Lessons from Brazil on how to turn companies' zero-deforestation commitments into action

By Michelle Mendlewicz, EDF Global Climate 2016 Summer Fellow and Dana Miller, Policy Analyst

Cattle ranching in Brazil | Photo: Scott Bauer via Wikimedia Commons

Hundreds of major consumer goods companies that have driven the demand for soy, palm oil, timber & pulp, and beef – the big four commodities that contribute significantly to deforestation – have committed to eliminating deforestation from their supply chains. However, a vast majority haven’t yet acted on their zero-deforestation commitments or reported their progress.

According to a report by Forest Trends’ Supply Change, the majority of companies do not disclose their progress on zero deforestation commitments, with only 23% to 27% of commitments backed-up by data.

An analysis by The Sustainability Consortium found similar results, with 25% to 40% of companies reporting any information on deforestation for beef, soy, and palm oil.

Cutting and burning trees adds as much pollution to the atmosphere as all the cars and trucks in the world combined, which is why it’s important that more than 400 companies, including Walmart and Unilever, that have committed to achieving zero net deforestation by 2020 actually follow through on their pledges.

Two examples from Brazil, home to the largest remaining area of rainforest in the world, show that collaboration with governments and civil society can help companies turn their zero-deforestation commitments into action.

Mato Grosso’s ambitious strategy

Brazil successfully reduced Amazon deforestation by about 75% from 2005 to 2013 while maintaining robust growth in beef and soy production. Its success can be largely attributed to joint efforts between companies, government agencies, and environmental communities.

Brazil’s experience shows it takes more than commitments from companies to accomplish zero deforestation — businesses must focus on implementation and monitoring.

An example of this collaboration is Mato Grosso’s “Produce, Conserve, Include” (PCI) strategy, launched at the Paris climate conference (COP21) in December 2015. The State of Mato Grosso contributed to 50% of Brazil’s deforestation reduction between 2005 and 2013, while increasing beef and soy production. It is the largest agricultural commodity producer in the Amazon, producing 27% of the soy, 25% of the corn, and 19% of the beef in Brazil. The PCI plan aims to simultaneously reduce deforestation in the Amazon by 90% by 2030, increase agricultural production, and promote socioeconomic inclusion of smallholders and traditional populations.

Major soy and beef merchants Amaggi and JBS, non-governmental organizations such as EDF and partners in Brazil, and the Government of Mato Grosso worked together to develop the plan and continue to collaborate on its implementation.

As PCI’s coordinator stated, the ambitious strategy is only possible because it was “embraced” by society, and due to local partners and international supporters of the initiative.

Brazil’s businesses, governments and civil society successfully reduce deforestation from beef production

Another example of collaboration between businesses, governments and civil society has already shown success in reducing deforestation from commodity supply chains in Brazil. An agreement between Greenpeace and food processing companies in Brazil, Marfrig, JBS, and Minerva, requires farmers to provide information about their suppliers. This information is then cross-checked with government agencies, including the Brazilian Institute of Environment and Natural Resources (Ibama) and the Public Prosecutor’s Office (Ministério Público), to eliminate environmental or socially harmful practices. According to Marfrig, of the 8,303 properties monitored in the Amazon region, 6,471 are approved to supply cattle, while the remaining 1,679 properties are banned.

Meatpacking companies also signed a Term of Adjustment of Conduct (TAC) with the Public Prosecutor’s Office (MPF) to stop purchasing cattle originating from properties that cause illegal deforestation, are located on indigenous territories, are not registered with the government’s system, or are featured in the Ministry of Labor’s list of labor analogous to slavery.

A study published in 2015 found that both agreements – the one with Greenpeace and the TAC with government agencies – have incentivized behavior change by companies. Ranchers supplying to these companies complied with laws to register their properties with the government’s system two years before nearby ranchers. Only 2% of purchases by JBS were with registered properties before the agreement was signed, while 96% of transactions were with registered companies by 2013. Purchases by slaughterhouses from recently deforested properties fell from 36% in 2009 to 4% in 2013. According to Supply Change, JBS and Marfrig have self-reported 100% progress on commitments to zero-deforestation cattle, among other commitments.

