Deforestation and Climate Change

Deforestation and Climate Change

Reducing Carbon Emissions from Deforestation and Forest Degradation

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Valentina Bosetti and Ruben Lubowski

Deforestation and forest degradation have long been recognized as environmental problems, with concerns over conservation of natural habitats and biological diversity capturing both scientific and public attention. More recently, the debate over tropical forest conservation has radically shifted to the approximately fifteen percent of global greenhouse gas emissions that are caused by deforestation and forest degradation, and to the potential synergies from integrating forest management with climate change policies.

Chapter 3: The European Union’s Position on REDD Financing

Pedro Piris-Cabezas

Subjects: economics and finance, environmental economics, environment, climate change, environmental economics


Pedro Piris-Cabezas As a leader in global climate policy with the largest current compliance market for greenhouse gas (GHG) reductions, the European Union (EU) has been particularly important in shaping international debates on REDD and determining near-term opportunities for REDD financing. Since early in the REDD financing debate, the EU has favored a fund-based funding mechanism over direct trading of REDD credits on GHG compliance markets. Such a fund-based approach was already reflected in the EU energy and climate package proposal as introduced by the European Commission (EC) in January 2008, which calls Member States to voluntarily earmark a share of the revenues from the auctioning of emissions allowances issued under the EU emission trading scheme (ETS) – the flagship of the European climate change policy – to a set of priorities including deforestation and other forest activities in third countries. The package aims at setting the EU on the path to a low carbon economy by establishing, inter alia, unilateral economywide targets through 2020 for greenhouse gas emissions and therefore providing continuity and stability to the EU ETS. This chapter provides an overview of the EU’s evolving position on REDD financing. The EU position on REDD financing was conditioned by the need to craft legislation that accounted for a potential lack of emissions reductions on the part of the United States of America and/or the economically more advanced developing countries, and by the desire to safeguard the objectives of the EU ETS. The EU energy and climate package not only established...

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