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As part of its initiative on Tropical Forests for Climate and Development, the Center for Global Development is producing a book entitled Why Forests? Why Now? The Science, Economics, and Politics of Tropical Forests and Climate Change. Co-authored by senior fellow Frances Seymour and research fellow Jonah Busch, the book will make the case that tropical forests are essential for both climate stability and sustainable development, that now is the time for action on tropical forests, and that payment-for-performance finance for reducing emissions from deforestation and forest degradation (REDD+) represents a course of action with great potential for success.
Why Forests? Why Now? will draw on original research, synthetic reviews, and national case studies supported by commissioned background papers and CGD’s own research. The content will cover the science, economics, and politics of forest conservation and finance to underscore the urgency, affordability, and feasibility of scaling up funding for reducing deforestation, particularly through performance-based approaches.
The Science – deforestation as a source of climate emissions, development benefits provided by intact forests, and advances in forest monitoring technologies;
The Economics – the affordability of mitigating forest-based emissions compared to other options, contributions of forests to developing economies, and what is known about what drives deforestation and how to stop it.
The Politics – the politics of international cooperation to reduce tropical deforestation, with a particular focus on constituencies for performance-based finance in relevant policy arenas at the international level, within selected rich countries, and within forest countries.
The publication of Why Forests? Why Now? is set for December 2016. This research supports the activities of a CGD Working Group to identify practical ways to accelerate performance-based finance for tropical forests.
Click here for a list of all papers in the series.
The international forest and climate communities have placed high hopes on the potential for compliance carbon markets to generate funding to reduce tropical deforestation through international forest offsets. At a meeting last week in San Francisco on “Navigating the American Carbon World” (NACW) it seemed as if these hopes are likely to be dashed. Or at least not realized in time to save the vast tropical forests in time for them to play a significant role in combatting dangerous climate change.
Reducing deforestation and conserving forests is a critical part of a solution to global climate change. Compelling evidence for this is at the heart of a recent CGD publication Generating results-based funding to pay tropical forest countries for their performance in reducing deforestation has been envisioned as a promising approach to mitigating dangerous greenhouse gas (GHG) emissions, and was enshrined in Article 5 of the Paris Agreement.
One way to generate funding to reward forest countries for reducing deforestation is to include forest offsets in compliance carbon markets. Carbon offsets allow GHG emitters to pay others for actions to reduce GHG emissions cheaply, outside the capped enterprise or sector, such as from uncapped sectors like forests. Offsets can provide an important tool for keeping the cost of emissions reduction low. As our CGD Working Group report, Look to the Forests, noted, there is not yet enough results-based funding, so hopes have been pinned on the potential of carbon markets to generate funding to pay for results.
In recent years over 50 jurisdictions have implemented policies to put a price on carbon. Some of these programs, including China and Korea, allow for the use of domestic forest offsets. But so far, only California has an active compliance carbon market (cap and trade program) that includes the potential to use international forest offsets in its enabling legislation.
The International Civil Aviation Organization (ICAO) has set itself voluntary goals to offset emissions from air travel and is also considering buying high quality international forest offsets in its market based program CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation). If cap and trade programs are allowed to purchase international forest offsets, this could be a boon to global efforts to reduce and halt deforestation, with enormous benefits both for local communities and the globe.
Where is California’s market today?
California has developed robust procedures that that would allow capped entities (polluters) to pay tropical forest countries to reduce their deforestation as a way to offset their own emissions. But until now, the procedures have not been cleared for use by the California legislature.
The launch of California’s international forest offset program has been slow and subject to continuous delays. There are several reasons for this. First, international forest offsets will compete with domestic (within California) offsets, which are already up and running. In California, the cap & trade program has generated an entire industry engaged in producing domestic offsets within the state. They have gained lots of experience with developing and implementing the domestic forest offset protocol. Companies that are required to reduce GHG emissions are keen to see more offsets because it drives the price of compliance down. But companies that generate offsets within the state are not interested in encouraging international offsets because they may be cheaper and compete with the domestic offsets.
Second, in California there is an active and outspoken community of people from disadvantaged communities located either near heavily polluting industries or major transport corridors. These communities, referred to as the Environmental Justice (EJ) community, and others, are opposed to the use of offsets, and in fact oppose trading emission permits altogether. They believe that there is a correlation between emission of GHGs and local pollutants that are harmful to health, and they hope to tackle the latter by forcing polluters to reduce more emissions in situ rather than through trading or offsets. The pressure from the EJ community is strong and finding a more sympathetic audience in the California legislature. The legislature is currently reviewing the impact of cap & trade, and especially offsets, on reducing local toxic and criteria air pollutants. There is pressure to stop cap & trade after 2020 and to replace it with direct command and control regulations, or even a carbon tax.
In the current California political climate, REDD+ and the use of international forest offsets are considered toxic. Some legal experts are even questioning whether carbon trading across borders is constitutional. Only sovereign governments are allowed to enter into international treaties. Do the agreements between sub-national governments like California and Ontario, or a future agreement between California and the state of Acre in Brazil, constitute an international treaty?
Perhaps the most significant obstacle is regulatory uncertainty in California. California’s cap & trade program is due to expire in 2020. The legislature is considering legislation that would extend it to 2030. There is solid support for the program in Governor Brown’s administration and by the majority democratic assembly and senate. But extending the program is likely to require a two-thirds supermajority vote and this would be more difficult to ensure. The administration already expended considerable political capital in passing the recent $52 billion transportation bill, which required a two-thirds majority, so there are questions about the level of political energy that remains to pass the cap & trade extension by a two-thirds majority. When California first put in place its cap & trade program (AB32), which goes till 2020, only a simple majority was needed. In the meantime, law suits were filed against AB32 claiming that revenues from the program are actually a tax, which requires passage by a two-thirds majority of the legislature. While the courts ruled that cap & trade revenues are not in fact taxes, but are regulatory fees, in 2010 voters approved Proposition 26 which stipulated that a two-thirds supermajority vote in the legislature is required to pass any fees, levies, charges or taxes that previously could have been enacted by a simple majority.
All this means that the potential for compliance cap & trade markets to generate funding to encourage tropical forest countries to halt deforestation is uncertain. At the NACW, experts suggested that California’s international forest protocols would be unlikely to be approved before 2020, and possibly as late as 2025. This is bad news for tropical forests. At current rates of deforestation, by 2025 a huge swath of tropical forests could be gone. Given that reducing deforestation, and reforesting degraded areas, can account for as much as 30 percent of current global emissions, maintaining forests is critical to halting dangerous global warming, and is one of the most cost-effective options to do so. With funding from compliance carbon markets in question, new ideas to generate funding for a financial incentive to halt deforestation are badly needed.
