Forests, the International Climate Policy Framework and the 2050 Low Carbon Roadmap

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1 Forests, the International Climate Policy Framework and the 2050 Low Carbon Roadmap David Ellison Hans Petersson Mattias Lundblad (Prepared for the Workshop on Climate Change and Forestry in Northern Europe, Uppsala)

2 Australia Croatia Netherlands Finland Italy Belgium France Norway Spain Estonia Poland Lithuania Latvia Luxembourg Sweden Bulgaria UK Greece Russian Federation Slovenia Czech Republic Ireland New Zealand Canada Austria Hungary Germany Japan Denmark Portugal Switzerland Slovakia Net Annual Increment/ Net Emissions (excl. LULUCF) [%] Accounted Removals (~25%) Incentive Gap Accounted Removals/ Potential Removals FM [%] (Ellison et al 2011) I N C E N T I V E G A P

3 What is the Incentive Gap? Measures the share of carbon sequestration not incentivized in the Kyoto Protocol framework Based on eligibility for forest-based carbon credits Can be measured in different ways As the share of non-incentivized carbon sequestration in standing forests under Forest Management (FM) As the share of non-incentivized carbon sequestration in FM and Harvested Wood Products (HWP) As the share of non-incentivized carbon sequestration in all Annex I forested areas (including ARD and unmanaged forest lands)

4 Incentive Gaps Across the Full Forest Value Chain CP 1 FM up to cap (8.6%) FM removals and HWP around FMRL and new cap (12%) CP 2 Growth 100% ARD (6.1%) Bioenergy (9%) ARD (7%) Bioenergy (9%) Growth 120% FM removals and HWP around zero and FMRL (22%) HWP (43%) IG = 76% IG = 49-71% FM removals and HWP above cap (48%) FM above cap (28%) Managed Forests (4%) Unmanaged Forests (1.1%) Unmanaged Forests (1.1%)

5 Eliminating the Incentive Gap How can forests be fully incentivized? Model should consider the full carbon value of all actions/activities Fully mobilize ALL LULUCF resources for climate change mitigation Count all carbon pools (omitted pools) One National Inventory Include full HWP accounting Recognize importance of the troika (bioenergy, HWP, standing forests) System should achieve the following: Weigh all sources according to their actual global warming potentials (full carbon value) Provide a balanced and efficient use of forest-based resources Provide cost effective strategies for climate change mitigation (and adaptation)

6 Why Should All LULUCF Carbon be Counted? Fully mobilize forests and forest growth in the climate policy framework Balance Interests across Forest-based Resources Bioenergy favored, HWP and standing forests not fully mobilized => Equal Weighting of All Carbon Components in the System Only Bioenergy and ARD are 100% mobilized in current framework Many carbon pools are not counted HWP and Standing forests only partially counted (reference line, cap) FM (Forest Management) not really mobilized in the climate policy framework LULUCF is the only segment in which all emissions/removals are not fully accounted All other segments (ETS, non-ets) have full 100% accounting

7 Mobilizing FM: Accounted Removals ( ) 100% 90% 80% 70% 60% 16% 16% No Accounted Removals AR(D) removals 50% 40% 68% AR(D) offsets FM removals 30% 20% 10% 0%

8 30 Swedish Harvest, Sinks and Net Removals, Harvest Mt CO 2 e Accountable LULUCF (CP2) Unaccounted FM Net Removals FMRL "grey area" (CP2) Accounted LULUCF (CP1) LULUCF (FMRL)

9 The Swedish Low Carbon Roadmap Swedish Greenhouse Gas Emissions, Sources and Sinks, Total GHG Emissions (All Sources) Unaccounted LULUCF Accounted LULUCF (CP1) Accountable LULUCF (CP2) FMRL Area (CP2) MtCO2e Total GHG Emissions (w/o LULUCF) 0 Total GHG Emissions (w/ LULUCF) Target scenario 2 (w/o LULUCF) Target scenario 1 (w/o LULUCF) LULUCF (FMRL) LULUCF (env.+prod.) (Swedish EPA, 2012)

10 The Cost of Failing to Mobilize Forests Negative emissions

11 The Incentive Gap and the Ratio of the New cap to Forest Potential in 2020

12 The Forest Potential for Negative Emission Scenarios Forest-Rich and Mostly Boreal Countries

13 Moving to the Global Context Global Incentivized Forest Area under the Kyoto Protocol (CP1) Canada, Russia, Japan, NZ not in CP2, US has not ratified KP (>80% Annex I forest cover) 11 Fully Incentivized (0.3%) (AR) Annex I: Incentivized 259 (6.4%) cap Annex I: not- Incentivized 1194 (29.6%) (not eligible for cap) Global Forest Cover: 4033 Million Ha No Incentives (remaining global forests) 2569 (63.7%) Totals Incentivized: (6.7%) Non-Incentivized: (93.3%)

14 The Goals for LULUCF Kyoto Rules LULUCF Pre-Durban (CP1: ) Post-Durban (CP2: ) Idealized Model FM election voluntary mandatory mandatory cap on FM carbon credits Reference Level/ (Accounting Method) Carbon Pools and Activities 3% of 1990 emissions, 15% of actual net removals (whichever smaller, or negotiated) reference level = 0 (gross-net) Many carbon pools and activities omitted (HWP, CM, GM, wetlands, unmanaged forests, etc.) 3.5% 1990 emissions no cap projected, historical or reference level = 0 (net-net) HWP included (limited by cap), but many carbon pools and activities omitted Estimate new baseline using average net removals in previous commitment period (continuous gross-net) Include all carbon pools and activities in one allencompassing National Forest Inventory Offsetting of net ARD emissions permitted not permitted collapse Arts. 3.3 & 3.4

15 The Goals for a Truly International Forest-Based Climate Policy Framework?

16 LULUCF & REDD+ Convergence The current reality is quite diverse and complex Some countries/systems allow forests in the climate policy and carbon trading framework, others do not And some countries/systems differentiate between LULUCF and the REDD+ treatment of forests, others do not These two systems (LULUCF & REDD+) were developed side-by-side, but independently of each other They have different rules and goals But with movement toward Common but less Differentiated Responsibilities in the Post-Kyoto framework What will happen with LULUCF and REDD+ Can they be more strongly mobilized in the International Climate Policy Framework?

17 Conclusions We still have a long way to go in order to truly mobilize LULUCF and all related carbon pools in the climate policy framework The Nuts and Bolts of Accounting Matter: No Accounting = No Incentives The carbon value of different LULUCF activities are not adequately or equally recognized, thus not likely to be weighed appropriately in actor decisions The elimination of barriers (cap, reference lines) to full carbon accounting in the (Post)-Kyoto framework(s) could go a long way to achieving a more balanced use of forest resources The inclusion of all relevant carbon pools in the LULUCF framework will help incentivize greater efforts to safeguard forests, in particular under mounting climate change The failure to include many carbon pools means that incentives to reduce forest degradation and promote climate change adaptation are not present Much of the international framework may depend on the successful integration of full carbon accounting for forests in the carbon trading framework and convergence between LULUCF and REDD+

18 Thanks for Listening! Comments Welcome

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