EDF Talks Global Climate

Hopeful signs for U.S. and Chinese Cooperation on Climate Change

The past week has offered a thrilling glimpse into the future for the millions of people around the U.S. and across the world who are yearning for real solutions to climate change. On June 18, Shenzhen, an economically-vibrant city of 15 million on the South China Sea, launched the first of seven Chinese regional pilot carbon market systems slated to begin by the end of 2014. The Shenzhen market is set include at least 635 local companies that contribute approximately 40% of the city’s CO2 emissions, and is expected to result in a 21% decrease in the carbon intensity of the economy in just two years. Shenzhen is one of seven carbon trading pilots that represent about 25% of China’s GDP and may include thousands of companies emitting hundreds of millions of tons of CO2.

Derek Walker is Associate Vice President of EDF's U.S. Climate and Energy Program.

Inspiration, encouragement and support for Shenzhen’s maiden market launch came from a familiar place:  California. Both Shenzhen and California have well-established reputations as trailblazers on innovative solutions that match economic growth with environmental gains. Perhaps it will be little surprise, then, that none other than the state’s top climate change official,  California Air Resources Board (CARB) Chair Mary Nichols and Governor Brown’s personal representative, Wade Crowfoot, stood with senior officials from Shenzhen and from the National Development and Reform Commission (NDRC) at last Tuesday’s launch. Nichols has presided over the development of California’s groundbreaking climate change effort and oversaw the Fall 2013 launch of California’s carbon market, the first comprehensive state-level system in the U.S.

The California market is a promising model for Shenzhen and the other Chinese pilots. California has held three allowance auctions to date, with strong participation by companies and a modest increase in the price of allowances with each auction. Ultimately, California’s carbon market will be a key element driving the state back to 1990 levels of greenhouse gas pollution by 2020, accompanied by dramatic improvements in air quality and significant incentives to carbon-cutting entrepreneurs. Nichols formalized the partnership between California and Shenzhen by signing a Memorandum of Understanding (MOU) paving the way for technical cooperation between officials and other stakeholders engaged in the respective carbon market programs.

The California-Shenzhen partnership is just the tip of the iceberg in the crescendo of cooperation between the U.S. and China.  Earlier this month in California, President Obama and Chinese President Xi signed an agreement to collectively fight dangerous hydrofluorocarbons (HFCs) that are used in air conditioning and refrigeration.  HFCs are pound-for-pound some the most potent greenhouse gases, and controlling them will be an essential short-term piece of solving the climate change puzzle.

As California and Shenzhen roll up their sleeves to support one another’s ambitious climate change programs, they will provide demonstrable proof of the promise of cooperation between their nations and will deliver results and momentum towards national action. In her remarks at the Shenzhen launch, Mary Nichols called the leadership of California, Shenzhen, and other provinces, states and cities around the world “a foundation that national and international action can spring from.”

The Chinese carbon trading pilots are strong signals that climate change is an issue to be taken seriously and to be acted on expeditiously. In the U.S., President Barack Obama takes the stage in Washington tomorrow to lay out his Administration’s vision for bold national action to fight climate change, an eagerly-anticipated outline of how progress will be achieved towards Obama’s 2009 commitment to slash greenhouse gas pollution 17% by 2020.

While 2020 will be an important milestone in charting progress, it is but the beginning of a long journey. Climate change science couldn’t be clearer about the need to achieve dramatic greenhouse gas reductions by mid-century. And no long-term solution to the environmental challenge of our lifetime will be found without the leadership of the world’s top greenhouse gas polluters. That leadership is now coalescing into national and bilateral action and, for the first time in some time, offers hope that we are headed in the right direction.

Cross-posted from EDF's California Dream 2.0 blog.

Posted in Emissions trading & markets, News |: | 1 Response

Mexico's new president releases promising strategy for national climate action

Mexico is the 12th largest emitter of greenhouse gases in the world and has been a leader among developing and middle-income countries on international climate policy – and so far domestic actions appear to be backing the country’s international commitments to reduce its emissions. While the strategy does not provide many new details, it does seem to carefully examine and support key aspects of Mexico’s new climate change law for implementation.

