EDF Talks Global Climate

Ontario Joins California and Quebec for Largest Carbon Auction Yet: All Current Allowances Sell

Toronto, Ontario skyline. Photo by Nextvoyage from Pexels https://www.pexels.com/photo/architecture-buildings-canada-city-457937/

The results of the first California-Quebec-Ontario joint auction of greenhouse gas allowances were released today, and even with a record-high volume of allowances for sale, the current auction sold out with the price clearing just above the floor. This is an indication of the strength and stability of the expanded market.

Even more significantly, this was Ontario’s inaugural Western Climate Initiative (WCI) auction, and it is a real-world demonstration of the benefits of linking cap-and-trade programs. Ontario’s participation in the WCI brings more trading partners to the table, helps keep compliance costs low, creates an opportunity to increase ambition to reduce emissions, and models what international climate action can look like.

First, let’s do the February numbers:

  • All 98,215,920 current allowances offered were sold, including 23,743,316 allowances from Ontario, and 14,894,520 previously unsold allowances. This is the first auction including allowances from Ontario, and the second offering of held allowances.
  • Allowances cleared at $14.61, this is 8 cents above the floor price of $14.53. This is down from the $1.49 above the floor price in the November, 2017 auction. However, this is not surprising given the significant increase in allowances for sale, and the floor price itself has increased 96 cents since November.
  • 8,576,000 future vintage allowances sold of the 12,427,950 allowances offered. These allowances will not be available for compliance until 2021, demonstrating there is confidence in the growing WCI market into the future.
  • Approximately $725 million was raised for California’s Greenhouse Gas Reduction Fund. This revenue will be invested in improving local air quality, building sustainable and affordable housing near transit, and helping low-income families weatherize their homes.
  • Ontario raised an estimated $377 million USD and Quebec an estimated $155 million USD to fund their own climate investments.

So what does it all mean?

By selling out of allowances, the market quelled concerns that supply would outstrip demand due to the unprecedented number of allowances for sale. These results show that the market is stable, and with the addition of new trading partners from Ontario, the demand for allowances is healthy.

This greater availability of allowances does contribute to the price clearing just above the floor, but rather than something to be concerned about, this demonstrates the importance of that price floor. It is a key feature to keep the market and the revenues on an even keel.

Another feature of the linked cap-and-trade program is the ability to bank allowances. It is possible that allowance prices will rise after 2020, and companies are planning ahead. Some may be buying the limited number of allowances they are allowed to save now, when they are less expensive, supporting the strong demand we saw in the February auction.

Every allowance that is banked represents one ton of carbon emissions that are not released into the atmosphere now. Greater emission reductions sooner mean less cumulative emissions, and that is a win for the environment. Lower emissions now also creates an opportunity for California to consider tightening the cap in the coming years. This would drive even deeper emission reductions as the state looks to the ambitious 2030 target.

For Ontario, these results also demonstrate some of the benefits of participating in a larger carbon market. Ontario’s last solo auction did not clear, perhaps because of partisan campaign promises to abandon cap and trade and leave the Western Climate Initiative. Even with demand potentially dampened in Ontario due to this uncertainty, all of Ontario’s allowances sold to buyers in the larger market. This provides proceeds that can fund Ontario’s transition to a clean economy. We can’t know what would have happened in an Ontario-only auction, but this seems a clear example of the stability that joining a larger market can generate.

We often talk about California and Quebec setting an example on climate action in the face of the Trump Administration determination to go backwards. Today’s results demonstrate that the Western Climate Initiative has gained a valuable new partner in Ontario, and that this partnership is succeeding.

Posted in California, Canada, Carbon Market Cooperation / Tagged | Leave a comment

New report shows landscape of finance for REDD+ and climate action in forests


A new report from Environmental Defense Fund and Forest Trends identifies the sources of funding currently available for REDD+ and climate action in forests, and analyzes the challenges and opportunities for accessing and coordinating this finance. Designed to serve as a resource for negotiators, policymakers, practitioners, NGOs, and others involved with the implementation of REDD+ and climate action in forests, the report aims to contribute to scaling up, coordinating, and allocating funding in a timely, efficient, and effective manner.