The Green Climate Fund (GCF) could begin offering results-based payments for protecting and restoring tropical forests as early as July. That’s good news for the climate and for developing countries, where tropical deforestation can be nearly half of low-cost emission reductions. Yet funding to protect forests remains low and slow, as Frances Seymour and I explain in our book, Why Forests? Why Now? As the GCF moves to enable results-based payments for forests, earlier initiatives offer valuable lessons on two things the GCF should—and can—get right: 1) keep rules simple, and 2) recognize that institutional procedures built for upfront investments may not always be appropriate for results-based payments.
Progress on forests at the Green Climate Fund
The GCF is a financial institution created by the United Nations Framework Convention on Climate Change (UNFCCC) in 2011, with headquarters in Songdo, Korea. It aspires to finance not just a collection of climate-friendly projects, but a “paradigm shift towards low-emission and climate resilient development.” The GCF has received more than $10 billion in pledges to date, though when the US will follow through with $2 billion remaining from its Obama-era $3 billion pledge appears uncertain as this funding was not included in the President’s budget request to Congress.
So far the GCF has approved 43 projects for climate mitigation and adaptation, totaling $2.2 billion in grants and loans. Two of these projects involve forests protection—$41 to finance Ecuador’s REDD+ action plan, and $53 million for smallholder farmers in Madagascar’s eastern rainforests. But the GCF hasn’t yet moved to systematically enable results-based payments for reducing emissions from deforestation (REDD+). It looks like that’s about to change.
When the GCF Board meets this July, it could issue a request for proposals for tropical countries to apply for results-based payments for reducing emissions by protecting and restoring forests. Last week in Bali the GCF convened a meeting of board-nominated REDD+ experts to discuss what might go into that request for proposals. I was invited to this meeting as a facilitator.
If the GCF enables results-based payments, it will join a diverse public funding landscape for REDD+ of about $8.7 billion from 2006-2015. More than half of this funding has been for inputs—readiness and policies. Less than half pays for results, including bilateral agreements of Brazil, Guyana, and Indonesia with Norway, and the multilateral Carbon Fund. The roughly $1 billion per year pace looks set to continue with an announcement in Paris in 2015 by Germany, Norway, and the United Kingdom of $5 billion, with the bulk of that on a results-basis.
Private finance for REDD+ makes up only about $1 billion, coming in the form of companies voluntarily offsetting their emissions. This amount is far less than anticipated a decade ago when it appeared reasonably likely that cap and trade programs in the United States and elsewhere would pass and would allow regulated companies to meet a portion of their emission-reduction obligations by purchasing REDD+ offsets. A carbon-neutral growth agreement by the International Civil Aviation Organization looks set to include offsets that could potentially include REDD+. However, a market for tropical forest offsets in California remains in political limbo, as my colleague Michele de Nevers describes.
GCF is a very important addition to the financial landscape for REDD+ because it is the only institution directly responsible to the mandate of the UNFCCC, with the legitimacy and balanced governance that comes along with universal representation of countries. The 2015 Paris climate agreement included a prominent role for protecting and restoring forests through results-based payments for REDD+; the GCF is the most direct way to operationalize that part of the agreement.
As a relative latecomer to the REDD+ finance landscape, GCF has the benefit of being able to learn a lot from earlier funds, both in terms of valuable precedents and cautionary lessons.
Make rules as simple as possible (but no simpler)
The most similar institution to the GCF—and thus the most valuable for learning—is the $736 million Carbon Fund, a multilateral consortium of 11 donors housed in the World Bank. I’ve previously written about my hopes and questions for the Carbon Fund in 2013, as well as its frustratingly slow pace of progress as of 2016, based on my experience as a technical advisor during the creation of the fund’s rulebook, the Methodological Framework. (As of today the Carbon Fund has started or will soon start negotiations on results-based payment agreements with Costa Rica, Democratic Republic of Congo, Chile, and Mexico, and has an additional 15 programs in its “pipeline.”)
Any results-based payment program needs rules. Reference levels provide a benchmark for measuring success in reducing emissions; social safeguards prevent harm to indigenous peoples. At this point the issues around such rules have been thoroughly discussed, and different REDD+ initiatives have taken different approaches, as detailed in Why Forests? Why Now?
In hindsight, one reason the Carbon Fund became complicated and slow was its desire to craft rules that could work for both carbon markets and public funds. Each is complicated in its own way—market designers typically ask for sophisticated carbon accounting rules to ensure the environmental integrity of offsets; public funders tend to ask for elaborate rules to minimize the risk that funds from their taxpayers will be misused. Trying to meet both sets of donor demands in a single set of rules led to complexity. The cost of complication is delay, burden on forest countries, and discouraging the submission of worthy applications.
GCF has more than twice as many principals (a 24-country board, divided evenly between developed and developing countries), so is it doomed to be even more complicated? Not necessarily. GCF has a big advantage over the Carbon Fund that it can choose to set rules only for public funding, and leave aside for now rules related to tradeable credits. Furthermore, to the extent that overcomplication at the Carbon Fund emerged from donors operating in a recipient-free rulemaking environment, the GCF’s 50-50 board structure has the potential to bring more balance. During the GCF’s expert workshop I was encouraged to see participants trying to operationalize decisions already made by the UNFCCC rather than setting up duplicative rulemaking processes.
Recognize that results-based payments may need different procedures than upfront investments
Another reason the Carbon Fund became slow and complicated was the need for its programs to adhere not only to the rules noted above but also to various institutional requirements of the World Bank. The issue here is not that a financial institution would impose safeguards and due diligence processes on its projects—as indeed they should—but rather that institutional requirements set up to finance upfront investments may not always be appropriate for results-based payments.
Safeguards and due diligence
All programs in the World Bank must follow that institution’s safeguard procedures, which are long and detailed and must be completed upfront. Meanwhile, the UNFCCC negotiations agreed to a set of Cancun Safeguards in 2010, which number just seven, but are purpose-built for REDD+ and can be assessed continually. Similarly, as part of its due diligence process, the World Bank requires that investment proposers provide project documents that specify upfront and in great detail many aspects of the activities to be undertaken. But with results-based finance, specifying all plans in advance may suffocate the flexibility needed to learn by doing on the way to producing results.
