Tuesday, 11 August 2009

Indonesia Counts Trees to Prepare for Carbon Market

Indonesia Counts Trees to Prepare for Carbon Market

By Jeremy van Loon

Aug. 10 (Bloomberg) -- Indonesia, owner of the earth’s second-largest tropical forests, is counting its trees with satellites and on-the-ground observers to prepare for earning money in carbon markets by protecting woodlands.

The southeast Asian country is taking steps to measure and verify the amount of carbon dioxide absorbed and stored by its forests, according to a proposal on the Web site of the United Nations Framework Convention on Climate Change. The UN, operator of the second-biggest carbon-emissions market, is considering awarding securities to nations in return for their saving trees.

Forests and peat swaps in Indonesia store CO2, a greenhouse gas that is released as trees are cleared for use in furniture and to make way for palm-oil production. Negotiators at UN climate-protection talks this week in Bonn are studying how to limit carbon emissions. So far they have not agreed to reward preserving tropical woods whose destruction accounts for almost a fifth of greenhouse-gas output gas each year.

“Forest protection is waiting for the rest of the negotiations to catch up,” said Rane Cortez, a forest carbon policy advisor at The Nature Conservancy. Cortez spoke in an interview at the talks, where delegates from more than 180 countries are debating targets for CO2 cuts and financial support for developing countries.

Indonesia will be aided by Australia, which will provide data from overseas archives and exchange scientific information with Indonesian officials, the proposal submitted by both nations said. No details on costs were provided. Indonesia will attempt to create an inventory of its trees, with which it will measure the changes in carbon stocks, the proposal said.

Price Push

Creating certificates for not cutting down trees and letting them trade in carbon markets could push emission prices 76 percent lower by 2020, the New Zealand-based economic modelers KEA 3 said in a study for Greenpeace International published in March.

That would remove incentives to invest in renewable energy in poorer nations, cutting the cost for polluting industries to buy emissions permits, the environmental-advocacy group said.

Tropical forests may be more sensitive to climate change than thought, making their protection even more essential, said ecologist Oliver Phillips of the University of Leeds. Warmer Atlantic waters in 2005 turned the Amazon, the world’s largest rainforest, into a net emitter of CO2 when it’s normally a carbon sink, Phillips and his colleagues said in March.

Nations need $10 billion to $40 billion annually in incentives in order to not turn their forests over to the timber and agriculture industries, New Zealand said last October in a proposal to the UN Framework Convention on Climate Change, the Bonn-based supervisor of climate-protection treaties.

Norway has suggested a mixture of using carbon markets and supporting forestry work with international funds. Brazil opposes the use of carbon credits while other forest nations such as Papua New Guinea support a market-based approach.

European Union carbon allowances for December delivery traded at 14.20 euros ($20.05) a metric ton.

To contact the reporter on this story: Jeremy van Loon via Bonn at jvanloon@bloomberg.net