Over 89 countries, representing 80% of global greenhouse gas emissions and 90% of the world’s economy have already pledged to take action on climate change.
Legislative frameworks aiming to reduce greenhouse gas emissions and promote low-carbon paths to economic development are emerging around the world. The European Union has enforced an Emissions Trading System (ETS) since 2005, and California just launched its own regulatory ETS for companies operating in the state. Similar legislation has passed in Australia, South Korea, New Zealand, and Canada, and is emerging in Brazil, China, and Japan.
REDD+ has an important role to play in these emerging greenhouse gas regulations.
REDD+ in the European Union’s ETS
The European Union’s Emission Trading System launched in 2005 and is now operating in 30 countries. The EU ETS allows the use of offsets from UN Joint Implementation and Clean Development Mechanism (CDM) projects. The CDM’s latest recommendations support the inclusion of REDD+ at project and jurisdictional levels, implying REDD+ could soon become a compliance-grade offset option for emitters subject to the EU ETS.
REDD+ in California’s ETS
California’s ETS held its first auction in November 2012 and enforceable compliance begins in January 2013. Currently approved verified emissions reductions in the California market include US forest projects, urban forest projects, US ozone depleting substances (ODS) projects, and livestock manure digester projects. California’s regulation recommends that the first sector-based credits to become eligible for trading under the state’s cap & trade system should come from REDD+. California is now piloting REDD+ projects for use as offsets in its cap & trade program in Chiapas, Mexico and Acre, Brazil. The California Air Resources Board anticipates that REDD+ offset credits from these and potentially other future Board-approved program countries could enter the CA market by 2015.
REDD+ in Canada’s ETS
Canada has committed to a reduction of greenhouse gas emissions of 17% by 2020 from 2005 levels. Four Canadian provinces, Quebec, Ontario, Manitoba, and British Colombia, accounting for more then 75% of Canadian GDP, are participating in the design and implementation of regional emissions trading systems that will allow for carbon offsets, potentially including REDD+.
REDD+ in Australia’s ETS
Australia has committed to reducing its greenhouse gas emissions by 5% below 2000 levels by 2020. In 2003 the New South Wales state government launched the country’s first emissions trading scheme. The National Australian Emissions Trading Scheme had originally planned to link with the European Union’s Emission Trading Scheme in 2015, and might have allowed for international offsets such as REDD+ to be approved by the Australian Climate Change Authority. The change of political representatives in 2013 has resulted in legislation to repeal the Carbon Pricing Mechanism in favor of a “Direct Action” approach. More information can be found from Australia’s Department of Environment.
REDD+ in Japan’s ETS
Japan has made commitments to cut greenhouse gas emissions by 25% by 2020 from 1990 levels and 30% by 2030 from 1990 levels and has been holding bilateral talks with developing nations to introduce carbon offsets from emission reductions projects such as REDD+. The National Japanese Emissions Trading Scheme is being developed while government agencies are implementing additional ETS such as the Metropolitan Emissions Trading Scheme in Tokyo, Provincial Emissions Trading Scheme in Saitama Prefecture, and the Voluntary Emissions Trading Scheme across the country.
REDD+ in China’s ETS
China has set targets to reduce greenhouse gas emissions per unit of GDP by 17% from 2005 levels by 2015 and with the support of the EU is developing a National Emissions Trading Scheme that will link with the EU ETS. Currently the Chinese National Development and Reform Commissions is piloting emissions trading schemes in seven cities and provinces, Beijing, Tianjin, Shanghai, Chongqing, and Shenzhen, along with Hubei and Guangdong.
REDD+ in Brazil’s ETS
Brazil has committed to reducing greenhouse gas emissions from business as usual by at least 36% by 2020. To meet this goal Brazil is currently legislating emissions trading system scheduled to begin in 2013. REDD+ is a fundamental pillar of the Brazilian strategy to reduce greenhouse gas emissions.
REDD+ in South Korea’s ETS
South Korea passed a national Emissions Trading System in May of 2012, with an expected start date of January 2015. The ETS will cover 60% of South Korea’s total GHG emissions and creates an ETS larger than Australia’s. Lawmakers have indicated that offsets under the UN’s Clean Development Mechanism will be approved within South Korea’s ETS, but have yet to announce any rules governing how many Certified Emission Reductions under the UN program would be allowed in the program. The CDM’s latest recommendations support the inclusion of REDD+ at project and jurisdictional levels, implying REDD+ will soon be a compliance-grade offset option for emitters under the South Korean ETS.
REDD+ in South Africa’s Carbon Tax
South Africa plans to introduce a carbon tax on annual emissions for all the industrial sectors responsible for greenhouse gas emissions. To slow the impact of the new tax, it would initially be required for only one third of each company’s emissions, starting in 2013. Then gradually, over the next 7 years, the amount would be increased by 10% a year until 2020. For emissions above the capped amount, companies would pay a carbon tax of $16 on each ton of carbon dioxide equivalent. Until South Africa’s draft policy of its carbon tax is published later this year, it is unclear whether regulated companies can invest in projects to reduce emissions off-site.
For further information
For more information on emissions markets, mechanisms, and opportunities, please refer to the 2013 IETA Greenhouse Gas Market Report.