Stricter deforestation limits set in revised Norway deal

New terms for Guyana’s forests’ deal with Norway have been agreed, with payments from Oslo to decrease should the deforestation level here increase over last year’s level.

“There is room for small fluctuations but if you go above last year’s results then you immediately start to reduce the amount [of money] due to Guyana. At 0.1 [percent of deforestation]… nothing is due to Guyana,” said Per Fredrik Pharo, the Deputy Director of Norway’s Climate and Forest Initiative in an interview with Stabroek News yesterday.

Erik Solheim

Under the terms of a new Joint Concept Note (JCN) released Thursday, the interim reference level for deforestation was revised to 0.27%, a cut of almost forty percent from the previous level of 0.45%. In the first reporting period under the agreement, the annual deforestation rate was 0.056%, which was above the annual average deforestation rate of 0.022% over the last 20 years. Guyana can still increase deforestation and receive money but once the deforestation rate rises about the 0.056% deforestation rate, payments will be reduced and if deforestation reaches 0.1%, no payments will be made.

“The idea is that the payment cannot go up and down every year in accordance with the small differences from one year to the other. There’s a threshold level and as long as it’s below that, money can be paid,” Norway’s Minister of the Environment and International Development Erik Solheim told Stabroek News.

“Neither Guyana’s government [nor] Norway wants to see a significant increase, so the reference level is used to calculate the magnitude of the payments due but there is also a mechanism to avoid an increase in trend over time,” Pharo, meanwhile, explained. “It allows for fluctuations below 0.056% which is in global terms exceptionally low so below that it really doesn’t matter,” he added.

The former interim reference level drew concerns with commentators saying that it was too high and did not accurately reflect Guyana’s historical deforestation level.

Pharo said that with the new reference level, those concerns have been addressed. “I think that’s indisputable and the reality is that these numbers are extremely low. In fact, they are so low that there are various issues here, you have a certain uncertainty in the measurements and because the numbers are so low…the margin of error means that we’re bordering on talking about something that we can’t even measure because the deforestation is so low,” he said.

The Deputy Director also pointed out that there is re-growth. “We know there is re-growth we know that when the deforestation rate is so low as low as it is in Guyana, then the re-growth is gonna be closer to matching the deforestation,” he added.

Meantime, the revised JCN says that “one-off predictable and controllable deforestation events will be allowed for critical national infrastructure that is part of Guyana’s transition to a low carbon development path.”

It said that during the duration of the current Guyana-Norway partnership, the only such event will be the construction of the Amaila Falls hydro-electricity plant. “This plant is the flagship of Guyana’s Low Carbon Development Strategy, and is expected to eliminate over 92% of the country’s energy-related emissions, after the emissions associated with its construction are accounted for. It will only go ahead after Guyana and Norway have agreed that the necessary Environmental and Social safeguards have been met, and an independent verification agreed by Guyana and Norway confirms the overall beneficial effects of the project from a climate change perspective,” the JCN says.

The project is estimated to see the deforestation of less than 4,500 hectares of forest, which if reported in a single year would yield around 0.025% deforestation, given Guyana’s current forest cover. In other words, the project in itself would cause deforestation above the agreed ceiling on deforestation. “To avoid the undesirable situation where Norwegian climate change mitigation funding would cease to flow as a result of the development of a project with significant net benefits to the global climate, the partners have agreed not to apply the 0.1% ceiling on deforestation directly related to the eventual construction of the Amaila Falls hydropower plant,” the JCN says. “The deforestation caused by the Amaila Falls construction would, of course, be monitored and reported and result in reduced payments on a tonne by tonne basis,” it added.

Pharo stressed that in the partnership period there is only one exception and that is Amaila. For other projects such as the upgrading of the Linden-Lethem road, he said, the road does not have a positive permanent impact so there is no reason to make an exception for that. “The joint concept note is very specific, there’s one exception in this period from 2010 to 2015,” he said.

The revised JCN was released as Guyana and Norway enters the second year of their agreement on climate change. On Thursday, Solheim announced a second payment of US$40M into the Guyana REDD+ Investment Fund (GRIF).

The second payment under the forests’ saving agreement between the two countries brings the total payments by Norway to US$70 million, with Oslo having paid US$30 million into the GRIF last year.

The GRIF is a fund for the financing of activities identified under the Guyana’s LCDS. Norway has committed to provide up to US$250 million to the fund up to 2015, based on independent verifications of Guyana’s deforestation and forest degradation rates and progress on REDD+ enabling activities. The World Bank is the trustee for the GRIF.

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