The same issue of heavy upfront documentation versus lighter ongoing assessment and planning appears likely to crop again at the GCF, which applies the safeguards of the International Finance Corporation, and requires planning documents of its upfront investments. However, The GCF might have some advantages over the Carbon Fund when it comes to processes that accommodate results-based payments. It’s a new institution, its mandate includes results-based finance, and such programs could potentially become a significant portion of its portfolio. I’m hopeful that the GCF can find ways to extend flexibility to results-based payments programs in recognition of their differing needs.
Applicants for upfront investment finance from the GCF are asked to predict in advance how many tons of carbon dioxide their projects will keep out of the atmosphere. But these claims are speculative—there’s no way to truly estimate the emission reductions a project or program will achieve until after the fact, and even then it can be challenging to attribute results to any particular policy, program, or project. Predicting future benefits is even more challenging for forest projects than engineering projects such as solar plants or seawalls.
Upfront predictions of eventual project successes shouldn’t be confused with true results, and they certainly shouldn’t prevent the GCF from offering a blend of across upfront and results-based finance. Indeed the concept of “multiple phases of REDD+” was agreed to encourage exactly this blend to occur. My colleague Bill Savedoff has written more about issues around “double counting,” as part of a larger body of work on cash-on-delivery approaches to development finance that also includes analysis on results-based payments for forests, including at the GCF.
Start now, and learn
The GCF has yet another advantage when it comes to results-based payments for forests: its requests for proposals can be easily modified in future iterations. Thus the GCF has every reason to issue a first request for proposals that helps it learn the ropes on paying for results, and then adapt as needed in subsequent requests.
By enabling results-based payments this year, the GCF can give a much-needed financial boost to tropical countries’ efforts to fight climate change by protecting and restoring forests.
Protecting and restoring tropical forests represents one of the biggest, cheapest, and fastest ways to fight climate change, as Frances Seymour and I show in our book, Why Forests? Why Now? Yet climate conversations in rich countries remain heavily dominated by energy, while tropical forests often feel like climate’s best kept secret.
1. Acknowledge that a stable climate requires multiple solutions.
Thirteen years after Pacala and Socolow’s “stabilization wedges” illustrated that many actions are needed in combination to effectively fight climate change, there’s still lots of thinking that climate change is only an energy problem. Fighting climate change indisputably involves shifting energy to cleaner sources. However, focusing policy efforts on fossil fuels alone makes solving the climate problem needlessly slow, weak, and expensive. Including the relatively cost-effective emission reductions from tropical forests in the global climate policy portfolio would help the world achieve a cooler climate more cheaply.
2. Expand the media’s focus.
There’s a big gap between how often media coverage of climate change discusses energy versus deforestation. News stories involving climate change mention energy 58 times as often as deforestation; they mention renewable energy 168 times as often as tropical deforestation. For every news story that mentions that carbon dioxide increases in the atmosphere are “driven by the burning of fossil fuels and deforestation,” dozens more mention only that carbon dioxide is “produced by burning fossil fuels.” Closing the gap in media attention would do much to raise awareness of forests as a climate solution. The damage wrought to tropical forests daily, and as a result to the world’s climate, contains myriad human stories which could bring a media story to life; while the opportunity offered by protecting and restoring forests is ‘solutions journalism’ waiting to be written.
Academia is considerably more vocal in linking climate change and deforestation. Scholarly articles on climate change mention energy 13 times as often as deforestation, and renewable energy 18 times as often as tropical deforestation—that’s still a wider gap than the roughly six-fold difference between emissions from fossil fuel use and net deforestation, but it’s substantially narrower than the gap in media coverage.
Forests are underdiscussed relative to their potential to slow climate change
Search results for "climate change"+...
58 to 1
168 to 1
13 to 1
18 to 1
Share of emissions from
6 to 1
8 to 1
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Note: Searches conducted Monday, March 13, 2017. "Energy" includes emissions from electricity and heat production, buildings, industry, and other energy. It excludes emissions from transport and agriculture (IPCC 5AR WG3 Summary for Policy Makers Figure SPM2). Net and gross emissions from tropical deforestation (IPCC 5AR WG3 Chapter 11 Figure 11.8).
3. The IPCC’s synthesis reports should unpack net emissions into gross emissions and removals.
The Intergovernmental Panel on Climate Change’s assessment reports are towering scientific achievements. The IPCC reports form the bedrock of what we know about how the climate is changing, what the consequences will be, and how to prevent it. However, as communication tools the reports sometimes come up short. One way the IPCC reports downplay the role of forests in fighting climate change is by displaying net emissions from deforestation in its various charts showing emissions from different sources. But unlike emissions from energy, industry, buildings, or transportation, net emissions from deforestation can be not just driven to zero, but made negative. That is, forests can take carbon out of the atmosphere.
The IPCC could improve understanding of forests’ potential role in fighting climate change by unpacking net emissions into gross emissions and removals in its Summary for Policy Makers, just as it does all the way down on page 827 of Working Group Report 3, Chapter 11. There one finds a bar chart showing that the 8 percent or so of annual emissions that come from net tropical deforestation are comprised of gross emissions of around 16-19 percent, while regrowing tropical forests remove around 8-11 percent of emissions from the atmosphere. This means that if all forest loss were halted, while letting cleared and damaged forests regrow, global net emissions would be reduced by as much as 24-30 percent. (In Why Forests? Why Now? we discuss several reasons this number could be lower—or higher.)
4. Realize we already have a carbon-capture technology.
In an era of technological marvels, it’s tempting to hope that humanity will be able to invent our way out of climate change. As welcome as it would be to have a new “breakthrough” engineering solution to remove carbon dioxide from the atmosphere involving tubes or wires or chemicals, let’s not forget to take full advantage of the safe, natural, proven, large-scale “carbon capture and storage technology” we already have—forests. Photosynthesis has been turning carbon dioxide into solid carbon perfectly well for millions of years. And it’s not just regrowing forests that take carbon dioxide out of the atmosphere—mature forests do too. A new study in Carbon Balance and Management finds that in eight out of nine Amazonian countries between 1980-2010, mature forests took more carbon dioxide out of the atmosphere than fossil fuel use put into it. So, let’s not try to inventing a carbon-capture technology; let’s invent another one, while deploying the leafy green technology we already have.
