable EU contribution to the effort to narrow
the global mitigation gap. The UN Environment Program estimates the gap to be about 8–10 billion tons
per year by 2020.18 Climate Advisers’ recent analysis—which takes into account the recent post-2020
pledges by the EU, the United States, and China—estimates that the 2030 mitigation gap will increase to
7–14 billion tons per year by 2030, depending on the strength of the yet-to-be-announced national post2020 climate pledges.19 The average gap during the decade is 7.5–12 billion tons per year. Halving the
mitigation gap would require about 4–6 billion tons per year in additional mitigation. An additional 1
billion tons from the EU, as the world’s largest economy, is therefore not unreasonable.
The EU could, as part of its pledge, set a maximum carbon price to limit the financial liability and
uncertainty. As we will see in part II, mitigation from REDD+ is highly cost-effective, probably even
more so than assumed so far. It seems reasonable to assume that the EU could set a fixed price at, say,
€5 per ton, and still get up to 1 billion tons of credible supply from REDD+. alone. At a price of € 5 per
ton, the total cost to the EU would be €5 billion per year, or less than €10 per EU citizen per year to keep
the 2°C option alive, and if REDD+ is includded, to save most of the world’s remaining tropical forests, at
17
The EU’s Low Carbon Roadmap from 2013 estimated that 40-­‐44% reductions by 2030 was the lowest cost trajectory to a pathway to 79-­‐82% reductions by 2050. See https://www.gov.uk/government/publications/analysis-­‐of-­‐eu-­‐2030-­‐greenhouse-­‐
gas-­‐emission-­‐reduction-­‐target-­‐options. 18
United Nations Environment Program, Emissions Gap Report 2014. 19
Wolosin and Belenky, “Paris Analysis.” 12
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a direct benefit to the EU that would likely far exceed the cost. A total of €5 per ton would be about onethird the price paid for Certified Emission Reductions under the Clean Development Mechanism in 2008,
when the price of EU allowances was high enough to stimulate fuel-switching away from coal in the EU.
Politically within the EU, the focus needs to be on the results, not the finance. Certainly, some
would see €5 billion as a lot of money to transfer abroad. It is about twice the annual “fast-start finance”
provided by the EU in 2010–12. Given the magnitude of the climate impact and the additional benefits,
however, this sum is arguably very small. The fast-start finance was meant to provide initial funding to
prepare for much larger amounts of climate finance to come. In contrast, the €5 billion per year for the
international mitigation commitment would drive large-scale global mitigation, and could be designed to
come from both public and private sources. It should therefore be regarded as a purchasing
commitment required to (1) contribute to narrowing the global mitigation gap, and (2) to getting a deal in
Paris. It should be framed politically—accurately—as a precondition for the EU to regain global
leadership on climate change and make EU policy consistent with a 2°C goal. Given that the EU holds
25% of the world’s GDP, this would not be an unreasonable contribution from the EU—in particular,
given the $100 billion a year that the developed countries have pledged to “mobilize” international
climate financing by 2020. The political focus should be on “1 billion tons” (and the additional mitigation
it would trigger), not on the €5 billion. This pledge should be conditioned upon the conclusion of a
meaningful climate agreement in Paris, and—of course—on the environmental integrity of the tons
available for purchase. The proper perspective is “what would it cost to achieve this ambition, which is
given, through other means,” not “how does this compare with previous climate-related ODA flows.”
The impact of the international mitigation pledge would likely far exceed 1 billion tons. It is
reasonable to assume that large-scale carbon demand from the EU would help developing countries do
more self-financed emission reductions. Though the EU would of course not be in a position to formally
take credit for this additional self-financed effort by developing countries, it would be credited as the
indispensable partner in a global partnership leading to possibly the most significant contribution to
increased global climate ambitions in the next two decades.
A demand signal for the period 2020–30 delivered in 2015 would likely also lead to significant
additional emission reductions before 2020, at no additional cost. A clear forward demand signal
would be a major boost to current mitigation efforts, and give countries time to prepare for large-scale
demand. Current official development assistance (ODA) programs could be used to kick-start the
“market” through various mechanisms (perhaps even rheoufh advance market commitments, auctioning
of put options, reverse auctions, or open tenders).
A “dual commitment” is likely most politically realistic, while also offering the largest climate
benefits. Pledging to mitigate 1 billion tons might be preferable to a pledge of, say, 10% additional
mitigation below 1990 levels. The latter would be a lower volume (approximately 0.5 billion tons per year
in 2030, and lower initially), yet is—perhaps ironically—likely to trigger even more political resistance
among the EU’s member states. Some countries that were opposed to do 40% at home would feel
threatened by the ambitious 10% number (because 10% at home—the natural association—is a very
significant effort). At the same time, many NGOs would see a 10% pledge as a premature step toward
the inclusion of REDD in the ETS.
A “dual commitment” could garner broad support from stakeholders. A separate international
mitigation commitment not linked to the EU’s internal mitigation target would avoid the ideological
resistance to carbon markets and offsets. By being truly additional to domestic efforts, it would get the
full support of the environmental NGO community. There is significant ideological opposition, in
13
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particular when it comes to linking REDD+ to carbon markets, most of which is arguably misguided. But
there are practical reasons for keeping a REDD+ commitment out of the ETS, or at most testing a partial
and gradual inclusion. Including REDD+ in the ETS at this stage, with a large oversupply of credits for
the foreseeable future, would probably be ill advised—even setting aside the ideological opposition. But
a separate commitment to pay for international emission reductions, including from REDD+, would have
broad support. In fact, it would be almost identical to the proposal made by Greenpeace’s of a “Tropical
20
Deforestation Emission Reduction Mechanism” ahead of the Copenhagen talks. The critical aspect for
delivering international mitigation generally, and REDD+ particularly, is predictable and significant
demand, measured in tons of CO2 rather than euros. It is less important whether it is linked to an offsets
program. In essence, a separate international mitigation pledge would create a separate market for
REDD+ and other international mitigation credits.
An international mitigation pledge would generate additional benefits that domestic action would
not. It would achieve a higher level of ambition from the EU at a relatively lower cost; mobilize more
action from both the developed and developing countries; mobilize climate finance and secure a robust
global climate agreement; facilitate future linking of carbon markets; deliver tremendous development
benefits; and serve the EU’s foreign policy interests. The additional benefits are elaborated further
below:
•
Achieving a higher EU ambition at a lower average cost. Although more climate action could
have been undertaken within Europe at a reasonable cost, a significant increase in ambition—of,
say, 10–20%—would likely entail a significant additional cost, at least in the short and medium
term. The EU Commission already estimates that carbon prices of €50–60 per ton in 2030 and
€100–370 per ton in 2050 will be needed to meet the EU’s climate goals.21 In contrast, there are
abundant cost-effective emission reductions to be achieved in developing countries that could
support such an ambition. The UK has estimated that for a 50% reduction target, access to 5%
through international offsets would reduce costs by 32%, while 10% would reduce costs by
44% compared to purely internal mitigation.22 As is shown in the forest sector analysis below,
the EU could potentially secure a large portion of an international commitment at a cost as low
as $5 per ton.
Given the strain on public budgets and the recent agreement to generously compensate the
Eastern European countries for accepting the goal of reducing the EU’s internal emissions by at
least 40% by 2030, achieving political acceptance among a group of front-runners to also
pledge mitigation internationally will surely be a challenge. Conversely, the European leaders are
more likely to be favorable to additional policies framed as a concrete and measurable solution
to narrow the global mitigation gap rather than as a proposal for additional public finance. What
is more, as is shown in the final section, there are ways to pass on the cost of an international
mitigation pledge to the private sector, in accordance with the polluter-pays principle.
