Europe shies away from forest carbon credits to avoid lowering the price of carbon.

Halting the loss of global forest cover by 2030 should be one of the EU’s goals in forthcoming negotiations for a new international climate treaty, the European Commission said on Friday. But hopes that carbon credits generated from avoided deforestation would be allowed on to the EU Emissions Trading Scheme (EU ETS) were dashed by the commission’s proposals.

The commission announced in its communication on deforestation that “allowing companies to buy avoided deforestation credits [on the EU ETS] would result in serious imbalances between supply and demand”. The emissions from deforestation are roughly three times greater than the emissions regulated under the EU ETS, the report explained, which could lead to forest credits swamping the carbon market and undermining the price of carbon.

Forest preservation fund

EU Environment Commissioner Stavros Dimas said global action to reduce deforestation could be financed by a “global forest carbon mechanism”. The mechanism would use auction revenues from emissions trading to boost “capacity building, technical support for forest governance and developing the necessary technical know-how to monitor and enforce commitments”.

The EU would contribute 5% of monies raised by auctioning emissions rights to EU ETS participants after 2012. This could raise €1.5bn-€2.5bn annually by 2020, according to the Commission.

Suspect logging

On illegal logging, the commission proposed that companies selling timber in the EU should be obliged to check it was legally sourced.

Dimas said action was vital to stop forest destruction, currently running at 13 million hectares per year.

- Read our in-depth report on EU logging policy

- See the EU memo on its forestry proposals