5. We are the vested interests we’ve been waiting for.
Some climate solutions will create legions of jobs—think wind technicians, “America’s fastest growing profession.” Others will produce a new generation of billionaires, a la Elon Musk of Tesla fame. These people make powerful advocates for a low-carbon future. The irony to fact that reducing deforestation is a relatively low-cost climate solution (suggested to us by David Kaimowitz, a reviewer of Why Forests? Why Now?) is that there’s nobody who stands to see their stock price double, or land a big federal contract. That’s not that nobody benefits from keeping forests standing. Far from it—standing tropical forests provide healthier air, cleaner water for farming, and more energy from hydroelectric dams. But the beneficiaries of these services are dispersed, uncoordinated, and (even worse as far as Congress is concerned) living overseas, so they are less likely to take to the halls of Congress to advocate on their on behalf. Domestically, the vested interests in tropical forest conservation lie with all of us concerned about a stable climate, so the more we speak up to our representatives about protecting them, the more they might listen.
In spite of the five hurdles above, many countries are moving forward on policies to protect forests. In fact, forests make up a full quarter of the emission reductions pledged by countries in the lead up to the Paris climate agreement in 2015, according to a new study in Nature Climate Change.
What’s lacking, however, is results-based finance from rich countries, as enshrined in the Paris climate agreement. While more than fifty tropical countries have stated their willingness to reduce emissions from deforestation in return for results-based funding, only seven have seen payment-for-performance agreements with rich countries materialize. More attention to forests could lead to more results-based funding, leading in turn to more forests and a cooler planet.
The biomass energy industry, US Senators, and the FAO would have you think that burning wood to produce electricity is a good idea for the climate. Think again.
Forests provide an important source of energy for poor households in developing countries. Fuelwood and charcoal are on average the most valuable forest products to communities that live in and around forests. But according to a new study by Winrock International, woodfuel accounts for 30 percent of climate emissions from forest degradation across the tropics. And the health impacts of burning wood for cooking and heating are severe, especially for women and girls, so many international initiatives are underway to improve access to modern energy services and reduce reliance on wood for fuel.
In some industrialized countries, a reverse trend has been underway, as burning wood for electricity is now being promoted as a climate-friendly source of renewable energy. Ships are sailing across the Atlantic bound for the UK and Europe, laden with wood pellets from North American forests. Some of those pellets are the processed remains of bottomland hardwood forests in my home state of North Carolina.
The emergence of the wood-based electricity industry in rich countries is largely policy-driven, and based on a fallacy: that burning biomass for energy is carbon neutral. After all, trees grow back, right? It’s not a simple as that.
Debunking the carbon neutrality fallacy
A newly released study published by Chatham House meticulously debunks the carbon neutrality fallacy. According to that report, felling entire trees for energy will almost all always lead to higher carbon emissions than burning fossil fuels. When a tree is harvested for energy, the planet loses a piece of its natural carbon capture and storage infrastructure, and mature trees sequester carbon at much higher rates than smaller trees. Further, harvesting whole trees disturbs soils and leads to additional carbon losses.
But what about burning the left-over residues from wood harvesting and processing? Wouldn’t that be okay? Unfortunately, the answer is still often “no.” Why not? There are several reasons:
Incentives for additional harvesting: Whole trees are often misclassified as “residues,” and according to investigations by the Dogwood Alliance, industrial pellet facilities in the US Southeast such as those in North Carolina rely on clearcuts of “low value” timber.
Supply chain emissions: emissions from burning are only part of the story. Full life-cycle accounting for the impacts of wood fuel would take into account the emissions from processing and transporting the wood as well.
Use of harvesting residues: Unless they would have otherwise been burned on site, such wood waste left in the forest would decay more slowly, delaying emissions, and would provide soil nutrients that promote future forest growth.
Use of processing residues: Most sawmill waste already goes to uses such as particleboard, so using them for fuel would increase emissions in the near term.
Fundamentally, the time dimension is critical: burning wood now releases carbon into the atmosphere that will warm the planet and take decades if not centuries to recapture through forest regrowth. To slow climate change, we simply don’t have the luxury of waiting for that to happen, and instead should be working overtime to enhance forest carbon stocks now—with forests one of the only near-term options for negative emissions—rather than settling for break-even eventually.
Based on these considerations, legislation championed by Maine’s delegation to the US Senate that would declare forest biomass to be carbon neutral is a very bad idea.
The FAO fuels the fire
Regrettably, the FAO has apparently fallen for the carbon neutrality fallacy. It has selected “Forests and Energy” as its theme for this year’s International Day of Forests (March 21st), and praises the use of wood energy for “mitigating climate change and fostering sustainable development”. The featured video depicts a woodsman strolling through fall leaves in a temperate forest with a little girl collecting sticks in a basket. The voice-over asks, “What if there were a way to save it all, and use it when we want?” After clips of wood being felled, processed, and burned, the voice-over assures us that “Using wood sustainably keeps a balance for future generations.”
While the tagline of FAO’s video is “The forest: nature’s powerhouse,” growing and burning trees is not a very efficient way to convert sunlight into electricity. According to William Moomaw of Tufts University, burning wood should be compared to the efficiency of photovoltaic panels, which convert solar energy to electricity at about 20 percent efficiency, with no emissions. His back-of-the envelope calculations suggest that this is about 80 times more efficient than growing and burning wood, which generates more emissions per unit of electricity than burning coal.
Déjà vu? Carbon accounting rules are part of the problem
A quirk in how greenhouse gas emissions from biomass energy are reported under the UNFCCC creates perverse incentives for countries to use biomass rather than fossil fuels for energy, even when it’s worse for the climate. To avoid double counting, emissions from biomass are included in land sector reporting rather than energy sector reporting. So when a UK power plant burns wood pellets imported from elsewhere, no emissions are reported. But there’s a problem. According to the Chatham House study, accounting practices for the land-use sector in many countries have the potential to leave emissions from woody biomass unaccounted for.
We’ve seen this movie before: As described in our recent book, Why Forests? Why Now? (drawing on a policy paper by CGD Senior Fellow Kimberly Elliott), EU biofuel policies drove a surge in imports of palm oil from Southeast Asia as a feedstock for biodiesel, and to replace other vegetable oils diverted to produce biofuels. Yet palm oil was being produced on Indonesia’s carbon-rich peatlands—rendering them vulnerable to chronic fires, which in late 2015 generated higher daily emissions than the entire US economy. Not taking into account the emissions from such land-use change makes biodiesel appear to be more climate friendly than it actually is. (See this WRI working paper for more on how accounting errors have led to overstatements of the potential of bioenergy.)
