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An Analysis of China’s Legal and Policy Framework for the Sustainability of Foreign Forest Carbon Projects
Yixin Xu Southwest University of Political Science and Law [email protected]
Abstract
China’s policymakers regard forest carbon sequestration as one of the most cost- effective ways to combat climate change. Yet, scholars argue that foreign forest carbon projects in developing countries are environmentally and socially unsustainable. This paper explores China’s policy and legal framework for the sustainability of forest car- bon projects that utilize international carbon-certification schemes. It finds that while China’s government has set ambitious climate goals for the forest sector, the appli- cable regulations are not comprehensively developed, and risks of unsustainability ex- ist in practice. The government should undertake comprehensive institutional reform, including reform to establish implementation regulations for redd projects, adjust laws on forest and land to address climate risks, set up regulatory social-impact as- sessments, and create a greater demand for private forest sustainability assessments.1
Keywords cdm and redd in China – foreign investment in forest carbon projects – sustainability assessment
1
1 The field study for this research was conducted with financial support from the China Schol- arship Council while undertaking my doctorate at Erasmus School of Law. I am deeply grate- ful for the support of my supervisors: Professors Michael Faure and Yuwen Li. I would like to express my appreciation for my interviewees for their time and invaluable insights. I am also grateful to Alexander Zahar and to four anonymous referees of this journal for their feedback on earlier versions of this article.
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1 Introduction
In the lead-up to the unfccc’s cop in 2015, China pledged to considerably re- duce carbon emissions in order to combat climate change.2 Chinese policymak- ers consider forest carbon sequestration to be one of the most cost -effective ways to reduce greenhouse gases to combat climate change.3 However, the im- plementation of forest carbon projects in other developing countries has given rise to significant environmental and social sustainability problems.4 Environ- mental issues mainly revolve around the planting of trees that replace natural forests. This results in a deterioration of the local environment and threatens biodiversity.5 Socially, certain projects make the poor even poorer, and projects sometimes exclude local people from their own land.6 This study assesses the extent to which China’s policies and legal frame- work can deliver sustainable forest carbon projects with foreign investment. I consider three aspects of sustainable development and forest sustainabil- 2 3 4 5 ity:6 economic, environmental, and social. This three-pillar approach is also
2 Kate Sheppard, ‘United States, China Announce Deepened Partnership on Climate’, The Huffington Post, 27 September 2015. 3 Zigui Zhou, Yong Zhang, Lanying Li, Tusheng Li, Jun Ru, and Yanfeng Bai, ‘Development Status, Problems and Suggestions for Forestry Carbon Sequestration in Zhejiang Province’ (浙江省林业碳汇发展现状, 存在问题及对策建议), 1(7) Journal of Zhejiang Agricul- tural Sciences 980 (2014), at 980. 4 A forest carbon project refers to a project implementing forest plantation or forest manage- ment activities with the objective to mitigate or to adapt to climate change. 5 Manny Mogato, ‘Calls on Asian Nations to End Deforestation’, 20 June 2008,
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adopted in international standards and forest principles.7 Economically, I con- sider the direct economic returns of the projects’ contracting parties. Environ- mentally, I consider biodiversity conservation as the major criterion, because forests in developing countries possess most of the tropical forests and contain the world’s greatest territorial biodiversity.8 Furthermore, forests in developing countries are the livelihood of poor people;9 the survival of 1.6 billion people (some of whom are the world’s poorest) depends on forests.10 In terms of social sustainability, I consider poverty alleviation as a major element. This implies fairness and public participation in the project benefit-sharing and decision- making. Overall, laws and regulations regarding sustainable forest carbon proj- ects in developing countries should contribute to, or at least have no negative impact on, biodiversity conservation and poverty alleviation in the local area. Even if, in some cases, the goal to mitigate climate change may conflict with the goal of sustainable development, I argue for the priority of sustainable use of natural resources in forests.11 Forest carbon projects in China can be divided into two groups: one uti- lizes domestic carbon-certification schemes (domestic forest carbon projects); the other relies on international carbon-certification schemes (foreign forest carbon projects).12 Sustainability issues are the same for both domestic and foreign projects. However, in order to receive internationally credible, trad- able forest-based carbon credits, foreign investors require that forest carbon 7 8 9 10 11 12projects use international certification schemes. Such schemes may have
7 See, for example, cdm, ‘Voluntary Tool for Describing Sustainable Development Co-Benefits of cdm Project Activities or Programmes of Activities’, sd-tool01, Ver- sion 1.1, at 2; Report of The United Nations Conference on Environment and Development, un General Assembly, the Forest Principles, A/conf.151/26 (Vol. iii) (1992); and oecd, ‘Guideline on Sustainability Impact Assessment’, 05 July 2010,
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special rules on sustainability and apply special implementing regulations in China. The foreign forest carbon projects need to comply with both interna- tional certification schemes and Chinese law. Sustainable development is a significant criterion for cdm forest car- bon projects, redd activities, and other international carbon-certification schemes.13 Previous literature has criticized the sustainability of forest carbon projects in developing countries.14 This literature, however, lacks a focus on, first, forest carbon projects, and, second, China’s national legal framework.15 This study aims to fill these gaps in the literature by focusing on forest proj- ects in China under the international climate change regime. It also aims to serve as a reference for other developing countries tackling similar problems in foreign forest carbon projects. Hence, I generalize the nature of the prob- lems of unsustainability to shed light on the necessary institutional reforms.