The report, “Mapping Forest Finance: A Landscape of Available Sources of Finance for REDD+ and Climate Action in Forests”:

    • Describes the sources of finance available for each phase of REDD+ —Readiness (Phase 1), Implementation (Phase 2), and Results-based Finance (Phase 3) – and related climate action in forests by detailing each finance source’s: type, mechanism, eligibility requirements, scale, access process, scope, and challenges.
    • Presents information that is both historical and forward looking so as to provide context and inform future decisions when it comes to planning REDD+ implementation and supporting financial strategies combining a diversity of funding sources. The Green Climate Fund, for example, recently announced a pilot program for forest sector results-based payments. Additionally, while not yet an available source of results-based finance, transfer-based payments (TBPs) are a potential source of viable funding for performance based results. Parties in the UNFCCC are currently negotiating internationally transferred mitigation outcomes (ITMOs) as a part of Article 6.2, which will determine the exact nature of TBPs in relation to REDD+.
    • Reveals many challenges with and opportunities for accessing and coordinating finance for REDD+ and climate action in forests at the international and national level. Key challenges identified include minimizing the gap between what is available and what is needed for each REDD+ phase; developing cohesive national visions that can be translated into usable investment plans; allocating funding appropriately according to cross-sectoral and coherent national finance strategies; and aligning requirements and criteria under funding sources for consistency and coherency of requirement processes so to facilitate access and disbursements.
    • Highlights challenges specific to forest landscape restoration (FLR), such as the high costs associated with addressing degradation and promoting sustainable management of forest landscapes, when compared to activities for reducing emissions from avoided deforestation. This challenge creates the need for more comprehensive national REDD+ visions that include activities to address the barriers for sustainable management of forests and enhancement of carbon stocks; and
    • Describes the opportunities for both accessing and coordinating finance, which range from exploring viable, complementary sources of market-based REDD+ finance for Phase 3 to redirecting sources of funding for agriculture, for example, to finance REDD+ activities.

The report also reflects how many finance sources are able to fund multiple phases of REDD+, considering that REDD+ phases often overlap and operate simultaneously, as seen in the infographic below which shows the sources of finance and funding mechanisms for the three phases of REDD+. Such a comprehensive landscape of complementary and/or synergistic sources of funding can contribute to defining efficient and coherent financial strategies for REDD+ design and implementation.

The report, produced with support from IUCN as part of ongoing efforts to accelerate action on REDD+ through forest landscape restoration, is timely as the coordination of financial support for REDD+ and climate action in forests will continue to be a top agenda item at the upcoming Bonn intersessional, having featured prominently during COP 23. During the COP, country negotiators – as a continuation of REDD+ focal point meetings held since COP19 – resumed discussions on the coordination of support for the implementation of activities in relation to mitigation actions in the forest sector by developing countries, including institutional and financial arrangements. Negotiators debated the potential need for additional governance arrangements for improving the coordination of support for REDD+ funding and implementation. Additionally, side event and panel participants, country representatives, and others involved with REDD+ and climate action in forests expressed concerns over the availability, sustainability, and coordination of funding for results. Yet, negotiators could not agree on a decision and the co-chairs decided to continue negotiations during the next meetings to be held in May 2018.

The report aims to contribute not only to upcoming UNFCCC conversations pertaining to improving access to and coordination of finance for REDD+ and mitigation actions in the forest sector but, by clarifying the challenges with and opportunities for adequately accessing and coordinating funding for REDD+ and climate action in forests, will also contribute to ensuring that funding is made available and disbursed in a timely, efficient, and effective manner.

View the report at edf.org/mappingforestfinance.

Posted in Deforestation, Forestry, REDD+ / Leave a comment

A look into the diverse indigenous enterprises working in Colombia’s tropical forests

Colombian coffee has a Protected Designation of Origin | Photo: Wikimedia

Amazon indigenous communities have made huge strides in the last two decades to secure legal recognition for their ancestral lands – territories which play a major role in efforts to conserve rainforests and stabilize the global climate. But there is still much work to be done.

Many protections for indigenous lands are still precarious and once land rights are secured, the key challenge remains: how to keep these lands economically viable for their ancestral owners in the face of often overwhelming economic pressures from mining, logging and commercial agriculture to exploit the lands in destructive ways.

Environmental Defense Fund (EDF) and Ecodecision worked with the Organization of the Indigenous Peoples of the Colombian Amazon (OPIAC) to identify examples of indigenous-led enterprises from the Amazon that were contributing to better incomes and creating local value for indigenous territories.

The goal was to better understand how indigenous enterprises support their culture, the challenges they face, and the scope for replication and growth.

The study examined many cases of indigenous enterprises for:

  • Use of ingredients from the forest and traditional practices or knowledge
  • Type of organization used to run the enterprise
  • Role of women in the enterprises
  • Current scale and investment need to scale further

We found indigenous enterprises of the Colombian Amazon are as diverse as the people, flora and fauna of the region.