Implementing, monitoring and collaborating on zero-deforestation commitments

Challenges remain, however, in eliminating deforestation from beef supply chains. Marfrig, JBS, and Minerva control around half of beef slaughter in the Amazon, while companies that control the other half have no monitoring systems or commitments in place. The limited scope of the agreements can cause issues including “laundering” – when ranchers raise cattle on noncompliant properties and move the animals to compliant ranchers before selling them to slaughterhouses – and “leakage,” when cattle produced on recently deforested land are sold to slaughterhouses that do not have monitoring systems in place.

Greater collaboration between a larger number of companies, producers and governments within a region can reduce the risk that deforestation will leak to other suppliers.

Brazil’s experience shows that it takes more than commitments from companies to accomplish zero deforestation. In order to achieve real progress, businesses must focus on implementation and monitoring. By collaborating and engaging with government agencies and environmental communities, companies can overcome the challenge of traceability and advance the fight against climate change.

For more information on efforts to reduce deforestation from cattle supply chains, visit Zerodeforestationcattle.org.

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Mexico highlights climate leadership at home during Climate Summit of the Americas

Jalisco summit 700*325

Aristóteles Sandoval, Governor of the State of Jalisco, signs the 2016 Climate Action Statement during the Climate Summit of Americas. (Photo credit: Twitter @AristotelesSD)

Governors, ministers, business and community leaders from across the Americas, and the world, convened last week in Jalisco, Mexico for the 2nd Climate Summit of the Americas.

One year after the first star-studded summit held in Ontario, Canada, state and provincial governments reunited to showcase their achievements; highlight further challenges; and push further action and cooperation by states and provinces, as well as national governments.

So-called “subnational” governments have been far more visible on the international stage of global climate action in recent years, particularly in the run-up to the United Nations climate negotiations in Paris.

In 2015, California’s “Under 2 MOU” brought together a total of 135 states, provinces, and regions – representing one quarter of the world economy – to commit to reducing greenhouse gas emissions by at least 80 percent below 1990 levels by 2050.

While the summit’s purpose is to highlight subnationals, Mexican federal officials, from the newly-named UN climate chief, Patricia Espinosa, to the federal Secretary of Environment and high-ranking energy officials were there to demonstrate, once again, that Mexico takes its climate reputation very seriously.

Mexico has long been viewed as a climate leader on the international stage.

In 2010, as the host of the global climate negotiations in Cancun, Mexico’s diplomats were lauded for pushing climate talks to break the deadlock from the 2009 Copenhagen meeting. In 2012, Mexico passed landmark federal climate change legislation. And in the run-up to the Paris meeting, when building momentum through country pledges was critical to the negotiations’ success, Mexico was the first among developing economies (and only the fourth country in the world) to formally pledge to cut its emissions.

Mexico’s global climate commitments are intertwined with its national energy overhaul.

Currently the energy sector produces roughly 65% of its total greenhouse gas emissions. Building out these sectors anew after decades of federal monopoly is no small task, but one on which the country has forged ahead, also setting ambitious clean energy goals, such as a goal to source 50% of electricity from clean energy by 2025, reducing methane emissions from oil and gas by 40-45% by 2025, and aiming to set up a clean energy certificates market that will begin operating in 2018.

Bringing these pieces together with its UN targets requires a comprehensive plan that will ultimately ensure the emissions reductions achieved and drive low carbon economic growth.

Such a plan should enable Mexico to align its climate, energy, and economic development objectives – and though a suite of policies are necessary, the country has waded into discussions of a key policy tool that some of the subnational stars of the summit know quite a lot about – capping emissions and putting a price on carbon.

Mexico now has cooperation agreements with California and Quebec, which together operate the second largest emissions trading system in the world.

