Saving Trees Can Earn $13.5 Billion in Carbon Market (Update1)

By Jim Efstathiou Jr.

April 7 (Bloomberg) -- Using carbon trading to help save trees could generate billions of dollars a year for tropical forest conservation, said Johannes Ebeling, a senior consultant with emissions-credit developer EcoSecurities Group Plc.

Polluters seeking to offset harmful emissions and burnish their environmental reputations would buy credits generated by preserving trees in a carbon-trading system. Local villages would receive payments once they demonstrate trees haven't been cleared.

Reducing the loss of forests by as little as 10 percent could generate as much as $13.5 billion a year for conservation, Ebeling and Mai Yasue, a researcher at the University of British Columbia in Vancouver, wrote in a report today in the U.K. journal Philosophical Transactions of the Royal Society B.

``We need to give people some sort of a reliable framework to start investing,'' Ebeling said in an interview. Dublin-based EcoSecurities develops emissions-reducing projects that can be certified as credits and can trade in the European Union carbon market.

The loss of rainforests accounts for about 20 percent of global carbon-dioxide emissions, the largest source of greenhouse gases in the developing world, according to the report. Industrialized nations should reward developing countries for saving forests though carbon trading in a new climate-change treaty beginning in 2012, the researchers said.

Forestry Side

``Some of the least costly efforts that can be made are linked to land use and tropical forests,'' Gro Harlem Brundtland former prime minister of Norway and UN special envoy on climate change, said today at a conference in New York. ``There has been little action and little potential to use and to really take the benefits of doing something on the forestry side.''

The Kyoto Protocol, an accord among industrialized countries to limit global-warming gases, expires in 2012. The treaty doesn't allow countries to use carbon credits from forest-saving projects to meet pollution targets.

``There's a very, very broad consensus to include avoided deforestation in the post-2012 agreement,'' Ebeling said.

Trees store carbon dioxide, which they use to convert sunlight to chemical energy. Deforestation is the world's third- largest source of carbon emissions after fossil fuel use and industrial operations, according to the United Nations.

Rising global temperatures driven by human emissions of greenhouse gases are causing Arctic ice to melt and rainfall to decline in parts of Africa and the Mediterranean, the UN Intergovernmental Panel on Climate Change said last year.

Hotel Guests

Carbon credits for saving trees may be created and sold only if a forest faces imminent threat, and if questions surrounding the permanence of emission cuts can be resolved. Answering those concerns depends ``on countries wanting this agreement and being willing to compromise,'' Ebeling said.

Marriott International Inc., the world's largest hotel company, said today it will spend $2 million to help preserve a 1.4 million-acre rainforest in Brazil. Funding will go to the Amazonas Sustainable Foundation, which will seek to certify the project for tradable carbon credits, the Bethesda, Maryland- based company said in a statement.

By the end of 2008, Marriott guests will be able to offset heat-trapping pollution generated by their hotel stay by contributing to the fund. Power used in guest rooms and public spaces at the company's almost 1,000 managed hotels generates 2.9 million metric tons of carbon dioxide a year, Marriott said.

Credit Sales

In February, plans were announced to save the 1.9 million- acre Ulu Masen forest in Indonesia's Aceh province through carbon trading. Because credits from saving forests may not be used to meet binding carbon targets, the proposal hinges on credit sales to companies and individuals seeking to offset emissions.

Merrill Lynch & Co. has reached a deal with Carbon Conservation, a sponsor of Ulu Masen, to broker credits from the project, said Abyd Karmali, global head of carbon emissions at Merrill Lynch. Credits representing 3.3 million tons of carbon a year could flow from efforts to save trees in Ulu Masen.

``It's great that people like Merrill Lynch are moving forward,'' Ebeling said. ``I really hope that they will do it in a way that is compatible. Unfortunately, you can't really guarantee that. That's why a lot of people are holding back.''

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net.

Last Updated: April 7, 2008 16:00 EDT

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