Posted on 28 September
2009 - Bangkok, Thailand: A survey of investors
with approximately US$7 trillion of assets
under management has shown significant
support for an expanded carbon market mechanism
which would address the estimated 20 percent
of global carbon emissions due to deforestation
and forest degradation.
But the 2009 Forest
Carbon Investor Survey, conducted by the
Brunswick Group on behalf of the WWF Forest
Carbon Initiative, found investors looking
for initial public financing viable policy
frameworks, and more certainty from both
international agreements and national legislation,
before private funds can be mobilized.
The investment community
is looking to December’s UN Climate Conference
in Copenhagen to add substance to REDD (Reduced
Emissions from Deforestation and Degradation)
as the over-arching policy framework for
combating forest related emissions.
“Any global deal on
climate change must take into account the
significant role forests play in combating
global warming,” said James Leape, Director
General, WWF International. “If strong policies
are put in place to ensure real reductions
in emissions and real benefits to forest
communities, investors can play a key role
in supporting REDD.
“Agreement in Copenhagen
– coupled with progress on national initiatives
– will be a signal to investors that REDD
can and will succeed, and will ensure forests
are more valuable standing than cut down.”
The key findings from
in depth interviews with 25 senior institutional
money managers, sell-side analysts and specialist
sustainability investors in Europe, the
U.S. and Asia-Pacific are:
There is significant
potential for a multi-billon dollar expanded
carbon market, however substantial preconditions
still need to be met for REDD to succeed
Agreement at Copenhagen and legislation
in key countries including the U.S. are
crucial pre-requisites Public sector funding
will be vital before a market-based approach
can take effect Problems of verification
and monitoring can be addressed if there
is a strong political framework in place
National governments must put in place robust
and durable legal frameworks to create certainty
for investors The survey found investors
have a high degree of knowledge about REDD
and see strong potential in a future carbon
market. However, they are also unlikely
to invest in the market without clear political
commitment, funding and on-the-ground implementation
by key developed and developing countries.
The investors also believed
that a compliance market in forest carbon
would provide powerful incentives to reverse
deforestation in forest countries
More than one-third
expect a forest carbon market will evolve
from a voluntary to a compliance market
over the next five to fifteen years if certain
conditions for a market-based approach can
be met. This will require action from governments,
including public sector funding, to lay
the foundation for the market and support
efforts by forest nations to build legal
and technical capacity for REDD.
Key milestones sought
by investors are agreement at the Copenhagen
climate talks with support from major economies
such as China and India, as well as the
passage of U.S. climate change legislation.
A strong legislative framework in forest
countries is seen as core to addressing
problems of verification and monitoring
that have hampered agreement on REDD in
the past.
Investors have a favorable
view of proposals on REDD, supported by
WWF, which recognize the value of a phased
approach including pilot projects.
"REDD is critical
to a climate solution, and finance is critical
to making REDD work,” said Donald Kanak,
Chairman of WWF’s Forest Carbon Initiative.
“In the long term, private capital could
play a major role, if certain conditions
are satisfied. We need governments to step
up to create sufficient financing in the
near term to support forest countries’ efforts
to become REDD-ready."
Kanak presented the
survey results (summary attached) as negotiators
met in Bangkok in a lead up session to the
Copenhagen climate change talks convened
by the United Nations Framework Convention
on Climate Change (UNFCCC). The survey presentation
was followed by an expert panel discussion
which included: Prof. Dr. Singgih Riphat
of the Ministry of Finance, Republic of
Indonesia, and Mr. David McCauley of the
Asian Development Bank.
