Bringing forest carbon projects to the market

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However, this is still a niche market compared to the regulated markets, particularlythe CDM (figure 19). Although methodological hurdles are being gradually overcome,investment barriers remain and are still a major obstacle to project development. Onlywhen the sector is fully integrated into the regulated market system will large financialflows be directed to forests and to effective action against climate change.Primary CER volumes (CDM), CFI (CCX) and VER OTC volumes traded in 2006, 2007 and 2008700OTCCCXMDP6005001510432354MteqCO24006930053755220038910002006 2007 2008Figure 19: The voluntary market (470 M€) is growing fast but is still much smaller than theprimary CDM market (4 346 M€)Bringing Forest Carbon Projects to the Market49
2. Prospects for the forestcarbon market after 2012In the wake of the UNFCCC Conference (COP 15) in Copenhagen, the future offorestry projects within the carbon market remains uncertain. A great many political,institutional, economic, technical, and financial parameters are still undecided.Nevertheless, several regulated markets, including future Kyoto Protocol developmentsand a possible Federal quota system in the United States, are sending out positivesignals as to the future of the forest carbon market. This section will review thenegotiations now taking place as well as the broad trends that project promoters andinvestors may anticipate.2.1. Forests in the post-Kyoto period: where will AR, IFM, andREDD projects stand?2.1.1. Forestry returns to centre stagefor the post-Kyoto periodThe latest reports from the IPCC 36 show that global warming is accelerating and thatimmediate action must be taken to stabilize atmospheric concentrations of GHGs at450 ppm eqCO 2, the minimum required to prevent global warming of more than 2°C.Reaching this target will mean using the entire range of attenuation options offeredby the different sectors of the economy. Furthermore, although emission reductionsin industrialized countries are essential, they will not suffice. The contribution madeby transitional and developing countries is crucial and will imply very large-scaletechnology transfers and financing from the developed countries.Given this context, the inclusion of REDD projects in developing countries is asignificant attenuation option that may generate large emission reductions at relativelylow cost, as highlighted in the Stern Report on the economics of climate change 37 .Furthermore, REDD is expected to produce substantial co-benefits in terms ofbiodiversity protection and improved living standards for populations who depend onforest ecosystems.36 IPCC, 2007. 2007 climate change review: Contribution from working groups I, II and III to theFourth IPCC Assessment Report37 Stern N., 2007. Stern Report: the Economics of Climate Change50
Page 3 and 4: Authors and AcknowledgementsThis gu
Page 5 and 6: 2.2. Br i n g i n g f o r e s t car
Page 9 and 10: needed credibility to the forestry
Page 11 and 12: This lower market share can be expl
Page 13 and 14: that are used include grants, prefe
Page 15 and 16: ◆◆ ConclusionWhile forestry pro
Page 17 and 18: a)Gt equiv-CO 2 /year28,735,639,444
Page 19 and 20: 1.2. The different types of forest
Page 21 and 22: What is a forest?The United Nations
Page 23 and 24: 1.2.4. Projects concerning uses of
Page 25 and 26: organized 13 . Rapidly increasing i
Page 27 and 28: In national GHG inventories, Articl
Page 29 and 30: ◆◆ Forest carbon in non-Annex I
Page 31 and 32: At present, CDM forest projects onl
Page 33 and 34: to their development no longer exis
Page 35 and 36: Primary CDM credits traded in 2008
Page 37 and 38: Main forest quality standards on th
Page 39 and 40: The quantities of forest credits tr
Page 41 and 42: several plantation sites but run by
Page 43 and 44: It should be remembered that the da
Page 45 and 46: 1< 5< 10< 30> 30Projects seeking st
Page 47 and 48: We were able to collect data on sur
Page 49: 1.5. ConclusionCompared to the fear
Page 53 and 54: of GHG emissions, etc.). Moreover,
Page 55 and 56: For countries currently experiencin
Page 57 and 58: 2.1.2.2. Implementing and financing
Page 59 and 60: With more robust data on GHG emissi
Page 61 and 62: system similar to the current CDM o
Page 63 and 64: Aside from these funds dedicated to
Page 65 and 66: It should be noted that a change in
Page 67 and 68: to boost project development. Howev
Page 69 and 70: Project for commercial reforestatio
Page 71 and 72: Investor Bank Public or philanthrop
Page 73 and 74: Drawing up these documents and secu
Page 75 and 76: Case 1:JumaCase 2: ARCorridorCase 3
Page 77 and 78: In order to cover these costs, the
Page 79 and 80: REDD project is to curb deforestati
Page 81 and 82: 3.2.1.2. Carbon costsImplementing t
Page 83 and 84: 3.2.1.3. Management costsManaging,
Page 85 and 86: Income will depend on the volume of
Page 87 and 88: 3.2.2.6. ConclusionCalculating cost
Page 89 and 90: 3.2.3.3. Conclusion and recommendat
Page 91 and 92: Titleholders (100 %)ShareholdersInv
Page 93 and 94: Other indicators can also give a go
Page 95 and 96: IRR examples for plantations and na
Page 97 and 98: Example of a debt-financed project:
Page 99 and 100: 3.3.2.3. Subsidies and donationsA s
Page 101 and 102:
(Merrill Lynch, JP Morgan, BNP Pari
Page 103 and 104:
InitiativesBioCarbon Fund(World Ban
Page 105 and 106:
CasestudyNo. 1:JumaNo. 2: ARCorrido
Page 107 and 108:
Carbon standardsExperience and cred
Page 109 and 110:
3.4.1.2. Project eligibility for th
Page 111 and 112:
To handle the issue of permanence u
Page 113 and 114:
number of credits generated under a
Page 115 and 116:
Plan Vivo Suitable forvery small-sc
Page 117 and 118:
◆◆ Who has rights over the tree
Page 119 and 120:
(when the transaction is effectivel
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◆◆ the person(s) financing the
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3.4.2.4. How should carbon credit o
Page 125 and 126:
A contract presupposes an agreement
Page 127 and 128:
carbon credits. It is important to
Page 129 and 130:
The parties may agree on the method
Page 131 and 132:
Annex 1: Applicable methodologiesfo
Page 133 and 134:
Methodologies for large scale affor
Page 135 and 136:
Methodologies for small-scale Affor
Page 137 and 138:
Annex 2: The CDM project cycle136
Page 139 and 140:
The table below compares the calcul
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Case study no. 1Avoided deforestati
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Project activities and costs are as
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Case study no. 2Ankeniheny-Zahamena
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Project costs: 1.8 MUS$11%8%Activit
Page 149 and 150:
Case Study no. 3Ankeniheny-Zahamena
Page 151 and 152:
Direct income from conservation act
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Case study no. 4Commercial (re)affo
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Project costs: 15 M€4% Activity:
Page 157 and 158:
Case study no. 5Afforestation on th
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Project costsProject income10%5%Pla
Page 161 and 162:
GlossaryAcronym French Acronym Engl
Page 163 and 164:
teqCO 2Tonne équivalent CO 2teqCO
Page 165:
164Etude de cas n°3
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Bringing forest carbon projects to the market

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