Mexico's new National Strategy on Climate Change lays out actions the country could take to reduce its emissions domestically. (Source)

The strategy was called for in Mexico’s General Law on Climate Change (LGCC), which was signed into law last June. Because the sweeping, but extremely general, legislation predated Enrique Peña Nieto’s new presidency, it was an open question whether the incoming administration would champion the issue or downplay implementation.

Peña Nieto’s administration hinted at an answer by releasing its official strategy for addressing climate change earlier this month.

The new National Strategy on Climate Change, released June 3 by the Environment Ministry (SEMARNAT), lays out a number of potential actions Mexico can take to reduce emissions – also known as “mitigation.” These actions focus on prioritizing mitigation potential, cost-efficiency, and additional benefits for reducing domestic greenhouse gas emissions.  Some highlights include:

    • Accelerating the transition to low-carbon energy sources, with a goal to produce 35% of electricity from “clean” sources by 2024.
    • Development of new economic instruments to finance mitigation, including the potential development of an emissions trading system.
    • Reducing subsidies that favor inefficient use of resources, and redirection of current subsidies from fossil fuels.
    • Reducing energy intensity through conservation and efficiency measures.
    • Integrating national emissions reductions targets into the federal, state and sectoral programs.
    • Improving forest management and reducing deforestation through REDD+ (Reducing Emissions from Deforestation and forest Degradation) policies and other measures.
    • Reducing emissions of short-term climate forcers and other greenhouse gases.

There are a number of highly encouraging signs from its release, which was  a few weeks before the official deadline. The Peña Nieto administration reiterated and expanded on some  key components of the law and the strategy maintains its focus on developing a climate change program that is centered on reaching Mexico’s emissions reductions targets.

Recall that only last summer, the historic climate law passed in Mexico’s outgoing congress with broad support across parties, including the current president’s. The comprehensive and historic law laid out a broad institutional framework; established federal responsibility for the development of strategies, plans and programs to address climate change mitigation and adaptation; and put forward ambitious (though still non-binding) domestic targets for reducing greenhouse gas emissions.

We noted then that the real guts of how Mexico would achieve those targets was left to be determined, and ultimately its success would rely on strength of commitment to implementation by Mexico’s next federal government.

What the climate strategy could mean for Mexico

The good news is that the new administration’s plan appears to take full advantage of the framework laid out by the law through the new “National Climate Change System.” The plan also includes the key commitment that national mitigation targets of 30% below business as usual by 2020 and 50 % below 2000 levels by 2050 will be integrated into the federal, state and sectoral development programs – where the real action on emissions reductions will be.

Notably, its introduction also frames the strategy explicitly in an international context where many countries, as well as some states and provinces, are developing or implementing emissions trading systems as a cost-efficient mechanism for reducing emissions.  (You can learn more about emissions trading programs around the globe in EDF’s new resource, The World’s Carbon Markets.)

Clearly, Mexico has taken note of its potential to participate in carbon markets in building a low-carbon economy – and rightly so.

With a new administration that has focused on public commitments to economic growth, job creation, and energy, taking advantage of such tools could form a key part of reducing emissions nationally while setting the country on a path to prosperity and low carbon development for the future.  Mexico, in particular, has a wealth of opportunities for effective, cost-efficient emissions reductions in many key sectors.

As an international leader on climate, Mexico also appears interested in leveraging this positive domestic action globally.  The document states:

This strategy is a fundamental step to implement the General Climate Change Law and shows that Mexico is advancing in complying with its international commitments. To the extent that it is executed, it will also be the best argument to demand collective action against climate change from the international community.

With the world’s global carbon-dioxide emissions reaching a record high in 2012, there is still a chance to avoid the worst effects of climate change – but action, indeed, is what we need.

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New IEA report sets a road map to a cleaner energy future

Today, the International Energy Agency released a special report of its World Energy Outlook, entitled Redrawing the Energy-Climate Map. The report is notable not only for its substantive conclusions – but for what it signifies.

First, the substance:

The report starts by emphasizing that energy-related CO2 emissions are a crucial driver of global warming, that they are increasing rapidly, and that as a result the world is not on target to keep concentrations of greenhouse gases below the level that would provide even a fifty-percent probability of limiting the increase in average global temperatures to two degrees – a commonly cited benchmark to prevent the worst impacts of climate change.  Standard fare, perhaps – but noteworthy nonetheless coming from the world’s leading energy authority.