•
Unlocking the large mitigation potential of the developing countries. Most emission
reductions to meet the 2°C goal will need to take place in the emerging and developing
countries. Although they are increasingly taking on commitments and responsibility for action,
20
See http://www.greenpeace.org/international/Global/international/planet-­‐2/report/2008/3/tropical-­‐deforestation-­‐
emissio.pdf. 21 EU Commission, Summary of the Impact Assessment: A Roadmap for Moving to a Competitive Low-­‐Carbon Economy in 2050 (Brussels: European Union, 2011), http://eur-­‐lex.europa.eu/legal-­‐content/EN/TXT/PDF/?uri=CELEX:52011SC0289&from=EN. 22 UK Department of Energy and Climate Change, Analysis of EU 2030 greenhouse gas reduction target options, 28 October 2013, https://www.gov.uk/government/publications/analysis-­‐of-­‐eu-­‐2030-­‐greenhouse-­‐gas-­‐emission-­‐reduction-­‐target-­‐options 14
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they will need massive support to meet their full cost-effective mitigation potential. They cannot
be reasonably expected to cover the full cost of their maximum effort. This is not just a question
of fairness, but of feasibility.
At the 2014 climate talks in Lima, 14 developing countries came forward with a joint “Lima
Challenge,” where they committed to coming forward in 2015 with a combination of
unconditional (self-financed) and conditional emission reduction targets, whose conditional
portion indicates the level of ambition they would offer on top of their maximum domestic
efforts, if sufficient economic incentives were to be made available.23 These conditional
reductions would be left on the table unless they were matched by a commitment from the
developed countries to help finance them. As an example, in 2009 Indonesia pledged to reduce
its emissions 26% compared with its business-as-usual trajectory by 2020 on its own, or 41%
with support. The conditional portion of this pledge amounted to almost half a billion tons of
CO2.
The EU could help create a “race to the top” by deciding that only countries or jurisdictions that
pledge ambitious mitigation on their own would be eligible to receive payments for verified
emission reductions through international mitigation partnerships with the EU, EU member
states, or EU-regulated entities.
When countries pledge ambitious self-financed action, there will always be a risk that pledges
will not be met. If provided with an incentive to go beyond those targets, countries are more
likely to also deliver on their unconditional target. Similarly, if they expect international incentives
to become available after 2020, they are also likely to take more concerted action before 2020,
to prepare for such incentives. Hence, international mitigation commitments can mobilize even
more mitigation from the developing countries than the portion directly supported.
•
Securing higher ambition from the United States and Japan. If the EU were to establish a
norm that climate leadership must be demonstrated not only through a country’s domestic
climate ambition but also through its contribution to mitigation abroad, it is possible that other
developed countries could be convinced to follow suit and adopt an international mitigation
pledge of their own. The United States, for example, is unlikely to change its domestic emissions
reduction goal before Paris—President Obama’s pledge to reduce U.S. domestic emissions 2628% by 2025 from 2005 levels.. And with Republican majorities in both the Senate and the
House of Representatives, President Obama has limited capacity to make new pledges for
additional U.S. government funding for international emissions mitigation in developing nations.
President Obama, however, does control a range of tools that—assuming he had the will to do
so—could create new financial incentives from the U.S. private sector for international mitigation
relying solely on the President’s existing executive authorities.24 President Obama, therefore,
could pledge that the United States would adopt new greenhouse gas regulations that would
incentivize U.S. companies to mitigate emissions outside the United States on top of the 2628% U.S. domestic goal. President Obama’s primary climate legacy and number one
environmental priority for the remainder of his term is formalizing the Clean Power Plan, which
would regulate emissions from existing power plants and will only be finalized just before Paris.
23
Andreas Dahl-­‐Jørgensen, “Forest Countries Challenge World to Increase Climate Ambition,” December 9, 2014, http://www.climateadvisers.com/forest-­‐countries-­‐challenge-­‐world-­‐to-­‐increase-­‐climate-­‐ambition/. 24
For an elaboration of U.S. options see forthcoming paper by Dahl-­‐Jørgensen, Purvis and Wolosin, Increasing U.S. Climate Ambition Through International Mitigation Partnerships. 15
The Billion-Ton Solution | Dahl-Jørgensen
Once that important regulation is finalized late in the year, President Obama might be convinced
to join a European-led effort to articulate new pledges for emission cuts outside developed
countries.
Other developed countries could also be convinced to adopt an international mitigation pledge.
For some, it would make sense to keep domestic and international commitments separate, as
the EU would. Others would perhaps want to use international mitigation as a way of increasing
their overall ambition while keeping the share of each flexible. For example, Japan is facing
significant uncertainty about its future energy mix while all its nuclear plants are going through
safety reviews, and it would likely maximize the flexibility to take action abroad. Indeed,
ambitious pledges for international mitigation is likely the primary option for Prime Minister Abe
to show international leadership on climate change.
•
Mobilizing climate finance and securing a robust global climate agreement. A commitment
to international mitigation by the EU would help seal a meaningful global climate agreement, by
increasing mitigation ambition, providing credible commitments to high-quality climate finance,
and possibly getting concessions on other aspects of the agreement.
Key parts of the Paris agreement are already coming into view. To some degree, there is no
longer a deal to be lost, in the sense that the ambition question is being formally kept out of the
agreement, while negotiations are centering on the legal form, how to differentiate between
countries at various stages of development, and the provision of finance. The one remaining
sticking point that could derail the Paris agreement is the level of international climate finance
from rich to poor countries, both for mitigation and adaptation. In Copenhagen in 2009, the EU
joined the other developed countries in pledging that they would jointly mobilize—from both
public and private sources—$100 billion per year in climate finance to the developing countries
by 2020.
If the EU were to secure 1 billion tons of CO2 a year abroad—at a cost of around €5 per ton, for
example—this would provide around €5 billion per year to the developing countries for climate
mitigation. Depending on how this is mobilized (see part III), this could potentially free up more
of the scarce public foreign assistance finance to be spent on adaptation and resilience in some
of the poorest and most vulnerable countries, which is a high political priority for a large number
of countries in the climate negotiations.
Critically, a pledge to international mitigation—measured in tons rather than euros—would
deliver quantified results in ways that other types of climate finance (e.g., through the Green
Climate Fund) would likely not do. At the moment, climate finance is seen by most developed
countries as a political problem—as a necessary concession to “get a deal”—rather than as a
strategic tool to deliver the policy reforms and investmetns needed to solve the climate crisis. An
international mitigation pledge could create sectorial or even economy-wide price signals in
developing countries that mobilize and redirect private investments on a large scale toward lowcarbon opportunities, in a way that a fund seeking up-front cofinancing from the private sector
for specific projects will not be able to do.
•
Advancing international carbon pricing. The EU has led the way globally on emissions trading,
and countries all over the world—and increasingly, developing countries—are now replicating
the EU’s early leadership. Already, 39 countries and 23 subnational governments have
16
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implemented or are scheduled to introduce carbon pricing.25 China has piloted regional
regulations and aims to have a national carbon market operational by 2016. Recently, 73
countries and more than 1,000 companies signed up to support strong carbon pricing policies.26
Evidence suggests that the developing nations that participated in international carbon markets
have been more likely to adopt their own domestic carbon prices and markets.27 Hence, by
committing to pay for emission reductions from developing countries now, the EU could help
spread carbon pricing and advance the convergence of global price signals to the long term
benefit of both the European and global economies. This would also help create a level playing
field for European companies and safeguard their global competitiveness.
