Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Addressing the challenges of deforestation and forest degradation to tackle climate change and biodiversity loss {SEC(2008) 2618} {SEC(2008) 2619} {SEC(2008) 2620}
Date: 2008-10-17
Institutions: European Commission
Subjects: EU action, EU environmental policy, climate change, deforestation, environmental monitoring, forest conservation

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 17.10.2008 
COM(2008) 645 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Addressing the challenges of deforestation and forest degradation to tackle climate 
change and biodiversity loss 

{SEC(2008) 2618} 
{SEC(2008) 2619} 
{SEC(2008) 2620} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Addressing the challenges of deforestation and forest degradation to tackle climate 
change and biodiversity loss 

(Text with EEA relevance) 

TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

5. 

5.1. 

5.2. 

SUMMARY ................................................................................................................. 3 

THE CHALLENGE OF DEFORESTATION AND FOREST DEGRADATION...... 4 

The pace and magnitude of deforestation and forest degradation................................ 4 

The causes of deforestation.......................................................................................... 4 

The impacts of deforestation........................................................................................ 5 

ADRESSING THE CHALLENGES OF DEFORESTATION.................................... 6 

A proposed EU global objective .................................................................................. 6 

Areas for action ............................................................................................................ 6 

THE CONTRIBUTION OF EU POLICIES ................................................................ 7 

Strengthening existing policies .................................................................................... 7 

Scale, sources of funding and mechanisms to meet the deforestation challenge......... 9 

DEFORESTATION IN THE UNFCCC CONTEXT ................................................ 11 

The short-term response: establishing a Global Forest Carbon Mechanism.............. 11 

The longer-term perspective: testing the inclusion of deforestation in carbon markets
.................................................................................................................................... 12 

6. 

PREPARATORY ACTIONS..................................................................................... 12 

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1. 

SUMMARY 

Forests cover roughly 30% of the world's land area and deliver a multitude of economic and 
social  benefits.  They  offer  major  environmental  benefits  related  to  biological  diversity  and 
climate change. Tropical forests are amongst the most important habitats for biodiversity and 
provide  crucial  eco-system  services  such  as  water  purification  and  erosion  prevention.  The 
livelihoods  of  1.6  billion  people  depend  on  forest  resources  to  some  extent  and  60  million 
indigenous people depend directly on forests for their survival. Forests also store significant 
amounts  of  CO2,  thus  preventing  further  increases  in  concentrations  of  greenhouse  gases  in 
the atmosphere.  

Forests  are  under  threat  from  deforestation  and  degradation.  According  to  FAO  estimates 
some 13 million hectares of forests are lost every year. Deforestation accounts for some 20% 
of global carbon dioxide (CO2) emissions (IPCC, 2007) – more than total EU greenhouse gas 
emissions.  Reducing  emissions  from  deforestation  will  therefore  be  essential  in  order  to 
achieve  our  objective  of  limiting  global  warming  to  2  degrees  Centigrade.  It  is  also  a  cost-
effective  way  to  combat  climate  change.  Protecting  forests  will  have  additional  benefits  for 
biodiversity and for the livelihoods of the poor. 

The time is right for decisive action. At the core of the proposed EU response is the objective 
to halt global forest cover loss by 2030 at the latest and to reduce gross tropical deforestation 
by at least 50 % by 2020 compared to current levels.  

Deforestation has taken centre stage in the UN climate negotiations (Bali Action Plan1). The 
road  to  a  climate  agreement  in  Copenhagen  provides  a  unique  opportunity  to  tackle  the 
deforestation  challenge. The EU should  heed the call for action. The proposals presented in 
this  Communication  should  form  the  basis  of  the  EU  position  at  the  upcoming  climate 
conference in Poznan. 

In  early  2009  the  Commission  will  be  presenting  a  Communication  covering  the  EU’s 
mandate  for  the  Copenhagen  negotiations.  In  line  with  the  EU  Summit  conclusions  of  June 
2008  this  will  include  a  comprehensive  strategy  for  scaling  up  finance  to  combat  climate 
change, including deforestation. To succeed in Copenhagen, the EU will need to pool efforts 
and resources, and present a united front to rally the support of partner countries. 

