Japan: Learning about REDD+

According to the World Bank Report “State and Trends of the Carbon Market 2010” released in May, the demand for Kyoto credits (2008-12) is forecast to decrease from approximately 1.6 billion tons foreseen last year to about 1.2 billion tons. The Report attributed this decrease to declining energy consumption amid global economic downturn.

In the meantime, industrial countries are obliged to achieve strict reduction targets and will need to use a huge amount of carbon offset credits for the coming years. Potential supply of credits to meet this demand up to 2020 may consist of: (1) credits from conventional individual projects such as CDM projects; (2) credits generated by a widespread use of energy-efficient products in offices and homes (demand management type); (3) credits generated through Carbon Capture and Storage (CCS); and (4) forest credits (REDD+ credits).

To make REDD+ a sustainable credit mechanism, it is desirable that private companies purchase REDD+ credits even prior to the establishment of an international institutional framework. On the other hand, we should note that a REDD+ project needs to be a sustainable business project, and therefore “what entity is responsible for its management and operation” is considered an important factor in assessing the risk and value of this credit.

REDD+ has not only values of CO2 absorption by forests but also values of biodiversity conservation through forest conservation.  While the latter values have a positive contribution to the environment, they have no direct influence on carbon credit prices from a point of view of the effects of emission reductions.  We should also take note of the difference between the positive effects of REDD+ and the values of REDD+ credits in market trading.

Industrial countries are interested in how to achieve emission reduction targets that will be imposed on them under the post-Kyoto framework. In the case they cannot achieve their emission reduction targets through domestic efforts alone, they need to use carbon credits from other countries, and thus have high expectations for credits generated from the REDD+ program. On the other hand, developing countries take interests in financial supports provided by industrial countries for the curbing of deforestation and forest degradation. Against this background, discussions of the REDD+ mechanism were launched at the 13th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) (COP13) held in 2007 by the industrial countries and developing countries who shared mutual interests: the former seeking the acquisition of carbon credits while the latter in need of funding.

During the COP15 to the UNFCCC in 2009, the participants agreed on the major part of the REDD+ mechanism, except the following unsolved issues: (1) Do the central governments of developing countries alone operate REDD+ projects? Or are the local governments also eligible? (2) How to measure changing emission reductions that are attributable to deforestation and forest degradation; and (3) To what extent should the indigenous peoples' rights and biodiversity conservation be taken into consideration?

To effectively address the REDD+ mechanism, it is vital, in the preparation phase, to develop a domestic institutional regime, assess the present state of forested land, and develop an environment providing underpinnings for REDD+, including capacity building of those involved in this mechanism and process. Since such efforts take a long period of time, in Oslo Climate and Forest Conference in May 2010, the interested countries agreed to establish the REDD+ Partnership to facilitate early progress on REDD+.

A total amount of US$4 billion has been pledged in support of REDD+ efforts, including approximately US$500 million by Japan and US$1 billion each by the U.S. and Norway.  Some industrial countries have already implemented pilot projects and made large-scale investments mainly to Brazil and Indonesia showing positive stance toward REDD+, with a view to putting REDD+ carbon credits on the market in the future.

Japan has an advantage in this sector, given its experience and knowhow accumulated through many years of forest assistance provided by JICA and the possession of a satellite equipped with an observation radar capable of determining the state of forests with high precision. During the COP10 to the Convention on Biological Diversity to be held in Nagoya in October 2010, the Government of Japan will organize a ministerial-level meeting on forest conservation and climate change.  We hope that there would be a significant progress on discussions of REDD+, and will take this opportunity to increase and appeal to the domestic and global community Japan's presence in the area of REDD+.