•
Promoting EU’s Foreign Policy and Development Objectives. An international mitigation
pledge would support broader EU foreign policy objectives, including through significant
sustainable development impacts in poor countries resulting from a wide variety of interventions.
For example, expanding access to clean, renewable energy will raise millions of people out of
energy poverty and reduce the estimated 7 million annual premature deaths that are due to air
pollution, both indoors from biomass and outdoors from coal power.28 Reduced global demand
for oil will reduce the geopolitical clout of some nations that are politically antagonistic to the EU.
Energy efficiency measures will save costs, freeing up resources for countries to invest in
infrastructure or development priorities. Promoting sustainable agriculture and the preservation
of the remaining tropical forests can enhance food security, create livelihoods, promote the rule
of law, protect indigenous peoples and local communities against human rights abuses, and
protect the world’s most valuable biodiversity. Finally, increasing the demand for low-carbon
technology—for energy efficiency, renewable energy, or carbon capture and storage—will
benefit European firms that specialize in those products, and thus will create jobs in Europe.
The EU could condition its pledge on others doing more, or making policy concessions. An
international mitigation contribution is fully consistent with the emerging bottom-up international climate
framework. It could be done completely unilaterally, and would not depend on reaching a consensus
within the United Nations Framework Convention on Climate Change. However, offering such a
commitment could be used strategically to get concessions from other countries in the international
climate negotiations. The European pledge could be conditioned upon one or a combination of
outcomes, such as similar contributions from other developed countries, sufficient self-financed
mitigation pledges by developing countries, sufficient “supply” of additional high-quality emission
reductions from developing countries – perhaps below a set maximum price, or aspects of the climate
agreement less directly related to mitigation ambition, such as a clear process for reviewing and
“ratcheting up” national climate goals. Although it may be politically tempting – or even necessary – to
add such conditions to a European pledge, Europena leaders are wise to consider the lessons from
Copenhagen and weigh the value of such additional “concessions” from others against the likelihood of
them happening.
25
World Bank, “State & Trends Report Charts Global Growth of Carbon Pricing,” May 28, 2014, http://www.worldbank.org/en/news/feature/2014/05/28/state-­‐trends-­‐report-­‐tracks-­‐global-­‐growth-­‐carbon-­‐pricing. 26
World Bank, “73 Countries and Over 1,000 Businesses Speak Out in Support of a Price on Carbon,” September 22, 2014, http://www.worldbank.org/en/news/feature/2014/09/22/governments-­‐businesses-­‐support-­‐carbon-­‐pricing. 27
Nigel Purvis, Samuel Grausz, and Andrew Light, Carbon Market Crossroads: New Ideas for Harnessing Global
Markets to Confront Climate Change (Washington: Center for American Progress, 2013),
http://www.americanprogress.org/issues/green/report/2013/04/29/61655/carbon-­‐market-­‐crossroads/.
28
World Health Organization, “7 Million Premature Deaths Annually Linked to Air Pollution,” press release, March 25, 2014, http://www.who.int/mediacentre/news/releases/2014/air-­‐pollution/en/. 17
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6. Conclusion
The most promising and most politically realistic way for the EU to further increase its global climate
ambition in 2015 is to make an additional international mitigation pledge—a “dual contribution”—on top
of the 40% (or higher) goal it sets internally. Specifically, the EU should pledge to reduce 1 billion tons of
CO2 per year abroad after 2020, as part of a global effort to narrow the mitigation gap. This will set a
norm for other developed countries to follow, opening up a new front in the climate battle. International
mitigation partnerships have the potential to substantially increase global ambition, without requiring
proportionate increases in any nation’s political will to act. Developing countries will be willing to do
more with support than they could achieve by themselves, at a relatively low cost. Leaving those
emission reductions on the table would be a poor political and environmental strategy for those — like
the EU — that seek a global climate framework that can narrow the remaining mitigation gap.
Although an international mitigation pledge could be designed in many ways, and could pursue emission
reductions from any number of sectors and countries, part II analyzes the potential for the forest sector
(REDD+) to deliver a significant portion of the European pledge for international mitigation.
18
The Billion-Ton Solution | Dahl-Jørgensen
Part II: The Case for International Forest Mitigation
The launch of the New York Declaration on Forests at the UN Climate Summit in September 2014
represented an unprecedented momentum to stop harmful forest loss.29 As of December 2014, 177
national and regional governments, companies, indigenous peoples’ organizations and NGOs had
endorsed the declaration, with its goals of (1) at least halving natural forest loss globally by 2020, and
strive to end it by 2030; (2) eliminating deforestation from the production of agricultural commodities
such as palm oil, soy, paper and beef by no later than 2020; (3) restoring 150 million hectares of
degraded landscapes and forestlands by 2020, and at least 350 million hectares by 2030; and (4)
ensuring that strong, large-scale economic incentives are in place commensurate with the challenge.
How can the momentum we are seeing today in the private sector be continued, broadened, and
implemented? And what is the relationship between efforts to reduce emissions from supply chains and
payments for verified reductions in forest emissions in developing countries (REDD+)? How can the EU
best contribute to reducing tropical deforestation?
This part of the paper starts by recapping the mitigation potential from forests, what it would take to
stop deforestation, and the role of REDD+ payments. It then makes the case for the EU to consider
REDD+ as an important component of an international mitigation commitment.
1. The Importance of Forest Mitigation
Without large-scale mitigation in the forest
sector, a two-degree path is most likely
beyond reach. The most recent report from the
Intergovernmental Panel on Climate Change
states—with the highest possible degree of
certainty and agreement among scientists—that
leveraging the climate change mitigation
potential from land use is “extremely important
in meeting emission reduction targets.”
Depending on the level of mitigation achieved in
other sectors, land-based mitigation can make
up 20–60% of the global cuts needed by 2030
(depending on cuts in other sectors, and with
the upper bound assuming large-scale
30
bioenergy), and 15–45% through 2050.
According to the latest emissions gap report
from the UN Environment Program, global
emissions must be net zero by 2055–70. In other
words, carbon sequestration through forest
Figure 4. Small Change in Gross
Deforestation/Restoration Leads To Large Mitigation
29
United Nations Development Program, UN Climate Summit: New York Declaration on Forests (New York: United Nations Development Program, 2014), available at http://www.undp.org/content/undp/en/home/presscenter/events/2014/september/23-­‐september-­‐united-­‐nations-­‐climate-­‐
summit/Land-­‐Use-­‐and-­‐Forest-­‐Action-­‐Area-­‐Online-­‐Pressroom.html. 30
IPCC, Fifth Assessment Report, WG3, chap. 11. 19
The Billion-Ton Solution | Dahl-Jørgensen
growth or carbon capture and storage will have to cancel out all gross emissions from all sectors.31
Due largely to the rapid increase in fossil fuel emissions, net carbon emissions from tropical forests are
now down to about 10% of global emissions. But this net emissions number conceals the outsized
share of net emission reductions that tropical forests can provide by simultaneously slowing
deforestation and enhancing reforestation and restoration. Deforestation and forest degradation have
been estimated to cause some 9.5 billion tons of greenhouse gas emissions (19% of the global total),
while restoration and reforestation remove some 4.4 billion tons from the atmosphere (a negative 9% of
32
global net emissions). Reducing tropical deforestation and forest degradation by a modest 25%, while
simultaneously increasing restoration and reforestation by 25%, would deliver 3.5 billion tons per year in
emission reductions (see figure 4). This is a modest ambition. The EU goal of a 50% reduction in gross
deforestation (i.e., halving the red column in figure 4) would bring the net emissions (the blue column)
close to zero, even before adding any new restoration effort. If restoration is doubled, net emission
reductions jump to a whopping 13.5 billion tons per year, or about 30% of today’s global emissions.
