With growing climate awareness, the contribution of deforestation to global greenhouse gas emissions has also moved into the public focus. This development is reflected in international forest policy, not least by REDD+, or Reducing Emissions from Deforestation and Forest Degradation, which has been the dominant international forest policy mechanism since 2005. As the name implies, the objective of REDD+ is to reduce emissions resulting from destruction of forests. The means to achieve this objective: financial incentives. In theory, payments under the mechanism are results-based: Financial support is only granted after the fact to those who can document how many tons of carbon emissions were avoided, and that the emission reduction would not have been realized without their measure.
The concept has been expanded continuously since its introduction and now includes not only the reduction of greenhouse gas emissions through avoided deforestation, but also through forest conservation, sustainable forest management and afforestation. These additional options are symbolized by the “plus” in REDD+. Another conceptual shift is expressed by the terms “jurisdictional REDD+” and “landscape REDD+”. At the landscape level, the reduction of emissions from agriculture is to be combined with forest protection.
While the focus of REDD+ was initially on individual projects financed by the private sector or international nature conservation organizations, it has since shifted to public administrative units such as federal states, provinces or even entire countries. This approach is intended to ensure that deforestation that is prevented within a REDD+ project is not merely pushed into adjacent areas, thus resulting in REDD+ not affecting total deforestation. The trend toward REDD+ measures within the framework of more comprehensive land use concepts instead of isolated individual measures by the private sector pursues the same objective. However, the focus on administrative units such as states or provinces inevitably shifts the emphasis of REDD+ from private to public actors: State institutions play a key role in jurisdictional REDD+ programs, while REDD+ projects initiated by private actors are integrated into such state programs. The more private sector REDD+ projects exist in a given area prior to the development of such jurisdictional REDD+ programs, the trickier this integration. This shift brings to light a number of contradictions with regard to the original objectives of REDD+ (see Market-compliant forest conservation for a discussion of those inconsistencies).
The role of the private sector as a source of financing for REDD+ is overestimated
A key argument by REDD+ advocates has been that public funds alone would not be sufficient to finance the required reduction of deforestation. The financial contribution of the private sector to measures to reduce forest loss was thus presented as pivotal for the success of REDD+.
This expected private sector financial contribution has not yet materialized, even though REDD+ was primarily designed to involve the private sector in the financing of the mechanism, either as a buyer of offset credits or as an investor in REDD+ measures. A comprehensive study by CIFOR, a renowned forestry research institute, shows that since the introduction of REDD+, around 90 percent of its funding has come from public sources. With the shift to REDD+ programs under state administration, the argument that the private sector is indispensable as a financier of REDD+ is becoming ever less persuasive: Beyond the purchase of carbon credits, substantial financial contributions from the private sector to REDD+ programs managed and implemented by public agencies are unlikely.
Carbon trading, however, is the most controversial element of REDD+. In response to the broad rejection of trading in such offset credits, industrialized countries are therefore increasingly arguing that REDD credits do not necessarily have to be tradable, but could serve only as 'accounting unit', to document the emission reduction achieved. In this case, however, it remains unclear how private investors are to be involved in the financing of REDD+ measures. REDD+ proponents have yet to explain what the shift toward REDD+ programs under public leadership means for the REDD+ approach: One of their central arguments in favor of REDD+ was that the public sector by itself did not have sufficient financial resources to stop the overexploitation of forests. Did this argument lack a sound basis from the outset? Or does a move toward REDD+ programs under public management mean the goal has been abandoned of making REDD+ an effective instrument against deforestation – an instrument that was said to succeed where previous international efforts to protect tropical forests have failed? What remains after more than a decade of experience with REDD+ is the observation that the private sector’s contribution to financing REDD+ has been negligible.
Have REDD+ projects systematically overestimated their contribution to reducing emissions?
