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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Wednesday, October 25, 2006

India's bright green idea: compressed biogas for cars

We have been making the case for the use of compressed biogas (CBG) as an automotive fuel for a long time now. A recent EU well-to-wheel study showed that of over 70 different automotive fuels and fuel paths, biogas is by far the most environmentally friendly and yielding considerably more well-to-tank energy than any other biofuel including second generation fuels like cellulosic ethanol, methanol or BTL-diesel (earlier post). Biogas can be produced in a decentralised manner from a wide range of organic waste streams (municipal, agricultural or industrial waste) making feedstock supplies highly dynamic. But more and more producers are using dedicated energy crops (such as sorghum and sudan grass, or specially bred biogas 'super' maize and hybrid grasses) to increase yields. The anaerobic fermentation of biogas maize, for example, yields some 4000 liters of petro-diesel equivalent energy. In Europe, several countries are betting big on using CBG, with Sweden, Norway, Germany and Austria all recently opening CBG pumps for cars. Three car manufacturers have CBG-compatible vehicles on the market, often in a bi- or tri-fuel configuration (earlier post).

Meanwhile, several developing countries have demonstrated that it is possible to introduce compressed natural gas (CNG) vehicles on a massive scale. Pakistan for example succeeded in getting over 1 million CNG cars on the road, in a crash-program that lasted two years and that consisted of building compressor outlets and tank stations (earlier post).

In a very important development, India is now going a step further and is taking concrete action towards realising the vision of using compressed biogas to fuel its rapidly growing car fleet. Over 70% of the world's longterm (2030) growth in demand for automotive fuels will come from rapidly developing countries like India, which is why this news is so important. If a country like India succeeds in proving the viability of CBG, then other countries in the Global South will follow (see the argumentation on this mechanism in professor John Mathews' Biofuels Manifesto).

The technology to compress biogas has already been devised, and it will not be too long before our cars will be running on CBG. In India biogas is primarily used in rural households for cooking purposes. This biogas can be purified to match natural gas standards by use of advanced technologies (earlier post), and fed into the natural gas grid. India recently announced it has started doing exactly this (earlier post). The purified form will match the methane content of CNG which is 95%.

The Indian Institute of Technology in Delhi (IIT), and the Indian institute of Science (IIS) in Bangalore have already brought to life such technologies, with the IIT filing a patent for their invention which is in the process of being sealed.

The Indian government has given licence to Delhi-based Indian Compressors Ltd to incorporate this technology. With regard to compressing purified biogas, Gaushala society of Kanpur and Gorakhpur have devised feasible methods, as has Didwania Compressor Works. “The CBG produced can be used in the same cylinders that store CNG and will match the efficiency of CNG,” said a government official. He added that compression of purified biogas and the marketing of CBG can be taken care of by the existing CNG stations. The government will make a beginning with pilot projects for use of CBG in vehicles. Gail has already been roped in to identify locations for such projects:
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Being a product of cowdung, sewage, sludge, non-edible oils and organic fractions of municipal solid waste and crop residues not suitable for fodder, biogas when used as a fuel, recycles carbon dioxide, not emitting a net amount. This makes it a cleaner fuel than CNG.

To add to automotive, biogas can also be used in diesel engines that are used for irrigation. According to data by the ministry of non conventional energy sources, with 8m diesel engines being used for irrigation, our farmers can save on 75% of diesel by use of biogas which can be supplied through a pipeline to the engines.

For this, the biogas digestive plants have to be set up in farms. While some rural areas of Punjab and Uttar Pradesh have already started such practices, Greaves India is already selling diesel engines that use only biogas as fuel. However, for such engines, additional batteries are essential.

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Ethiopian government hopes to leapfrog towards oil independence

Private companies in Ethiopia are driving the emergence of the country's biofuels industry. Now the government of the nation of 75 million people is getting involved after a troubling study by the Ministry of Trade and Industry shows that increasing international demand for fossil fuels will endanger the future security of supply to the country. Therefor, the country hopes to become entirely oil-independent by investing in locally produced biodiesel and ethanol.