Reaching the goals of the New York Declaration on Forests—ending forest loss by 2030 and restoring
350 million hectares—is estimated to reduce 4.5–8.8 billion tons of CO2 per year in 2030.33
Forest mitigation is a largely untapped mitigation strategy, and a dwindling opportunity. Despite
important progress in some countries, notably Brazil, tropical deforestation is not being reduced quickly
enough to stay within reach of the 2°C target. And despite progress on REDD+ under the United Nations
Framework Convention on Climate Change (UNFCCC) negotiations and ambitious mitigation
commitments from countries like Brazil and Indonesia, total global efforts are far short of the mitigation
potential.
34
REDD+ promotes sustainable development. The multiple benefits of REDD+ are well documented.
Beyond the climate benefits from carbon sequestration, it preserves global biodiversity and global
rainfall patterns that are critical for some of the world’s most important agricultural belts. Locally, REDD+
secures a resource base for both timber and nontimber forest products, ensures pollination, preserves
soils, and provides clean and steady flows of water. The governance reforms required to implement
REDD+ are critical to secure livelihoods and protect the rights of indigenous peoples and local
communities. Healthy forests also make communities and nations more resilient to impacts of climate
35
change, thereby protecting the hard-fought development gains of the last few decades. Although many
of these benefits are seen as “co-benefits,” REDD+ has in some cases proven to be more effective at
bringing about these additional benefits than interventions that have them as their primary goal. For
example, indigenous peoples and local communities in Indonesia have suffered human rights abuses
and a lack of customary land recognition for decades, and many aid organizations have tried to support
these efforts. With the emerging “One Map” initiative that seeks to put indigenous lands off limits for new
31
United Nations Environment Program, Emissions Gap Report 2014. Gross and net emissions from deforestation taken from Richard A. Houghton, “The Emissions of Carbon from Deforestation and Degradation in the Tropics: Past Trends and Future Potential,” Carbon Management 4, no. 5 (2013): 539–46. This is within the IPCC number of net emissions at 4.3–5.5 gigatons (Gt). However, the IPCC report does not include gross flows. To calculate the share of global emissions, the IPCC’s number of 49Gt CO2e global emissions was used, taken from IPCC, Fifth Assessment Report, WG3, chap. 11. 33
Michael Wolosin, “Quantifying the Benefits of the New York Declaration on Forests,” 2014, http://www.climateadvisers.com/quantifying-­‐the-­‐benefits-­‐of-­‐the-­‐new-­‐york-­‐declaration-­‐on-­‐forests/. 34
United Nations Environment Program, Building Natural Capital: How REDD+ Can Support a Green Economy (New York: United Nations Environment Program, 2014). 35
IPCC, Fifth Assessment Report, WG3, chap. 11. 32
20
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developers, as well as other related initiatives as part of the government’s REDD+ program, attention to
indigenous rights to land has been significantly increased.
2. What Would It Take to Stop Deforestation?
We know what it would take to stop deforestation. Although Brazil is unique in many respects, its
experience offers critical lessons for other forest-rich nations, including those countries with much less
capacity to act. Brazil has reduced deforestation in the Amazon by more than 75% below the 10-year
historical average (1996–2005). Applying conservative estimates, this translates into an emission
reduction of 2.6 billion tons over 7 years and a 1.6% reduction in global emissions in 2012.36 In
comparison, the EU reduced its annual emissions by about 400 million tons from 2006 to 2011.37 Even
more impressively, this all happened during a period of rapid agricultural growth. Figure 5 shows the
dramatic “decoupling” between deforestation and the production of soy and beef in the Brazilian
Amazon.
What caused Brazil’s decoupling? No expert predicted in 2004 that Brazil could reduce deforestation
in the Amazon by more than 75% in less than a decade, given the severe governance challenges that
still prevailed in the Amazon at the time
Figure 5. Brazil’s Decoupling of Deforestation and
(much like the situation in many
Agricultural Production
developing countries today). What caused
the decline? Many factors contributed, but
first among them was political will. Under
president Lula and ministers of
environment Marina Silva and later Carlos
Minc, Brazil launched an ambitious law
enforcement effort (guided by real-time
satellite monitoring), which entailed
sending in the military to arrest thousands
of illegal loggers. The government
protected vast areas by designating them
as national parks and indigenous
Source: PRODES, FAOSTAT, cited by Why Forests Why Now
territories, and it linked the provision of
(Washington: Center for Global Development, forthcoming), available
billions of dollars in agricultural credit to
via http://www.cgdev.org/page/why-forests-why-now-bookcounties’ performance in deforestation,
and-paper-series,
even blacklisting laggard counties to
38
encourage peer compliance. Spurred by international NGO campaigns and demands from commodity
buyers, soy producers agreed to a voluntary “deforestation moratorium.” Active Brazilian NGOs, using
the government’s transparent satellite deforestation data, supported the process. Finally, Brazil
established its Amazon Fund—with contributions from Norway, Germany, and Petrobras—which helped
36
Daniel Nepstad, Silvia Irawan, Tathiana Bezerra, William Boyd, Claudia Stickler, João Shimada, Oswaldo Carvalho, Katie MacIntyre, Alue Dohong, Ane Alencar, Andrea Azevedo, David Tepper, and Sarah Lowery, “More Food, More Forests, Fewer Emissions, Better Livelihoods: Linking REDD+, Sustainable Supply Chains, and Domestic Policy in Brazil, Indonesia, and Colombia,” Carbon Management 4, no. 6 (2013): 639–58, http://earthinnovation.org/publications/more-­‐food-­‐more-­‐forests-­‐
fewer-­‐emissions-­‐better-­‐livelihoods/. 37
Wolosin and Belenky, “Paris Analysis.” 38
Juliano Assunção, Clarissa C. e Gandour, and Rudi Rocha, Deforestation Slowdown in the Legal Amazon: Prices or Policies? (Rio de Janeiro: Climate Policy Initiative, 2012), http://climatepolicyinitiative.org/wp-­‐content/uploads/2012/03/Deforestation-­‐
Prices-­‐or-­‐Policies-­‐Working-­‐Paper.pdf. 21
The Billion-Ton Solution | Dahl-Jørgensen
lock in and create international attention arounf the country’s international commitment, while making
available resources for local implementation. For example, a $40 million contribution from the Amazon
Fund is enabling the state of Pará to roll out its successful Green Municipalities Program to 100
municipalities throughout the state, to sustain the impressive results achieved, and to catalyze further
progress.
Will Brazil’s deforestation stay low? It seems highly unlikely that Brazil will revert to the record high
deforestation rates of the 1990s and early 2000s. Too much progress has been made on monitoring,
legal frameworks, law enforcement, and private sector commitments and practices. Yet there is a real
risk of a partial reversal. In 2013, deforestation increased for the first time in many years (though from a
record low baseline, and still vastly below the previous levels), causing many experts to worry that the
gains could not be sustained. Then, in 2014, deforestation fell again to levels close to 2012’s record
low.39 Continued success will depend on political will and international support. Experts stress that
though most of the early and easiest reductions were achieved through a “stick approach,” maintaining
and continuing this progress will be difficult unless farmers on the ground start benefiting from real
incentives to protect forests.40
What would it take to stop global deforestation? Doing what Brazil has done is hard, and has
significant short- and medium-term financial and political costs. Doing so in countries with less capacity
in Brazil is harder still. But a concerted global public–private effort to stop deforestation would have
many similarities to the Brazil experience. It would require a three-pronged strategy:
1. Countries with tropical forests would need to implement sustainable land use policies and
governance reforms. Sustainable land use planning typically includes (1) policies to conserve
high-carbon forests; (2) freeing up degraded lands for agricultural expansion and forest
restoration; and (3) sustainable intensification of production on existing agricultural lands. Other
fundamental governance reforms typically part of REDD+ strategies include a recognition of
customary land rights, strengthening law enforcement, and aligning fiscal and sector growth
policies. This again requires robust coalitions for change, and an "all-of-government" approach.