Current REDD+ programs such as the Forest Carbon Partnership Facility – the central REDD+ program of the World Bank – also illustrate the problematic nature of embedding of private-sector projects in public REDD+ programs – and indirectly the implausibility of the emission reduction calculations by REDD+ projects. In the summer of 2018 – more than two years after the originally announced date – the World Bank published a draft purchase agreement for offset credits with the government of the Democratic Republic of Congo. In the draft, the Carbon Fund of the Forest Carbon Partnership Facility undertakes to purchase a total of USD 55 million in offset credits from the Congolese government’s REDD+ pilot program. The program is to be implemented in the province of Mai Ndombe. NGOs have been critical of the pilot program, among others due to the World Bank’s willingness – in violation of its own rules – to sign the purchase contract before a credible and fair plan is in place to distribute the proceeds from the sale of offset credits. Furthermore, the Congolese government’s action plan focuses on smallholder agriculture in particular and does not address causes of large-scale deforestation such as industrial logging.
On a part of the REDD+ pilot program area, Wildlife Works Carbon (WWC), a US company, is operating a REDD+ project that has been selling offset credits to companies and individuals in the so-called voluntary market for years. Since the REDD+ pilot program of the Congolese government requires carbon accounting for the entire forest area of Mai Ndombe province, embedding the WWC REDD+ project in the REDD+ program of the province will be inevitable. In order to prevent both the company and the provincial government from crediting themselves for supposed emission reductions from the WWC REDD+ project area, the supposed reduction sold as carbon credit by the existing project must be deducted from the government's REDD carbon balance sheet for the entire province. This requires an accounting procedure that guarantees that for every offset credit that the WWC REDD+ project sells on the voluntary carbon market, one ton of carbon dioxide will be removed from the provincial government’s balance sheet. If this is not done, the same emission reduction will have been credited twice, a risk referred to as 'double-counting' in climate parlance.
The following passage from the draft sales contract between the World Bank and the Congolese government indicates how far the project and program estimates of the supposed emission reduction diverge: “an existing legacy project – the Wildlife Works Carbon (WWC) Mai Ndombe conservation concession – was validated with a project baseline methodology prior to the jurisdiction determining its own baseline under the fully-fledged ER Program. To be integrated and rewarded for performance over the ERPA period (2018-2024) the WWC project was required to reduce its baseline by 33%.”
In the Brazilian state of Acre, the integration of REDD+ projects into the state’s REDD+ program has yet to be achieved. In order to avoid double counting, the provincial government has estimated an across-the-board contribution of 10 percent toward emission reduction for the REDD+ measures implemented by four existing private-sector REDD+ projects. Initial analyses suggest that this figure does not rule out double crediting of supposed emission reductions, as the existing REDD+ projects use extremely high reference values for calculating their supposed emission reductions.
Results-based payments even without documentation of emission reduction through reduced deforestation?
The REDD+ offset credit purchase agreement between the World Bank and the Congolese government illustrates another trend: the re-interpretation of 'results-based payments'. Despite a cost-intensive preparatory phase and more than USD 40 million for the “preparation of REDD+”, the purchase agreement – which has been marketed as “results-based” – guarantees a payment of USD 7.2 million even if the government cannot document its compliance with the contractually agreed emission reduction targets. REDD+ payments are therefore also possible without documented evidence of an emission reduction. The reasons given for this include high fixed costs for implementing the jurisdictional REDD+ program, for example for monitoring and carbon accounting. While REDD+ projects in the private sector pay these fixed costs from the revenues from supposedly verified emission reductions, the state-managed REDD+ programs need a guarantee that their costs will be covered even if there is no evidence that emissions from deforestation have been reduced as promised in the contract. Perhaps this is also a reason for the seemingly widespread tendency in REDD+ projects to set particularly high reference values. The higher deforestation in the hypothetical scenario without the REDD+ project is claimed to be, the higher the volume of supposedly avoided emissions that can be claimed by the REDD+ project and the more offset credits can be sold.
