The need to drastically reduce deforestation is critical to meeting greenhouse gas emissions goals. Depending on the study of the issue, estimates of the percent of annual anthropogenic greenhouse greenhouse gas emissions from deforestation range from 17 to 20 percent. This is almost a quarter of all human induced greenhouse gas emissions. While not the entire solution, private investment is necessary to reduce if not end the net avoided deforestation in the world over the coming decades.
The carbon markets will supply the majority of the private funding for avoided deforestation projects. However, the current afforestation and reforestation methodologies approved by the Kyoto Protocol do not provide a means of achieving the level of private investment needed. First, avoided deforestation is not yet part of the program. Second, the way the credits are issued, they may only bring $3 or $4 per credit. Third, the time and bureaucracy required to get through the inefficient Clean Development Mechanism (CDM) process under the Kytoto Protocol is too long and discourages investment, particularly since the Kyoto Protocol will expire in 2012. To achieve approval in time to benefit from the Kyoto Protocol may be a challenge.
Surprisingly, the voluntary market may prove to be the best means of driving private capital to forest-based carbon credit projects. The time and effort required to move projects forward is still significant, but much less than through the CDM process. The price for these credits can range from $5 to more than $10; thus, providing a much more profitable project and attracting more capital than CDM forest projects. Finally, there is no short-term deadline. Projects may be approved for 30 or more years, with requirements for periodic verification.
The fascinating aspect of the forest-related program under the voluntary process is that the private market and non-profit, non-governmental organizations have joined together to form their own system to address avoided deforestation in such a way that national government and certainly not United Nations participation is necessary. The New Carbon Cycle, therefore, may evolve at least to some extent and at least with respect to avoided deforestation without government programs. To ultimately meet the goal of substantial reductions in avoided reforestation and substantial increases in afforestation and reforestation, government participation is going to be required. However, a significant level of forest protection and increased growth will be achieved through the voluntary carbon markets.
