For countries that are committed to protecting and managing their forests and reforming agricultural production systems, a strong assurance of international carbon finance could be transformative.
Success in delivering one gigaton of emissions reductions will serve to catalyze more large-scale private and public funding commitments while contributing to the 2030 mitigation goals and delivering an array of non-carbon benefits.
By Gabriel Labbate, REDD+ team leader at the UN Environment Programme (UNEP)
Achieving the full mitigation and biodiversity potential of forests suffers from a “chicken and egg” problem. On the one hand, companies, enterprises and business corporations need confidence in the supply of high-integrity REDD+ credits will be available at scale. On the other, forest country governments need a signal that sufficient international funding will materialize to support large scale investments in forest protection.
There is a number at which the economics for forest conservation become overwhelmingly compelling.
REDD+ is the global mechanism for reducing GHG emissions by providing results-based payments for forest conservation and restoration. In 2020, a coalition of private and public sector partners launched the Green Gigaton Challenge (GGC) with the aim of breaking the supply-and-demand stalemate. Supported by the UN-REDD Programme and Emergent, along with the Environmental Defense Fund, Forest Trends and the Architecture for REDD+ Transactions (ART), the GGC is bringing together a coalition of public, private and philanthropic partners to channel funds into efforts led by national and subnational governments to reduce emissions from deforestation and forest degradation. GCC supports forest country governments by promoting donor-funded floor prices for results-based payments and facilitating and leveraging private sector demand above these floor prices. This helps these countries achieve their Nationally Determined Contributions (NDCs), while enabling companies to complement their internal decarbonization efforts with high-quality carbon credits.
To make all of this happen, UN-REDD will work with forest countries to develop their capacities to deliver high-quality emission reductions. Emergent will work with private companies and forest countries to structure large-scale transactions of high-quality emission reductions through jurisdictional REDD+ programs. The Environmental Defense Fund, Forest Trends and ART will contribute significant technical expertise on REDD+ in support of the initiative.
International Carbon Finance Paves the Way
Whether the GGC can make a difference is a function of price and volume: there is a number at which the economics for forest conservation become overwhelmingly compelling. A 1 gigaton annual bid over a decade, starting at a floor price of USD10/tCO₂e and increasing gradually to USD30/tCO₂e would change the trajectory of forest use in the Amazon, Congo and Indonesian forests. If this sounds like an extreme example, keep in mind that a price of USD30/tCO₂e is well below the price of the allowance in Europe’s ETS and still highly cost-effective in comparison with other options available to achieve the goals of the Paris Agreement.
For countries that are committed to protecting and managing their forests and reforming agricultural production systems, a strong assurance of international carbon finance could be transformative. The GGC will work with donors and the private sector to send a strong demand signal for high-integrity emissions reductions from forests. Such a signal can facilitate access to up-front finance by enabling investments in forest conservation that deliver positive financial returns. It can also serve to strengthen political will where there are windows of opportunity to implement the necessary policy changes and measures for reducing deforestation.
A Strong Signal of Ambition
The goal of the GGC represents an unmistakable signal of environmental and financial ambitions and if implemented would be a powerful force to change the economics and politics of deforestation in many parts of the world. It would make conservation and sustainable use of forests a viable alternative.
It is initiatives like this that will have a concrete impact on delivering a green recovery from COVID-19 and in implementing nature-based solutions to mitigate the negative impacts of climate change. Success in delivering one gigaton of emissions reductions will also serve to catalyze more large-scale private and public funding commitments while contributing to the 2030 mitigation goals and delivering an array of non-carbon benefits.
As world leaders gather at the UN Climate Change Conference (COP 26) in Glasgow in a few weeks, we echo the need to transition to a net-zero carbon world. If the international community can come together to adopt and deliver the goal of the GGC, it will have achieved a big step towards fulfilling the 2030 mitigation goals.