What’s this got to do with development?
The energy mix promoted by policies in industrialized countries has a profound effect on development through its contribution to climate change, which threatens to unravel decades of progress in human well-being. It’s also a small part of a broader set of climate justice issues. Given that we have a fixed planetary limit on the amount of greenhouse gas emissions that can be released into the atmosphere and still keep global warming below 2 degrees Celsius, any additional emissions from rich countries means fewer available to poor countries.
Surely no one could miss the irony: some of the same rich countries that urge strict scrutiny of carbon stock baselines for tropical forests in the context of REDD+ are getting away with fuzzy accounting on the implications of burning wood for the carbon stocks of temperate forests.
Whether temperate or tropical, we can’t have our forests and burn them too.
Tropical forests are an undervalued asset in meeting the greatest global challenges of our time—averting climate change and promoting sustainable development. Despite their importance, tropical forests and their ecosystems are being destroyed at a high and even increasing rate in most forest-rich countries. The good news is that the science, economics, and politics are aligned to support a major international effort to reverse tropical deforestation.
This article is part of "Forests for Climate and Development," a CGD partnership with the Guardian Development Professionals Network. You can see more on The Guardian's website.
FRANCES SEYMOUR: How did you first become aware of the importance of tropical forests to climate change and development goals?
Photo by World Economic Forum/Monika Flueckiger
PAUL POLMAN: I joined Unilever at the end of 2008. Earlier that year, Greenpeace activists in orangutan costumes had scaled our London headquarters to raise awareness about the deforestation impact of the palm oil going into various consumer products, including our well-known Dove brand. That protest evolved into a really constructive, if challenging, dialogue with Greenpeace on how Unilever could become part of the solution that continues to this day.
So some of my earliest conversations within Unilever were about how we could better use our “procurement muscle” to turn the palm oil industry around—building on the good work that had been started five years earlier, when Unilever was one of the founding members of the RSPO. The more I learned about tropical forests in the course of those conversations, the more I realised that this is not just about trees (magnificent and entirely worthy of our protection though they are in their own right). This is also about biodiversity, climate change, water, poverty and human rights, and the preservation of indigenous ways of life. In short, the forests are the “ground zero” of the twin challenges of climate change and sustainable development.
Our extended responsibility for the total value chain of our products is also something I believe in strongly. As such working on forest protection is for me a logical part of the Unilever Sustainable Living Plan we rolled out in 2010, given that the enormous global demand for food is one of the main drivers of deforestation.
Some of the materials used to manufacture your company’s products are “forest risk” commodities such as palm oil. How is Unilever ensuring that it is part of the solution rather than part of the problem of tropical deforestation, and what is the business case for doing so?
Unilever is the world’s single largest end-user of palm oil, purchasing nearly 3 percent of global palm oil production. Whilst we can not do everything alone, with this scale comes responsibility—to make sure that our supply chains are not driving tropical deforestation, and to tackle endemic social issues such as forced labour and the protection of indigenous people.
We take this responsibility extremely seriously. In 2015, we were already the largest end-user of physically certified palm oil in the consumer goods industry. By 2018, our aim is that 80 percent of our palm oil volumes will be physically certified, and by 2019, 100 percent.
However, our scale also brings us a huge opportunity—not just to de-risk our own supply chain to protect our own reputation, but to help drive sector-wide transformation. Without this, a commodity that is so central to our business will always be problematic, no matter how sustainable the palm oil we actually source is.
We have started to tackle this challenge within our own supply chain, by directing investment towards examples of the broader transformation we would like to see. For example in Sei Mangkei, in North Sumatra, we have invested 130 million euro in a new palm oil refinery that will allow us to work more effectively towards 100 percent physically certified oil, to improve traceability back to the plantation and to bring thousands more smallholders into our supply chain.
We are also using our influence to raise standards across the palm oil supply chain, by applying it to levers such as certification, methodologies and financing, and through engagement across governments and industry. The quality and quantity of this engagement has leapt in recent years, with the Consumer Goods Forum (CGF) commitment to zero net deforestation by 2020, the New York Declaration on Forests and the formation of the Tropical Forest Alliance all moving the agenda forward in different ways. Translating industry and political commitments into tangible change on the ground is the hardest bit, however, and it’s here where we still need to make real progress.
In 2015, an advocacy group identified Unilever as among the “laggards” for its policies and practices related to sourcing of “conflict palm oil.” How did you respond?
Different stakeholders have different priorities and different ways of measuring progress, and as the profile of palm oil has risen, more and more civil society groups have started to pay attention. While most have praised us for our leadership, some have criticised what they saw as a gap between our ambitions for, and work on, sector transformation, and the “nuts and bolts” of our sustainable palm oil sourcing policy. So in late 2015/early 2016, we took the opportunity to further evolve our policy to make sure it properly reflected our ambitions. We invited a range of NGOs and other stakeholders to contribute their views, and we held an independently-facilitated workshop in London that enabled people to meet us and discuss the issues in more depth.
Out of that process came our new palm oil policy, in which we committed to the 2019 deadline for 100 percent physically certified oil, as well as setting out our requirement for compliance across our suppliers’ entire operations, not just the palm oil that we buy from them. I’m pleased to say that the same advocacy group now rates us as a “front runner”—for now! It is the job of NGOs to continually push companies’ comfort boundaries, although we continue to prefer working with NGOs that are willing to come on this journey with us and be part of the changes needed, which often require involvement of third parties.
In Paris in 2015, you committed the company to move toward preferential sourcing of commodities from jurisdictions that were making progress on reducing deforestation—what progress have you made on that pledge over the last year?
We have made some good initial progress on making this pledge come alive.
At a small scale, we have started to test the idea of preferential sourcing from deforestation-free jurisdictions in the district of Kotawaringin Barat, in Central Kalimantan province, Indonesia. Here, like across Indonesia, smallholders have much lower productivity than the commercial plantations, despite making up approximately 40 percent of the country’s palm oil production. That means that there are big opportunities to increase yields, improve livelihoods and protect forests at the same time. However, increasing the productivity of smallholders is often constrained by issues such as lack of farmer groups and training, and limited access to markets and finances.