13 14 15
13 unfccc, ‘Decision 2/cp.13: Reducing Emissions from Deforestation in Developing Coun- tries: Approaches to Stimulate Action,’ fccc/cp/2007/6/Add.1, 2007, para. 3; unfccc, ‘Decision 1/cp. 16: The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention,’ fccc/cp/2010/7/Add.1, para. 70; and vcs, ‘Who We Are’,
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I assess r elevant political decisions and regulations on the sustainability of for- eign forest carbon projects in China combining legislative analysis, literature review, and field study. I hope to show how the general Chinese legal frame- work can deliver policy goals on sustainable forest carbon projects. I also focus on special implementation rules incorporating international cdm and redd rules, and I examine national regulatory environmental impact assessment (eia) and private sustainability assessments in China. For specific information on the relevant projects, I examined the project documents of seventeen forest carbon projects in China which utilize inter- national carbon-certification schemes.16 Information gaps in the desk study were filled through project visits and interviews. This field-based element of the study ran mostly from 8 June to 29 July 2015; I continued the field work through to June 2017 to keep track of new developments. The projects and in- terviewees were located in the provinces of Beijing, Liaoning, Sichuan, Anhui, and Chongqing. The interviews were conducted in a semi-structured manner. I selected interviewees with different backgrounds, to reduce biases. They in- cluded operators, investors, national government officers, local government officers, farmers, forest-certification agencies, forest-science institutions, and environmental ngos. The article is structured as follows. Section 2 investigates the extent to which the sustainable development principle is incorporated into the general policy and legal framework on forest carbon projects in China. Section 3 examines the sustainability assessments of forest carbon projects in China. Section 4 reports on the findings of the field research on the projects’ sustainability per- formance. Lastly, Section 5 draws lessons from China’s experience.
2 The Sustainable Development Principle in China’s Policy and Legal Framework on Climate Change and Forests
In this section, I first examine forest- and sustainability-related policy deci- sions forming part of China’s national climate change policies. These decisions determine the basic policy stance, principles, and objectives for China on addressing climate change. Next, I review the implementation rules of cdm projects in China. In the last part, I review the laws on forests and forest lands. 16
16 As shown in Table 2, the 17 projects I studied include five registered cdm afforestation and reforestation (cdm A/R) projects; four projects at the validation stage in the cdm procedure; and eight projects applying alternative carbon certification schemes.