2. Private companies would need to implement zero-deforestation policies. A growing number
of companies are pledging to not buy commodities tainted by deforestation, and are seeking
third-party verification by NGOs such as the Tropical Forest Trust and Greenpeace to comply.
More companies must follow suit, and they should cover a broader set of commodities. There is
also increasing interest among commodity buyers in helping to stimulate reforms by aligning
their purchasing power, investments, and ability to offer long-term market access with REDD+
incentives at the jurisdictional level. More analysis is needed to promote this idea.
3. Developed countries would need to create economic incentives, including REDD+
demand. Large-scale systems to reward countries for reducing forest emissions through REDD+
will be critical to stimulate the necessary public policies in forest-rich countries, yet they have
not yet been tested at scale. Norway’s bilateral pledges, though too small to pose as a fair test
of the potential of REDD+ incentives, still demonstrate a track record in stimulating forest
governance improvements. The relatively modest pledge of $1 billion to Indonesia—the country
with the largest deforestation problem—has already initiated processes that if continued would
mark a fundamental change in the political economy of land use. Anticorruption and law
39
Associated Press, “Deforestation Drops 18 Percent in Brazil’s Amazon,” November 26, 2014, http://bigstory.ap.org/article/27662c4b95ee4e75adbdb02bba82f05e/deforestation-­‐drops-­‐brazils-­‐amazon. 40
Nepstad et al., “More Food, More Forests.” 22
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enforcement measures mark the beginning of the end of decades of impunity for illegal activities.
A forest clearing moratorium, and the related “One Map” initiative, have exposed massive
amounts of overlapping and illegal forest concessions, and have made them publicly transparent
for the first time. Meanwhile, and only partially a consequence of the bilateral REDD+
partnership, the involvement and empowerment of indigenous peoples and local communities
led to a landmark constitutional court ruling that ruled that local communities’ should be allowed
to formalise their customary claims to millions of hectares of land. Until now, such lands have
been often been claimed by the state and doled out in various forms of concessions back to
local communities. As in any complex national reform process, it is difficult to assess causality,
but initial evaluations indicate that the agreement of international REDD+ incentives spurred
important progress.41
REDD+ demand is not the only international strategy to slow deforestation. Trade policy and demandside measures on legality, market access, and public procurement can also help, and indeed play
essential supplementary roles. Significant REDD+ demand will, however, be required to help alter the
political and economic realities to bring about reform in most forest-rich countries.
3. The Ongoing Supply Chain Revolution
While REDD+ demand has taken a long time to materialize, there is tremendous momentum to clean up
agricultural supply chains. In 2010, the Consumer Goods Forum (CGF)—a collection of some 400
companies with $3 trillion in sales—pledged to help (in the context of a global public–private partnership)
to eliminate deforestation from the supply chains of soy, beef, paper, and palm oil by 2020. Since then,
commitments have accelerated. This movement toward deforestation-free commodity supply chains is
playing out in three ways:
1. More companies are likely to come forward with new commitments over the next months.
Just in the last 12 months, the share of the global palm oil trade covered by companies with
commitments to zero deforestation has increased from 5% to about 96%.42 As the CGF pledge
has been translated into individual corporate commitments from large consumer goods
companies, agricultural traders have started making commitments. And as they have made
these commitments, even more producers and consumers have made commitments of their
own. This domino effect has fundamentally disrupted the global palm oil industry in a very short
period. With announcements from agribusiness giants such as Wilmar’s and Cargill’s that they
will be going deforestation free across all their commodities, it seems clear that other
commodities will see a similar development. Commitments from producers, traders, and
consumer companies are now also starting to trickle into finance. The Banking Environment
Initiative – a collection of about 10 international banks – has pledged to introduce zerodeforestation banking standards that match the metrics used by CGF.43 As the market share
41
Norad (2014) Considerable progress for Norway’s International Climate and Forest Initiative (NICFI), http://www.norad.no/en/evaluation/news/considerable-­‐progress-­‐for-­‐norways-­‐international-­‐climate-­‐and-­‐forest-­‐initiative-­‐nicfi
42
Chain Reaction Research: “96% of Global Palm Oil Trade Covered by Zero-­‐Deforestation”, December 8, 2014, http://chainreactionresearch.com/2014/12/08/the-­‐chain-­‐96-­‐of-­‐global-­‐palm-­‐oil-­‐trade-­‐covered-­‐by-­‐zero-­‐deforestatio-­‐plus-­‐
jokowi-­‐brazil-­‐kl/ 43
Cambridge Institute for Sustainability Leadership, “Banking Environment Initiative,” http://www.cisl.cam.ac.uk/Business-­‐
Platforms/Banking-­‐Environment-­‐Initiative.aspx. 23
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covered by zero-deforestation commitments grows, more buyers and financiers will gain
confidence that there will be enough sustainable supply.
2. The new commitments are helping to change the political economy in producer countries.
An increasing share of the private sector is now calling for, rather than actively opposing,
governance reforms related to REDD+. The Indonesia case is illustrative. In 2011, the Indonesian
private sector actively lobbied against the deforestation moratorium. In 2013, it was largely silent
when the moratorium was extended. But today—following the Wilmar announcement, which
affects 45% of global palm oil production and 80% of the palm oil producers—the Indonesian
private sector is actively calling for governance reforms. Asia Pulp and Paper, long regarded one
of the world’s least sustainable companies, is now on record asking for ramped-up law
enforcement and a review of overlapping concessions.44 At the UN Climate Summit in
September 2014, the Indonesian Chamber of Commerce along with leading companies issued a
statement requesting that the government of Indonesia incorporate all elements of their zerodeforestation pledges into Indonesian law.45 The CEO of Wilmar International, Kuok Khoon
Hong, conveyed similar arguments at the World Economic Forum in January 2014.
3. Leading Consumer Goods Forum member companies are now explicitly asking for a
global REDD+ mechanism to help meet its goal. Through the Tropical Forest Alliance 2020,
the CGF has called on governments to establish the enabling environment necessary for the
CGF to meet its goal. (A goal which when set in Cancun in 2010, was to help eliminate
commodity deforestation, in the context of emerging climate negotiations for a global REDD+
mechanism.) Increasingly, the CGF is seeing REDD demand as the most important contribution
developed countries can make to stimulate the governance reforms businesses need. This
makes business sense: Unless there are policy reforms, CGF members will be undercut by
unsustainable producers, and will find it challenging to abide by their commitments.