To  combat  deforestation  a  number  of  EU  policies  need  to  be  reinforced.  Moreover,  in  the 
context of current climate negotiations two concrete and ambitious proposals are suggested:  

(i)  establishing  a  new  instrument  to  generate  significant  funding  to  tackle  deforestation  and 
forest  degradation,  the  Global  Forest  Carbon  Mechanism;  (ii)  testing  the  inclusion  of 
deforestation in carbon markets. 

This Communication is not intended to give definitive answers to the many issues related to 
deforestation.  Its  objective  is  rather  to  set  out  the  main  lines  of  an  EU  response,  to  invite 
significant contributions from all stakeholders, and to set in motion a series of initial actions 
that will provide the foundations for a viable global response to deforestation.  

1 

http://unfccc.int/files/meetings/cop_13/application/pdf/cp_bali_action.pdf 

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2. 

THE CHALLENGE OF DEFORESTATION AND FOREST DEGRADATION 

2.1. 

The pace and magnitude of deforestation and forest degradation 

The world lost over 3% of its forest cover between 1990 and 2005. The annual loss amounts 
to 13 million hectares (FAO, 2005), an area approximately the size of Greece. Some 96% of 
recent deforestation has occurred in tropical regions (Fig. 1) and the largest net forest cover 
loss  between  2000  and  2005  was  recorded  in  ten  countries2  (FAO,  2007).  Over  the  same 
period, forest cover has increased in other regions, including the EU, Japan and China while it 
has  been  relatively  stable  in  India.  Because  of  their  global  impact  on  climate  and  for  the 
biodiversity values contained3, tropical forests must be the prime focus of action. 

The  degradation  of  tropical  forests  is  a  related  issue  that  also  has  major  impacts  on  climate 
and  biodiversity.  Degradation  takes  different  forms,  is  difficult  to  define4  and  is  not  always 
accurately measurable. Although it cannot be treated in the same way as deforestation, it must 
be addressed if any strategic approach on forests is to be coherent and comprehensive.  

Figure 1: World areas where deforestation is occurring. Areas in red show the main active deforestation fronts 
(Source: MEA, 2005) 

2.2. 

The causes of deforestation 

Drivers  of  deforestation  are  diverse,  complex  and  act  in  various  combinations  in  different 
geographic  locations5.  The  most  important  direct  cause  of  forest  destruction  is  typically 
changes  in  land  use.  Profitable  alternative  uses  of  land  with  a  high  market  value,  such  as 
obtaining  commodities,  provide  incentives  for  deforestation.    In  many  cases  infrastructure 
development  can  also  contribute  to  deforestation.  The  most  important  underlying  cause  is 
ineffective governance, linked to poorly enforced land -use policies and uncertain land-tenure 
regimes.  To  be  effective  any  global  approach  to  deforestation  will  have  to  address  these 
drivers directly.  

2 

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4  

5 

Brazil,  Indonesia,  Sudan,  Myanmar,  Zambia,  United  Republic  of  Tanzania,  Nigeria,  Democratic 
Republic of the Congo, Zimbabwe, Venezuela.  
About half of the world plant and animal species are found in tropical forests, many of which threatened 
with extinction  
The FAO defines it as "the long term reduction of the overall supply of benefits from the forest, which 
includes carbon, wood, biodiversity and other goods and services". 
More information is available in the Impact Assessment. 

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2.3. 

The impacts of deforestation 

Deforestation has various negative, environmental, economic and social impacts, particularly 
on climate, biodiversity and poverty6.  

Deforestation accounts for some 20% of total CO2 emissions (approximately 5.8 Gt – see fig. 
2)7.  In  addition  to  the  release  of  CO2  from  trees  through  decomposition  of  biomass  and 
burning, it also generates emissions from soil, for example, the burning of deep peat soils in 
deforested areas. Other impacts on climate include changes to the amount of energy reflected 
by the earth’s surface,  and  the  complex interaction  that forests have  with  the  chemistry  and 
hydrology of the atmosphere 

Figure  2:  GHG  emissions  by  sector  in  2004.  Data  for  forestry  include  CO2  emissions  from  deforestation; 
decomposition  of  above-ground  biomass  that  remains  after  logging  and  deforestation;  peat  fires  and  decay  of 
drained peat soils (IPCC 2007) 

waste and wastewater

forestry

agriculture

industry

residential & commercial
buildings

transport

energy supply

It is also a major driver of biodiversity loss. Tropical forests in particular host about half of all 
terrestrial  species  and  play  a  central  role  in  the  functioning  of  the  biosphere.  Continued 
deforestation will result in significant biodiversity loss, including extinction of species and the 
associated loss of goods and services (Sukhdev et al. 2008). Under business as usual the value 
of the forest-related goods and services lost by 2050 has been projected at 5% of global GDP 
(COPI, 2008). 