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2.1 Policies on Climate Change and Forests China’s national policies set a variety of targets to increase forest extent, with the objective to mitigate or to adapt to climate change. I first consider the pol- icy context, since laws and regulations are supposed to reflect policy goals and ambitions. These targets are summarized in Table 1. I compare the targets with each other, analyse the ways in which they have been dealt with, and find two key issues emerging regarding forest-related political decisions in China’s cli- mate change policies. Once the policies are laid out in chronological order, the inconsistencies among them become clear. The first policy step that China took towards combating climate change was the 2007 Program, issued by the National Development and Reform Commis- sion (ndrc). This Program emphasized that climate change had already had a negative impact on forests and ecosystems in China.17 It stated that China had a forest cover of eighteen per cent, or 175 million hectares, by 2005.18 It stipulated specific goals for the government to increase forest cover and forest carbon stock between 2007 and 2010.19 The next policy was the 2009 Action Plan. It set targets for the period 2011–2020 to increase forest cover to 23 per cent, an increase of 40 million hect- ares compared with 2005.20 Oddly, the targets in percentage terms and total hectares do not correspond: to reach a forest cover of 23 per cent, China needed to increase cover by 46 million hectares compared with 2005. This number is considerably higher than the 40 million mentioned in the document. This poli- cy adopted 2020 as the comparison year for the targets in the period 20 21–2050. The problem with this is that the projection for 2020 was unsettled when the policy was issued. It is also difficult to make such a projection because the Ac- tion Plan uses both a total target (40 million hectares) and a yearly incremental target (5 million hectares per year), which lead to different outcomes.21 Two years after the 2009 Action Plan, the State Administration of Forests (saf) issued the Twelfth Five-Year Action Points. The saf claimed that the pol- icy was developed based on the Twelfth Five-Year Plan and the Twelfth Five-
17Year Work Plan, issued by the National People’s Congress (npc) and the State 18 19 20 21
17 2007 Program, at 17. 18 Ibid., at 10. 19 Ibid., at 2 and 26–27. 20 2009 Action Plan, at 24–5. 21 If the government manages to increase forest coverage by 5 million hectares per year from 2011 to 2020, it will result in 50 million hectares more than 2005 (assuming that there is no forest planted between 2005 to 2010).
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did not specify the specify not did saf www.ccchina.gov.cn/nDetail. . as the unit for forest carbon co 2 as the unit for forest and the saf ndrc ), 19 September 2014, < September ), 19 www.forestry.gov.cn/portal/main/govfile/13/govfile_1885. , 1 December 2011, < www.gov.cn/zwgk/2012-01/13/content_2043645. 2011, December 1 , , the 2009 Action Plan, at 12, uses t , the 2009 Action - > (herein www.chinanews.com/cj/cj-gncj/news/2009/11-06/1951154.shtml , December 2011, < saf 国家应对气候变化规划 ( , 30 June 2015,
22 23 24 25 26 27 28 29 30 31 32 33 22 23 24 25 ext 27 31 32 Council, e 33 t in stock carbon for unit the specified Program 2007 26 28 xplanation in text, 29 30 Congress, ational People’s
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Council, respectively—the highest-level legislative bodies in China. These three policies share the same targets on forest cover and forest volume.34 How- ever, they set their targets against a 2010 baseline.35 Moreover, although their end-date was 2015, their forest-volume-increase target was 0.3 billion cubic meters higher than that set in the 2009 Action Plan for 2020. Also worth noting is that the Twelfth Five-Year Action Points is the only na- tional climate change policy to set a specific target for all four elements: rate of forest cover, extent of forest cover, forest carbon stock, and forest volume. Other policies do not set out their targets so fully. The 2014 Program, issued by the ndrc, chose to align its targets with the 2009 Action Plan rather than the Twelfth Five-Year policy decisions issued by the higher authorities.36 The ndrc is a committee under the State Council, and thus of a lower rank than the npc or the State Council. Although the ndrc set the targets against the 2005 baseline, there is a four-year gap between this program and the previous one (covering 2007–2010). The ndrc was also responsible for issuing China’s Intended Nationally De- termined Contribution under the unfccc/Paris Agreement, which set out the country’s climate-related ambitions and voluntary commitments for the pe- riod 2015 to 2030.37 What is not included in the table above, yet is relevant to the policy process, is the drafting process of China’s Law Addressing Climate Change. This law-in- progress will seek to protect forests and increase forest carbon stock.38 One of the leading scholars in the field, who is participating in the drafting of the law, has said that provisions on the forest sector will be general or abstract in the new law.39 (From the information currently available, it is not possible to tell when the law will be released.)