Ethiopia is among the poorest of the world's least developed countries, with over 45% of the population living below the poverty line. Significant improvements to Ethiopia's trade balance are needed to stimulate economic development. But around 65% of Ethiopia's export earnings are needed to pay for the import of petroleum products. Long transportation distances add to the costs of getting the fuels to Addis Ababa, where ca. 40% of the petroleum fuels are consumed. This is a large burden on Ethiopia's trade balance. Ethiopia is entirely dependent on oil imports, and even though its current consumption is very low (a mere 724,000 tonnes of diesel and 1.5 million tonnes of petroleum products per annum), its consumption rate is growing at around 10% per year (following its rapid economic growth, standing at 9%).

The study therefor focuses on the feasibility of kickstarting a biodiesel and ethanol industry in the country, to reduce its reliance on foreign oil. The Ethiopian Ministry of Trade and Industry, the Ministry of Agriculture and Rural Development, and the Ministry of Mines and Energy discussed the issue and decided to form a technical committee. It is to be led by the Ministry of Mines and Energy through its Energy Development Department. Sources from the Ministry of Trade and Industry state that "there is no land problem in the country, it [biofuels production] is an appealing option as it is a labour intensive sector. The government would like to see the sector grow in leaps and bounds the way we observed in the floriculture industry." Specifically, the study looks at soil types in the country and at potentially suitable energy crops. So far, it has identified Jatropha curcas as a crop that can be adopted on a wide scale in different geographical zones.

Several biofuel companies active in cultivating Jatropha have already built a presence in the country. Amongst them Energy Seed Plc [no site], FRIEC Green power [no site], Biofuels Ethio Plc [no site], and the National Bio-Diesel Corporation (now owned for 80% by Sun Biofuels Ltd). These companies have started work in the Afar, Oromia, Benshangul Gumuz and Gambela Regional States.

The National Bio-Diesel Corporation Plc, a company which was established by two Germans and an Ethiopian, received an 80,000 hectare plot of land in the Benshangul Gumuz Regional State. The company is expected to invest €42 millin (US$60 million) in the sector. The corporation hopes to produce 150 million litres of biodiesel a year, covering 15% of the country's fuel consumption. An Israeli company, Hovev Agriculture Ltd, is waiting for the green light from the federal investment office to enter the market and is planning to invest US$ 100 million. It has requested 400,000hectares of land.
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The Energy Development Department in the Ministry of Mines and Energy is working to deliver regulations in the coming three months.

According to the Ethiopian Petroleum Enterprise, the country consumed 724,000tn of diesel and imported close to 1.5 million tonnes of petroleum products in the 2004/2005 fiscal year.

The National Bio-Diesel Corporation Plc (NBC) received a 4,000ha plot in June and has recieved another 1,000ha in the South Nations Nationalities Peoples Regional State (SNNPRS) to plant jatropha and is negotiating for more, which will be used to produce biodiesel.

The 4,000ha plot, which was leased at 117 Bir [€10/13.4US$] per hectare, is located in Welayita Zone, in the Affo district. According to Yeshitila Seifu, head of potential studies and promotion department of the SNNPRS investment commission, NBC has already started planting seedlings on the Welayita plot the 1000ha is in Gamo Gofa.

NBC’s other request is to get more land in the region. “The Corporation has gotten very positive indications that it will receive the land soon,” stated Yeshitila. The plot in Welayita has already started the pre-plantation process.

In late January 2006, NBC acquired 85,000ha plot in the Benishangul Gumuz Regional State near Pawe, in Mambuk district, where it invested 60 million dollars and which should cover 15 percent of the country’s diesel demand.

Jatropha is a shrub with a maximum height of 5 metres; its seeds have a high oil content and are resistant to drought. The plant is used as an ingredient for traditional medicine in some parts of Ethiopia, and is also used for building fences in some parts of the country.