A road map toward a more secure future

The key finding of the report — what makes it required reading — is the analysis of what the IEA calls its “4-for-2˚C scenario.”

The IEA identifies a package of four policies that could keep the door open to 2 degrees through 2020 – at no net economic cost to any individual region or major country, and relying only on existing, widely available technologies:

  1. Specific energy efficiency measures in transport, buildings, and industry (1.5 GT savings in 2020/49% of the total package)
  2. Limiting construction and use of the least-efficient coal-fired power plants (640 MT/21%)
  3. Minimizing methane emissions from upstream oil and gas production (550 MTCO2e/18%)
  4. Accelerating the partial phaseout of fossil fuel subsidies (360 MT/12%)

The IEA estimates that these four measures would reduce energy-related GHG emissions by 3.1 GT CO2-eq in 2020, relative to IEA's "New Policies" reference scenario – corresponding to 80% of the reduction required to be on a 2-degree path.

Take a look at this chart, from IEA's report, that summarizes the policies:

Here's a second chart, also from IEA's report. This one makes the key point about no net economic costs:

Four policies, using widely available technologies, imposing no net economic cost on any individual region or major country, that put the world in the position to make the turn to climate safety.

That’s the headline.

The cost of delay

IEA's report also discusses the vulnerability of the energy sector to climate change, and emphasizes that delaying climate action will drive up the costs of meeting a 2 degree target later.  The report estimates that putting off action until 2020 would trim near-term investment by $1.5 trillion in the short run – but at the cost of requiring an additional $5 trillion to be spent in subsequent years.  In present-value terms, using a 5% discount rate, delay doubles the cost of action: from $1.2 trillion to $2.3 trillion.

This is an argument that we at EDF — and others — have been making for some time. But it is a crucial one nonetheless – and the IEA analysis gives some added analytical weight to the argument.

Not an oil shock, but a climate shock

These findings are especially welcome coming from IEA, a world-respected authority on energy markets and policy that was founded to facilitate international coordination among oil-consuming countries.  Indeed, the messenger may be nearly as important as the message.  What launched the IEA was the 1973-4 oil crisis.  Now, nearly forty years later, the IEA report makes clear that the real energy-related threat to economic prosperity is not an oil shock, but a climate shock.

Back to the big picture

To be sure, the four policies analyzed in this report won’t fully suffice to address climate change in the long run: indeed, much more ambition will be needed.

Under the “4-for-2˚C” scenario, the IEA estimates that world energy-related emissions will peak and start to decline before 2020 – but we’ll still need concerted action on a global scale to get greenhouse gas emissions onto a steepening downward trajectory.

Take a look at one more chart from IEA's report:

Acknowledging this point, IEA's report underscores the importance of continued innovation in low-carbon technologies in transport and power generation (including carbon capture and storage), and highlights the vital importance of a long-term carbon price.

Beyond the scope of the report, there’s much to be done outside the energy sector – in particular by curbing tropical deforestation, and promoting the spread of agricultural practices that can achieve the “triple win” of greater productivity, greater resilience to climate, and lower environmental impacts (including GHG emissions).  And all of these efforts must be carried out in tandem with the overarching challenge of promoting broad-based economic prosperity around the globe, as President Jim Yong Kim of the World Bank has repeatedly emphasized.

But the bottom line is that one of the most hopeful publications on climate change you’ll read this year has come from the International Energy Agency, of all places.  Here is a road map toward a cleaner, more secure future.  Now it’s up to us to take it.

Cross-posted from EDF's Climate 411 blog.

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U.S. environmental groups echo aviation industry's call for ICAO to adopt global emissions cap this year

Environmental Defense Fund and Natural Resources Defense Council today echoed the new call by the International Air Transport Association (IATA), a trade body comprising 240 airlines worldwide, for governments to agree this September on a single global cap on emissions of international flights to take effect in 2020.

NGOs today echoed IATA's call for an agreement this year on a global cap on aviation emissions. Photo credit: Flickr user Mike Miley

The NGOs issued their call in response to a resolution, adopted today at IATA’s annual general meeting in Cape Town, that urges its member airlines to “strongly encourage governments” to adopt such a single global measure at this year’s International Civil Aviation Organisation (ICAO) Assembly.