34 35 36 37 38 39
34 Section 3, Chapter 1, and Section 1, Chapter 21 of the Twelfth Five-Year Plan; and para. 6, part 2 of the Twelfth Five-Year Work Plan. 35 Ibid., and Twelfth Five-Year Plan, at. 9. 36 Article 71 and 88, Legislation Law of the People’s Republic of China, 15 March 2015. 37 China’s indc, at 3–4. 38 Article 45, Law on Addressing Climate Change of the People’s Republic of China (Draft for Opinion) (中华人民共和国气候变化应对法(征求意见稿)), 18 March 2012,
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China’s climate change policies, as discussed above, recognize sustainable development as a pivotal principle.40 They also put forth some environmen- tal and social requirements, in addition to ‘sustainable forest management’, that can contribute to delivering sustainable results in forest-carbon activities. The 2007 Program stated that the government was to protect natural forests, nature reserves, forest coastal shelterbelts, and mangroves, in order to enhance China’s adaptive capacity to climate change.41 The 2009 Action Plan aimed to promote ‘ecological progress’, requiring the country to improve forest eco- systems and maintain biodiversity.42 Moreover, it required all forest-carbon activities to combine increasing forest cover with improving the quality of forests. As for the 2014 Program, it requires the government to enhance the stability of forest ecosystems and to control pests.43 On the social aspect, the 2007 and 2014 Programs sought to increase forest carbon storage in a sustainable manner to support economic and social devel- opment.44 The 2009 Action Plan required the government to incorporate so- cial involvement in carbon activities. Finally, the legislative process for the Law Addressing Climate Change took into account the views of relevant industries, ngos, lawyers, and the general public.45 Although the government has set ambitious goals to enlarge the forested area and to improve forest quality, problems may occur in implementation for two reasons. First, the policies are inconsistent in defining their targets. Not all policies cover the full spectrum of policy targets, whereas some policies adopt conflicting targets. Second, the baselines are derived from the national climate
40 41 42 43 44 45
40 For instance, 2007 Program, at 2. 41 Ibid., at 9 and 27. 42 Section Purposes, 2009 Action Plan. ‘Ecological progress’ requires the country to effi- ciently use geographical space, to conserve natural resources, to protect the ecosystem and environment, and to enhance corresponding regulatory systems. This concept was initially mentioned by President Hu at the 17th cpc Congress, 24 October 2007,
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2.2 Implementing Rules for cdm Forest Carbon Projects in China While the above policies establish targets for the forest sector, they do not pro- vide specific procedures to implement forest carbon projects. The same prob- lem arises from the Instruction Opinion on Advancing the Forestry Carbon Sink Trade, issued by the saf in 2014, which merely sets up principles but lacks implementation rules.47 For the implementation of cdm projects, the ndrc, in 2005, issued the Measures for the Operation and Management of Clean Development Mechanism Projects (the ‘Measures’).48 As for redd, China currently does not have any implementation rules for redd activities, except for a methodology issued by the saf for carbon accounting, which addresses deforestation.49 Despite the absence of comprehensive implementation rules, redd proj- ects exist in practice. The ndrc has claimed that the saf had initiated actions on redd already since 2013.50 However, an ngo engineer said that there were no redd projects in China because the Chinese government did not want to acknowledge the existence of deforestation and forest degradation.51 Large forest activities need support from local governments in China. Participating
46 47 48 49 50 51
46 One possible baseline could be saf, The National Forest Inventories (全国森林资 源清查),
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52 53 54 55 56
52 For instance, Derong Lin et al., ‘Impacts and Inspirations of redd+ Mechanism on Mul- tifunctional Forest Management in China’, 24(3) World Forestry Research 22 (2011), at 22; and Hong et al., supra note 49, at 208. 53 Nuyun Li and Jinhong Yuan, ‘Chinese Sample of Forestry Carbon Voluntary Trade: Set up Carbon Trade System and Monetize Ecological Products’, 5 Forest Resources Management 4 (2015), at 4. 54 ccba, Governance of the Standards,
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57 58team to work out how to comply with the current cdm procedure and relevant 59 60 61 62 63
57 Niklas Höhne, Sina Wartmann, Anke Herold, and Annette Freibauer, ‘The Rules for Land Use, Land Use Change and Forestry Under the Kyoto Protocol: Lessons Learned for The Future Climate Negotiations’, 10(4) Environmental Science and Policy 353 (2007), at 353–69. 58 Susan Subak, ‘Forest Certification Eligibility as a Screen for cdm Sinks Projects’, 2 Climate Policy 335 (2002), at 337; and Sebastian Thomas, Paul Dargusch, Steve Harrison, and John Herbohn, ‘Why Are There So Few Afforestation and Reforestation Clean Development Mechanism Projects?’, 27 Land Use Policy 880 (2010), at 881. Even so, I doubt that China would modify this rule for forest carbon projects, because China has strict rules to ensure that forest land and forest products are owned by the state or farmer collectives. 59 China’s dna is the National Leading Committee on Climate Change. If a project passes the expert review, the ndrc will submit the application to the Review Board; see Mea- sures, articles 11(1) and 19. 60 Para 1, cdm-eb16, ‘Annex 6: Clarification on Elements of a Written Approval’ (2004), at 1. 61 Article 15 and 20, Measures. 62 Ibid., article 8. 63 Ibid., article 12 (4).