At the Summit, Mexican federal officials signed a joint agreement with Quebec and Ontario to work toward carbon pricing. The California agreement, signed in 2014, highlights carbon pricing and the implementation of market mechanisms for reducing emissions. The agreement with Quebec and Ontario, signed at the summit on Wednesday, envisions an eventual participation by Mexico in the Western Climate Initiative.

Mexico is aligning its opportunities.

Trade-relationships, and other ties in the Americas are distinct advantages for Mexico in a global carbon trading world. This enviable strategic advantage needs the sustained political will and resources to build a transparent and robust system, and the vision of its policymakers and entrepreneurs to make it work for Mexico.

 

Read more:

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California’s ambitious new climate commitments follow 10 years of success

Photo credit: Joseph Thornton | Flickr.com

California made history a decade ago this month by being first in the nation to pass legislation (AB 32) putting an absolute limit on carbon pollution through 2020.

The California Legislature made history again last week by extending and strengthening those limits to 2030 (SB 32 and AB 197). SB 32 requires California to reduce pollution 40% below 1990 levels by 2030 – as ambitious as Europe’s climate policies – and provides the flexibility to use a variety of tools to accomplish this goal. The governor has announced he will sign both bills.

Legislators also passed a spending plan yesterday that will direct approximately $900 million in cap-and-trade proceeds to reduce pollution and benefit California communities, especially the most disadvantaged.  Another bill passed yesterday, AB 1550, increases the commitments of those disadvantaged communities and makes low-income communities beneficiaries as well.

California’s decision to set these new targets and establish this new spending plan was not just based on hope and necessity, but on a 10-year foundation of success and a solid understanding that this next set of targets are ambitious but achievable.

Here’s why California’s climate program has been a success, and why the new long-term emissions reduction target will help the state continue to thrive.

California’s carbon pollution is declining.

AB 32 requires California reduce its greenhouse gas emissions to 1990 levels by 2020, a reduction estimated at about 15% below where emissions would have been without regulation.  To meet these reductions, California has adopted a suite of climate policies anchored by a cap-and-trade program, which puts an absolute limit on carbon pollution, while providing cost-effective options for businesses to meet their reduction obligations.

California’s carbon pollution has steadily declined in the last 10 years. In the first two years that the cap-and-trade system was in place (2013 and 2014), California’s carbon emissions declined by an amount equivalent to taking over 1 million passenger vehicles off the road for a year.

California is ahead of schedule in meeting its 2020 goal. Emissions have been below required levels in every year we have data for. Regulators expect that in 2020 California will exceed its own requirements by an amount that is equivalent to taking 3.3 coal burning power plants off-line for one year.

California’s economy is growing.

Historically economic growth has been accompanied by a corresponding increase in emissions, but California is charting a different course. The state’s Gross State Product has increased steadily since the recession as emissions have continued to fall, as shown in this figure:

In the first two and a half years of California’s groundbreaking carbon market, the state added over 900,000 jobs, a growth rate that eclipsed the national rate.

Carbon markets are going global.

The impressive outcomes from the first decade of California’s AB 32 implementation have attracted numerous partners. States, provinces, cities and countries are taking note and action.

At the Paris negotiations at the end of 2015, California Governor Jerry Brown showcased a “Memorandum of Understanding,” bringing together states and regions committing to reducing greenhouse gas emissions to at least 80% below 1990 levels by 2050, or to less than 2 metric tons per capita by 2050. Over 100 states, provinces, and cities, representing one quarter of the world economy, signed on the agreement.

In addition, California is partnering directly with several Canadian provinces to implement joint cap-and-trade programs. It has also established an agreement to share information and work with China and Mexico on their carbon pricing efforts.

2030 target is ambitious but achievable.

Estimates suggest that after on-the-books polices are implemented, California will still have to find a way to reduce pollution another 17-29 percent to meet the 2030 target. The Air Resources Board has proposed relying on a ratcheting up of existing polices and a reliance on the existing cap-and-trade program to ensure the 2030 target is met.  Research from the Lawrence Berkeley National Laboratories shows that meeting the 2030 target is possible with a ratcheting up of existing polices

The world will be watching whether California can repeat its gold medal performance under these new targets, and all indicators seem to point in the state’s favor.