In response, we have agreed to partner with the provincial government of Central Kalimantan, the district government of Kotawaringin Barat and the NGO/expert institute INOBU to take a “village by village” approach to sustainable palm oil. In practice this means supporting all smallholders in the village of Pangkalan Tiga to reach RSPO and ISPO standards of palm oil production, as well as mapping the palm oil smallholders in at least three further villages in the district, helping thousands of farmers to obtain land certificates, business licences and environmental permits.
The certification of all smallholders in Pangkalan Tiga would make it the first certified “sustainable village” in the world of palm oil. The partnership is the first public-private agreement between a sub-national government and an international buyer, and if successful has the potential to be expanded to other areas in the district.
At a larger scale, we recently announced our involvement in a new finance facility for investing in deforestation-free sourcing areas. The Tropical Forests & Agriculture Fund is an initiative of the Norwegian Government and IDH, which aims to protect over 5 million hectares of forests and peatlands in tropical production and sourcing areas directly through projects secured by 2020.
It will do this by de-risking private capital investments into large deforestation-free production and protection initiatives. The Fund will be launched in mid-2017 with an initial committed capital of $100 million from the Norwegian governments’ International Climate and Forest Initiative (NICFI), based on a 2020 capitalization target for the Fund of US$ 400 million, to be drawn from bilateral and multilateral public donors as well as private sector partners. The Fund aims to trigger US$1.6 billion in private capital investments and by 2020 to fund more than 20 production and forest protection projects globally.
The Fund will be an incentive for governments of countries with tropical forest areas to reduce deforestation and related greenhouse gas emissions, by driving enhanced, high productivity investments in countries and jurisdictions that have policies to that regard in place.
Unilever plans to invest $25 million in the Fund over a five year period, targeting palm oil smallholders in our priority sourcing areas in Indonesia and West Africa. We see this money as a highly leveraged investment to secure our long-term access to sustainable sources of the commodities on which our business relies.
What has emerged as the most difficult challenge in implementing the company’s commitments to get deforestation out of its supply chains?
One of the biggest challenges we face is that the vast global palm oil supply chain is incredibly long, complex and opaque, and so working out where palm oil that has been grown on recently deforested land is entering our supply chain is very hard. Unilever needs palm oil not just for our food products but also for our personal care portfolio, the latter in the form of numerous palm oil derivatives which increases the complexity of our palm oil supply chain significantly.
Even achieving a basic level of traceability has been a challenge, although we have made good progress and now 73 percent of our volume can be traced back at least to the processing mill in the country of origin. A critical tool in this effort has been the World Resources Institute’s Global Forest Watch platform, which recently announced new functionality to use the power of satellite monitoring to track and manage forest-related sustainability performance.
Whilst keeping up momentum towards 100 percent traceability, we are at the same time working with Proforest, Rainforest Alliance and Daemeter on our existing mill traceability data to identify high-risk sourcing areas around those mills.
It is these challenges, along with the inherent limitations of certification schemes, that have been the driver for our commitment to preferentially source from entire jurisdictions that are making demonstrable progress to protect forests whilst increasing agricultural productivity.
What is the primary reason that more companies haven’t followed Unilever’s lead in pledging to promote transformational change in eliminating deforestation from commodity supply chains?
I think, actually, that more companies are starting to play transformative roles in commodity supply chains. M&S, for example, is very aware of the importance of raising standards across the industry and a real champion of collaborative working to achieve this across an impressively wide array of products and commodities. More broadly, the Consumer Goods Forum resolution of zero net deforestation by 2020 foresees a very transformative role for itself and member companies, although implementation is neither as uniform nor as aggressive as we need, of course.
Leadership starts with a firm commitment at the top, and a longer term vision for business beyond the confines of quarterly reporting. Companies often worry that their supply chains need to be whiter-than-white before they can stand up and talk about the broader changes that need to take place—they worry they will be shot down in flames if they don’t have a perfect story to tell about their sourcing. But at Unilever we find value in acknowledging our limitations and mistakes, but making the case for the transformational change anyway. And this makes sense—because a company does not operate in a vacuum, but in a much larger system, and both need to change together.
What’s the single most important thing governments in tropical producer countries could do to accelerate progress toward more legal and sustainable commodity production?
Governments of tropical forest countries could accelerate progress hugely by implementing the land use reforms necessary to grow their economies without destroying forests.
These include clarifying concessions and ownership (for example through the completion of Indonesia’s One Map initiative), improving transparency of decision-making, protecting the customary land rights of forest communities and indigenous people, strengthening the enforcement of forest and clamping down on illegal deforestation.
They could then ensure all relevant policies—from financing to infrastructure—were fully aligned with and supportive of such a “green growth” agenda.
At a sub-national level, they could demonstrate political appetite and practical actions to partner with sustainable commodity buyers, public and private donors and investors and local NGOs to create deforestation-free jurisdictions.
…and governments in rich consumer countries such as the US and the UK?
The Paris Agreement, adopted at COP21, sent a strong message about the critical role that forests can play in international climate action and included explicit mention of REDD+. The stand-out country in this space is Norway, as their International Climate and Forest Initiative has established REDD+ “pay for performance” partnerships with key forest countries such as Brazil and Indonesia. The commitment at COP21 by Norway, alongside the German and UK Governments, for another $5 billion for REDD+ over the next five years should jump-start other, longer-term commitments from other developed countries that can be aligned to the jurisdictional “produce protect” approaches discussed earlier.
Governments in consumer countries can also play a huge role in strengthening the signals sent by the private sector for deforestation-free commodities—particularly through their procurement, trade and development assistance policies. Some countries have made good progress, but we need more ambition and coherence, for example at EU level, where the EU should broaden its approach to illegal logging to include forest-risk commodities such as palm oil and soy.
You recently participated in the World Economic Forum in Davos. How do you think high-level networking events like that, as well as business groupings such as the Consumer Goods Forum, and multi-stakeholder partnerships such as the Tropical Forest Alliance 2020, can help actually reduce deforestation?
Events like the World Economic Forum in Davos may sometimes look like talking shops and there is of course always that risk. But in actual fact, such meetings play a very important role. They get people together, including those representing many different countries and companies, who literally would not be in a room together at any other time during the year. And having got them together, they provide a strong incentive for people to cooperate, collaborate and come to some sort of decision or agreement that moves the agenda forward in some way. Initially, it may seem like this is more of a shuffle than a step or even a leap—but sometimes it is these small movements that actually lead to much larger things. The New York Declaration on Forests, which was a significant coming-together of global commitments to tackle deforestation, was catalysed by a series of meetings in Davos earlier that year.
