During yesterday’s hearing on International Deforestation and Climate Change, Senator John Kerry committed to ensuring that any future domestic cap-and-trade program will accept credits from international forest projects.

Stuart Eizenstat, the former U.S. Ambassador to the EU and leader of the US delegation in the negotiations of the Kyoto Protocol, argued for the importance of “starting with domestic legislation” in the fight against tropical deforestation. Senator Kerry responded that he would “add a marker” to any domestic climate change legislation, including the Lieberman-Warner bill, to ensure that credits derived from forest projects in other countries can be used to offset emissions in the United States.

The Lieberman-Warner bill, in its current form, would allow regulated industries to meet up to 15% of their emissions requirements by purchasing credits from carbon offset projects. Including international projects in the 15% offset quota would significantly boost efforts to avoid tropical deforestation. Emissions trading systems established under the Kyoto Protocol, including the European Union Emissions Trading System, do not allow the use of credits derived from most types of forestry projects. As a result, US leadership on this issue would help to create a robust market for credits from “avoided deforestation” projects [subscription req.].

The hearing touched on several other issues as well. Dirk Forrister of Natsource, LLC, testified on behalf of the International Emissions Trading Association, and discussed the importance of market-based solutions to climate change. In order to succeed, however, there needs to be a strengthening of the environmental integrity of carbon offset projects.

Forrister and Dr. Kevin Gurney, Associate Director of Purdue’s Climate Change Research Center, testified on the importance of building monitoring capacity on the ground in tropical countries, and using a combination of satellite and on-location monitoring to detect increases or decreases in the rate of deforestation.

Senator Bob Menendez focused on the importance of establishing national baselines and holding all countries accountable for the results. He argued that industrialized countries must assist the developing world in creating baselines and encouraging sustainable development and logging practices.

Noting the global problems created by rising commodity prices, Senator Menendez questioned Eizenstat about the link between biofuel production and deforestation rates. Eizenstat testified that roughly 15 to 20 percent of the recent increase in food costs is a result of biofuel production. He noted, however, that the effective counterweight to this problem is forcing biofuel producers to account for the full carbon lifecycle of their products, including emissions caused by burning down tropical forests and using the cleared land for soy or palm plantations.

For further information about this topic, please contact Akin Gump.