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Why aviation’s carbon must be capped, and how to do it

 

Airplanes on a flooded runway at Don Muang International Airport on Nov 19, 2011 in Bangkok, Thailand. Image: 1000 Words / Shutterstock.com

Government negotiators met in Montreal last week to seek agreement on a global cap on carbon pollution from international aviation. Bilateral negotiations are continuing, and text of a draft resolution is expected to be considered at the triennial meeting of the UN’s International Civil Aviation Organization (ICAO) in early October.

In anticipation of these meetings, Carbon & Climate Law Review (CCLR), a broadly-read journal catering to climate insiders, just released a special issue on international aviation. Experts illustrate the need for and feasibility of a strong market-based measure. Here are some highlights from the special issue:

Aviation’s impact on climate is understated

Aviation’s total global warming impacts are more than double those estimated from its carbon dioxide (CO2) emissions, or equivalent to roughly 5% of total radiative forcing from CO2. Nitrogen oxide emissions and aviation’s impacts on clouds add significantly to the warming effect of carbon dioxide. Without new policies, aviation emissions could compromise the goal of the 2015 Paris Agreement to limit the increase in global temperatures to 1.5 – 2 degrees Celsius above pre-industrial levels.

Climate change increases risks to aviation safety, infrastructure, and operations

Aviation pollution causes harm to the climate, but a warming climate also creates challenges for aviation safety and operations.

According to industry experts, in high temperatures, planes can’t carry as much. Airports risk damage to runways from storm surge and rising sea levels. Passengers and crew may be exposed to more turbulence. New electronics, sensing, and communication technology may be needed to reduce the risk of exposure to severe weather.

The solution: a market-based measure

To contain aviation’s impacts on climate change, experts from industry, policy, and law call for a market-based measure to cap emissions from international flights.

A market-based measure can be established and enforced under existing law

Legal experts recommend that an MBM can be established as a set of “standard” under the existing Chicago Convention, the foundational treaty for international aviation. Compliance with existing standards is good but not perfect. The experts show how market entry conditions, domestic transportation statutes, and conditions imposed by aviation financial services and trade associations can be used to bolster compliance.

A market-based measure should provide broad coverage and deliver co-benefits

Expert contributors to the issue recommend that the coverage of the MBM be broad. They caution that exemptions from a market-based measure could distort the market and disproportionately benefit the wealthiest individuals in those countries.

Other contributors show that policies to reduce emissions from deforestation and forest degradation (REDD+) can help meet international aviation’s demand for emissions offsets, even after taking into account existing commitments and demand for offsets. Further, a “keep what you save” policy that allows air carriers to use their own fuel use reductions to reduce offsetting obligations could help resolve current debates over allocating offsetting obligations between air carriers.

This fall’s ICAO General Assembly is a critical moment for countries, and the aviation industry, to demonstrate leadership in providing safe international air travel while minimizing risks to the climate.

If countries don’t agree to the market-based measure in October, the world may have to wait until ICAO’s next General Assembly in 2019. With rapid growth of aviation pollution, that’s a delayed take-off that none of us can afford.

Click “read more” to see key takeaways from each article of the special issue of CCLR. The journal’s publisher, Lexxion, has made the special issue free to access through October 7, 2016.

Read More »

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EDF-IETA maps show how the world can double down on carbon pricing

Carbon pricing

Currently, about 12% of the world's greenhouse gas emissions are covered by carbon pricing. More details about this map can be found in the Doubling Down on Carbon Pricing report by EDF and IETA.

There are a number of signs we are entering a golden age for carbon pricing. Perhaps the most important one is that many countries around the world are currently considering carbon pricing policies to achieve their greenhouse gas emissions reduction goals.

And for good reason.

A price on carbon gives emitters a powerful incentive to reduce emissions at the lowest possible cost, it promotes innovation while rewarding the development of even more cost-effective technologies, it drives private finance, and it can generate government revenue.