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national implementation rules.64 At the time of the interview, his team and the government were looking for upfront investment to hire consultants to help them with implementing a forest carbon project that could produce interna- tionally or nationally tradable carbon offsets.65 The Measures evidence governmental support for forest carbon projects by reducing the levy on sales of Certified Emission Reductions.66 The state collects two per cent of the cer sales of cdm A/R projects.67 This is signifi- cantly less than the levy of 30-to-65 per cent on other types of cdm project.68
2.3 Laws and Regulations on Land Use and Forests Except for special implementation rules, China’s laws and regulations on land use and forests are also applicable to international forest carbon projects. Therefore it is important to consider the extent to which relevant laws and regulations can contribute to promoting sustainability. To this end, I examine laws and regulations covering the following subjects: property rights to forest and land; the transfer of rights to land use; tax on land for forestry; and insur- ance for forestry projects. Currently, there is no special provision in China’s laws and regulations on land use and forests for forest carbon projects. Sustainable utilization is a principle of the forest industry in China.69 I consider the measures in these laws and regulations that may influence the sustainability of project results, which can be narrowed down to limitations on land use, public participation on decision-making, and incentive-based measures to protect forest.
64 65 66 67 68 69
64 Interview with a researcher at Chongqing Forestry Science Research Institute, Chongqing Province, China (18 July 2015). This interviewee was introduced to me by the Chongq- ing City Forestry Administration on account of his expertise on forest carbon sequestra- tion. Chongqing announced the launch of forest carbon projects in 2010; see Chongqing Science and Technology Commission, Chongqing Emergently Launching a Study on the Strategy of Forest Carbon Sequestration (重庆市紧急启动森林碳汇战略专题研究), Ministry of Science and Technology, 30 March 2010. 65 Chongqing has incorporated forest carbon offsets into the Chongqing Carbon Emissions Trading Centre since 2012; see Huan Meng, ‘Chongqing Pilot Carbon Emissions Trading Centre Incorporates Forest Carbon Trading’ (重庆试点碳排放交易市场 纳入森林碳 汇交易), China Climate Change Info-Net, 27 April 2012. 66 This point of view is also reflected in Jonas Fejes and Philip Thörn, The eu-China cdm Facilitation Project Final Report (2010), at 19. 67 Article 36, Measures. 68 Ibid. 69 Article 5, Forest Law of the People’s Republic of China (1998) (hereinafter Forest Law).
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Land in China belongs to the state, except for the land that belongs to farm- ers’ collectives.70 The use of land is divided into three categories: land for agri- culture, land for construction, and unused (barren) land.71 Forest land is under the first of these categories. It ‘shall not be converted to non-forest land’.72 To address deforestation and forest degradation, the government is to gradually recover forests from cultivated land.73 Forest carbon projects can be imple- mented on transferrable state-owned and collectively owned barren land, and, of course, on existing forest land.74 Not all forest land is suitable for forest carbon projects. In China, forests and forest land are categorized into five groups, based on their purposes: shel- ter forests, timber stands, ‘economic’ forests, fuel forests, and special-purpose forests.75 Of these, only use-rights to timber stands, economic forests, and fuel forests are transferrable in the market.76 Forest carbon projects involving trans- actions between foreign and domestic private parties are limited to projects on barren land and on forest land in one of the three aforementioned transfer- rable categories. This limitation exists to protect shelter forests and special- purpose forests, which possess important environmental or social functions. The use-rights to state-owned and collectively owned forest land and barren land may be transferred through a contract for forest carbon projects.77 The duration of the contract for forest land and barren land is to be reflected in the contract.78 A contract for the use of state-owned lands needs governmental
70 71 72 73 74approval at or above the county level.79 In the case of lands owned by farmer 75 76 77 78 79
70 Articles 48 and 58, Property Law of the People’s Republic of China (2007) (hereinafter Property Law). 71 Article 4, Land Administration Law of the People’s Republic of China (2011) (hereinafter Land Administration Law). 72 Ibid., Article 4. Article 15, Forest Law. 73 Article 39, Land Administration Law. See Section 3 on the general plans for the utilization of land. 74 Ibid., Article 14 and 15. Article 125, Property Law. 75 See the definitions of forest, forest wood, and forest land, at article 2, Regulation on the Implementation of the Forestry Law of the People’s Republic of China (2011); and see the categorization of forests, at article 4, Forest Law. 76 Article 15, Forest Law. 77 Article 15, Land Administration Law. 78 Articles 126 and 128, Property Law. 79 Article 40, Land Administration Law. Article 17 (2) (3), Regulation on the Implementation of the Land Administration Law of the Peoples Republic of China (2011); Item 8, State Council, Decision of the State Council on Amending Some Administrative Regulations, 9 July 2014,
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3 Sustainability Assessment of Foreign-Invested Forest Carbon Projects in China
Two types of legal instrument can be adopted to assess the sustainability of forest carbon projects in China. First, the proponent of a cdm project in China is required to conduct an eia before applying for a letter of approval from the government.84 Second, some cdm and redd forest carbon projects in other developing countries have voluntarily sought certifications from international forest-certification schemes to demonstrate their positive impacts on the en- vironment and society. In this section, I first review the eia process, applied by governmental agencies in accordance with Chinese laws and regulations. I then look at three forest-certification schemes utilized by private self- regulating entities.