The three strategies – green growth policeis supported by REDD+ incentives and corporate
commitments – cannot succeed in isolation. They depend on and reinforce each other. First, green
growth policy reforms will in most places not be possible or sustainable without the financial support
and political cover that comes from REDD+ and global commodity markets. Second, support from the
developed countries will not by itself change the land use calculus and transform markets unless
countries and companies see a development or business case for taking action. And third, voluntary
private sector commitments cannot transform entire markets without land use governance reform in
producer countries that create a level playing field, and ensure access to nonforested lands for
agricultural production. The most important way voluntary supply chain commitments reduce land use
emissions may in fact be indirect, through its impact on policy. With strong and growing commodity
demand from domestic and emerging markets, there will always be new companies willing to step in to
supply those markets unsustainably unless producer countries implement land use reforms. Largescale incentives for REDD+ constitute the most important lever developed countries have to
stimulate forest and land use reforms in countries with tropical forests and to thereby close that
loophole. REDD+ is also critical for addressing the almost 50% of forest emissions not driven by
international trade in commodities.
44
Rhett Butler, “APP, Environmentalists Talk Future of Indonesia’s Forests,” Mongabay, February 20, 2014, http://news.mongabay.com/2014/0220-­‐app-­‐fcp-­‐debate.html#evK62zDQwDj6Fowl.99. 45
See http://www.undp.org/content/undp/en/home/presscenter/events/2014/september/23-­‐‑september-­‐‑united-­‐‑
nations-­‐‑climate-­‐‑summit/Land-­‐‑Use-­‐‑and-­‐‑Forest-­‐‑Action-­‐‑Area-­‐‑Online-­‐‑Pressroom.html 24
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4. The Role of REDD+ Payments
Emission reductions from REDD+ are highly cost-effective—perhaps even more than previously
thought. REDD+ was always estimated to be highly cost-effective. Indeed, REDD+ was ironically
excluded from large-scale mitigation policies due to its very ability to deliver large volumes of
inexpensive emission reductions, as this would risk flooding carbon markets, depress prices, and slow
the energy transition in advanced economies. Yet even those estimates were overstating the cost. The
most frequently cited cost estimate, the 2008 Eliasch report, indicated that a 50% reduction in
46
deforestation by 2030 would cost $17–34 billion per year. This seems too high, by several orders of
magnitude, for three key reasons.
First, too often REDD+ is depicted as a choice between food production and conservation rather
than as a new framework for sustainable, productive land use. Many studies have estimated the
levels of REDD+ payments necessary to compensate private landholders—on a hectare-by-hectare or
project-by-project basis—for the private opportunity cost of land use change. (In other words, pay
landowners or agribusinesses not to convert specific forests areas to farms.) In reality, the farmer could
be offered alternative, nonforested lands, or be supported to intensify production on existing lands.
Similarly, stopping illegal loggers with law enforcement has a lower financial cost than paying them off
(which, of course, would also be unjust). REDD+ incentives provided at the national or jurisdictional level
against a set “reference level,” as agreed on under the UNFCCC, would need to be sufficiently large to
make a difference politically by strengthening the reformers’ ability to implement sustainable land use
policies and law enforcement. Part of the money would be needed to cover their
budgetary/implementation costs, including the programmatic and transaction costs of providing benefits
on the ground, and a part could be used for other green growth investments. But there would be no
need to match the total of foregone private profits from every hectare of potentially converted land. The
trade-offs of REDD+ should be made through national land use planning processes, not by individual
farmers and firms weighing the advantages of production versus protection. The actual financial
resources needed to achieve REDD+ results at the national or jurisdictional level is substantially lower
than the opportunity costs faced by private decision-makers. The concept of REDD+ has long suffered
from this confusion, partly because many pilot activities have been at the project level, rendering them
unable to make an impact on broader policy change.
Second, previous estimates assumed that rich countries would need to pay for most reductions.
In 2009, it became clear that this would not be the case, with Brazil, Indonesia, and other countries
pledging substantial mitigation without international support. As the next climate agreement takes effect
in 2020, most forest-rich countries will be willing to undertake some forest mitigation without support,
both to contribute to climate action and because reducing deforestation is increasingly understood to be
in their medium- and long-term interest (notwithstanding the significant short-term financial and political
costs). As discussed in part 1, the Lima Challenge demonstrated this commitment and leadership from
important tropical forest countries.
The commitment to self-finance a significant share of the emission reductions will be reflected in
countries’ reference levels and a lower share of the overall reductions to be paid for through REDD+.
Similarly, corporate zero-deforestation commitments increase the incentive for governments and
producers to change their practices beyond the incentive from REDD+ payments alone, potentially
achieving greater reductions at a given level of REDD+ payments.
46
Johan Eliasch, Climate Change: Financing Global Forests—The Eliasch Review (London: Earthscan, 2008). 25
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Third, cost estimates were inflated based on the assumption that REDD+ would be fully integrated
into global carbon markets. This would imply paying a high and increasing carbon price determined by
the global marginal abatement cost. However, since REDD+ can be achieved at a far lower cost than
other mitigation actions, one can avoid paying excessive “REDD+ rents” by keeping REDD+ separate
from other sectors. This also has the added benefit of lowering price volatility risk in carbon markets like
the European ETS, and of creating a broad coalition of environmental and social NGOs supportive of
large-scale REDD+ payments because REDD+ reductions would come in addition to rather than
replacing climate action to transition out of fossile fuels in advanced economies.
The power of REDD+ payments lies not in their direct financial impact but in their ability to
redirect economic activity and existing agricultural investment flows. The Food and Agriculture
Organization recently estimated global annual investment in agriculture at about $328 billion, of which
47
about half is private and half is public. REDD+ obviously cannot succeed if it tries to financially
outcompete food production. But it can make a significant difference on the margins, by keeping those
existing investment flows away from forest areas and direct them to degraded land and existing farms.
By so doing, REDD+ can help bring about the transition from extensive to more productive agriculture
that will be needed to secure food security and long-term economic development.
5. Ready for What? The Moving Goalpost of REDD Demand
Current REDD+ pilot efforts are suffering from a lack of carbon demand signals. Some developing
countries have made important progress, driven by a combination of government leadership,
international partnerships, and strengthened market pressure through international commodity supply
chains. But in the absence of global REDD+ demand signals, too few nations are addressing the direct
and underlying drivers of deforestation withh the resolve needed. Most countries with tropical forests
have taken preliminary steps on “REDD+ readiness,” such as strategy formulation and capacity building,
with very limited support or certainty of future funding. The policy change expected from REDD+ is
simply too fundamental to be triggered by small, up-front “readiness” grants with cumbersome
procedures and without a clear path to future results-based payments. “Readiness” alone is therefore
unlikely to deliver REDD= results, except in those countries that have already mustered the political will
to take serious action. Conversely, readiness has so far progressed most rapidly where it has been
coupled with results-based pledges from the start. REDD+ is essentially a development choice; and to
succeed, it needs to be chosen at the highest political levels and with support across line ministries. It
involves significant up-front costs—political as well as financial. Its benefits, however, though real, will
tend to materialize beyond the electoral cycle. A few million dollars for readiness has proven to be
insufficient to make this development choice a realistic option.
The failure to create demand for REDD+ leaves billions of tons of cost-effective mitigation
unexploited pre-2020. The EU decided against the inclusion of forest mitigation in its ETS, and failed to
find alternative ways to create demand. The United States came close to creating massive demand for
REDD+ through the Waxman-Markey Bill in 2009, which passed the House of Representative but died in
the Senate. In the UNFCCC process, REDD+ was held back by the broader decision in Durban in 2011
to postpone the start of a new climate agreement from 2013 till 2020, despite the REDD+ rule set having
been largely agreed upon at that time (and later finalized in Warsaw in 2013).
