Brown's plan to save rainforests

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A new global deal to protect the world's rainforests has been proposed in a report drawn up for Gordon Brown.

The idea is part of a review into deforestation and green energy by Swedish businessman Johan Eliasch.

The ex-Tory donor says cash put aside for carbon saving in rich countries should be transferred to nations with rainforests in need of protection.

Rainforest destruction accounts for about a fifth of the carbon emissions blamed for fuelling climate change.

Details of Mr Eliasch's plan are due to be announced on Tuesday.

Swamping fear

His report says an international deal to protect forests would reduce the cost of tackling climate change by up to 50% in 2030.

It would also allow much more ambitious CO2 cuts to be achieved globally without extra cost.

Forest destruction produces about a fifth of the world's extra C02, and any scheme to reduce forest felling will be broadly welcomed.

But the review will need to ensure it does not lead to indigenous people being dispossessed; or feed corruption; or create a moral hazard in which poor countries hold rich nations to ransom threatening to fell their trees; or flatten carbon markets supporting clean energy.

Carbon markets allow companies and rich countries to buy and sell carbon permits in order to minimise the cost of complying with CO2 targets.

The money raised underpins low-carbon technologies. Forestry was excluded from the original Kyoto deal in 1997 for fear that cheap forestry credits would swamp the carbon market and stifle investment in technology.

Mr Eliasch seeks to guard against this by insisting that any forest credits are over and above the funds currently flowing to clean technology. The report says modelling shows that allowing forest credits into the third phase of the EU Emissions Trading Scheme (EU ETS) would have no impact on the carbon price.

Essential governance

Such a scheme could reduce deforestation rates by up to 75% in 2030, he says. Adding a programme of re-forestation would make the forestry sector carbon neutral.

The review will be met by goodwill peppered with scepticism. Some carbon traders are confident that forest credits can be prevented from swamping the market, but others do not believe the scheme will work.

A massive challenge will be avoiding "leakage" in which some countries take hand-outs for keeping forests they had no plans to fell in the first place, whilst illegal loggers run riot in countries that either stay outside the scheme or fail to enforce it.

A government source told BBC News that the Eliasch plan would require co-operation from all the major forest nations. This will be hard to achieve as Brazil has been highly sceptical about the use of carbon markets to support forestry.

Its forest supreme Jose Miguez said at the Bali climate meeting last year that the Amazon forest was so vast that it could generate enough carbon credits to swamp the entire global carbon trading system.

"This plan clearly faces challenges," said the UK government source. "But we have watched for 30 years as the rainforests have been destroyed. Doing something has to be better than doing nothing."

Some sceptics fear even that optimism may be misplaced if carbon trading merely creates the illusion of progress but in fact diverts funds to the many crooks now running forestry in some developing nations.

The difficulties of imposing law and good governance in countries such as Indonesia or Papua are formidable.

Some campaigners fear that channelling funds into forestry could spark a new "natural resources" curse in which corrupt and inefficient governments get money to protect their forests but can only waste it because it is not clear who owns the forests, who should be paid for protecting them, and how agreements should be policed.

Updated protocol

The nightmare scenario, according to one analyst, is that we place undue confidence in protecting tropical rainforests in order to tackle climate change, lose sight of the imperative for a quick transition to a low-carbon economy in the rich world, trade off domestic emissions against putative "avoidance of deforestation", but then find that tropical country governments are unable to reduce deforestation.

An alternative proposal would be to establish a mechanism under the UN to consider costed proposals from tropical countries to halt deforestation over, say, 10-20 years. On the basis of expert assessment, the international community would then mobilise funds through aid budgets; or a levy on EU ETS auctions would disburse money to reward actual achievement.

The Eliasch Review does make good governance a pre-requisite of receiving carbon funds and his plan insists on protection for indigenous peoples.

The UK government hopes it will form the basis of an international forestry agreement in next year's deal to renew the Kyoto Protocol.

One carbon trader told me: "Look, there are going to be some people scamming money out of this deal – but at least it is a deal... and it has to do more good than harm."

Full details of the plan will be revealed on Tuesday. The government broadly supports the report, although it does not agree with all the details.