Finally,  deforestation  removes  the  protection  which  natural  forests  provide  against  storms, 
floods  and  extreme  fluctuations  in  local  weather  patterns.  It  can  also  have  negative  social 
impacts  on  poverty,  not  just  because  many  of  the  world’s  poor  depend  on  forests  for  their 
livelihoods,  but  also  because  of  the  ecosystem  services  which  forests  provide.  The  negative 
impact of deforestation on human health through increases in air pollutants and the spread of 
insect-borne diseases like malaria is also significant.   

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Cfr. , footnote 4. 
IPCC estimates for the 1990s. 

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3. 

ADRESSING THE CHALLENGES OF DEFORESTATION  

3.1. 

A proposed EU global objective 

Meeting the EU's objective of limiting climate change to 2°C above pre-industrial levels will 
require a cut of global emissions by at least 50% below 1990 levels by 2050. This reduction is 
impossible without substantial action to combat deforestation.  

It is proposed that in the UNFCCC negotiations on the future climate regime the EU aims to 
halt global forest cover loss by 2030 at the latest and to reduce gross tropical deforestation by 
at least 50 % by 2020 compared to current levels. This objective will be pursued within the 
UNFCCC  negotiations  and  is  expected  to  deliver  major  climate  change  and  biodiversity 
benefits by 2020. 

3.2. 

Areas for action 

Figure  3  shows  the  significant  mitigation  potential  of  these  measures  by  2030  in  different 
regions of the world, up to a market price of carbon of €40 per tonne of CO 2: 

Figure 3: Forest-related greenhouse gas mitigation potential across world regions 

The EU needs to take a leading role to shape the global policy response to deforestation. The 
Community and Member States must work together to pool resources and ensure that actions 
are complementary. The battle against deforestation must be fought on several fronts: 

Firstly, strengthening forest governance and institutions at local and national level is a pre-
condition for any effective policy response. 

Secondly, it should be explicitly recognised that one of the main drivers for deforestation is 
economic. Forests are destroyed  because it is more profitable in the short run to use land for 
other purposes than to keep them standing. An effective policy has to reward the value of the 
services provided by forests.  

Thirdly, a comprehensive policy on deforestation cannot disregard the demand side and the 
responsibility  of  consumers.  Certain  internal  and  external  EU  policies  can  be  used  to  help 
achieve the overall objective. 

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Fourthly, because deforestation is a global issue requiring a global solution, the aim being to 
stabilise CO2 emissions at an acceptable level and to halt biodiversity loss, the international 
climate negotiations provide a unique opportunity to get to grips with deforestation. The UN 
Convention  on  Biological  Diversity  should  feed  biodiversity  considerations  into  the 
negotiations8. 

Fifthly,  if  policy  is  to  be  designed  and  implemented  properly,  it  must  be  based  on  high-
quality  information.  Existing  forest  monitoring  and  assessment  programmes  are  neither 
complete nor integrated. A more comprehensive science-based approach is required to guide 
policy decisions and monitor implementation. 

4. 

THE CONTRIBUTION OF EU POLICIES 

4.1. 

Strengthening existing policies 

Forestry-relevant policies are not confined to the forest sector. Many internal and external EU 
policies  have  indirect  impacts  on  deforestation  sometimes  encouraging  over  exploitation  or 
shifts in land use that directly contribute to deforestation. Different sectors and policies - such 
as  trade,  energy,  agriculture,  food  security  and  development  cooperation–can  play  a 
significant role in helping to conserve world's forests. 

4.1.1.  EU policies to promote sustainably produced timber and timber products  

The EU is a major consumer of timber and timber products from around the world.  In 2005, 
83 million m3 of timber and timber products were imported into the EU market9. Imports of 
illegally harvested timber and timber products10 are estimated at 16 million m3, accounting for 
more than 19% of imports from all countries11.  