3.1 eia in China Chinese laws regulate eias at three levels of rigour, based on the significance of the project’s environmental impacts and the environmental sensitivity of the project area.85 Forest carbon projects, regardless of whether the source of
80 81 82 83 84 85
80 Articles 11 and 14, Land Administration Law. 81 Article 6(5), Interim Regulations of the People’s Republic of China on Urban and Town Land Use Tax (2006),
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Impacts); Article 2, 3, and 4, Ministry of Environmental Protection, ‘Classified Administra- tion Catalogue of Environmental Impact Assessments for Construction Projects’ (2015),
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certifier, which can be an enterprise or an institution with legal personality.92 If the eia is inaccurate due to negligence or fraud, the third party bears joint liability for any environmental damage.93 The third party may lose its certifi- cation or suffer other penalties.94 Criminal liability of involved governmental officials is also possible in extreme circumstances.95 Public participation is a procedural element that may serve to protect the rights of forest owners.96 In China, the eia process requires forest projects to disclose environmental information for public review.97 It also ‘encourages relevant entities, experts and the general public’ to participate in the eia, through meetings, hearings, or other means of participation.98 The eia report is to explain why an opinion received through one of these channels was ad- opted or passed over by the project developer.99
3.2 Forest-Certification Schemes in China Besides the regulatory eia, the sustainability of forest carbon projects in China can be assessed by private certifiers based on forest-certification schemes. Three of these are widely recognized and applicable in China: the Climate, Commu- nity and Biodiversity Standard (ccbs); the Programme for the Endorsement of92 Forest Certification (pefc); and the Forest Stewardship Council (fsc).100 93 94 95 96 97 98 99 100
(建设项目环境影响评价资质管理办法) (2015),
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These schemes have special decision-making or implementation mechanisms to guarantee the sustainability of forest projects. They are based on contract law, are self-regulated, and certification is given by their own implementing bodies.101 This section discusses the history of the three schemes in China and summarizes their advantages compared with the regulatory eia for delivering sustainable forest results. Of the three schemes, only the ccbs has been applied to foreign forest car- bon projects in China. Between 2007 and 2017, nine projects have used the ccbs (Table 2, below). They include four registered cdm A/R projects, one withdrawn cdm project, and one project validated by the Verified Carbon Standard (vcs).102 The ccbs assesses projects based on three elements: global climate change mitigation, local communities’ socio-economic benefits, and biodiversity conservation.103 The ccbs requires practitioners to explain the risks and benefits of a project to the local stakeholders and invite them to par- ticipate in related decision-making and implementation.104 The pefc uses its Sustainability Benchmarks to certify national for- est standards.105 These benchmarks include a set of requirements for forest
101 102 103 104 105
Commercial Use’, Colombia, 17 February 2011, pdd, at 67. In addition, a vcs certified project may seek the ccbs certificate. See vcs, ‘Project id: 1175 Avoiding Planned Defor- estation and Degradation in The Valdivian Coastal Reserve’, Chile, 09 April 2014,
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Table 2 Forest carbon projects in China with international carbon certification.106
No. Project name ccbs status Other Carbon certification
1 Afforestation and Reforestation on Degrad- Validation cdm registered ed Lands in Northwest Sichuan expired 2010 2009 2 Reforestation on Degraded Lands in Validation cdm registered Northwest Guangxi, China (cdm Northwest expired 2010 2010 Guangxi Project) 3 Multiple-purpose Reforestation on Degrad- Validation cdm validation ed Lands in Longyang withdrawn 2010 4 Multiple Reforestation on Degraded Lands Validation – in Maanshan Nature Reserve, Sichuan withdrawn 2011 5 Small-scale Reforestation for Landscape Validation cdm validation Reforestation, Tengchong, Yunnan expired 2012 (withdrawn) 6 Afforestation/Reforestation on Degraded Validation cdm registered Lands in Southwest Sichuan approved 2013 2013 7 Afforestation of Degraded Shengle Eco- Validation cdm registered logical Zone in Helinge’er, Inner Mongolia, approved 2013 2013 Project 8 Reforestation Project in Yingjing County, Validation vcs validated Sichuan Province (Yingjing Project) approved 2013 2014 9 Restoration of Giant Panda Habitat in Validation – Southwest Sichuan approved 2014 10 Facilitating Reforestation for Guangxi – cdm registered Watershed Management in the Pearl River 2006 Basin (cdm Pearl River Project) 11 Small-Scale Afforestation for Combating – cdm validation Desertification at Kangping County, Liaon- (withdrawn) ing Province, China 12 PetroChina Xinjiang Oilfield Emission Re- – cdm validation duction and Afforestation Project 106
106 See the project databases of ccba,
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Table 2 Forest carbon projects in China with international carbon certification. (cont.)