Take-away from ten years of REDD+ implementation
Studies such as the 2006 Stern Review touted REDD+ as a bargain that could quickly and cheaply reduce emissions. This prediction has not been fulfilled. Rather, experience with REDD+ in Brazil in particular shows that money alone does not end deforestation. There, the government achieved globally acclaimed successes and a rapid reduction in deforestation in the early 2000s. Central factors were the strengthening of the environmental agency responsible for controlling illegal deforestation, the collapse of world market prices for the key agricultural products meat and soy, and the extensive recognition and demarcation of indigenous territories. Satellite maps provide striking documentation of the significantly lower rate of deforestation on demarcated indigenous territories compared to non-demarcated land. REDD+ did not play a role in Brazil until around 2007. At that time, deforestation rates had already fallen to their lowest level to date thanks to the implementation of the above measures. The development of deforestation rates since the introduction of REDD+ in Brazil shows how REDD+ has failed as an instrument to reduce deforestation: It has not been able to curb deforestation driven by political lobbying and economic interests associated with deforestation in Brazil. In 2017, deforestation was already skyrocketing, and a further increase is expected for 2018. This also applies to the model state of Acre. The extent to which this affects the “results-based” payments by the KfW-managed REDD Early Movers Program with Acre, as well as the conclusions the German government will draw regarding its support of REDD+ as a supposed forest and climate protection instrument, remain to be seen.
With the exception of international aviation, the private sector shows limited interest in purchasing offset credits from REDD+ projects. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) adopted by the International Civil Aviation Organization (ICAO) in 2017 is currently the only potential source of significant demand for REDD+ offset credits. The demand for REDD+ credits from airlines illustrates how REDD+ is not contributing to climate protection, but threatening to become a fig leaf for increasing carbon emissions.
Last but not least, the adoption of the UN's Paris Climate Agreement has fundamentally changed the context in which REDD+ is implemented. From 2020, all countries and not only industrialized countries, have committed to presenting national greenhouse gas balance sheets in order to document their compliance with their nationally determined contributions (NDCs) to the global reduction of emissions. To avoid the double counting of one and the same emission reduction – by the buyer of a carbon credit and in the national inventory of the country selling the carbon credit – a comprehensive register would be required. Without such a register, there is a real risk that both the buyer of a carbon credit and the country where the REDD+ project is located, claim credit for the same emission reduction – with the result that national greenhouse gas balance sheets would not present an accurate picture.
This fundamental change introduced by the UN Paris Agreement and which requires all countries to present national greenhouse gas accounts, calls into question REDD+ approaches based on the trading of offset credits from REDD+ measures. Industrialized countries or companies buying carbon credits from REDD+ projects in countries of the global South are under less pressure to reduce their own emissions. Buying such REDD+ carbon credits allow more corporate emissions in industrialized countries that will affect the climate for centuries.
Moreover, carbon offsetting under the changed context of the UN Paris Agreement is also economically a bad deal for countries in the global South: At the current price of USD 5 for a REDD+ credit worth one tonne of carbon dioxide, buyers in industrialized countries are buying a cheap alternative to reducing their own emissions. But in countries of the global South alike, USD 5 from the sale of a REDD+ offset credit are not sufficient to fund the reduction of emissions as part of a transition away from fossil fuels. The Indian organization CSE, for example, calculated that a minimum price of USD 22 a tonne would be needed to offset the cost to smallholder families of abandoning traditional firewood use and switching even only to LPG-fueled energy-efficient stoves.
CIFOR (2013): Global Landscapes Forum Final Report. Bogor.
Grieg-Gran, M. (2006): The Cost of Avoiding Deforestation: Report prepared for the Stern Review of the Economics of Climate Change.
REDD-Monitor (2018): The shambles of the World Bank’s REDD negotiations in the Democratic Republic of Congo.
FDCL (2018): DOSSIER Amazonien: Entwaldung, „Entwicklung“ und Widerstand. Der Kampf um den größten Regenwald der Welt.