The EU can help promote sustainable forest management in various ways: 

a) 

b) 

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Through the Forest Law Enforcement Governance and Trade Action Plan, which has 
as its centre-piece the development of Voluntary Partnership Agreement (VPA) with 
timber  producing  countries.  This  will  ensure  that  exports  from  these  countries  are 
covered by a license attesting that the timber has been harvested legally. The VPAs 
also  establish  a  framework  for  addressing  governance  and  law  enforcement 
challenges,  which  are  often  at  the  root  of  problems  of  deforestation  and  forest 
degradation. As such there is a strong synergy between FLEGT and efforts to tackle 
deforestation.  

Another measure (under the FLEGT Action Plan) is a Regulation that lays down the 
obligation  of  EU  operators  to  minimise  the  risk  of  illegally  harvested  timber  and 
timber  products  entering  their  supply  chain.  The  Commission  has  proposed  a 
Regulation to achieve this objective.  

UNCBD  COP  9  created  an  Ad  Hoc  Technical  Expert  Group  (AHTEG)  on  Biodiversity  and  Climate 
Change to provide biodiversity relevant information to the UNFCCC processes. 
excluding pulp and paper. 
All wood products excluding pulp and paper. 
Including imports from non-tropical countries. COMTRADE, 2007; Turner et al., 2007.  

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c) 

d) 

e) 

f) 

g) 

h) 

Reducing emissions from deforestation is also one of the priority areas of the Global 
Climate  Change  Alliance  (GCCA),  which  the  EU  launched  and  which  focuses  on 
poor developing countries. It provides a platform for policy dialogue and exchange 
of  good  practices  on  how  to  tackle  the  combined  challenge  of  the  fight  against 
poverty and climate change. It works in support of the international negotiations on a 
post-2012 Climate Change Agreement. 

By  continuing  to  provide  input  to  existing  international  fora,  such  as  the 
International Tropical Timber Organisation, the Convention on International Trade in 
Endangered Species of Wild Fauna and Flora (CITES) and the UN Forum on Forests 
(UNFF),  and  giving  further  consideration  to  the  2015  review  of  the  UNFF  Non-
Legally Binding Instrument on Forests. 

Through green public procurement (GPP) policies, under which public authorities in 
the EU can generate demand for sustainably and legally harvested timber.  

By promoting instruments like eco-labelling and by encouraging forest certification 
schemes as well as private sector procurement favouring sustainable timber; and  

By  developing  sustainability  criteria  for  wood  and  other  biomass  used  for  the 
generation of renewable energy. 

European  initiatives  such  as  the  Global  Monitoring  for  Environment  and  Security 
(GMES)12  and  the  Tropical  Ecosystem  Environment  observation  by  Satellite 
(TREES)  project  can  play  an  important  role  in  monitoring  land-use  changes  and 
deforestation trends. 

4.1.2.  EU policies related to non-timber products 

There are linkages between demand for agricultural commodities and pressures on land use. 
There  is  also  a  tension  between  the  need  to  increase  food  production  and  the  need  to  halt 
deforestation. Agricultural production should be increased without further deforestation. This 
requires  substantial  investment  to  increase  yields  on  existing  farmland.  Stepping  up 
agricultural research to enhance agricultural productivity growth in developing countries in a 
sustainable manner should be pursued. 

The  development  of  biofuels  should  be  sustainable,  so  vigilance  is  needed  to  ensure  that 
further development of domestic production and imports does not jeopardise efforts to protect 
forests  or  broader  biodiversity  priorities.  Appropriate  criteria  to  achieve  this  are  being 
developed at EU level13. 

The  Convention  on  Biological  Diversity  is  preparing  guidance  on  the  biodiversity-related 
aspects  of  sustainability  of  biofuels  following  the  latest  Conference  of  the  Parties  in  Bonn 
(COP 9), and this should help in achieving international consensus. The Commission will play 
an active role in the follow-up process to make this a success.  

More generally on policy coherence, the Commission is committed to: 

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Now named Kopernikus, http://ec.europa.eu/kopernikus/index_en.htm 
COM(2008) 19. 