No. Project name ccbs status Other Carbon certification
13 Jiangxi Province Le’an County Forest Farm – vcs validated Carbon Sink Project 2014 14 Reforestation Project in Qinghai Province – vcs validated 2012, China 2015 15 Fujian Yong’an Improved Forest Manage- – vcs validated ment Project 2016 16 Yunnan Kunming Liangqu Improved Forest – vcs validated Management Project 2016 17 Inner Mongolia Chao’er Improved Forest – vcs validated Management Project 2016
management accreditation.107 In February 2014, the pefc certified the China Forest Certification Scheme (cfcs) and other Chinese certification bodies us- ing its Sustainability Benchmarks.108 The pefc requires that all projects certi- fied by the cfcs be audited by pefc-authorized auditors against its bench- marks.109 Although the cfcs can be used to certify carbon forest projects in China, no project has been certified under it to date.110 Currently, the pefc is at the stage of assessing the feasibility of implementing certificates for forest
107 carbon108 projects in China and developing relevant tools.111 109 110 111
107 pefc, ‘China’s National Forest Certification System Achieves pefc Endorsement’, 3 March 2014,
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The highest decision-making body of the fsc is its so-called General Assem- bly, through which all fsc members can participate and vote on formulating fsc standards.112 Any environmental ngos, business and social organizations, companies, and individuals may apply for membership of the fsc.113 Mem- bers are divided into three groups—environmental, social, or economic—and votes are equally allocated to these groups. This distribution is designed to en- sure ‘environmentally appropriate, socially beneficial and economically viable’ forest management.114 Although the fsc China Working Group was established in 2007, the fsc has not so far been successfully applied to any forest carbon project in China.115 This is perhaps because the fsc China Working Group does not consider it- self as an entity specialized in assessing the sustainability of forest carbon projects.116 Therefore, project developers have not sought certification from the fsc. fsc certification applications in other activity areas, by contrast, have rapidly increased in China, from covering one million hectares in July 2009 to covering nearly 3.4 million hectares in June 2014.117 Considering this rapid popularization of the scheme, it is possible that the fsc will develop tools for assessing the sustainability of forest carbon projects which will be applied to such projects in China.