Business groupings such as the CGF and multi-stakeholder partnerships such as the Tropical Forest Alliance play a slightly different role, both to the World Economic Forum and to each other. The CGF helps companies to focus on their commodity supply chains, making their way through all the complexity and the challenges. While the Tropical Forest Alliance brings a much wider set of committed stakeholders together to focus on priority geographies. It is early days of course for the latter but much good progress has been made, not least the recent “Marrakech Declaration for the Sustainable Development of the Oil Palm Sector in Africa.”
Your endorsement of our new book Why Forests? Why Now? referred to it as a “welcome source of optimism.” In light of the daunting challenges faced by the global community in reaching the goals of the Paris Agreement, why are you optimistic that we’ll be successful in marshalling the potential of tropical forests to contribute?
I’m optimistic because there seems to be huge amounts of energy, momentum and good will in this area. People are actively wanting to come together and make something big happen, and we know that there are triple wins—for forests, people and climate—there for the taking. As Desmond Tutu recently said, “I am a prisoner of hope.”
The world’s elite—plus a few ringers like me—gathered last week in the small Swiss village of Davos to discuss the state of the world at the 2017 Annual Meeting of the World Economic Forum (WEF). Although not formally on the agenda, the issue of tropical forests infiltrated a number of discussions. But first, a quick recap of the meeting’s big themes that provided the broader context.
Frances Seymour speaks at Davos 2017
Photo by Gianina Caviezel
Three leading themes
There is no typical Davos experience. Over the week-long forum, participants can choose from more than 400 events on the official program, many with limited sign-up, ranging from speeches by world leaders in the 1000-seat plenary hall to taking part in an extraordinarily moving simulation of A Day in the Life of a Refugee (in which I managed to lose my identity card and money within the first five minutes). Other events—where (I assume) the “real” business is conducted—are by invitation only. And those are before you get to the dozens of early breakfasts, evening receptions, and late nightcaps sponsored by individual companies, countries, and others. But from events accessible to me, and chance conversations in lounges and shuttle buses, I’d say the top three themes of this year’s meeting related to technology, China, and Trump.
The Fourth Industrial Revolution was the theme of the 2016 WEF, and carried over into 2017 discussions. Companies focused on software, social media, and robotics were prominent among participants and sponsored events and spaces. Rapid technological change in areas such as artificial intelligence and self-driving cars was highlighted as creating opportunities for business, but also potential disruptions to society, especially inequality and unemployment. A particularly creepy exhibit was a demonstration of Sofia, a human-sized android with close-to-true facial expressions and skin tone, who is probably already overqualified for many of today’s lower-skilled jobs.
The Rise of China
A second theme was the rise of China. The keynote speech by President Xi Jinping, the first Chinese head of state to attend the WEF, stimulated the loudest buzz in the corridors. His robust defense of more inclusive, sustainable, and better-governed economic globalization as an engine for achieving global prosperity struck many participants as an inflection point in the world order, if not turning it upside-down. He specifically called out the Paris Agreement on climate change as an example of the need to adhere to multilateralism. Executives from Chinese companies were well represented in discussions ranging from ending illegal fishing to generating employment in Africa.
The Transition to Trump
The leadership transition in the United States cast a shadow over every conversation in Davos. An inevitable question to each panel or interviewee was about the likely impact of the Trump administration on whatever issue was being discussed, ranging from climate change to gender equality. While everyone acknowledged the unpredictability of the new president’s policies, my overall impression of the answers to those questions was one of forced optimism that maybe they wouldn’t be as bad as they look in prospect. For example, Secretary of State John Kerry used the WEF as a platform to enumerate the many foreign policy achievements of the Obama Administration that he hoped the new regime in Washington would sustain.
Stoking nostalgia for the outgoing administration, Vice President Joe Biden gave a moving talk about his cancer moonshot, and a plenary address affirming the need to maintain both economic and political elements of the current liberal international order. It was telling that hundreds of WEF delegates chose to attend a Friday evening concert by the Afghan Women’s Orchestra rather than watch Trump’s inaugural address.
Forests at Davos: MNCs embrace SDGs
A life-sized wooden sculpture of a tree by John Grade was the first thing greeting 2017 WEF participants as they entered the Congress Centre. And while the program did not include any sessions focused on forests per se, tropical forests featured prominently in discussions focused on issues such as climate change and food systems. Even celebrity chef Jamie Oliver, in an interview with Ariana Huffington, mentioned rainforest devastation as one of the reasons we need a “food revolution”.
One of the most powerful features of the WEF is the Global Situation Space, a giant screen outside the main plenary hall on which digital data on global trends are presented by Carnegie Mellon University in time-lapse animations. Presentations on the Climate Crisis and the Food Crisis (to which yours truly contributed) gave due attention to tropical deforestation as a contributor to greenhouse gas emissions and food insecurity.
Watch Food Crisis: The Big Picture, presented at Davos 2017
I had arrived at a plenary panel on climate change prepared to be annoyed by the usual exclusive focus of such discussions on energy, but was pleasantly surprised by the extensive air time given to forests. Although the session was somewhat marred by an awkward exchange between Al Gore and Prime Minister Hasina over whether or not Bangladesh should build a coal-fired power plant in the Sundarbans mangrove forests, the panel featured Yu Xubo (the CEO of COFCO) talking about getting deforestation out of commodity supply chains, Prime Minister Erna Solberg announcing new Norwegian funding toward this objective, and Stuart Gulliver, the CEO of HSBC, defending himself against a Greenpeace report slamming the bank’s finance of forest destruction by palm oil companies in Indonesia.
The theme of this year’s WEF was Responsive and Responsible Leadership, and one expression of that theme was to feature the U.N. Sustainable Development Goals in elements of the program. The colorful circular SDG lapel pins were a frequently glimpsed accessory on suits, and a few corporate leaders talked about the SDGs with the zeal of recent converts. My sample of one-on-one conversations included banter with a billionaire who expressed skepticism about the human causes of climate change, and responding to an Indonesian businessman’s interest in the disproportionately high emissions from crops grown on peat soils.
But overall, corporate leaders did not vote with their seats to demonstrate interest in sustainability. A number of sessions explicitly framed around related topics were poorly attended, such as a useful one on Mainstreaming Sustainable Production where fewer than half of the chairs were filled. So while it’s great that the WEF is leading Davos Man to water, the next step is to figure out how to make him drink.
