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California is looking to tropical forests to help slow climate change.

After years of delays, the California Air Resources Board (ARB) appears to finally be moving ahead with plans to finance tropical forest protection through “sectoral offsets” to its cap-and-trade program, in which California companies could meet part of their climate obligations by buying offset credits from states in developing countries that reduce emissions from deforestation.

It’s great news. Around 2008 it seemed possible that carbon credits from reducing tropical deforestation could become a $15–25 billion per year market, but those hopes foundered in the wake of collapsed United Nations climate talks in Copenhagen in 2009 and the demise of United States federal climate legislation shortly thereafter. Instead, nearly all of the international funding for reducing tropical deforestation has come out of public budgets.  California’s move could finally spur some much-needed private finance to protect forests.

On Wednesday, ARB held a public hearing in Sacramento to present the concept and receive public feedback.  The mood was upbeat as ARB staff described the success of California’s three-year-old cap-and-trade program to date and the benefits that would come from including tropical forests in the program (slides are here).  Staff from ARB were joined by officials from tropical forest states, indigenous leaders, and technical experts. 

In the words of ARB Board Member Hector de la Torres, in reference to fighting climate change, “California can’t do it alone. We are first taking care of California, then building momentum elsewhere.”

In the words of Rodrigo Fernandes das Neves of the government of the Brazilian state of Acre, “partnership with California represents a lot for us.”

In the words of Chief Almir of the Surui tribe of Brazil, “our message to California is to go on fighting for this mechanism. It will contribute a great deal for our people and this world.”

I attended the hearing as well, and delivered these remarks:

Good morning. Thank you for the opportunity to share views, and express support.

My name is Jonah Busch. I’m a research fellow at the Center for Global Development, a think tank based in Washington, DC focused on actions that rich countries can take to improve the lives of people in poor countries. Fighting climate change is at the top of that list.

California is recognized around the world as a leader on climate, by putting a price on carbon pollution, by transitioning to clean energy, and by decarbonizing the world’s 8th largest economy. Today California has a golden opportunity to lead on climate again, by introducing sectoral offsets for reducing emissions from deforestation and forest degradation.

I’d like to make three points.

First, tropical forests are important. Tropical forests are important for fighting climate change. Every year tropical deforestation produces more greenhouse gas emissions than the European Union. There’s no chance of avoiding dangerous climate change without halting and reversing tropical deforestation.

Tropical forests are also important because their destruction is harmful to the people who live near them. In Brazil deforestation is blamed for exacerbating their record-breaking drought. In Indonesia as we speak massive and deliberately set forest fires are choking Southeast Asia with a thick carcinogenic haze, causing a public health emergency affecting millions of people.

And tropical forests are important because they can be protected at low cost. Our research shows that relative to California, tropical forests offer 55 times as many emission reductions below twenty dollars a ton.

This brings me to my second point: California’s leadership is important.

Many countries and states around the world are interested, at least in principle, in taking advantage of this low-cost climate solution. The United Nations has finalized rules for paying for reductions in emissions in deforestation. These rules are expected to be part of an international climate agreement this December in Paris.

But while there are internationally agreed rules, there haven’t yet been international market transactions. California has a chance to set the standards for market-based payments in a way that guarantees environmental integrity, and benefits indigenous peoples, the best guardians of tropical forests. Once California sets these rules, others US states and even other developed countries are likely to follow, just as they did a generation ago on clean air.

California’s leadership sends an important signal to developing countries, too.  More than 50 tropical countries are lining up to reduce deforestation, if funding comes forward. California can jumpstart action in those countries, by sending the signal that market finance is on the way.

My final point is this: the road ahead is doable.

Performance payments for forest conservation have been tested using public funding, and they’re working. Brazil’s anti-deforestation policies reduced Amazon deforestation by 80% over the last decade – the single largest reduction in greenhouse gas emissions ever achieved by any county. In return Norway contributed one billion dollars into the Amazon Fund.

The Air Resources Board white paper lists a number of issues for the road ahead—monitoring, reference levels, safeguards. These issues are important, but surmountable. Many good ideas for addressing these issues have been put forward in the last decade, including by the REDD Offsets Working Group, and other people in this room. A new report by the Center for Global Development recommends keeping rules simple and practical.

Again, congratulations to ARB for embarking on this very important journey of including sectoral offsets for tropical forests.

Tropical forests are important, California’s leadership is important, and it can be done.  Thank you.

There is still a thorough technical, legal, and political process to be taken before tropical forests are fully integrated into California’s cap-and-trade program.  Getting the process moving with the hearing on Wednesday was a big and important step for tropical forests and the climate. 

Disclaimer

CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.