Two Germans and one Ethiopian-born US citizen established the National Bio-diesel Corporation Plc. in 2003. The founders sold 80% of the company’s shares to the UK based Sun Bio-Fuels in 2004.

According to sources at NBC the newly acquired plots are not only for jatropha planting, but also for the planting and testing of alternative oil plants. The source declined to name these alternative oil plants. According to experts, it will take up to five years before the first jatropha biodiesel will appear on the market.

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Petrobras prepares for construction of 1300 km ethanol pipeline

Quicknote bioenergy technology
Over at Ethablog, Henrique Oliveira announces that Brazil's state-owned oil company Petrobras is preparing to begin construction on its single largest project since it developed a gas pipeline between Bolivia and Brazil, in 1992: the construction of an ethanol pipeline (earlier post). The line will carry ethanol produced in the municipality of Senador Canedo, in Goias state, to the Paulinia refinery, in Sao Paulo, and, from there, to the port of Sao Sebastiao.

The project is expected to be concluded in two years, and will use 180,000 tons of carbon steel tubes, laid out over approximately 1300 kilometres (800 miles). 10,000 men will work on the project, which will also include compression and leakage measurement stations. The cost of the project, estimated at R$ 500 million (~US$ 235 million) will be picked up by Transpetro, a Petrobras subsidiary. The line will serve exclusively ethanol plants producing for international markets, transporting 4 billion liters of ethanol at full capacity.

On its website, Transpetro speaks at great technical length about the project, apparently contradicting many a biofuel naysayer in the U.S. who claims that ethanol cannot be transported by pipelines because it would pick up other particles and because it contains water. Oliveira leaves the discussion of the finer details of the science of carrying ethanol over long distances to engineering aficionados, who, if they so wish, may read Transpetro’s complete document [*.pdf / portuguese]. Article continues at Ethablog [entry ends here].
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North Sea Bioenergy partnership plants sorghum and sudangrass for biogas

Quicknote bioenergy crops
Sudangrass and sorghum (both belonging to the species Sorghum bicolor) are drought-tolerant tropical crops that yield high quantities of easily fermentable biomass. Now the North Sea Bioenergy partnership, a project to stimulate the use of bioenergy in Belgium, the Netherlands, Scandinavia and the Eastern part of the UK, is experimenting [*Dutch] with both energy crops for the production of biogas. Earlier we reported about German scientists developing sudangrass - sorghum hybrids for biogas too.

Northern Europe is currently experiencing a biogas boom, with many livestock farms turning manure into (pipeline quality) gas. The green gas is then used for electricity generation or as a transport fuel (biogas is the cleanest of more than 70 different automotive fuels and fuel paths - earlier post). But fermenting manure alone is not efficient. Adding dedicated energy crops, such as biogas maize (or its 'super' variant), increases methane yields 10-fold.

Two pilot fields (one in Rumbeke-Beitem, Belgium and another one in Nij Bosma Zathe, Netherlands) are growing eight types of energy maize, sunflowers and Sudangrass (picture) and Sorghum to test their suitability as biogas crops. Especially the latter two have shown very high biomass productivity over very short growth periods. They are co-digested with manure in anaerobic fermenters and yields prove to beat expectations (one hectare of Sudangrass yields around 4000 liters of petro-diesel equivalent biogas). GHG emission measurements are also taken during the entire life-cycle (from crop to final energy production). Results on GHG emissions are expected in the coming months.

Biogas as a transport fuel might be a more feasible path for the production of automotive fuels from biomass than cellulosic ethanol, because the production process is fairly straightforward. Like cellulosic ethanol, the anaerobic fermentation process utilized to produce biogas makes use of the entire biomass stream from a dedicated energy plantation, yielding high amounts of useable energy. In this sense biogas might be qualified as a 'second generation' biofuel, even though the technique has been around for decades.

