The international community should enable rainforest countries to halve deforestation by 2020 and make the global forest sector ‘carbon neutral’ by 2030. This is the recommendation of an independent report to the British Prime Minister published today.
The Eliasch Review, Climate Change: Financing Global Forests, is an independent report commissioned by the Prime Minister and led by Johan Eliasch, Special Representative on Deforestation. It provides a comprehensive analysis of the financing and mechanisms needed to support sustainable management of forests and reduce emissions associated with deforestation. The Review finds that the international community should aim to support forest nations to halve deforestation by 2020 and make the global forest sector ‘carbon neutral’ by 2030 – i.e. with emissions from forest loss balanced by new forest growth. Reducing emissions from deforestation should be fully included in any post-2012 global climate deal at Copenhagen.
National Governments should develop their own strategies to combat deforestation in forest countries, including establishing baselines, targets and effective governance and distribution of finances. In the long term, the forest sector should be included in global carbon markets. Public and private sector funding will be needed in the short to medium term as carbon markets grow. The international community should provide support for capacity building where necessary. Total capacity building costs are estimated at up to $4 billion over five years for 40 forest nations. Mr Eliasch said: “Saving forests is critical for tackling climate change. Without action on deforestation, avoiding the worst impacts of climate change will be next to impossible, and could lead to additional climate change damages of $1 trillion a year by 2100. Including the forest sector in a new global deal could reduce the costs of tackling climate change by up to 50% and therefore achieve deeper cuts in emissions, as well as reducing poverty in some of the world’s poorest areas and protecting biodiversity. “Deforestation will continue as long as cutting down and burning trees is more economic than preserving them. Access to finance from carbon markets and other funding initiatives will be essential for supporting forest nations to meet this challenge.” Energy and Climate Change Secretary Ed Miliband welcomed the report: “Deforestation accounts for almost a fifth of global carbon emissions. I welcome this report’s contribution to the global debate about how we address this. It will help us chart a course to reduce deforestation, help the world’s poorest people and cut carbon emissions. I hope it can help the vital process of securing agreement on climate change in Copenhagen.” International Development Secretary, Douglas Alexander said: “With more than a billion of the poorest people on our planet dependent on forests to provide them with a livelihood, today’s report highlights the challenges we face in reconciling the short-term interests of individuals with the global challenge of tackling climate change.” Prime Minister Sir Michael Somare of Papua New Guinea said: “Papua New Guinea welcomes the Eliasch Review as it highlights the fundamental role of carbon markets over the medium to long term while emphasising the need for a comprehensive approach in the shorter term.  Within the context of the current global financial instability, we must urgently identify mitigation strategies that are lower-cost and quickly implementable – reducing emissions from deforestation in developing countries offers exactly that potential! Accordingly, on behalf of the Coalition for Rainforest Nations, we will work closely with Prime Minister Brown to take forward the best ideas from this Review.” Foreign Minister Bruno Stagno-Ugarte of Costa Rica said: “The Costa Rica experience supports many of the findings from the Eliasch Review – with dedicated resources, creative institutions and a sound legal framework, deforestation can be reversed and forest cover expanded.  For Costa Rica to be successful towards our goal of carbon neutrality by 2021, we will require international support to scale-up our efforts to conserve existing forests and increase reforestation and restoration activities.  Only through an integrated approach to forestry, can we push back the effects of climate change. Today we have a historical opportunity to make things right and correct the mistakes of the past.” Foreign Minister Hassan Wirajuda of Indonesia said: “As the world acknowledged last year in Bali, we cannot win the battle against climate change unless tropical forests are fully integrated within a post-2012 agreement. The necessary methodologies and technologies exist. What remains is capacity building and the mobilisation of the necessary international resources.

We look forward to working with the Government of the United Kingdom on the important issues of tropical forestry and climate change.” Norwegian Minister of the Environment and International Development Erik Solheim said: “The Norwegian government welcomes the Eliasch review as an important contribution to the discussion of developing a mechanism for including deforestation and forest degradation in a new climate regime. We look forward to working with Prime Minister Brown, the British government and other partners to take this vital effort forward.” The full report can be seen online at www.occ.gov.uk.  Gordon Brown commissioned Johan Eliasch to produce the Eliasch Review, in his capacity as Special Representative on deforestation and clean energy.

The Eliasch Review is an independent report to government. It aims to provide a comprehensive analysis of international financing to reduce forest loss and its associated impacts on climate change. It does so with particular reference to the international debate surrounding the potential for a new global climate change deal in Copenhagen at the end of 2009. The Review draws on a large amount of existing research, responses to a stakeholder consultation and visits to various countries. A range of new research and analysis was undertaken by the review and commissioned from external experts. Summaries of some of this research are available at www.occ.gov.uk

Payments from polluters in rich countries to tropical communities in exchange for slowing deforestation may soon play a bigger role in combating climate change if problems like measuring preservation efforts can be overcome. It’s a bit of a minefield,” Michael Brune, the executive director of nonprofit group the Rainforest Action Network, told the Reuters Global Environmental Summit in New York. He said there are plenty of opportunities to attract funds to protect key ecological areas, but enforcement of laws to preserve them amid illegal logging and clearing is difficult. “But I would say the benefits outweigh the threats.”Carbon brokers in New York and London have begun working on deals in which greenhouse gas polluters in rich countries would attempt to reduce their carbon footprint by paying communities in developing countries to slow tree felling rates. They have been spurred by recent data showing that the burning and clearing forests to create everything from pastures to palm oil plantations, in areas from the Amazon to Aceh province in Indonesia, releases nearly 20% of the world’s greenhouse gas emissions.
A new United Nations climate treaty could make such trade official and greatly raise the value of such deals. Tropical nations could get billions of dollars and huge amounts of carbon dioxide could be saved from reaching the atmosphere, cutting the odds of an increase in everything from stronger storms to droughts. But there are also many risks, including difficulties in monitoring forest preservation, the planting of forest stands that lack biodiversity, and backlash from local groups. In Barcelona on Wednesday, an international alliance including 250 representatives from business, trade unions forestry companies, governments and local and indigenous peoples, laid down guidelines for such trade.