47
Sarah Lowery, David Tepper, and Rupert Edwards, Bridging Financing Gaps for Low-­‐Emissions Rural Development through Integrated Finance Strategies (Washington: Forest Trends, 2014), http://www.forest-­‐
trends.org/documents/files/Bridging%20Financing%20Gaps%20English.pdf. 26
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Forest-rich nations have been preparing for REDD+ for almost a decade now, and are losing faith
that serious willingness to pay will ever materialize. The stakes cannot be overestimated. Decisions
made by countries during the next 12 months will determine whether REDD+ will ever become a reality.
Not including large-scale REDD+ incentives in the international framework to apply through 2025 or
2030 would be tantamount to giving up on the goals of the New York Declaration on Forests only a year
after it was launched. If credible willingness to pay is within reach, forest-rich nations could be
convinced to put forward not only ambitious and unconditional mitigation pledges of own action, but
also additional mitigation subject to international financial support. However, a failure in 2015 to include
provisions for large-scale REDD+ demand in countries’ mitigation contributions for the post-2020
agreement would likely close the REDD+ window of opportunity and even leave the 2°C target out of
reach.
REDD+ is the only agreed-upon sectorial mechanism under the UNFCCC. To date, there has been
very slow progress in developing a “new market mechanism” (as established at the UNFCCC’s 17th
Conference of the Parties in Durban) that scales up from projects to sectorial approaches. REDD+ has a
rule set that was agreed to under the UNFCCC to do exactly that, in a way that deals with “additionality”
without creating perverse incentives for countries not to enact ambitious climate policies. Technical
concerns about monitoring, “permanence,” and “leakage” can be dealt with. Leakage is best dealt with
through jurisdictional and national approaches, and through the participation of many countries.
Permanence can be dealt with through continued carbon payments in the short term, and reformed land
use policies in the long term. Both can also be dealt with through simple measures such as discounts
and buffers. The agreed-on “Warsaw Framework” for REDD+ contains robust social and environmental
safeguards, and despite initial ideological opposition in the negotiations, the developing countries have
accepted that strong safeguards are not only a precondition for financial support, but also an integral
part of effectively and sustainably reducing forest emissions. Many financing channels are up and
running, ranging from national funds like the Brazilian development bank’s Amazon Fund, to bilateral
funds like Germany’s innovate REDD+ Early Movers to multilateral funds like the World Bank’s Forest
Carbon Partnership Facility’s Carbon Fund. These can be scaled up or replicated, and more are already
being put in place.
6. The EU’s Opportunity to Lead on Forests
In 2008, the EU promised to “take a leading role to shape the global policy response to
deforestation.” It even articulated the goals of reducing gross tropical deforestation by 50% by 2020
48
and achieving zero net deforestation by 2030. In large part emboldened by the EU’s signals that it
would mobilize significant demand for REDD+ credits, the developing countries accepted ambitious
language to “reduce, halt, and reverse” forest and forest carbon loss, but with clear caveats that
significant international incentives would be required to succeed.49
The EU considered options for mobilizing REDD+ demand, but did not deliver on them. In 2010,
the EU Commission included REDD+ purchases as one of several options to be considered as part of a
strategy to ramp up the EU’s 2020 target from 20% to 30% below 1990 levels. But this target was never
48
For a good review of the EU’s policy process on REDD+, see Moritz von Unger, Charlotte Streck, and Donna Lee, “Options for Financing REDD+ in the Context of EU Climate Policy: Status and Opportunities,” TNC and Climate Focus, http://www.climatefocus.com/documents/files/options_for_financing_redd.pdf. 49
United Nations Framework Convention on Climate Change, “Cancun Agreements,” 2010, http://unfccc.int/resource/docs/2010/cop16/eng/07a01.pdf#page=2. 27
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raised, despite the fact that reaching the 30% target is now estimated to be cheaper than the 20%
target was expected to be when it was set in 2008. The Commission also discussed testing compliance
demand for REDD+ by governments through the “Effort Sharing Decision” (for those sectors not covered
by the ETS) in the pre-2020 period, which also has not happened. The EU’s only adopted policy on
REDD+ demand has been a nonbinding encouragement to its member states to use revenues from
auctioned ETS allowances on REDD+. Though, in theory, these EU allowances are a promising source of
predictable and large-scale demand, in practice their the low prices dramatically reduced the available
funding. Germany has used this source of funding to finance its innovative bilateral REDD Early Movers
program, but at a lower scale than initially hoped for, due to falling auctioning revenues as EU carbon
prices fell. Although some member states—notably, Germany and the U.K.—have started piloting
REDD+ payments through their development budgets, the EU as a whole has yet to create the sizable
demand for forest carbon pre- or post-2020 that forest countries were expecting.
Trade measures can support but not replace the need for positive incentives. In the last few years,
the EU as a whole has largely moved away from REDD+ and instead focused on its Forest Law
Enforcement, Governance, and Trade program (FLEGT). Through this program, forest countries are
supported with technical assistance to implement “Voluntary Partnership Agreements” with the EU, to
allow continued imports of forest products into the EU from those countries that are in compliance with
the EU’s new timber regulations. The motivation behind FLEGT is to reduce the EU’s global forest
footprint, recognizing that EU members’ demand for forest and agricultural products is a highly
significant driver of deforestation. Although FLEGT is making a positive contribution, it is hard to see
how this program will fundamentally change the land use policies of forest-rich nations and level the
playing field among local producers that serve domestic markets or export markets beyond the EU. In
short, there is a mismatch between the EU’s policy goals and its current policies.
To reinvigorate REDD+ the EU should prioritize REDD+ as a core component of its international
mitigation commitment. The commitment itself would be sector neutral, but accompanying political
statements could highlight REDD+ as a core strategy to deliver the commitment. Not all of the
international mitigation commitment would need to be from REDD+, of course. When assessing options
in terms of cost-effectiveness, the ability to mobilize own efforts from developing countries, and positive
development effects, REDD+ would in any case emerge as a very high priority.
A pledge of 1 billion tons with a strong focus on REDD+ would make the EU’s policy consistent
with its stated goals. Since Copenhagen and Cancun in 2009-10, when the EU pushed for and got a
commitment from developing countries to “slow, halt and reverse forest carbon and cover loss”, they
have struggled to come up with a credible response. Until last year, the world had almost stopped
waiting for the EU to create large-scale demand for REDD+. Then, in September 2014, the EU endorsed
the New York Declaration, which committed to “ensure that strong, large-scale economic incentives are
in place commensurate with the challenge”. The time to deliver on that commitment is in 2015, when the
EU’s climate targets are set for the next 15 years.
A dual pledge focused on forests would fit well within the EU’s negotiating position. It would
stimulate increased ambition from developing countries, and even competition among them to put
forward the most ambitious climate goals (or forest “reference levels”). It would allow the EU to
distinguish between countries at different levels of development by requiring a larger portion of own
effort (i.e. stricter reference levels) from middle-income countries. It would stimulate the private sector to
deliver the low-carbon economy by redirecting the large capital flows currently driving deforestation. It
would do so not through direct cofinance and the often creative mathematics of “leverage” claimed by
the aid community, but by getting prices right and letting the private sector innovate and create value.
28
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Part III: Options for Inclusion in the EU’s Policy and Legal
Frameworks
Several options exist for incorporating an international mitigation pledge into EU climate policy.