Cases of diverse indigenous enterprises of the Colombian Amazon

There are dozens indigenous enterprises in the Colombian Amazon and they vary in product offerings, organizational forms, and market sizes. We selected some of the most developed ones with the ability to deliver products (domestically and internationally), gender involvement, external partnerships, and potential for investment.

Mambe.org is a non-profit that partners closely with indigenous peoples and places a focus on indigenous women and their artisanal products. It operates a storefront in Bogota that sells the women’s crafts. In addition to the storefront, Mambe.org makes connections between indigenous communities’ ecotourism offerings and tourists. The board of Mambe.org includes indigenous representation, but some of its day-to-day operations aspects are managed by non-indigenous employees.

Selva Amazonía is an indigenous enterprise of the Nasa tribe that makes cosmetics based on ingredients collected from the forest and uses traditional and sustainable techniques for harvesting with a strong role for women. Its legal representative is a woman and women play a strong role in the production of its products.

ASOPROCEGUA, the Association of Agricultural Producers for Economic Change in Guaviare, has been growing quickly over the last couple of years by processing Amazonian fruits. It sells its products whole sale and retail in Bogota, Medellin and Cartagena – a rare example of an indigenous enterprise commercializing its products beyond Bogota to other parts of Colombia. Its purees of the non-traditional Amazonian fruits are important ingredients to a fast-growing ice cream company focused on Colombian flavors and ingredients.

The Indigenous Central Cooperative of Cauca (CENCOIC) is a coffee producer organization with 2300+ producing members, which recently celebrated its 37th birthday. It has much to celebrate as it also recently exported its prized coffee to roasters in the US, UK, New Zealand, Germany, France, and Australia. Its members follow conservation best practices that mandate the conservation of forests, water sources, and other natural commons.

Next step: how to scale up these indigenous enterprises

Despite the diversity of indigenous enterprises in product offerings, organizational structures, and market sizes, they all face common challenges in terms of access to markets and finance, and the need to continually improve their business administration capabilities. Flexible funding and support mechanisms are highly needed for indigenous groups to consolidate and grow these enterprises based on their hard-won territorial rights and rich natural and cultural heritage.

Over the next year, EDF with OPIAC and partner Canopy Bridge will explore how to further scale these examples and the many other indigenous enterprises in Colombia. This will include connecting them with new buyers from the US and other countries. Best practices will also be shared between them and aspiring indigenous leaders and entrepreneurs to further strengthen the sector. Indigenous enterprises and the values embedded in them are an essential component for tropical forest conservation and empowering indigenous peoples to control their own destinies.

These case studies are part of a broader effort to inventory economic enterprises lead by indigenous communities in a comprehensive online database.

Posted in Indigenous peoples / Leave a comment

California Adopts Climate Game Plan for 2030

Cap and trade is like the goalie – it’s there keeping California’s emissions in check even if it’s the state’s other policies that are scoring most of the goals. Photo: Wikimedia

By Katelyn Roedner Sutter and Erica Morehouse

Today the California Air Resources Board (CARB) adopted the 2017 Climate Change Scoping Plan, the strategy for achieving California’s 2030 greenhouse gas emissions target. Developing and updating this Scoping Plan is a process pioneered by California that provides a game plan of how the state intends to meet its climate goals with an increased focus on air quality.

The cap-and-trade program continues to be a centerpiece of the current Scoping Plan because it allows the state to put a firm limit on overall carbon emissions. This is essential as the state charts a path to an ambitious 2030 target. The Scoping Plan lays out the blueprint for California’s overall climate policies. Cap-and-trade design details will be further developed in future ARB rulemakings; EDF will be deeply engaged on details like setting a high enough price ceiling and setting the level of the cap with a focus, as always, on environmental integrity.

Cap and trade is a team sport in California: focusing on who makes the goals is missing the point

The role of cap and trade is an important one: assuring that California doesn’t exceed the emissions limit it has adopted into law. California has a variety of policies in place to meet its climate targets, which means there are multiple programs acting to lower the same emissions. But cap and trade is the policy that will ensure California reaches its climate target by setting a firm limit. If other policies do not do as much as anticipated to reduce emissions, cap and trade will make up the difference. The flip side is that if other policies are driving down emissions faster than expected, cap and trade may need to do less of the work to reduce emissions.

I’m a hockey fan, so here is one way to think about it. A goalie on a hockey team isn’t failing when they aren’t the one who scores the winning goal. They are succeeding when they are preventing the other team from scoring. Cap and trade is like that goalie – it’s there keeping California’s emissions in check even if it’s the state’s other policies that are scoring most of the goals. But cap and trade is also a versatile athlete, it can play the forward position when needed. California has designed its climate policies as a team sport, though, and whatever position cap and trade plays, it’s a critical member of the team as today’s Scoping Plan recognizes.