Wood chip costs in Western US, which have been some of the highest in North America, declined 13% in the 3Q, but are currently still 25% higher than a year ago. Another region in the US that has experienced substantial fibre cost changes this year is the Northeast, where hardwood log prices have increased for five consecutive quarters and currently are 45% higher than a year ago. Pulpmills in Maine are struggling to supply their mills with wood fibre, and they now have the highest hardwood log costs in North America. Due to the local fibre shortage, mills are importing logs from neighboring states, Canada and as far away as the Lake States.

With the hurricane season more intensive than usual, wood raw-material supply flow for both pulpmills and sawmills in the US South were interrupted in the 3Q. Heavy rainfall that followed the severe winds has drastically reduced both logging activity and the transport of logs. Late summer and early fall is typically the season when pulpmills build their log inventory for the winter season. Unless logging can be increased when hurricane season is over, wood fiber supply may be tight next spring. There is still time to catch up in terms of inventory building, but much depends on when the weather improves. In addition to better logging conditions, there is also the issue of finding enough loggers and truckers to move the wood. This is becoming an increasing problem in the US South and many wood consumers are worried that this will not only be a problem this fall but also in the coming years. However, the current financial crisis and the increasing unemployment rates could potentially make it easier to recruit personnel to the forestry sector.

Many pulpmills in the hurricane-impacted regions have reached out further to source their logs this fall. Pulpwood stumpage prices were practically unchanged this quarter, so landowners continue to experience lower stumpage prices for both sawtimber and pulpwood in 2008 than last year. Despite the recent price increases, pulpmills in the US South have benefited from fairly stable wood fibre costs the past 15 years. Since 2002, softwood chip prices have gone up by 18% compared to the WRQ Global Average Conifer Fibre Price, which has gone up almost 40%.

Pulpwood and wood chip market updates are included in the 24-page publication North American Wood Fiber Review. The report, established in 1982 and with readers in most of the large forest companies in North America, tracks wood chip and pulpwood prices in 15 key markets of the US and Canada. Wood Resources International mailto:info@wri-ltd.com– www.woodprices.com

The Vale Florestar project, one of mining company Vale’s main environmental projects in the north of Brazil, will benefit 300 Mha in the southeast of Pará. It will enable CO2 sequestration in record volumes. Altogether, more than 11 million seedlings have already been planted and 40,000 ha have been recovered; 15,000 to plant eucalyptus and 25,000 for reforestation of the native woods in the region.Vale Florestar, initiated in 2007, is the largest environmental recovery project established in the Amazon.
By 2015, it will receive $300 million in investments, of which $60 million will be provided by the end of the year. Today Vale helps to protect nearly 3 billion trees around the world, most of them in the Amazon.

Wood fibre prices worldwide have been rising steadily for the past six years, reaching record levels in 2Q/08. Expanding demand for renewable energy may potentially drive prices even higher in many countries in the near future, according to Håkan Ekström, president of Wood Resources International. Since 2002, global average prices for pulpwood have risen 67% for softwood and 64% for hardwood, in US dollar terms.

To date, most pulpwood has been consumed by the pulp and paper sector, with smaller amounts used to produce wood-based panels such as MDF (medium density fiberboard). The hot new market for wood fibre is that of biomass energy; demand in both Europe and North America is expected to soar over the next five to ten years. With the supply of wood fibre relatively inelastic, at least in the short term, this sudden new demand would normally be expected to push wood prices to unprecedented new heights. However, Ekström points out that the availability and cost of ocean transport may restrict international trade in wood fibre to a great extent. “A lot of new power projects are being developed with the expectation that “waste wood” will be both relatively inexpensive and vessels for transport will be readily available. Both assumptions may prove to be highly optimistic.”

Pulpmills in both Europe and the Pacific Rim are increasingly sourcing their mills with wood from fast-growing plantations in the Southern Hemisphere. This has resulted in a major expansion of worldwide trade of both wood chips and pulplogs the past few years.

Global trade of wood chips has more than doubled in 20 years, reaching 31 Mt in 2007. Just since 2003, total trade has increased by almost 30%. This development is the result of a tighter wood supply in close proximity to many pulpmills in the Northern Hemisphere, higher costs for locally sourced wood fibre and relatively lower-cost alternatives in new supply regions. The question is… will wood chip trade continue to increase?

Wood Resources International, in cooperation with DANA Ltd and Pike & Co, is organising a conference with the focus on bringing together plantation forestry owners, woodchip suppliers, transportation experts, and end-users including pulp mills and biomass buyers, in order to answer questions about global wood availability and costs. This meeting, the Third International Pulpwood Conference, will be held in Singapore, October 19-21, at the Grand Copthorne Hotel. Due to the “tug-of-war” which is developing between fiber markets in Europe and Asia, some 200-250 delegates from 25 countries are expected to attend the meeting.

For more information on the conference, see www.pulpwoodconference.com.