We track the developments on the utilization of tropical crops for biogas in Europe, because ultimately this experience may offer keys to unlocking the vast potential of similar projects in Africa itself [entry ends here].
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Micronutrients to play key role in Africa's biofuels success

Sub-Saharan African agriculture is known for its very low productivity. A large number of factors is responsible for this, ranging from a lack of knowledge about basic agricultural techniques amongst individual farmers to the non-existence of institutional frameworks for agricultural outreach, a lack of infrastructures which prevent farmers to make a decent income from their land which in turn limits investments in it; even trade barriers play a role (lack of market access which ultimately leads to underinvestment in productivity increases). Recently, the all-important African Fertilizer Summit (earlier post) focused on one of those aspects. It concluded that with only very modest changes in fertilizer practises, African agriculture can increase its output considerably. Ultimately, the projections on Africa's high potential for the production of biofuels (earlier post) take into account a radical change in fertilizing practises (an overview of which biofuel crops need which kind of fertilizer regimes can be found here).

Now Rob White of the International Zinc Association of Southern Africa focuses down further, on one particular micronutrient: zinc. White says that without the required high yields and consistency of crop supply, the economics of (South) Africa's nascent biofuels industry will become more challenging. Micronutrient reserves in soil decline owing to monocropping, the planting of higher yielding varieties and the heavy use of fertilisers. Regular micronutrient surveys and amendments of micronutrients, including zinc, will play an important role in the success of the biofuels industry:
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Although generally recognised for its role in protecting steel against corrosion, zinc plays an important part in the health of every living organism and is an essential element. Zinc deficiency in agricultural soils is common on all continents and constitutes a major problem in many parts of the world because it causes serious inefficiencies in crop production. White says that relatively small amounts of zinc compounds, however, can cure deficiency and last for several years before they need to be repeated. “This treatment is highly cost-effective when the costs of the zinc application and the value of the extra yield are considered,” White says.

He adds that, considering that a minimum response of only one ton of cane a hectare is needed to cover the cost of 50 kg of zinc fertilising material, it may be concluded that the application of zinc can be highly profitable where this treatment is needed.

Soil application of zinc fertilisers is by far the most widely used method for zinc fertilisation of crops. Several different types of compounds are used. The most widely used compounds include a wide range of inorganic zinc compounds and synthetic chelates. Zinc sulphate is the most widely used form of zinc addition. However, White says that different plant species respond differently to different chemicals as it is the delivery of usable zinc that can be taken up by the plant that is of importance. He comments that South Africa has a history of zinc to soil addition that may not be optimal and adds that the growth of the biofuels industry may assist in developing best practice.

The key crops for biofuels in South Africa have been identified as maize, soya, sorghum sunflower and sugar cane. “Unfortunately, with the exception of sunflower, where more data is required, all these crops are sensitive to zinc deficiency. “Maize is especially sensitive to zinc deficiency and some of the newer cultivars even more so. “Globally a present problem is that the abilities of some of the new high-yielding maize cultivars to absorb zinc are very poor and thus they are much more sensitive to zinc deficiencies than indigenous cultivars in zinc deficient areas,” White says.

Inorganic fertilisers are responsible for much of the growth in the world’s agricultural production. In Africa, however, fertiliser consumption is very low – the entire continent uses only 2% to 3% of global supply. There are many reasons for this and some are obvious, but the challenge is to address the situation. “Subsidies for fertiliser additions have been shown to work globally but have been ineffective in Africa,” White says.

One suggested route forward is promoting cost-effective partnerships between all people and organisations involved in the process.

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The World Bank thinks carbon trading can save rainforests

Earlier we reported about Europe and the US's "historic deforestation debt" and concluded that simply putting a price on a hectare of rainforest by coupling it to the price of carbon might not be strong enough an incentive for farmers (small and big) in the tropics to stop logging (earlier post). Later, we found that the concept of "compensated reduction" already circulated amongst some NGO's. Today, the World Bank releases a report in which it argues that carbon trading can be used to protect endangered rainforests by compensating nations that avoid deforestation. The Bank suggests that industrial states offset their carbon emissions by funding projects designed to reduce deforestation in developing countries.