The legal and technical aspects of integrating the commitment into EU climate policy could be
elaborated and fine-tuned during the five-year window after the pledge is made and before it takes effect
in 2020. To start mobilizing the supply side, it is important that the pledge be made explicit in 2015, with
the caveat that the legal predictability following formal inclusion in EU policy would come later.The
following options, along with others, could be considered, some of which could be combined:
1. Decentralized purchases through the Effort-Sharing Decision. This option would simply add
a legally binding commitment to purchase/pay for international credit purchasing to member
states, on top of the internal mitigation required under the Effort-Sharing Decision (ESD)—that is,
the cuts EU member states are committed to achieve in sectors not covered by the ETS, such
as transportation, buildings, agriculture, and waste. Each EU member state could then decide
whether to procure the additional tons from government budgets or to impose additional
regulations on those industries that are not covered by the ETS to purchase international carbon
units (that are not fungible with the ETS). The EU Commission could suggest dedicated funding
streams for member states to mobilize for this purpose (e.g., ETS auctioning revenues or
dedicated environmental taxes). Alternatively, this could be left to member states.
2. Political coalition. Some committed EU member states could take on the additional
international mitigation commitment without sharing it across all the member states. This may
not require EU regulation, and could potentially be more of a political pledge. For it to count as
an EU commitment to mitigation in the UNFCCC, it would probably still require coordination
among the member states and with the EU Commission about the rules and structures for the
carbon transactions. This option may be politically more feasible than agreement under the ESD,
because one would not need to convince all the EU member states. However, it would make it
obvious to domestic constituencies in the countries that take on the extra burden that others are
not contributing. For that reason, the contributing countries may prefer to take on the additional
effort on behalf of the EU, but still do so as part of the ESD negotiations. An arguably more
important disadvantage of the “political pledge” approach is that it may be perceived more like a
“fast-start financing” pledge than a rules-based “compliance pledge” measured in tons of CO2. It
may therefore become a continuation or scaling up of ODA programs, with all the related
procedures and limitations, than a purchasing commitment (that may typically fall under a
different ministry with a different mandate, like the Ministry of Finance or ministries covering
climate change. To mitigate this risk, the pledge should include language about creating legal
predictability as part of the operationalization of the effort toward 2020, and that the tons will be
verified according to established rules (or rules to be clarified by 2020).
3. Centralized purchases at the EU level. EU-wide procurement of international carbon credits
could potentially save on cost and strengthen the EU’s bargaining power with sellers by acting
at scale as a monopsonist buyer. It could also allow for the use of potentially efficiencyenhancing purchasing methods, such as large-scale global tenders. Centralized purchases
would require the EU Commission be given the resources needed, which is always a challenge
vis-à-vis the member states. Options for mobilizing the revenues would need to be sorted out
before 2020. (This could include, for example, ETS auction revenues (currently delegated to
member states, with “recommendations” from the Commission to spend it on climate finance,
29
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including REDD+), dedicated set-asides from certain taxes (at the national or EU level), as a
budget item in the overall EU budget or as a separate climate budget stemming from the EUinternal Effort Sharing Decision).
4. Hybrid approach—centralized mechanism with bilateral contributions. One could envisage
a hybrid approach that combines the voluntary “political coalition” and a quasi–“centralized
purchases” model. In this case, member states would agree to the overall ambition (e.g., 1 billion
tons per year). A subset of member states would then make politically binding but nationally
determined pledges splitting the responsibility of the overall additional EU mitigation pledge.
Member states would then task the European Commission to set up a voluntary EU-wide
mechanism and to negotiate bilateral framework agreements with forest-rich countries on their
behalf. Purchasing member states would have the option to pay for forest reductions through
the EU mechanism at EU’s agreed-on prices from the jurisdictions negotiated by the
Commission.
This approach would avoid the potential redundancies and confusion of having several EU
member states negotiate bilateral agreements with the same forest-rich countries or jurisdictions
and would ensure a consistent approach. At the same time, this flexible “opt-in” system would
not require nations that lack the political will or financial resources to assume any purchasing
obligation. In addition, this system would not require the transfer of any budgetary resources to
the EU from Member States, as participating Member States would decide whether and when to
pay for forest emission reductions via the EU mechanism. This system would also create
transparency so that purchasing member states would receive political recognition for their
international forest contributions. As with the "political coalition" model, it would be important
that the tons be verified according to clear rules, either defined by the EU or taken from the
UNFCCC where available.
5. “Compensation Credits.” The concept of “Compensation Credits” combines the classic
offsetting with regulatory obligations outside emission trading by allowing entities with
obligations under a range of EU climate and energy laws (e.g., energy efficiency, renewable
targets, fuel standards, agriculture policy) to meet part of those obligations with compensation
credits.50 It has many of the same pros and cons as traditional offsetting—for example, costeffective compliance for industry, protection against price shocks and global competition on one
hand, and delayed domestic action within the relevant sector/policy energy transition and
uncertainty of demand on the other. This option would likely trigger reactions from parts of the
NGO community, much like the opposition to traditional offsetting.
6. Partial inclusion in the ETS. The EU could decide to allow some international credits into its
ETS, its main climate policy instrument. This could likely only be a partial solution, given that the
demand would be insufficient to add up to the EU’s international commitment (e.g., 1 billion tons
a year). It would also be opposed by many NGOs, and even be opposed by some policymakers
for technical reasons (e.g., in the case of REDD+, the “leakage” and “permanence” of credits,
both of which can be accommodated for through buffers or discounting of credits). Conversely,
the ETS is the EU’s main policy tool to meet its mitigation targets, and has a track record of
mobilizing private capital for international mitigation. Partial inclusion up to a defined cap would
require the EU Commission or the member states to find a way to guarantee both that sufficient
mitigation occurs in the EU to meet the internal goal and that sufficient tons are paid for to meet
50
Conway, Streck and Unger, “REDD+ Finance in the European Union: Options for Scaling-­‐up Near Term Support”, August 2014 30
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the additional 1 billion tons per year. This could be done with a combination of a cap on the
volume of credits to be allowed into the ETS and a commitment among the governments or the
EU Commission to be the purchaser of last resort if the ETS demand is insufficient to pick up the
maximum allowed supply (on top of the share that the EU member states were in any case
planning to procure outside the ETS through one or more of the other options presented above).
In any circumstance, even a partial inclusion in the ETS would not be an option until the EU has
found a permanent solution to its current oversupply of existing allowances through the
emerging Market Stability Reserve.
Conclusion
The EU contributes only about 11% of global emissions but has the world’s largest economy, at about
25% of the global GDP. It has an explicit ambition to take—and a proud history of having taken—the
lead on climate change. To continue to lead, the EU should not only reduce its own carbon emissions by
at least 40% below 1990 levels by 2030 but also establish an international norm that all major
economies should contribute to significant emission reductions abroad. Thus, it should pledge an
additional 1 billion tons CO2 outside its borders.
While the pledge should be sector neutral, REDD+ can deliver a significant portion of the reductions. It is
the only developed sectorial mechanism. Some 60 countries are actively preparing for full
implementation—and need international incentives to deliver on their potential. REDD+ can
demonstrably deliver large-scale and near-term mitigation, with unmatched additional development
benefits. And it can do so at a cost several orders of magnitude lower than other sectors abroad, and at
a fraction of the cost of delivering similar mitigation contributions at home.
A commitment from the EU before the Paris climate talks in December 2015 to mitigate 1 billion tons
CO2 per year starting in 2020 would mobilize significant additional mitigation efforts from developing
countries—and likely from the other developed countries—with positive spillovers to the broader climate
negotiations on ambition and finance. As the European Union faces a seemingly intractable contradiction
between its eagerness to lead on climate change and its fiscal challenges at home, international
mitigation and REDD+ offer a unique opportunity to regain global climate leadership and get the climate
negotiations on track to narrow the global mitigation gap.
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