REDD and carbon markets:
A look at two parallel planets
Chris Lang, www.redd-monitor.org
Civil Society Workshop on Carbon
Markets in South East Asia,
12-14 October 2011
utline:
What is REDD-Monitor
REDD as a carbon trading
mechanism
!"anet earth# Carbon
mar$ets are co""a%sing
!"anet &'# Carbon mar$ets
are the on"( wa( to sa)e the
%"anet
REDD is a
carbon tradin! mechanism
World "ank: *+he ,C!,-s ."timate goa" is to
/.m%-start a 0orest carbon mar$et that ti%s the
economic ba"ance in 0a)or o0 conser)ing
0orests.1
htt%#22bit."(23'40t1
#$%REDD: *+he 0ina" %hase o0 REDD in)o")es
de)e"o%ed co.ntries %a(ing de)e"o%ing co.ntries
carbon o00sets 0or their standing 0orests.1
htt%#22bit."(2mR5W67
*E00ecti)e"(, we can sec.ritise the
carbon, a""owing com%anies and
go)ernments to b.( into it to
o00set their emissions on a "ong-
term basis8 90 we get this
b.siness right, it wi"" be h.ge.1
*9-m doing it to ma$e mone(. +he
n.mbers are co"ossa".1
:incent +cheng.i;, %ro%ert( entre%rene.r.
htt%#22bit."(2gd%ELi
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*Carbon o00sets neared a""-
time "ows @in A.g.st
2011B, con0irming their
stat.s as the world&s
worst per'ormin!
commodity.1
Re.ters htt%#22re.t.rs2%=&hb?
*+he thing that wi""
most $i"" renewab"e
de)e"o%ment is "ow
carbon %rices.1
Cames CoD, !E(r(
htt%#22b"oom.bg2n6R:DF
Ghares in a com%an( ca""ed (radin! Emissions at
historic "ow. Com%an( does not ha)e cash
co""atera" against 0orward %.rchases.
Ghares in London-based carbon bro$er
CarbonDesk ha)e been s.s%ended - di00ic."ties in
raising new 0.nds 0rom in)estors.
Mercuria, a Gwit;er"and-based commodities
trading ho.se, is "a(ing o00 sta00 at its carbon trading
des$.
(ricor, a com%an( that aims to se"" REDD credits,
%osted a "oss o0 H2.I mi""ion in 2010.
Gome recent Point Carbon artic"es#
*@CBarbon o00set mar$ets J and carbon mar$ets as a
who"e J now 0ace ma/or cha""enges.1
*+he )a".e o0 transactions in the %rimar( CDM
mar$et J the "argest o00set mar$et b( 0ar J
tota""ed aro.nd K2F bi""ion in 2002-10... Gince
the b."$ o0 transactions are 0orward %.rchase
agreements with %a(ment on de"i)er(, act.a"
0inancia" 0"ows thro.gh the CDM ha)e act.a""(
been "ower, abo.t K?.4 bi""ion thro.gh 2010.1
Wor"d 5an$
htt%#22bit."(23LC.mo
)owever***
+he Wor"d 5an$ em%"o(s +,, sta'' who are
wor$ing 0."" time on carbon markets.
+he 5an$ ho%es to t.rn *Carbon into ,inance1#
*Risk-mitigation too"s addressing de"i)er( risks1,
9,C-s *Carbon De"i)er( -uarantee1,
*,ront"oading mechanisms1, *-uaranteed
Carbon Ga"es Contract1, *Carbon Me..anine
Debt ,aci"it(1 Mwhich wo."d *address the need to
"imit senior debt and achie)e greater e3.it(
%artici%ation in risky %ro/ects1N.
htt%#22bit."(2%iOFPn htt%#22bit."(23LC.mo
So 'ar, neither CDM nor E(S
includes tradin! in 'orest carbon
Q>0R o0 the )o".me o0 0orest carbon trade ta$es
%"ace in the )o".ntar( o)er-the-co.nter mar$ets.
MO+C trades are traded direct"( between two
%arties J not )ia an eDchange.N
*REDD has 0o""owed a dramatic growth
tra/ector(, b.o(ed b( strong internationa" %o"ic(
signa"s, emerging com%"iance mar$ets, and
se)era" new"( minted methodo"ogies enab"ing
)eri0ication.1
Gtate o0 the ,orest Carbon Mar$et 2011 htt%#22bit."(23EAO"c
G.%%orters, donors and a.thors o0 the re%ort are
a"" carbon trading %ro%onents or carbon traders...
*Low hanging 0r.it1 -
b.nd"ing R+ commodities
and carbon trading
Ro.ndtab"e on G.stainab"e "io'uels
Ro.ndtab"e on G.stainab"e /alm il
Ro.ndtab"e on Res%onsib"e Soy
5etter Su!ar Cane 9nitiati)e
4"oba" Ro.ndtab"e 0or G.stainab"e "ee'
4o)ernorsS C"imate and ,orests +as$ ,orce wor$sho% Ge%tember
2011#
'ationa" Wi"d"i0e ,ederation, WW,, Conser)ation 9nternationa",
Rain0orest A""iance
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Welcome to planet #$:
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*4i)en the in)estment )o".mes, #SD 01 2 33
billion %er (ear, re3.ired to on"( ha"0 emissions
0rom the 0orest sector b( 20P0, there is a c"ear,
(et .naddressed, need to mobi"ise private
sector 'inancin! at scale, in addition to
go)ernment in)estment.1
*@,B.t.re in)estment o%%ort.nities in 0orest-
carbon %romise to be o0 great interest to the
%ri)ate sector in genera", in %artic."ar in)estors
and other 0inancia" intermediaries.1
,inancia" instit.tions co."d *in)est their own
e3.it( direct"( into 0orestr( %ro/ects, or into
0orestr( %ro/ect de)e"o%ment com%anies or
0orest 0.nds1.
e.g. 5an$ o0 America Merri"" L(nch in)esting in
the #lu Masen REDD %ro/ect - *%ossib"( a
mode"1.
Merri"" L(nch %romised #S45 million in 200O.
'o carbon credits ha)e been generated.
Carbon Conser)ation is 6,7 owned b( a mining
com%an( ca""ed East Asia Minera"s.
Carbon Conser)ation was %aid in shares in East
Asia Minera"s. On ? Oct 2011, shares worth
&GK0.?I each Mdown 0rom &GK4.OO at time o0
sa"eN.
Ownershi% o0 carbon in &". Masen 0orests not
agreed.
Merri"" L(nch# *hi!hly speculative1 to get in)o")ed.
'o ana"(sis o0 the problems with REDD.
'o mention o0 indi!enous peoples.
'o ana"(sis o0 addressing drivers o'
de'orestation.
'o mention o0 the !lobal economic crisis.
'o mention o0 an( problems in the carbon
markets.
TWhat (o.Sre seeing right now are the
ma/or Wa"" Gtreet ho.ses, 0or
eDam%"e, 8ehmans, Merrill 8ynch,
-oldman Sachs, "ank o'
America, "arclays, names "i$e this
who at the )er( to% o0 the
organisations ha)e s.dden"(
rea"ised, wait a min.te, climate
chan!e isn&t 9ust a risk, we can
make money out o' this. And thatSs
the hard reality o0 the mar$et.T
!a." C"ements 7.nt, 7ead, &'E! ,9, 200O
Mshort"( be0ore Lehman 5rothers went ban$r.%t and
Merri"" L(nch was ta$en o)er b( 5an$ o0 AmericaN
htt%#22bit."(2nt/A;4
(hank you:
redd-monitor.org