The resolution gives governments a set of principles on how governments could 1) establish procedures for a single market-based measure, and 2) integrate a single market-based measure as part of an overall package of measures to achieve the industry's goal of having "carbon-neutral growth by 2020."

In a statement today, Annie Petsonk, EDF's International Counsel, said:

IATA has opened the door, now it is time for governments to walk through it this September. This is the signal that governments have been seeking.

Not all the elements offered in IATA’s resolution will fully address aviation’s contribution to climate change, the NGOs cautioned. Our colleagues at Transport & Environment and Aviation Environment Federation have issued their own comments on the resolution, as has Carbon Market Watch and NRDC's Jake Schmidt.

In advance of IATA’s general meeting in Cape Town, 11 global NGOs sent a letter to IATA Director General Tony Tyler calling on IATA to act on market-based measures. The environment, development, community and science groups said in the letter:

To be credible, such measures must include targets compatible with climate science, strong provisions to ensure the environmental credibility of the traded units, limited access to offsets and strict provisions to ensure compliance.

Aviation is already the world's seventh largest polluter, and if emissions from the industry are left unregulated, they're expected to double by 2030.

Posted in Aviation, News |: | 4 Responses

World's Carbon Markets: EDF, IETA launch online resource on emissions trading programs

While Washington is stuck in gridlock, other jurisdictions around the world are moving forward on climate policy.

Market-based approaches to cutting carbon are in place in jurisdictions accounting for nearly 10% of the world’s population. Above: areas shaded blue have emissions trading programs that are already operating; areas in green have programs that are launching or being considered.

Market-based approaches to cutting carbon are already in place in jurisdictions accounting for nearly 10% of the world’s population and more than a third of its GDP. Many more jurisdictions are either moving ahead with market-based measures, or actively considering them.

As interest grows around the world, policymakers are increasingly seeking information about the range of existing and proposed initiatives.

In response, EDF has partnered with the International Emissions Trading Association (IETA), a trade association that represents businesses involved in carbon trading and climate finance, to launch The World's Carbon Markets: A case study guide to emissions trading.

The online resource provides detailed information about key design elements and unique features of 18 emissions trading programs that are operating or launching around the world.

EDF has also put together a quick reference chart that makes comparing the 18 programs even faster and easier.

Growing interest in emissions trading

Market-based policies are a proven way to limit carbon pollution and channel capital and innovation into clean energy, helping to avert the catastrophic consequences of climate change.

While emissions trading programs around the world, like the ones we have looked at in detail, vary in their features, they all share the key insight that well-designed markets can be a powerful tool in achieving environmental and economic progress.

The countries, states, provinces and cities highlighted in this report, which are moving ahead with strong action on climate change, constitute a vital and dynamic world of “bottom-up” actions that complement multilateral efforts such as the ongoing United Nations climate negotiations.  Jurisdictions considering market-based approaches can use this new resource to learn from their growing number of peers already headed in that direction.

We expect the site will also be of value for policy makers, academics, analysts, journalists, and colleagues in the NGO community and beyond.

If you find the information in The World’s Carbon Markets case studies helpful, please share edf.org/worldscarbonmarkets with your networks.

Posted in Economics, Emissions trading & markets, News |: | 3 Responses

EDF releases new blog for all our expert voices

EDF’s Climate Talks blog keeps you updated on major international climate issues. We provide thoughtful analysis on international climate negotiations and important climate policy developments around the world, so you can stay informed. However, we know you may have a broad interest in environmental issues.

That’s why we wanted to share with you Environmental Defense Fund’s new flagship blog, EDF Voices. EDF Voices collects stories, ideas and arguments from all of our EDF expert voices in one place. Our thought leaders use this space to weigh in on all sorts of environmental issues, from stories on how farmers in India are adapting to climate change to ideas on how to save the Amazon and its indigenous peoples.

We hope you like what you read on our new EDF Voices blog and become a subscriber.

Posted in Deforestation, India, Indigenous peoples, News, Other |: | Leave a comment

Mind the gap: Airlines can't meet emissions reductions goals without global market-based measure, report finds

Greenhouse gas emissions from airplanes are no small matter: if the aviation industry were a country, it would be the seventh largest emitter of carbon dioxide in the world – and a new report shows us the worst is yet to come.

