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Forest Carbon Economy Fund: a new pathway for funding forest carbon and biodiversity outcomes

Joseph Pallant, Director of Climate Innovation

Before the COVID-19 crisis shifted our “normal” the climate crisis was already top of mind driving what we need to do to create a better, more sustainable and equitable, “new normal.” I know that an increased focus on achieving Natural Climate Solutions is an important piece of that puzzle, having had the good fortune to witness the powerful role this kind of work has in fighting climate change, supporting biodiversity, and growing healthy economies.

Policy opportunity

In January 2020, the government released  “Canada’s Fourth Biennial Report on Climate Change” to the United Nations, which for the first time includes the impact of human-caused forest carbon emissions in our official greenhouse gas (GHG) projections. The report signaled a critical shift in policy that brings Canada more closely in line with global best practices. More specifically, the inclusion of human-caused forest carbon emissions on our carbon footprint creates opportunity for Canadians to protect, restore, and better manage our forests — and thereby make progress toward our international commitments under the Paris Agreement.

Three pillars of work

We are now working to create a system to fund projects led by local communities by unlocking the new value of additional carbon stored on the landscape. To enable this in practice, we identified three key pieces of policy infrastructure needed — and so set out to craft them:

  1. Build a Forest Carbon Reporting Methodology that enables quantification and verification of climate impact from improving forest carbon outcomes in Canada.
  2. Design a procurement pathway that allows the federal government to efficiently finance large-scale climate action in Canada’s forests, enabling benefits to flow directly to local communities.
  3. Clarify a pathway to register project-based forest carbon emissions reductions as part of Canada’s progress toward the Paris Agreement.

Forest Carbon Economy Fund

These three key pieces of policy infrastructure make up the Forest Carbon Economy Fund — its name highlights the similarity to Canada’s Low Carbon Economy Fund and the basket of values enabled by such investment. It is our hope that the Government of Canada will adopt this program, in the manner it best sees fit, to enable accelerated investment in communities, conservation, restoration, and improved management of forests across Canada.

Social and environmental outcomes

Ecotrust Canada has long worked in the field of natural climate solutions, precisely because of the way the issue brings together societal and environmental benefit together. In 2020, we are exploring overlaps between community interests, biodiversity needs, and climate action, with our partner Wahkohtowin Development that represents five First Nations in Ontario’s Northeast Superior. We will also be undertaking research that directly examines the convergence of biodiversity conservation and climate benefit in Canada’s boreal forest.

Recovery and resilience

With the prospect of a long economic recovery ahead, it is critical that government stimulus programs pay particular attention to rural, remote, and Indigenous communities. As we rebuild, Canadians will want to see equitable allocation of resources across all regions, with projects that support a more resilient, localized economy, and at the same time, see solutions that address the climate crisis. The Forest Carbon Economy Fund addresses each of these goals in a unified and mutually supporting system, with the additional benefit of providing a framework to predict, and report on the economic, social, ecological, and climate impacts of its prospective projects.

We believe that the accountability and goal orientation of the Forest Carbon Economy Fund is a strong fit for the spirit of the times. A federal government seeking to reduce domestic emissions will be well served by such a tool that supports projects with clear, compelling biodiversity, and social benefits along with the proven carbon emissions reductions.

READ MORE about our CLIMATE INNOVATION strategic initiative