This spring, World Bank Group President Jim Yong Kim and International Monetary Fund Managing Director Christine Lagarde convened the Carbon Pricing Panel to urge countries and companies around the world to put a price on carbon. On April 21, 2016, the Panel announced the goals of doubling the amount of GHG emissions covered by carbon pricing mechanisms from current levels (about 12 percent, as illustrated in the map below) to 25 percent of global emissions by 2020, and doubling it again to 50 percent within the next decade.

EDF and the International Emissions Trading Association (IETA) worked together to explore a range of possible, though non-exhaustive, scenarios for meeting these goals. You can see the results in a series of maps which show how carbon pricing can be expanded worldwide.

Achieving the Carbon Pricing Panel’s goals will be a crucial stepping stone to realizing the ambition of the Paris Agreement, which aims to hold the increase in the global average temperature to well below 2°C above pre-industrial levels. Meeting that objective will require countries not only to implement the targets they have already announced, but to ratchet up their efforts dramatically in the years ahead. Carbon pricing will have to play a key role in that effort.

Explore how the world can reach the Carbon Pricing Panel’s ambitious goals.

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California carbon market's August auction results see slight rebound, but show need for post-2020 climate action

The results released today from California and Quebec’s latest cap-and-trade auction show a slight rebound in demand from results seen in May, but still demonstrate the need for a continued commitment on ambitious climate action beyond 2020. The results were released minutes after members of the California Assembly voted on ambitious 2030 targets; the final legislative votes are expected tomorrow.

The August 16 auction offered more than 86 million current vintage allowances (available for 2016 or later compliance) and sold just over 30 million. Approximately 10 million future allowances were offered that will not be available for use until 2019 or later; 769,000 of those allowances were sold.

These auction results represent a slight increase in demand from the May auction, where approximately 10% of the current and future vintage allowances that were offered sold. More allowances were also offered at this auction since allowances consigned by utility participants that were not sold in May were offered again at this auction.  The number of allowances offered for sale by utilities meant that the only state controlled allowances that sold were a small number of future vintage allowances.

California state controlled allowances that were not sold in August will not be offered again until two auctions clear above the floor price, representing a temporary tightening of the cap and a way for the program to self-adjust to temporary decreases in demand.

What changed and what is the same since the May auction

After May’s auction we pointed to several major factors that contributed to low demand: secondary market allowances were available for purchase below the floor price; regulated emissions have been below the cap allowing businesses to take a wait-and-see approach to purchasing allowances in advance of a pending appeal challenging the cap-and-trade auctions in the court of appeal; and need for increased certainty about the post-2020 cap-and-trade program.

Here’s what affected the August auction results:

  1. Secondary market prices have increased to right around the price of the current auction floor. This is likely the main factor contributing to the August auction’s slightly higher sales.
  2. There have been no further developments on the litigation as parties wait for the court to announce an oral argument schedule.
  3. There has been some movement on California’s effort to provide post-2020 certainty but not definitive action. In July, California's Air Resources Board released proposed amendments to set rules and a cap-and-trade carbon budget in-line with achieving a 40 percent reduction below 1990 levels by 2030. Final agency action is not expected until spring of 2017. The California Legislature is also considering a package of bills that would cement the 2030 target, currently in executive order, into statute. Assembly members voted today on climate targets and we will see whether legislative members will fulfill the will of over two-thirds of the California electorate by passing these targets.

California’s package of climate programs, including cap and trade, must first be evaluated based on whether emissions are going down – and the latest data from ARB in June showed that emissions do continue to decline. Selling out an auction and raising a set amount of revenue does not equate to overall success for the cap and trade program.

That said, once climate proceeds are in the Greenhouse Gas Reduction Fund (GGRF), spending them wisely to reduce emissions and benefit communities, especially disadvantaged communities, is a metric of program success. To date, about 1.4 billion dollars have been languishing in the GGRF, not creating benefits, and resulting in consequences for real Californians.

In addition to passing climate targets, Legislators should continue to act on proposals like the one Pro Tem Kevin de Leon has put forward to spend existing climate dollars this session.

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