The report released today out of Manchester Metropolitan University shows international aviation emissions are projected to increase by anywhere from a substantial 50% to a whopping 500%, and that means the aviation industry won’t be able to get anywhere near meeting its own modest commitments to reducing its emissions – unless it adopts a global market-based measure.

The aviation industry has voluntarily committed to achieve no net increase in emissions from 2020 onward and to halve its emissions by 2050 from its 2005 levels through, it says, efficiency improvements including improved air traffic management, on-board technologies and biofuels.

However, the study, from Professor of Atmospheric Science and Director of Centre for Aviation, Transport, and the Environment (CATE) David Lee, Ph.D., shows emissions from the sector are projected to roughly triple, and make it impossible for airlines to meet their own commitments. Even with speculatively optimistic scenarios for such efficiency improvements, Lee found:

 None of the measures, or their combinations, for any growth scenario managed to meet the 2020 carbon-neutral goal, the 2005 stabilization of emissions goal, or the 2005-10% stabilization of emissions goal at 2050.

The maximum reductions over [business-as-usual] technology and operational improvements were clearly achieved by the extension of the existing [market-based measures] out to 2050. (page 22)

This means the aviation industry is now facing a huge gap between emissions it can reduce through efficiency improvements and its goal of carbon neutral growth from 2020.

Just take a look at this telling figure from Lee's report, which shows that even under the most optimistic technological scenarios for improving the efficiency of international aviation, emissions for the years 2006-2050 are expected to increase dramatically:

As Figure A1 from the report shows, even under the most optimistic technological scenarios for improving the efficiency of international aviation, emissions for the years 2006-2050 are expected to increase dramatically. The most aggressive uptake of operational and other technologies as well as biofuels still yields a yawning gap between projected emissions (lower boundary of green shaded area) and the emissions targets on the table, whether those are the targets proposed by governments (horizontal pink lines) or by the industry itself (horizontal grey ladder). Source

So, how can the aviation industry bridge the gap?

Industry spokespeople assert that from 2021, this gap could be filled through a market-based measure. However, the industry also seems to want to delay developing any serious global market-based approach until the gap is looming to be filled.

Lee sees the handwriting on the wall: there is no other way to fill the emissions gap than market-based measures. Our European colleagues at Transport & Environment agree, saying:

The only remaining means to bridge this emissions gap would be to extend market based measures like emissions trading on a global basis.

This measure already has support from EU Climate Commissioner Connie Hedegaard, as well, who said last week in a trip to the United States, that that "we of course want a global, market-based mechanism" for reducing aviation emissions.

The gap will need to be filled, and the time to construct the gap-filling mechanism is now. Lee’s study makes crystal clear the futility of waiting until 2021 to construct the market-based measure, as the airlines have advocated. If airlines simply delay dealing with the issue until 2021, when demand for gap-fillers takes off, they risk substantially higher prices for filling those gaps. And in an industry famous for its thin profit margins, delay – and its attendant higher costs – really isn’t a welcome option.

Airlines that want the flexibility to determine how best to meet the gap – for example, those that want to begin saving emissions now, in order to draw on those reductions for the future – ought to throw their weight behind the development of a global market-based mechanism in the International Civil Aviation Organization (ICAO).

Airlines, countries — including the United States – and environmental groups have all agreed aviation emissions should be addressed in ICAO, so we’ll be looking to the Administration to reach a global agreement, and to reach it quickly.

Posted in Aviation, News |: | 1 Response

EDF, environmental groups call for Secretary of State Kerry to make climate top priority

Environmental Defense Fund joined dozens of organizations today in calling for newly confirmed U.S. Secretary of State John Kerry to “spur bold and immediate action” on climate change.

Dozens of environmental, development and faith-based organizations are urging Secretary of State Kerry to make climate a top priority of his international agenda. Image source

The letter to Secretary Kerry, signed by 60 environmental, development and faith-based organizations, says such leadership “couldn’t be more urgent.”

Climate change threatens our planet, our security, the health of our families, and the fate of communities and nations throughout the world. It is the greatest challenge of our time and our response will leave an historic legacy here in the U.S. and abroad.

With Secretary Kerry’s leadership, the groups said, the United States could

play a critical role in reducing climate change, promoting global stability and human security, creating economic opportunities for U.S. businesses and workers, helping to alleviate global poverty, protecting past U.S. development investments, complementing global health and food security efforts, protecting critical forest areas and biodiversity, ensuring significant cost-savings through disaster preparedness measures, and better enabling the United States to achieve its other diplomatic and national security objectives.

