Yvo De Boer, UN Climate Chief, admitted that only 15,000 of the 45,000 registered participants were given entry passes, leaving 30,000 registered participants in the cold, literally.  He admitted that the UN misjudged how many people would actually show up, saying “you can’t fit a size 12 feet into size 6 shoes.” Even officials from The Climate Registry, Climate Action Reserve and a Canadian national delegation Member of Parliament were turned away.

The Main Conference at the Bella Centre turned into a side show, and seemed to be dominated by thousands of climate-tourists bent on disrupting the meetings.  All of this in the backdrop of a one hundred year old coal-fired electric facility that was belching out enough CO₂ to offset any benefits that might come from the fray. The UN completely misjudged the number of people who they invited and the Conference was not prepared.

Little wonder there is scant progress on a Climate Agreement when the UN organizers cannot even process the people it registered months in advance.

While China has pledged to cut its rate of carbon growth by 40-50% relative to its growth, it is balking at direct verification of its reduction claims by outside parties.  Currently, under the Kyoto Protocol, China submits “national communications” to the UN Framework Convention on Climate Change (UNFCCC). This means China is regulating itself.

The United States has passed a Climate Action Bill through Congress and has says it is willing to put similar legislation through the Senate this spring, but insists that countries like China should be subject to “transparent”  verification of reduction claims.  US Democratic Senator John Kerry explained that “without transparency,” (code for international inspection), it is unlikely that the US Senate would pass carbon emission cuts.  Clearly, the United States is not impressed with the current self-regulatory reporting to the UNFCCC.

A final note: the House version of the US Climate Bill threatens unilateral trade sanctions for countries not meeting a similar target to the American target.  So, China faces a possible import tax on its trade with the US.  When the two leaders, Mr. Obama and Hu Jintao, arrive later today there will be a final opportunity for compromise.  Let’s hope these two leaders have developed a cooperative rapport during their recent meetings in China, because it looks like both will need to compromise from their current stated positions.   Just like the Marvin Gaye Motown refrain … it takes two, b-a-b-y …

One of the few areas to gain consensus and make progress at the Copenhagen Climate Conference was the recognition that forest protection and conservation would be a key element in the upcoming agreement. The world loses approximately 13 to 16 million hectares of forests annually; an area larger than the size of England! This loss of forests is responsible for 20% of the world’s greenhouse gas emissions. In recognition of the importance of forests, the United States, Australia, France, Japan, Norway and the UK pledged $3.5 billion to a new initiative known as REDD (Reduced Emissions from Deforestation and Degradation) where these developed nations would provide funds to forests preserve in emerging nations.

Pavan Sudhdev, SVP for Deutsche Bank, noted that the annual loss of forests costs the world $2.5 to $4.5 trillion dollars. Beyond the loss of forests, there are additional costs: the loss of watersheds, biodiversity, pollinating bees, and microbes that break down pollution, cost the world several trillion dollars more. These benefits that we get from preserving forests are intact ecosystems are called “ecosystem services”. Since the 1780’s greenhouse gas (GHG) concentrations in the atmosphere have gone up from 287 ppm (parts per million) to 387 ppm in 2009. One of the main causes of this increase in GHG concentration in our atmosphere is the “terra-forming” of the planet. Land use changes caused by agriculture and urbanization have touched over 50% of the land surface of the planet, leading to rapid deforestation.

One solution to protect nature’s services that we require from ecosystems (clean air, clean water, pollination of crops) is to put a value or price on these services. REDD does just this and mechanisms like REDD are quickly gaining ground as a practical way to ensure “No Net Loss” of the earth’s important “natural capital”. Just as we need enough capital in the bank to live off the interest, clean watersheds and standing forests are the natural capital that we need to preserve in nature’s bank (the earth). It may sound crazy to even talk about finance and nature in the same breath, but this is a major source of discussion in Copenhagen.

REDD is a complex set of mechanisms that allow developing nations to derive a value for standing forests, based upon the carbon sink found in these forests. Without such a value, it is estimated that most of the emerging world’s forests could disappear by 2025. REDD represents an ecosystem service payment arrangement where wealthy or developed nations establish funds to preserve remaining forests in developing countries.

What does this mean for Canada? Canadian forests may be the largest single sink of carbon in the world, even more than the Brazilian rain forests, so they are worth preserving as well. Canada is not however an emerging nation, so REDD doesn’t apply. What does apply, however, is “conservation forestry” carbon offsets, a sort of REDD for developed countries. In the US, the Climate Action Reserve has set out the template for North American conservation forestry carbon offsets, and the proposed US Climate Regulation would rely heavily upon forest carbon offsets.

Settlement and transference or sharing of rights from governments to First Nations in Canada provide a great opportunity to use conservation forest carbon offsets to preserve huge forest carbon sinks and fund sustainable First Nations communities. The BC government recently announced two landmark deals, one with the Coastal First Nations of BC and one with the Haida, both of which allow a sharing of carbon offsets revenue for ecosystem-based management programs. This means that First nations can now participate in preservation of forests, and derive value for managing forests for their standing carbon value as well as their timber value.

Environmental commodities are not physical assets, per se, which makes them different from corn and cotton and scores of other products that are traded on commodity markets. Environmental commodities are intangible; however, they do have real value, and can be bought and sold.