The World Bank report says 5% of the world's rainforest is lost each decade. The forest was more valuable if left to store carbon dioxide emissions than if cleared for pasture, it argues.
Imagine a poor farmer cutting down a hectare of rainforest, rich in biodiversity, to create a pasture worth US$300. The trees, cleared and burned, release 500 tons of heat-trapping carbon dioxide into the atmosphere, contributing to global warming, Meanwhile, firms in industrialized countries are paying many times the value of the cleared land—about US$7,500—to meet their commitments to limit the same amount of carbon dioxide emissions. “The trees are worth more alive, storing carbon, than they would be worth if burned and transformed to unproductive fields,” says Kenneth Chomitz, lead author of a new World Bank report on tropical forests. “Right now, people living at the forest’s edge can’t tap that value.”
The report, At Loggerheads? Agricultural Expansion, Poverty Reduction and Environment in the Tropical Forests, says a system of international payments – “forest carbon finance” – could change that situation.

The report sketches an interesting overview of who benefits from deforestation, who loses, which factors in different forest systems and land-use practises lead to "forest poverty" or to its opposite (huge profits), and for which land-use situation "forest carbon credits" might work. (It doesn't take into account the highly productive commodity estates, such as palm oil plantations in SEAsia or large sugarcane complexes in Brazil; and now that these crops can be used as biofuel feedstocks for which an international market exists, this lack is certainly problematic.)

According to the World Bank, deforestation contributes to 20% of global carbon dioxide emissions. Deforested land that is worth $200-500 as pasture [note: but between US$ 10,000 and 20,000 if converted into oil palm plantations - for smallholders; even more for estates] could be worth $1,500-$10,000 if left as forest and used to offset - or trade against - carbon emissions in the industrial world. Carbon trading is a market mechanism intended to tackle global warming. The most important greenhouse gas contributing to global warming is carbon dioxide (CO2), which is mainly emitted by burning fossil fuels:
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The key idea behind carbon trading is that, from the planet's point of view, where carbon dioxide comes from is far less important than total amounts. Its proponents argue that trading the right to emit CO2 allows firms and nations to decide whether they should spend money on cutting pollution or on buying the right to pollute by paying someone else to cut back.

"Global carbon finance can be a powerful incentive to stop deforestation," said World Bank economist Francois Bourguignon. "Compensation for avoiding deforestation could help developing countries to improve forest governance and boost rural incomes, while helping the world at large to mitigate climate change more vigorously."

At the moment, carbon trading markets like that run by European Union members offer no reward to forest owners for cutting emissions by simply leaving trees where they are. But if developing nations could tap this income, they could use the money to preserve the environmental benefits of forests and stimulate more productive agriculture on poor quality land.

The World Bank is one of the main players in carbon financing, and estimates the value of carbon traded in 2005 to be about $10bn. It believes the carbon market has the potential to bring more than €18bn/$25bn in new financing for sustainable development to the poorest countries and the developing world.

“Global forest carbon financing could be a powerful incentive to stop deforestation” says François Bourguignon, Chief Economist and Senior Vice-President, Development Economics at the Bank.

The report argues that with stronger financial incentives for avoiding cutting down trees, poor farmers in Madagascar and other forest countries could invest in sustainable agriculture in already-cleared fields, rather than cutting down more forest for paltry and often temporary gains.

Tropical deforestation accounts for about 20 percent of global CO2 emissions, so the report says global forest carbon finance could therefore be a tool for slowing global warming.

“These forests are being lost at the rate of five percent or more a decade,” Chomitz says.

“Now that may not sound like much, but that’s equivalent to losing an area the size of Portugal every year and it means by the middle of the century, vast tropical forests may be reduced to just shreds of what they once were.”

“Now is the time to reduce pressures on tropical forests through a comprehensive framework that integrates sustainable forest management into the global strategy for mitigating climate change and preserving biodiversity,” says Kathy Sierra, the Bank’s Vice President for Sustainable Development.

