I – Introduction

“The costs of not acting to tackle climate change are far greater than the costs of action. (…) As well as acting urgently, the international community will need to ensure that emissions reductions are effective, economically efficient and equitable” (Stern, 2006)

This thesis will review the forestry carbon standards in the voluntary carbon market and act as an instrument for organizations, businesses and individuals to compare these standards and choose which carbon credits to purchase.


Based on the reports from the IPCC, the Kyoto Protocol included 6 greenhouse gases (GHG) (CO2, CH4, N20, HFC, PFC and SF6). Most of the anthropogenic emissions are sourced from energy (25.9%), industry (19.4%) and forestry (17.4%) (IPCC AR4, 2007). The Kyoto protocol addresses the issues of energy and industry, however carbon emissions from deforestation were not included.

The Kyoto Protocol provides three mechanisms to reduce GHG emissions (United Nations, 1998):

Emissions Trading (ET) is where a government sets a cap on the amount of carbon emissions a company can produce. If a company reduces their emissions, meets the target and has shown further reductions beyond this, they are able to sell these carbon reductions to companies that fell short of the target. The units traded are known as carbon credits and the price is dictated by supply and demand.

Clean Development Mechanism (CDM) allows the trade of carbon credits from projects that are located in non-Annex I countries.

Joint Implementation (JI) permits the development of projects that reduce carbon emissions in Annex I countries and trades the carbon credits.

On July 2009, the G20 summit in L’Aquila, Italy agreed to limit the global temperature to rise to a maximum of 2oC compared to pre-industrial temperatures. This is the equivalent of reducing GHG emissions by 50% below 1990 levels by 2050. Both the public and the private sector play essential roles in reaching that target. The costs incurred in the reduction of emissions and adaption to climate change are now estimated at $100bn per year by 2020 (Lazarowicz, 2009).

The compliance market has its limitations. The targets and rules are negotiated during international forums, limiting the speed at which progress can be made on such a large and complex issue. For this reason the compliance market does not supply conditions for many businesses, organizations and individuals that also want to reduce their emissions; however the Voluntary Carbon Market fulfils this need. By 2008, many standards were available (VCS, GS, CCAR, ACR, CCX, etc…) providing a certification for Voluntary Emissions Reductions (VERs).

Deforestation is the third largest source of carbon emissions. Forests absorb carbon emissions, however the planting of forests has only a limited role in the compliance market representing 0.3% of all carbon credits (CDM Pipeline, 2009a). Emissions from deforestation are not included in the Kyoto Protocol. The VCM began to develop methodologies to certify forestry projects around the world.


This study aims to explore how the world has evolved from climate change as a tentative concept to the implementation of international agreements and the building of mechanisms for the carbon market. Understanding the carbon market and in particular the forestry carbon market is fundamental to acquiring a thorough and comprehensive analysis.

In addition, this thesis aims to act as a tool for organizations, businesses and individuals to adopt the most appropriate forestry carbon standard according to their requirements.


To meet the aims, this thesis will:

– Outline the history of climate change negotiations and development of the carbon market.

–  Explore the compliance and voluntary carbon market.

– Examine the forestry carbon market.

– Create an instrument to compare the various carbon standards within a set of criteria.

– Review the forestry carbon standards according to the criteria.

– Propose a new forestry carbon standard using the results of the tool and incorporate the best mechanisms available in the market.

Thesis structure

Chapter I defines the aims and objectives.

Chapter II outlines the chronology of the international climate change regime from the 19th century until present time.

Chapter III sets out the carbon market by identifying GHGs, the sources of emissions, the targets in place to reduce the emissions with a focus on cap and trade. The Kyoto Protocol and its three mechanisms are analysed with criticism towards CDM and the issues associated with “hot air” are also included. This is followed by looking at compliance emissions trading operating outside the Kyoto Protocol such as the New South Wales GHG Abatement in Australia and the Regional Greenhouse Gas Initiative in the US. This chapter will conclude with the analysis of the voluntary carbon market, its history and the position today.

Chapter IV explores the forestry carbon market, determines the definition of afforestation and reforestation, and the issues with leakage and permanence. This is followed by an analysis on deforestation, the largest emitter countries and the causes of deforestation. REDD is assessed as a policy to reduce deforestation with an analysis on REDD additionality, leakage and permanence and a summary about historical baseline, historical adjusted baseline and projected baseline. Followed by an overlook on the indigenous people, local communities and land rights as well as co-benefits and sustainable development concluding with REDD+, the BioCarbon Fund and the North American versus European forestry demand.

Chapter V develops the forestry standard tool by defining the criteria and standards to b reviewed and a comprehensive research of all the standards against the criteria. A table summarizes the results which can be used as a tool to choose the standard. Highlights of the standards are discussed and finally the new forestry carbon standard is proposed based on the review of the standards and tools results.

Chapter VI summarises and concludes the thesis

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