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– 

– 

– 

– 

– 

– 

the 

impact  of  future  EU  and 

assessing 
initiatives  on 
deforestation,  including  those  not  directly  linked  to  forests  and  timber/timber 
products; 

international  policy 

continuing  to  include  in  future  reviews  and  impact  assessments  of  trade  and 
agricultural  policy  agreements  a  specific  analysis  of  their  likely  impacts  on 
deforestation; 

conducting environmental impact assessment associated with country strategy papers 
developed to guide development assistance policy; 

studying the impact of EU consumption of imported food and non-food commodities 
(e.g.  meat,  soy  beans,  palm  oil,  metal  ores)  that  are  likely  to  contribute  to 
deforestation. This could lead to considering policy options to reduce this impact; 

improving  agricultural  productivity,  especially  by  stepping  up  research  to  improve 
the  productivity  and  sustainability  of  agriculture  in  developing  countries;  the 
Commission has decided to double its support for international agricultural research 
from 2008 to an average of € 63 million for each of the next three years;  

continuing  the  review  process  that  started  with  the  adoption  of  the  first  report  on 
Policy  Coherence  for  Development14,  which  is  important  in  helping  the  EU  to 
support  developing  countries  in  their  efforts  to  attain  the  Millennium  Development 
Goals. 

4.2. 

Scale, sources of funding and mechanisms to meet the deforestation challenge 

In order to successfully tackle deforestation, significant additional funding will be needed to 
provide the necessary assistance for capacity-building to developing countries and to provide 
incentives to counteract the drivers of deforestation. 

The cost analysis of forest protection contained in the impact assessment accompanying this 
Communication  concludes  that  an  estimated  amount  of  between  €  15  and  25  billion  per 
annum would be needed to halve deforestation by 202015. 

Further work is needed to quantify the financing needs, but it is clear that developed countries 
need to allocate considerable resources to help to tackle deforestation in developing countries 
under  the  future  international  climate  regime.  This  funding  will  complement  financial  and 
other  efforts  by  developing  countries  and  will  need  to  come  from  both  public  and  private 
sources. Funding mechanisms will only be effective if: 

•  developing  countries  are  first  provided  with  the  financial  and  technical  assistance 

necessary to build capacities and strengthen institutions; 

•  work is carried out to resolve remaining technical issues (e.g. monitoring and verification);  

•  performance can be assessed and rewarded against agreed baselines; and 

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Commission Staff Working Paper SEC(2008) 434  
Paragraph 5.2.2 of the Impact Assessment. 

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•  build  on  existing  and  proven  aid  delivery  practices  and  respect  the  principles  of  sound 

financial management. 

At the EU level, an appropriate level of funding from 2013 to 2020 would be required for the 
fight against deforestation, mainly in the form of support to developing countries for slowing 
down, stabilising and reversing deforestation and forest degradation.  

The  total  amount  of  funding  will  depend  on  the  level  of  mitigation  actions  undertaken  by 
developing countries.  

•  Recognition  of  forestry  credits  in  the  EU  emissions  trading  system  (ETS)  would  not  be 
realistic  at  the  present  time.  Emissions  from  deforestation  are  roughly  three  times  higher 
than the amount of emissions regulated under the EU ETS. As the EU ETS is currently the 
only  major  operational  trading  system  in  the  world,  allowing  companies  to  buy  avoided 
deforestation  credits16 would result in serious imbalances between supply and demand in 
the  scheme.  There  are  also  unresolved  monitoring,  reporting,  verification  and  liability 
questions. Forestry credits are temporary and will then have to be replaced after a certain 
period. This means that, if a company goes out of business, somebody would have to take 
on this liability to guarantee environmental integrity. 

For  these  reasons,  the  EU  should  consider  recognition  of  forestry  credits  for  EU  ETS 
compliance only as a complementary tool and in the longer term – i.e. post-2020 - provided 
that  certain  conditions  are  fulfilled  (especially  supply/demand  balance  and  liability). 
Furthermore,  once  other  emission  trading  systems  are  established  and  interconnected, 
generating increased demand for emission reductions, it may become feasible to use forestry 
credits to finance forest protection. 

•  However, a major portion of EU funding could come from proceeds from the auctioning of 
allowances  within  the  EU  ETS.  Indeed,  under  the  proposed  amendment  of  the  ETS 
Directive  of  January  200817,  at  least  20%  of  auction  proceeds  should  be  used  to  support 
climate objectives, including fighting deforestation. Recently, the European Parliament and 
the Council endorsed the use of proceeds from the auctioning of allowances in the aviation 
sector for reducing emissions, including by avoiding deforestation. 