For more information, you can read the full letter to Secretary Kerry and see the statement from EDF President Fred Krupp on Secretary Kerry in advance of his confirmation last week.

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EDF applauds nomination of U.S. Senator Kerry as Secretary of State

EDF President Fred Krupp commented today on the nomination of U.S. Senator John Kerry as Secretary of State:

Senator Kerry is a superbly qualified public servant who will bring to his new post a deep understanding of issues at the confluence of international diplomacy, national security, economic growth and environmental protection, along with a demonstrated willingness to lead on climate change — the signal environmental challenge of our time.

President Obama's decision to put climate change at the heart of his second-term opens the prospect for Secretary Kerry to push for real and measurable progress on climate change in a range of bilateral and multilateral forums. We look forward to the opportunity to work with Secretary Kerry and his team as they redouble America's commitment to diplomatic leadership in confronting the climate challenge.

Posted in News |: | 1 Response

California’s carbon market: a potential game-changer in slowing the Amazon’s deforestation

(Cross-posted from EDF's California Dream 2.0 blog)

California moved into the fast lane on the low-carbon development highway when it launched its carbon market this month. Now it has the opportunity to do even more to stop dangerous climate change while cutting the costs of controlling global warming pollution.  Recommendations from a group of experts on how Reducing Emissions from tropical Deforestation and forest Degradation (REDD+) can come into California’s market show how.

Deforestation accounts for about 15% of global greenhouse gas emissions, but new recommendations from international experts show how California's new carbon market can help stop dangerous climate change and preserve tropical rainforests.

In the world of greenhouse gas emissions, tropical deforestation is huge. Accounting for about 15% of these emissions globally, deforestation emits more than all cars, trucks, buses, trains and airplanes on the planet — combined.

When California launched its cap-and-trade program Jan.1, it created the second largest carbon market in the world. With REDD+, the Golden State now has another golden opportunity to expand its global environmental leadership even further.

The REDD+ Offsets Working Group (ROW) convened by California, the Brazilian state of Acre, and the Mexican state of Chiapas, has released recommendations for how California can bring REDD+ into its carbon market.  The ROW, in accordance with California’s Global Warming Solutions Act’s (AB32) guidance, recommends that California allow states or countries that reduce their total emissions from deforestation below an historical average, while maintaining or increasing the output of commodities like cattle and soy that drive deforestation, to generate compliance credit in California.

This “jurisdictional” approach is much like what California is doing – reducing state-wide emissions below a clearly measurable historical level.

The ROW also recommends requiring states to show that they have made their own efforts to reduce deforestation, beyond any reductions that they seek credit for and ensuring that local –particularly indigenous — communities participate in policy design, have a choice about whether or not to participate in programs, and benefit directly if they do.

Tropical states such as Acre and Chiapas that are moving forward on their own to reduce deforestation know that California’s market for international offsets is very limited, and don’t expect to get paid for most of the reductions they’ve made or can make.

But they need a signal, and California’s carbon market may now hold the key to the future of the forest.

Until recently, rampant deforestation in the Amazon was a big part of the global warming problem – and a disaster for the millions of species of plants and animals and thousands of indigenous groups that live in the forests.  But when Brazil and Amazon states adopted new policies in 2005, all that began to change.

They ramped up law enforcement and started making large-scale reductions in Amazon deforestation, reducing their deforestation about 76% below the 1996 – 2005 average by 2012 (about 2.2 billion tons CO2) while increasing agricultural production and cattle herd. This came very close to the national target Brazil adopted — 80% reduction by 2020 — making it the world leader in emissions reductions.

Despite that progress – or maybe because of it – the Agriculture Caucus of the Brazilian Congress recently pushed for and won legislation weakening forest protection laws. The result? Although 2012 recorded the lowest deforestation on record, reports now say deforestation in the last five months has actually gone up in relation to 2011.

Creating demand for real, verifiable, additional REDD+ from jurisdictions that have solid social and environmental safeguards could be the sign the Amazon – and tropical jurisdictions around the world – need to know that REDD+ is real. Bringing it into California’s carbon market is an effective path to making that happen.

Posted in Brazil, Deforestation, REDD |: | 7 Responses