A Green Solution to Climate Change: the Hybrid Approach to Crediting Reductions in Tropical Deforestation

Abstract

Global climate change is a multi-faceted international crisis that requires creative and flexible regulatory solutions. Addressing the principal anthropogenic cause of climate change—carbon dioxide emissions from the burning of fossil fuels—has been the focus of the international response to global climate change to date. However, a significant and often overlooked source of global carbon dioxide emissions is deforestation, which accounts for up to eighteen percent of global carbon dioxide emissions annually.

Part I of this article examines how the Kyoto Protocol currently incorporates forestry projects as a tool to combat climate change and how those efforts can be improved to more fully embrace carbon markets as a mechanism to credit efforts to curb tropical deforestation. Part II evaluates four potential impediments to crediting efforts to curb deforestation: additionality, leakage, permanence, and monitoring. Part III discusses the compensated reductions plan and the European Commission Joint Research Centre proposal, two existing proposals to credit developing nations for reducing emissions from tropical deforestation. Part IV proposes the Hybrid Compensated Reductions and Preventive Credits plan to credit developing nations for reducing emissions from tropical deforestation. The hybrid plan offers developing nations an incentive to curb tropical deforestation rates by providing the necessary financial support, through enabling carbon credit trading, to execute and maintain these reductions.

Keywords: climate change, carbon dioxide emissions, deforestation, Kyoto Protocol, carbon trading, carbon market, greenhouse gas, greenhouse gas emissions

JEL Classification: K32, K33, Q23, Q27, Q54