It is estimated that auctioning allowances could generate annual revenue of €30–50 billion for 
EU Member States by 2020. If 5% of the auctioning revenue was earmarked to contribute to 
global efforts to combat deforestation , €1.5–2.5 billion could be raised in 2020.  

– 

A  response  to  deforestation  needs  support  beyond  incentive  schemes.  Funding  is 
required to improve governance and to resolve technical issues (such as monitoring 
using satellite and other technologies). European Community and EU Member States 
development assistance can play a role in addressing these problems. This assistance 
can be channelled through existing arrangements at national level as well as through 
international and multilateral arrangements established for this purpose.  

•  These sources of public funding should  be complemented by private funding. 

16  
17 

"Avoided deforestation" credits will be referred to as "deforestation credits" further on. 
COM(2008) 16. 

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5. 

DEFORESTATION IN THE UNFCCC CONTEXT 

The  EU  should  pursue  the  objective  of  establishing  an  internationally  supported  incentive 
scheme to reduce deforestation and forest degradation in developing countries as part of the 
future UNFCCC global agreement for the period 2013-2020. 

The  scheme  would  be  open  to  all  developing  countries  ratifying  the  future  agreement,  and 
able  to  contribute  to  the  globally  agreed  emission  reduction  objective  of  the  future 
international climate framework through the commitment to take national mitigation action in 
order to reduce emissions from deforestation and forest degradation.  

A two-track approach is proposed: 

(1) 

(2) 

establishing a Global Forest Carbon Mechanism;  

testing the inclusion of deforestation in carbon markets. 

5.1. 

The short-term response: establishing a Global Forest Carbon Mechanism 

The  EU’s  aim  would  be  to  enable  developing  countries  to  contribute  to  the  globally  agreed 
emissions  reduction  objective  by  taking  action  to  reduce  emissions  from  deforestation  and 
forest degradation. 

A Global Forest Carbon Mechanism (GFCM) should be established. While institutional and 
operational  details  would  have  to  be  worked  out,  and  in  this  regard  existing  arrangements 
would be considered for the GFCM to be effective the following points are essential: 

– 

– 

– 

– 

– 

– 

– 

Participation should be open to developing countries that ratify the future agreement 
and commit to action with a view to reducing deforestation under that regime. 

It  should  focus  on  reducing  emissions  from  deforestation  and  forest  degradation. 
Complementary  ways  need  to  be  found  to  assist  developing  countries  to  preserve 
their forests and to reduce the risk of international leakage.  

It should support capacity-building activities in developing countries. 

Nationwide implementation involving the entire forestry sector would be required to 
benefit  from  its  funds  so  as  to  minimise  the  risk  of  in-country  leakage  (in  large 
countries there could be regional implementation with regional disparities).  

It  should  take  account  of  the  need  to  secure  co-benefits,  such  as  protecting 
biodiversity  and  eradicating  poverty,  to  the  greatest  extent  possible.  Where  co-
benefits  can  be  assessed,  financial  incentives  could  potentially  be  directed  towards 
the  actions  with  the  highest  co-benefits.  Input  from  the  Convention  on  Biological 
Diversity's  work  on  climate  change  and  biodiversity  should  be  fed  straight  into  the 
UNFCCC negotiations. 

The  results  of  the  emission  reduction  efforts  must  be  assessed,  monitored  and 
accounted for at national level, with independent verification of these reductions. 

Financial support for action by a country against deforestation and forest degradation 
would be performance-based and provided on the basis of verified results.  

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– 

– 

It should require that effective forest governance structures are in place, and that the 
rights of the forest dependent people are respected.  

The  principle  of  common  but  differentiated  responsibilities  should  be  taken  into 
account when designing the financial support instruments under the Mechanism.  

5.2. 

The  longer-term  perspective:  testing  the  inclusion  of  deforestation  in  carbon 
markets 

Public funding is the most appropriate way to take forward a number of essential activities – 
in  particular  capacity  building,  technical  support  for  forest  governance  and  developing  the 
necessary  technical  know-how  to  monitor  and  enforce  commitments.  Public  funding  is  also 
the most realistic tool with which to provide incentives for combating deforestation over the 
period  2013  to  2020.  However,  it  is  not  the  only  mechanism  that  could  be  envisaged  to 
provide  such  incentives  and  the  EU  should  also  be  prepared  to  explore  the  possible 
contribution of well designed market approaches.  

