Forest sector seeks inclusion in emissions trading

Forestry could be included in emissions trading from 2013, experts believe. According to the Stern Report, the sector holds great potential since deforestation contributes more to global warming than transport.

Forest-based industries – wood and paper – are seeking greater recognition from policymakers as contributing to global warming mitigation both in Europe and in developing countries.

Experts say that the benefits are potentially huge as forest-based products have the ability to store carbon dioxide: “One cubic centimeter of timber equals one tonne of CO2 that is stored,” says Dr. Bernhard Schlamadinger, a consultant to the UNFCCC secretariat, the World Bank and the FAO. Forests, he adds, “are a net remover of carbon”.

But UN and EU legislation currently does not allow reforestation projects in Brazil or Central Europe to be included in the Kyoto protocol’s project mechanism – clean development and joint implementation (CDM/JI).

“When the [EU Emissions Trading Scheme] directive was decided in 2001, it was just a few months before the UN climate convention took the final decision on forestry,” says Schlamadinger, who also works at the Joanneum Reasearch Institute, a large state-owned Austrian R&D firm. 

“So the timing was a bit awkward. That was one of the reasons why the [EU Emissions Trading Scheme] excludes forestry.”

But he hopes that this can change soon, possibly with a new Commission proposal to include aviation in the ETS, due out before the end of 2006.

“We hope to piggy-back on other changes that might occur in the EU-ETS,” says Schlamadinger. “Realistically, I think inclusion by 2013 can be achieved. Whether we can do it with aviation remains to be seen.”

However, he admits there is still a lot of convincing to do. “It is not in the radar screen of people in [the Commission’s] DG environment,” Schlamadinger says.

“The parliament has actually mandated the European Commission to find ways of including forestry,” something that Schlamadinger says is “written in the linking directive”. But, he adds, this “has not been fulfilled yet”.

Forest industries are keen to underline the many benefits they can bring to energy and climate policies as they make their way to the top of the European and global agenda.

"Based on its rich forest resources, Europe has a unique opportunity to increase the production of biofuels for transport as well as biochemicals," said Jussi Pesonen, President and CEO of UPM-Kymmene, one of the leading forest companies in the world.

UPM says it plans to strongly increase its stake in second generation bio-diesel in the next few years and prepares to become a significant producer of bio-fuels. "The importance of renewable fuels is increasing, and we consider this an opportunity to further utilise our existing value chain and be part of the future development," said Pessonen.

But at the same time, he insists that a strict hierarchy be maintained in the use of wood. Biofuels, he says, are an opportunity only if the wood fibre is used primarily for pulp or paper production. "These in turn can be reused and recycled and used for energy purposes at the end of the product lifecycle," he says.

Recycling for energy production, Pesonen continued, would come "in addition to forest biomass" derived from wood residues of the forest industry (branches, chips).

However, Pesonen admits that the use of wood biomass can only be limited. The share of wood energy in total EU primary energy consumption stood at only 3.2% in 2004. But Pesonen says the use of wood and wood byproducts in electricity and heat is growing rapidly, at more than 20% per annum.

"The use of wood energy is logically greater in large forest countries like Sweden, Finland, and Austria where activity sectors linked to biomass are especially significant."

Although generally welcome, the development of bioenergy is causing unease with the pulp and paper industry which uses wood fibres for paper production and wood residues as a source of energy.

"As the price of biomass goes up, it starts to compete with the price of the fibre wood" used in paper production, explains Harri Karjalainen from WWF Finland. "So instead of bringing the harvested wood to the pulp mill, the lorry goes to the energy plant where the trees are burned."

The UN Framework Convention of Climate Change (UNFCCC) currently does not foresee concrete actions to include forestry in global-warming mitigation measures. But this could soon change, with the growing recognition of deforestation as a major contributor to global warming.

Sir Nicholas Stern's Report on the economics of climate change came to a stunning conclusion: the loss of natural forests around the world contributes more to global warming emissions than the transport sector (EURACTIV 31/10/06).

Deforestation is an issue chiefly outside Europe (South America, Asia). According to the Finnish Forest Industries Federation, the loss of forests globally is fourteen million hectares per year. But in Europe and North America, forests are growing at a rate of around one million hectares per year.

The conference of the parties to the UNFCCC agreed in November 2006 to explore a proposal by Brazil that would provide incentives to reduce deforestation emissions in developing countries (EURACTIV 20/11/06). The issue will be further explored in March 2007 at a meeting in Bonn. A review of the Kyoto Protocol is scheduled to take place in 2008.

December 2006: Commission proposal to include aviation in the EU-ETS 

March 2007: UN to explore a proposal from Brazil to include reforestation in Kyoto-based projects

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