The report stresses the fight against forest poverty should be part of the framework. About 800 million people live in and around the tropical forests and many of them are extremely poor.

“But we shouldn’t automatically assume that poverty causes deforestation, or that deforestation causes poverty,” Chomitz says. “These generalizations are only partially true, and don’t provide a good foundation for policy.”

He says deforestation is often undertaken by wealthy ranchers and plantation owners and poor households can carve productive farmlands out of the forest.

The report says one way to address both problems is to strengthen forest governance – which in practical terms, means finding ways to sort out conflicting claims on trees and land.

But approaches differ in three forest zones described in the report:

* In the mosaiclands, patchworks of farms and forest where most people live, it says environmental services markets could help. In Costa Rica and Mexico, these markets let water users compensate upstream forest owners for reducing sediments in rivers.

* In forest frontiers, where loggers, plantation owners, and households are competing for trees and land, provision of more secure tenure can fight resource grabs by the elites and deter wasteful deforestation. For example, in Cameroon, forest concessions are now allocated through a public auction, independently observed so it’s conducted in accordance with the law. Part of the forest royalties are distributed to local communities and nongovernmental organizations monitor how concessionaires care for the forests assigned to them using satellite photos and on-site visits.

* In areas currently beyond the agricultural pressures, the report says challenge is to head off future conflicts. Regularization of protected areas and recognition of indigenous lands are approaches which have been successfully used in this zone.


Obviously, there are a large number of identified problems that will make the implementation of such a system extremely difficult. Some of those are:

1. the fact that this is a top-down scheme: forest carbon credits are in all likeliness received first by the state bureaucracy of a country, after which they 'trickle down' via a long chain to finally arrive at the small farmers who should benefit from them most. Knowing the situation of bad governance and mass corruption in many developing countries, it is almost certain that the actual cash will not reach the bottom of the pyramid.
Considerable research has shown that smallholders in the tropics avoid strategies that require the temporary suspension of cashing in, and instead prefer tactics that result in immediate and guaranteed incomes. This will prove to be a huge barrier for the implementation of this scheme. When farmers have to wait for their money for too long, they will prefer certainty and start logging instead, so to speak.

2. it will be difficult to do the actual carbon accounting of different forest types and monitor their state on a continuous basis

3. the report does not take into account the huge profitability of lucrative crops like palm oil and sugarcane in light of their use as feedstocks for biofuels. If oil prices rise, these crops will become green gold (even more than they are today) and carbon compensation might not be able to compete. (E.g. a smallholder in the tropics in SEAsia on average makes somewhere between US$ 10,000 and 18,000 per hectare of palm oil, over the life of the plantation. Carbon prices would have to rise dramatically to ever reach this level)

4. The value of biofuel crops is now firmly tied to oil prices. Carbon prices are not, or in a far less direct way. (In the European carbon market, oil prices affect emissions permits because they are linked to the price of natural gas. Gas burns more cleanly than coal, so utilities burning it need only about half the allowances they would require if they burned coal to produce the same amount of power. With oil and gas prices rising, utilities are burning coal because it's cheaper. That increases demand for allowances. On the other hand, carbon prices collapsed when news arrived that governments had issued too many allowances.)
The World Bank remains vague about whether a separate carbon trading mechanism would be created for forests, one that is independent from other carbon markets. If not, the system might be difficult to work with as so many external factors and state decisions taken in European/Western markets will play a key role on global carbon prices.

All in all, it is good to finally see a major institution looking at the problem of deforestation in the tropics, and proposing a market-based mechanism to change the situation. All of us have interest in seeing such a mechanism succeed.

More information:

World Bank: Overview of the report's themes - At Loggerheads? Agricultural Expansion, Poverty Reduction, and Environment in the Tropical Forests - Oct. 24, 2006

World Bank: Document page of abstract, different chapters, report in full.

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