Lagging behind norms on gender and food
Over wine and cheese one evening, a former WEF Secretariat employee described the organization to me as “an essential self-authorizing instrument of global governance”. To the extent that he’s right, I found it discouraging that the WEF lags behind in modeling norms that I had naively started taking for granted in the world that I usually inhabit.
Much attention was given to the WEF’s 2017 achievement of ensuring that at least 20 percent of the participants were female. But a number of all-male panels suggested the need for continued evangelism for the Owen Barder Pledge. A New York Times article providing a glimpse of a woman’s experience in Davos rang true to my own, especially the structural disadvantage of constantly having to change shoes.
Free food and drink were abundant and delicious in Davos. But despite posters on the wall exhorting participants to show leadership by eating a plant-based diet—and presumably the need to be sensitive to the dietary restrictions of culturally diverse participants—beef was featured as entree of set menus for several of the catered meals that I attended. As detailed in our new book, Why Forests? Why Now?, beef production is an outsized contributor to tropical deforestation and the emissions that cause climate change.
For nearly two decades, China has been rolling out a collection of fiscal instruments for improving environmental quality. These programs, collectively termed “eco-compensation,” include not only payments for environmental services (PES), but also an array of taxes, fees, subsidies, funds, compensation payments, and interstate compacts. Many of these programs are large and innovative, as I recently learned at an international conference in Kunming on eco-compensation, organized by China’s National Development and Reform Committee (NDRC) and the Asian Development Bank.
Eco-compensation has its origin in the 1998 Yangtze River floods, which killed thousands of people and left millions homeless. The Chinese government realized the importance of maintaining upstream forests for flood protection and introduced payments to landowners who protected or restored forest. (For more on how forests protect people from natural disasters, see Frances Seymour’s and my new bookWhy Forests? Why Now? The Science, Economics, and Politics of Tropical Forests and Climate Change.)
Since then, China has spent more than $150 billion on eco-compensation, according to one government official who spoke at the conference, including to reduce erosion, prevent sandstorms, combat desertification, and protect parks. China now claims forest cover of more than 21 percent, up from a low of 16 percent, according to another government official. (Independent scientific estimates confirm that China’s forest cover has increased, mostly with plantation monocultures rather than restored native forests.) Speakers described how China has recently passed a series of environmental protection laws, and how in 2015 “eco-civilization”—harmony between economy and environment—was inscribed as one of five pillars of the national Five Year Plan.
One new eco-compensation program, discussed by several speakers at the conference, is an interprovincial “horizontal” agreement for water quality along the Dongjiang River. The downstream province of Guangdong pays the upstream province of Jiangxi based on the quality of the water. The better the water quality, the more Guangdong pays. The agreement builds on dozens of similar arrangements between municipalities. One innovative feature of this agreement is that it’s two-sided: if the water quality is below a certain benchmark, Jiangxi has to pay Guangdong.
One of the most consequential programs discussed at the eco-compensation conference is China’s growing carbon market. Currently composed of pilots in eight cities, the program is set to expand in 2017 to a national market covering eight industrial sectors and 3-4 billion tons of carbon dioxide per year. It’s expected to be a $10 billion-per-year market. It is envisioned that after 2019 the carbon market will grow to cover all sectors, with offsets for agriculture and forestry projects.
The conference featured international speakers too. There were presentations on South Africa’s “Working For” environmental public works programs, which employ 70,000 people; Vietnam’s PES program; wetland mitigation banking in the United States; experiments with PES in Central Asia; forest planting programs in the Philippines; and biodiversity offsets in France.
I was invited to talk about recent global developments in reducing emissions from deforestation (REDD+). I discussed the Paris climate agreement; bilateral pay-for-performance deals in Brazil, Guyana, and Indonesia; the Forest Carbon Partnership Facility’s Carbon Fund; California’s moves to incorporate tropical forest offsets into cap-and-trade; the International Civil Aviation Organization’s pledge of “carbon neutral growth”; and India’s pro-forest tax reform—all topics we explore in depth in Why Forests? Why Now? I noted the current opportunity for a big buyer to access low-cost, high-volume emission reductions through REDD+, and to gain global goodwill by doing so.
The conference featured a number of recurring themes. Several speakers highlighted that eco-compensation brings institutional side benefits—including new data collection and monitoring and evaluation, as well as governance cooperation across districts that might not otherwise interact.
But several speakers stressed that eco-compensation can’t solve every problem. Complementary policies are needed to address other issues, in particular poverty alleviation. As one speaker put it, government planners should ask critically “what can eco-compensation do that other policies can’t?”
There were frequent debates over whether polluters should pay for environmental damages or whether beneficiaries should pay for improvements in environmental quality. Ronald Coase and his interpreters would surely be smiling.
So, are market-based approaches to environmental protection taking over in a land where the Hammer and Sickle is still a common sight? Well, not quite. Eco-compensation programs have been a complement to—not a substitute for—direct regulation of polluting industries. For example, after the 1998 floods the Chinese government instituted a logging ban as well as payments to upstream landowners. China’s fledgling carbon market functions alongside powerful government authority to clean up or shut down power plants; thanks to these efforts, CO2 emissions have been falling since 2013 or 2014.
Thus, policy sticks and carrots go hand in hand in China as elsewhere. In Costa Rica, the world’s premier PES program was the political sibling to a concurrent deforestation ban. And in Brazil, where restrictive policies caused a drop in Amazon deforestation of 80 percent between 2004 and 2014 even while beef and soy production increased, commenters have long warned that unless sticks are paired with carrots, deforestation could resurge. Worryingly, this now appears to be happening: deforestation in the Amazon in 2016 rose by 29 percent from the previous year (though it’s still 71 percent below the peak in 2004).
I was asked at the conference what the outcome of the US election means for the Paris climate agreement. I discuss this subject in a companion blog, If the Trump Administration Abandons Climate, Will China Take Global Leadership? In short, if the US retreats from global climate leadership, China will have an opportunity to claim the mantle, along with both the domestic responsibilities and international goodwill and influence that come along with it.
Can China lead on climate? If the commitment to improved environmental quality, openness to both market-based and regulatory approaches, and strategy of learning by doing that I observed at the eco-compensation conference are indicative of China’s climate efforts more broadly, there is good reason for hope.