THE Greening of Carbon Trade.

• Author: Taylor, David A.

Creative research in climate change is promoting the exchange of gas-emission credits between countries, while conserving precious forests

KEN MacDicken likes to show visitors his grandfather's spear. It is quite a piece of work: an authentic Filipino spearhead lashed to a broom handle. The elder MacDicken got the spearhead when he visited Ken in the Philippines in the 1970s. The handle is painted metallic silver, maybe for emphasis. For Grandpa MacDicken, and for Ken, the combination represented something appealing--the grafting together of an old technology with a new one.

For years, MacDicken and other scientists in Central and South America have been grafting new technologies onto the old practice of forestry. Instead of surveying trees for logging operations, however, they've been measuring forests in order to keep them standing. The work has involved a wide range of people, from Bolivian government officials to Guatemalan farmers. At the Nature Conservancy's headquarters outside Washington, D.C., honchos in the Latin America division still speak of MacDicken in glowing terms as their first "carbon guru."

The work of people like MacDicken lies at the heart of the international climate-change industry after the 1997 Kyoto conference--measuring carbon stored by living forests as an "offset" for emissions of carbon into the atmosphere. They are researchers on the frontier of a field that will have consequences for everyone from tropical farmers to big utility corporations--the field of carbon trading.

In the confusion surrounding global climate change, one point of agreement is that carbon--specifically carbon dioxide ([CO.sub.2])--plays the lead role among greenhouse gases. From 1850 to the late 1980s, the amount of [CO.sub.2] in the atmosphere increased 25 percent. If that upward curve continues unchecked, according to an international panel of scientists, the resulting change in the world's climate could lead to extreme storms, shift entire crop ranges and habitats toward the North and South poles, inundate coastal cities, and play havoc with human health. The World Health Organization warns that with climate change, we can expect more food-and water-related diseases, cardiovascular and respiratory problems, and a shift in disease vectors. Malaria, for example, will cut a wider geographical swath than now.

Deforestation, especially of tropical forests, accounts for about a quarter of the [CO.sub.2] released into the atmosphere, or about 1-2 billion tons every year. Forest fires not only reduce the capacity of forests to absorb [CO.sub.2] from the air, they also hemorrhage more carbon into the air. Environmentalists saw the link and proposed saving forests as a way to reduce greenhouse-gas emissions and store (or "sequester") carbon in growing tree tissue. Emissions reductions could be assigned a value based on the amount of carbon stored in each case, credits toward reducing the level of greenhouse gases in the atmosphere.

Before the Kyoto conference, carbon trading--the exchange of carbon-emissions credits between countries--had dubious prospects. Few utility companies (the group most in need of defraying their large carbon emissions) voiced any interest in it, and even fewer had explored how it might work. Most were suspicious of the international machinery that had built up around climate change. But in the wake of that meeting's accord on the need to reduce emissions, the situation changed.

The World Bank explored a way to link market forces to emissions reductions. It set up a Global Carbon Initiative with what sounds like a bullish mutual fund prospectus, aiming "to promote a global market in greenhouse-gas emissions reductions that serve our client countries' development needs," and launching a series of "increasingly tailored" carbon investment funds (CIFs). The Bank pledged to level the playing field between carbon buyers and carbon sellers, with benefits to both. Developing countries and other nations with low emissions could sell carbon credits for money and support in developing efficient energy sources and maintaining carbon-storing forests. Carbon buyers in industrialized countries...