Between  2008  and  2012  afforestation  and  reforestation  activities  are  recognised,  subject  to 
strict  quantitative  limits,  for  government  compliance  and  can  generate  credits  in  the  Clean 
Development Mechanism (CDM). This recognition, within current limits, should be continued 
post-2012.  In  addition,  the  Commission  will  test  the  recognition  of  deforestation  credits  for 
government compliance. Certain pre-conditions would need to be met before any inclusion 
of forests in carbon markets could be considered as a realistic option.  

1. 

2. 

3. 

There  would  need  to  be  an  international  agreement  with  ambitious  mid-term 
emission reduction commitments. This would be necessary to generate a sufficiently 
high  demand  for  emissions  reductions,  so  that  developed  countries  actually  reduce 
their emissions instead of simply offsetting them with carbon credits.  

As  with  CDM  afforestation  and  reforestation  projects,  the  additional  impact  of 
reduced deforestation on carbon emissions would need to be properly monitored and 
independently verified.  

The permanence of forestry credits, and liability, are matters that would need to be 
resolved.  For  these  reasons,  a  new  sectoral  market  mechanism  is  needed  to  avoid 
leakage problems and to ensure a benefit in terms of net-deforestation. 

Inclusion of forestry credits in the EU ETS should only be considered after a thorough review 
of  the  experience  of  using  deforestation  credits  for  government  compliance  and  for  the 
period after 2020. 

Full reliance on carbon value would focus solely on the services of forests as carbon stocks, 
while not rewarding other important services that forest ecosystems provide and whose value 
can be significantly higher. This is an issue that will also have to be resolved.  

6. 

PREPARATORY ACTIONS 

For a Global Forest Carbon Mechanism to be operational in 2013 and to test the feasibility of 
including forests in carbon markets intensive preparatory work will be necessary. A number 
of  donors  are  already  active  in  this  field.  If  we  are  to  actively  lead  the  fight  against 
deforestation  the  EU  should  be  prepared  to  take  the  initiative  in  a  number  of  areas.  This 

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includes  supporting  developing  countries  in  building  capacity,  strengthen  forest  governance 
and  complete  the  knowledge  gaps.  Initiatives  that  have  recently  been  launched,  such  as  the 
UN REDD Programme18, could be supported by the EU. The Global Climate Change Alliance 
also provides an appropriate framework for furthering dialogue with developing countries on 
deforestation  and  framing  follow-up  actions  to  take  forward  collective  efforts  in  addressing 
the challenge of deforestation. 

Effective  policy  depends  on  high-quality  information  and  monitoring  systems.  In  particular 
monitoring  forest  degradation  will  require  both  dedicated  efforts  and  agreed  definitions  and 
criteria.  A  conservative  approach  should  be  taken  to  monitoring  to  make  sure  that 
uncertainties do not result in emissions reductions being over-estimated.  

Technological developments in data software, satellite and communications technology have 
made tools for forest monitoring cheaper and more accessible. However, remaining gaps need 
to  be  addressed  with  priority.  In-country  capacity  needs  to  be  developed  to  establish  high-
quality  national  monitoring  and  verification  systems  to  measure  progress  and  assure 
compliance. In mastering this challenge one could draw on EU initiatives and methodologies 
already  implemented  by  the  Joint  Research  Centre  or  other  programmes  –  such  as 
Kopernikus,  the  Global  Earth  Observation  System  of  Systems,  and  Global  Observations  of 
Forest  and  Land  Cover  Dynamics.  Regional  initiatives  such  as  the  Observatoire  des  Forêts 
d’Afrique Centrale should also be promoted and implemented in other tropical regions. 

To take the process forward, the Commission intends to organise a conference in the run-up to 
Copenhagen  which  will  provide  a  forum  for  discussion  of  the  Commission's  proposals,  as 
well as engaging key stakeholders and developing appropriate follow up measures. 

18  

a joint initiative from FAO, UNEP and UNDP to support developing countries in their preparation for 
the future REDD mechanism. 

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