Beating reduction goals is a good thing and an opportunity

California’s emissions are declining and the state is on track to beat its 2020 goal. There’s discussion about the implications of having emissions significantly below the cap, but rather than being a concern, we see this as a sure sign of success. More emission reductions earlier in the program is good news for the environment. It’s also an opportunity for California to consider cutting emissions even more by trimming the overall number of allowances it makes available in the coming years as the state looks to the ambitious 2030 target.

Today’s adoption of the 2017 Scoping Plan helps ensure the ongoing success of California’s team of climate strategies, with cap and trade as the check on carbon pollution. Together, California’s suite of climate and air policies can keep driving down global warming pollution while improving the health and environment across the Golden state.

Posted in California / 1 Response

Shoddy CIFOR publication on indigenous peoples’ rights abuses gets the facts wrong

Indigenous People Day at COP23 | Photo by UNClimateChange

The Center for International Forestry Research (CIFOR) held a press conference during COP 23 in Bonn to launch a new publication, “Rights abuse allegations in the context of REDD+ readiness and implementation.”

But the research underlying this sensationalistic headline is fundamentally flawed. Not only is their publication factually wrong in many places, but the peer-review process failed to identify numerous weaknesses in the analysis. A rights-based approach for REDD+ was already enshrined in the UNFCCC COP 19’s decision on the Warsaw Framework for REDD+ in 2013. One could argue that it actually goes even further back to the Cancun Safeguard decision at COP 16 in 2010.

Below are the five primary issues in the report. (Note: The rest of this piece assumes readers are generally familiar with the points made in the CIFOR publication and very familiar with REDD+ within the UN Framework Convention on Climate Change, the UNFCCC.)

  1. The mafia, not REDD+ supporters, are killing indigenous and community leaders

The biggest problem with CIFOR’s publication is they fail to identify who is murdering indigenous and community leaders trying to protect their rights and forests, which gives the impression that it’s people connected to REDD+.

But the researchers say in footnote 2 they did not attempt to investigate the veracity of the allegations:

“As this review refers only to published sources, it does not include more recent allegations or attempts to evaluate the veracity or present status of each case (including whether corrective measures have since been taken), …”

If they would have done more research, they would have found that the majority did not have anything to do with a REDD+ process or rise to an actual “rights abuse” definition. Global Witness documented 200 killings in 2016, and 97 so far in 2017, and identified the biggest violators as mafias involved in illegal logging, mining, and agribusiness – not REDD+ proponents murdering indigenous and community activists.

  1. CIFOR’s publication relies on unreliable sources

Some of CIFOR’s sourcing for its publication is untrustworthy. For example, REDD-Monitor.com has a clear anti-REDD+ agenda and its funders include a who’s who list of groups with strong anti-REDD+ positions. Its About page calls REDD+ a “hairbrained scheme to allow continued greenhouse gas emissions from burning fossil fuels by offsetting these emissions against ‘avoided deforestation’ in the Global South.”

  1. CIFOR’s article’s peer-review is weak

While many of the reviewers are knowledgeable about rights and the REDD+ field, they are not the people who are most well-acquainted with UNFCCC REDD+ decisions.

  1. UNFCCC REDD+ uses a rights-based approach

REDD+ negotiators, indigenous peoples representatives, and civil society organizations spent eight years creating comprehensive guidance for REDD+, called the Warsaw Framework for REDD+.

The Warsaw Framework includes the “Cancun Safeguards” and also mandates reporting on how the safeguards are addressed and respected. The Cancun Safeguards were agreed to in 2010 and were one of the first REDD+ decisions that guided all subsequent decisions.

The Cancun Safeguards was one of the first decisions to reference the United Nations Declaration on the Rights of Indigenous Peoples (also known as “UNDRIP”) in an international agreement. Nearly all of the world’s countries approved the decision and the insertion of a reference to UNDRIP forced many countries who had not previously acknowledged the Declaration to do as much.

  1. The Warsaw Framework for REDD+ does not include project-based REDD+

A significant part of the “allegations” and “potential” negative examples explored in the article are linked to REDD+ projects, which again, are not covered by the Warsaw Framework for REDD+. But do a simple word search for “projects” in all of the UNFCCC REDD+ decisions and you’ll see the word does not appear once. That’s because implicitly, UNFCCC REDD+ is meant for jurisdictional REDD+ programs – not one-off REDD+ projects.

Suggestions for moving forward

CIFOR and the REDD+ community should consider a few steps to make amends for their inaccurate publication.

