RED vs. REDD: Biofuel Policy vs. Forest Conservation. Factor Markets Working Document No. 41, May 2013

This paper assesses the complex interplay between global Renewable Energy Directives (RED) and the United Nations programme to Reduce Emissions from Deforestation and forest Degradation (REDD). We examine the interaction of the two policies using a scenario approach with a recursive-dynamic global Computable General Equilibrium model. The consequences of a global biofuel directive on worldwide land use, agricultural production, international trade flows, food prices and food security out to 2030 are evaluated with and without a strict global REDD policy. We address a key methodological challenge of how to model the supply of land in the face of restrictions over its availability, as arises under the REDD policy. The paper introduces a flexible land supply function, which allows for large changes in the total potential land availability for agriculture. Our results show that whilst both RED and REDD are designed to reduce emissions, they have opposing impacts on land use. RED policies are found to extend land use whereas the REDD policy leads to an overall reduction in land use and intensification of agriculture. Strict REDD policies to protect forest and woodland lead to higher land prices in all regions. World food prices are slightly higher overall with some significant regional increases, notably in Southern Africa and Indonesia, leading to reductions in food security in these countries. This said, real food prices in 2030 are still lower than the 2010 level, even with the RED and REDD policies in place. Overall this suggests that RED and REDD are feasible from a worldwide perspective, although the results show that there are some regional problems that need to be resolved. The results show that countries directly affected by forest and woodland protection would be the most economically vulnerable when the REDD policy is implemented. The introduction of REDD policies reduces global trade in agricultural products and moves some developing countries to a net importing position for agricultural products. This suggests that the protection of forests and woodlands in these regions reverses their comparative advantage as they move from being land-abundant to land-scarce regions. The full REDD policy setting, however, foresees providing compensation to these countries to cover their economic losses.

Brazilian climate policy since 2005: continuity, change and prospective. CEPS Working Document No. 373, February 2013

In the five-year period 2005-09, Brazil has dramatically reduced carbon emissions by around 25% and at the same time has kept a stable economic growth rate of 3.5% annually. This combination of economic growth and emissions reduction is unique in the world. The driver was a dramatic reduction in deforestation in the Amazonian forest and the Cerrado Savannah. This shift empowered the sustainability social forces in Brazil to the point that the national Congress passed (December 2009) a very progressive law internalising carbon constraints and promoting the transition to a low-carbon economy. The transformation in Brazil’s carbon emissions profile and climate policy has increased the potentialities of convergence between the European Union and Brazil. The first part of this paper examines the assumption on which this paper is based, mainly that the trajectory of carbon emissions and climate/energy policies of the G20 powers is much more important than the United Nations multilateral negotiations for assessing the possibility of global transition to a low-carbon economy. The second part analyses Brazil’s position in the global carbon cycle and public policies since 2005, including the progressive shift in 2009 and the contradictory dynamic in 2010-12. The final part analyses the potential for a transition to a low-carbon economy in Brazil and the impact in global climate governance.