But such carbon credits have found demand only in a small, thinly traded voluntary carbon market, as countries struggle to agree on new, binding emissions cuts under U.N. climate talks.
“There is growing impatience with the multilateral process, not only from practitioners such as myself, but more importantly, from many forest countries,” said Christian del Valle, environmental markets and forestry director at BNP Paribas in London.
“Thus far the multilateral process has not delivered meaningful on-the-ground results, and forests continue to be lost because the only accessible price signal today indicates they are worth more cut down than standing,” he said.
A full U.N. climate deal could create a market through which rich, polluting countries could buy carbon credits, paying for forest protection in the process, just as they pay for clean energy projects now under the Kyoto Protocol’s existing carbon offset market, the Clean Development Mechanism.
So far, the only demand for forest carbon credits has been in the voluntary carbon market, worth $424 million last year, which lacks the binding rules of the Clean Development Mechanism.
Governments like those of Norway, Germany, Britain and the United States have pledged $6.5 billion to help poorer countries develop systems to reduce emissions from deforestation, but that is seen as only a halfway measure. Private-sector involvement will be essential.
Recent studies suggest that between $17 billion and $33 billion per year is needed to achieve a U.N. Environment Program recommendation to halve global emissions from deforestation by 2030.
“We are not going to get the scale of what we need without participation by the private sector,” said Donna Lee, who was the lead U.N. negotiator on REDD for the United States and is now a consultant for the advisory group Climate Focus.
“There is a disconnect between the understanding by countries and negotiators and the private sector of what the private sector needs in order to participate in REDD,” she said.