  • CIFOR should consider writing its own research paper on the dozens, if not hundreds, of indigenous leaders and forest activists that are murdered every year defending their rights and the forests.
  • CIFOR should not treat REDD Monitor as a legitimate resource for academic research.
  • CIFOR should improve its “peer-review” process and ensure information is, per its tagline, “accurate.”

Vigilance will always be needed to ensure that no abuses of indigenous rights occur in the context of REDD+ readiness and implementation. One such violation is one too many.

However, such risks have long been identified and are already being addressed, not least because indigenous groups have effectively used national and international REDD+ processes to advance recognition of their rights.

Sensationalized publications based on unsubstantiated allegations do nobody any good, and divert attention from documented rights violations and murders committed by actors seeking to destroy forests – not by REDD+ proponents who are eager to work with indigenous leaders to protect them.

Posted in Deforestation, Indigenous peoples / Leave a comment

The New Normal: California-Quebec Auction Clears Above the Floor Price

Photo: Pxhere

By Erica Morehouse and Katelyn Roedner Sutter

California and Quebec released results today for the November 2017 auction which showed steady prices well above the floor for the second auction in a row. The November auction was also the second in a row to sell out of allowances. Both outcomes are a reflection of the secure market that is now set to run through 2030, and demonstrate that the design features of cap and trade are working as expected to maintain a strong and stable program.

November Auction At-a-Glance

  • Approximately $862,407,989 raised for the Greenhouse Gas Reduction Fund to invest in a number of programs including clean transportation, urban greening, and improving local air quality.
  • All current vintage allowances were sold of the 79,548,286 offered for sale, including 15,909,657 allowances that were previously unsold in 2016. This is the first auction including held allowances.
  • Current vintage allowances sold at $15.06, $1.49 above the $13.57 floor price. This is 31 cents higher than the August clearing price.
  • All future vintage allowances sold of the 9,723,500 offered for sale. These allowances will not be available for compliance use until 2020. For the second auction in a row, future vintage allowances sold out above the floor price, showing strong confidence in the cap-and-trade program after 2020.

The Nuts and Bolts of Cap and Trade, Important and Working

This auction demonstrated how some of the “behind the scenes” elements of cap and trade are working – and succeeding – to keep the market strong and stable.

Importance of Banking

These auction results show that businesses’ ability to “bank” allowances for use in later years when prices will be higher and the cap tighter are critical for market stability, and most importantly, emissions performance. In 2016 and early 2017, before California legislatively extended its cap-and-trade program from 2020 to 2030, demand for allowances was falling off in part because emissions were already below the cap and the uncertainty of the future program discouraged any banking. With the cap extended to 2030, however, demand and prices are more stable and there is once again a strong incentive for polluters to save their allowances for future years and make cost-effective emission reductions sooner than required for compliance. Early reductions can be cost effective for companies, and are great for the environment.

First Auction to Offer Unsold Allowances

The November auction is the first to offer previously unsold allowances, in this case allowances held over from the 2016 auctions. Last year, when demand for allowances was lower, these unsold allowances were held to be re-offered at later auctions. This adjusted supply downward when needed and adds extra supply when allowances prices start to rise (as they are doing now), creating price stability in the market. These 15 million extra allowances now mean there was enough supply to meet demand.

California Emissions Continue to Decline

Further good news from November, as EDF reported yesterday, is that the California Air Resources Board released their 2016 emissions report and found that emissions covered by cap and trade have not only continued to decline, but are doing so at a faster pace than in previous years.

  • Emissions are a whopping 58 million metric tons below the cap for 2016, an amount equivalent to taking over 14 coal fired power plants off-line for a year. Even if some of these “saved” pollutants are emitted later, this is a win for the atmosphere since there will be several years where they will not be contributing to atmospheric warming.
  • The bulk of these reductions came from the electricity sector, which reduced emissions by increasing renewable production and hydroelectricity and decreasing imports from coal-generated electricity.
  • Transportation emissions did increase in California as they did in the rest of the world. However, the state has a number of policies that are targeted at reducing those emissions and cap and trade is keeping overall emissions in check so they have time to work.

Today’s auction results show one more data point in the example California and Quebec are setting for the world in how to implement effective climate policies. This example was on display at the recent UN Conference of Parties (COP23) in Bonn, Germany that wrapped up last week. Governor Brown as well as three other U.S. Governors and many mayors were in attendance making sure the world knew Donald Trump cannot prevent U.S. states and cities from acting to reduce emissions and protect their residents.

Posted in California, Emissions trading & markets / Leave a comment