A carbon offset represents a reduction of one metric ton of greenhouse gas emissions –  measured as one ton of carbon dioxide gas removed from the atmosphere in one year. Carbon offsets are known by of other names such as verified emission reductions (VER’s), and certified emission reductions (CER’s), but they are all measured the same way, and are mostly related to a specific project that caused a reduction in the emission of greenhouse gas (GHG).

Renewable energy certificates (REC’s) represent 1 MWh of power generated by renewable resource. Run of the river, solar, and wind power are among the types of renewable energy projects that can generate REC’s.  Sometimes REC’s are also called green tags. Energy efficiency credits, also referred to as white tags, represent 1 MWh of power that’s been conserved.

In a similar way, 1 L of water preserved in one year represent a unit of water offset. New markets for carbon offsets are developing all the time. First generation offsets have been traded, and now there is a growing interest in full ecosystem offsets. These non-physical assets would be classified under the heading of environmental attributes or environmental commodities. The worldwide market for these informal commodities is now estimated to be $1 trillion in value.

Environmental attributes are increasingly being associated with the new ecosystems services marketplace. Natural ecosystems can benefit people through multitude of processes that they supplied, and collectively these benefits are known as “ecosystem services”.  For example, benefits like clean drinking water, clean air, decomposition of wastes, and pollination of crops are all ecosystem services that are provided to us. In 2004 the UN millennium ecosystem assessment (a four year study involving 1300 scientists) grouped ecosystems services into four categories:

1. Provisioning (such as the production of food and water);
2. Regulating (such as the controlled climate);
3. Supporting (such as crop pollination and nutrient cycles); and,
4. Cultural (such as spiritual and recreational benefits). 

Unfortunately, on their own, ecosystem services do not have any financial value. Environmental attributes can place a value on the services provided by ecosystems. For example, most trees only have value if they are somehow processed into paper lumber or other cellulosic products. Conservation forestry carbon offsets provided value to landholders who are willing change their behavior and provide more net trees on a given piece of land that would normally be the case. In this way the environmental attribute is used as a mechanism to pay the landholder for the valuable ecosystem service provided by additional trees on their property. The trees, of course, are sequestering carbon dioxide from the atmosphere and thereby contributing to the curtailment of global warming.

As the world population moves past 7 billion people, the demands imposed on the world’s ecosystems is immense. The ecological footprint of our 7 billion people is now in excess of what the world can handle. In other words we don’t have enough natural capital (i.e. clean air, clean water, fertile soil, etc.) in our world bank to support our population sustainably over time. Just like financial capital, we optimally have enough in the bank so that we can live purely off the interest generated by the capital. The world population is now eating away at the natural capital of the earth and we are heading toward ecological bankruptcy. Through the ethical, standardized and proper use of environmental attributes, we have a mechanism to provide an economic incentive to replenish natural capital worldwide.

Nowhere is this more important than in the prevention of deforestation and the subsequent negatve impacts of deforestation on climate change. In Copenhagen, in December 2009, 192 countries are meeting to develop new mechanisms for environmental attributes to be applied to this problem. Mechanisms such as conservation forestry carbon offsets and REDD (Reduced Emissions from Deforestation and Degradation) offsets have been put forward as a means to halt the dangerous continued deforestation of the planet.

In the future, new environmental attributes will be developed to address other ecosystem services. Human activities have now transformed 50% of the Earth’s ice-free land surface. Water is increasingly scarce in many parts of the world and mass water offsetting is set to begin.  As well 66% of world fisheries are now overexploited, and 25% of bird species are extinct.  Even insects, such as bees, are now threatened, and this could have a devastating effect on the pollination of food crops.  New species-based offset programs are being investigated to halt extinctions.  Finally, full ecosystem offsets will be developed where an entire ecosystem is being affected, such as the Tar Sands in northern Alberta.

The United States  is now moving toward regulation with the passage of a climate bill through Congress this year , and introduction of another proposed bill for the Senate next year (Kerry/Boxer Bill).  In both cases the United States is looking to generate up to 90% of the carbon offsets required for its national climate regulation system from forest sources, and half of this from foreign sources.  This is great news for First Nations as there will be significant incentives to conserve such forests under ecosystems management schemes.  In the United States many conservation forest projects are now in the carbon pipeline under the new Climate Action Reserve (CAR) rules, favoured by US legislators.

In Canada , many of the major undeveloped forests on the West Coast and the Northern region are under land claims with Federal and Provincial governments.   A recent study, “The Carbon The World Forgot”, indicates that these northern boreal forests ”contain two to three times the carbon stored in the tropics”.  This same region is home to some of the world last intact terrestrial and aquatic  ecosystems, with abundant populations of mammals and birds.  Scattered throughout this northern forest are hundreds of indigenous communities.  With over 200 billion tons of carbon dioxide equivalent tied up , this is a crucial carbon sink or storage area.  The world’s policy makers are just becoming aware of the incredible importance of these forests.   The carbon stored here is equivalent to over 40 years of world greenhouse gas emissions .

By asserting their claims to this traditional land, First Nations will be able to negotiate sustainability management plans with government that allow for the generation of forest-based offsets.  The monetization of these offsets can be put into sustaining thes ecosystems as well as sustainable community development. Many green jobs can be created with community members actively managing and protecting the forests.   Large scale ecosystems-based management schemes are being developed now, with the Great Bear Rainforest being a great example of evolving best practice for management and governance.

Shawn Burns, CEO Carbon Credit Corp.

Carbon Hunters

Thursday November 26, 2009 at 8 pm on CBC-TV

Repeating: Friday November 27, 2009 at 10 pm ET/PT on CBC News Network