As part of The Bridge Tank’s ongoing work on green finance, and our efforts within G20 to ensure that financial institutions in the South are involved in the design of green finance, Joël Ruet joined France Culture’s “Magazine du week-end” for a program dedicated to carbon credits in the African rainforest.
While carbon offset projects based on forest conservation efforts are multiplying, the effectiveness of these new financial mechanisms is now being called into question. The program was an opportunity for Joël Ruet to discuss the limits and opportunities of these innovative climate financing models with Alain Karsenty, Researcher at CIRAD’s “Environment and Society” Department, and Wannes Hubau, Biological Engineer specializing in tropical forests and Professor at Ghent University.
Speaking to Marguerite Catton, Joël Ruet introduced major challenges encountered today in the structuring of green finance tools:
“There is a green finance that is currently being structured, which is necessary but which does not exist, which is where all the dangers of appropriation and expropriation lie. Moreover, this green finance must cover climate finance, sustainable development finance and biodiversity finance. So there are 3 types of finance that don’t exist, that need to be defined and co-defined simultaneously, with very disparate stakeholders: the local communities, the governments of the Global South, the organizations of the Global North, and the financial powers of the Global North.”
In this context, African rainforests are of particular interest for carbon offset projects. Often described as the lungs of the planet, these forests play a key role in carbon sequestration, making them important carbon sinks that need to be conserved. Carbon offset projects based on forestry assets thus offer a new kind of finance,
“finance that is no longer going to be in the computers of Wall Street or the City, but geolocated in places where people live, where sovereign states are trying to be economically sovereign.”
The structuring of financial assets based on the capacity of these forests to capture and store carbon does, however, depend on certain conditions, as Alain Karsenty, Researcher at CIRAD’s “Environnements & Societies” Department, pointed out.
“Just because a country has a forest that absorbs CO2 doesn’t mean it can sell carbon credits. A country must be able to demonstrate that it has taken measures to reduce deforestation compared to a reference scenario.”
Taking Gabon as an example, Joël Ruet highlighted the political trade-offs involved in incorporating tropical forests into the country’s NDC. First and foremost, it is necessary to differentiate between what is a gift of nature on the one hand, and the protection efforts made in the present carbon sink on the other, as well as to model the future, a difficult task given the almost absolute uncertainty surrounding the reaction of forests to ongoing climate change.
Although Gabon’s forest absorbs 100 million tonnes of CO2 today, simply maintaining this absorption capacity by 2050 will require major conservation and non-deforestation efforts. These will involve both unconditional measures and those conditional upon international funding.
The dichotomy between carbon credits’ perception as Eldorado and the crisis that looms over them therefore also stems from the uncertainty surrounding the perimeter and the sustainability of the underlying asset: its biological stability over time, the scientific models on which these offset mechanisms are based, and the accuracyd of the measurements and certifications carried out by private players with a vested interest in the outcome.
According to Wannes Hubau, biologist specializing in tropical forests and professor at Ghent University, the increase in carbon concentration in the atmosphere directly affects the forest:
“Before CO2 emissions, mature forests were in equilibrium with the atmosphere, so there was carbon sequestered by growing trees and released by dying trees, but now we’ve discovered that this free practice no longer exists. Because of CO2 fertilization, there is more growth and therefore more carbon captured than released, so forests have become a carbon sink. »
Numerous question marks regarding inclusivity and social justice still remain on this market currently being developed,
« it is a relatively young market. There is a need to improve regulations for funds to actually reach the village where the people protecting the forest are. »
Alain Karsenty also pointed out issues of credibility, effectiveness, and environmental integrity with these carbon offset programs.
« Everything is based on a baseline scenario. This can be the past, by comparing deforestation levels in the past […] or a business-as-usual scenario, with deforestation increasing in predefined proportions to meet development needs and a growing population. But these scenarios are in the hands of those who produce them, i.e. the people who draw up the projects, or the states that draw up their reference scenarios. They cannot be contested, and these scenarios often imply sharp increases in deforestation. […] There is a major credibility problem from the point of view of the environmental integrity of these mechanisms.”