3.3 Critical Analysis of Sustainability Assessment in China
112 Chinese113 scholars have mainly discussed the technical elements of the regula- 114 115 116 117 tory118 eia.118 I will focus instead on its institutional design. The discussion in
112 fsc, ‘Governance’,
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Section 3.1 has shown that China’s regulatory eia utilizes government supervi- sion, third-party implementation, and public participation, all of which may contribute to delivering more sustainable environmental results. However, the current implementation rules of forest carbon projects in China are limited to the assessment of environmental impacts and do not include social impact assessment (sia).119 Both eia and sia should be compulsory for forest carbon projects to ensure environmentally and socially sustainable results. Regarding the forest-certification schemes, their effectiveness is nil where developers adjust their activities only for the purpose of meeting certifica- tion standards at the time when they are being reviewed.120 In addition, the variety of forest-certification schemes is problematic. Multiple certification schemes exist that do not use a common standard, which increases the com- plexity of forest-certification schemes for potential clients and wood-product consumers.121 This may be a reason why there is a low demand for forest- certification schemes in the Chinese market.122 119 120 121 122
Zheng, and Jinliang Li, ‘Discussion on Environmental Impact Assessment of Forest Man- agement’, 26(2) Journal of Beijing Forestry University 16 (2004), at 16–20; Yueping Lei, ‘Pri- mary Study on Environmental Impact Assessment of Feasibility Study in Forestry Project’, 27(3) Central South Forest Inventory and Planning 1 (2008), at 1–3; and Shoulin Dai, Jun Zhang, Jinru Zhu, Gaojie Chen, Aihua Shen, Renzhu Fang, Bo Jiang, and Weigao Yuan, ‘Assessment on the Environmental Impact of Integrated Forestry Development Project in Zhejiang Province’, 39(6) Journal of Anhui Agriculture Science 3411 (2011), at 3412–15. 119 China currently does not have sustainability assessment, although some Chinese domes- tic carbon certification schemes address sustainability issues to a certain extent. For in- stance, the China Beijing Environment Exchange (cbeex) designed the first voluntary carbon standard in China for domestic carbon trading: The Panda Standard. It assesses whether the project contributes to poverty alleviation. See Panda Standard, ‘Panda Stan- dard Sectoral Specification for Agriculture, Forestry, and Other Land Use’,
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Lastly, conflicts may exist between Chinese eia regulations and the self-regulating rules of forest-certification schemes in China. Scholars have suggested that the highest standard among them should be applied to avoid non-compliance.123 While this may solve legal conflicts, it may also lead to higher operational costs to meet highest-standard requirements for (sustain- able) management.124 Higher operational costs and a high certification fee may de-motivate Chinese project developers from seeking forest certification.125
4 Sustainability in Practice
What is the actual sustainability performance of forest carbon projects? In this section, I first review the online self-descriptions of forest carbon projects about their environmental and social impacts. Next, I discuss the financial bar- riers of projects and the motivations of project participants to implement forest carbon projects in China. Lastly, I examine the sustainability problems in the practices of forest carbon projects based on project-site visits and interviews.
4.1 Self-Description in Project Design Documents The cdm’s Project Design Document (pdd) template requires projects to demonstrate their environmental and social impacts.126 The pdds of cdm
123 124 125 126
123 Xiao et al., supra note 120, at 19–23. 124 The certification fee for a certifying period (normally 5 years) for a large state-owned for- est industry in the north of China is between 1.2–1.8 million rmb; see ibid., at 21; and Jan Fehse, ‘Forest Carbon and Other Ecosystem Services, Synergies between the Rio Conven- tions’, in Climate Change and Forests: Emerging Policy and Market Opportunities, edited by Charlotte Streck, Robert O’Sullivan, Toby Janson-Smith, and Richard Tarasofsky (London: Chatham House, and Washington, dc: Brookings Institution Press, 2008), at 60. 125 For more relevant discussion, see Yixin Xu, ‘From Host to Investor: Enhancing the Sus- tainability of cdm Forest Projects’, in eu Environmental and Planning Law Aspects of Large-Scale Projects, edited by Bernard Vanheusden and Lorenzo Squintani (Intersentia, 2016), at 57–77; Kirsten Carlsen, Christian Pilegaard Hansen, and Jens Friis Lund, ‘Factors affecting certification uptake: Perspectives from the timber industry in Ghana’, 2 Forest Policy and Economics 83 (2012), at 83–92; Ewald Rametsteiner and Markku Simula, ‘For- est certification: An instrument to promote sustainable forest management?’, 1 Journal of Environmental Management 87 (2003), at 87–98; and Yulin Zeng and Jingce Ma, ‘On the Development Status, Issues and Countermeasures of China’s Forest Certification’, 1 Jour- nal of Central South University of Forestry and Technology (Social Sciences) 98 (2010), at 100. 126 Sections D and E, cdm-ar-pdd-form, Version 8.0, 9 March 2015,
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projects are validated by does and published by the cdm Executive Board on its website. By April 2017, there were five registered cdm forest projects in China, as shown in Table 2.127 Their pdds claim many environmental and so- cial benefits in the environmental and social-impact analyses for their project areas.128 They also mention various environmental risks, such as fire, pests, disturbance of existing vegetation, herbicide and pesticide application, fer- tilization, and monoculture Eucalyptus plantation.129 Four projects mention possible negative socio-economic impacts, on culture, ethnic minority groups, and the local economy.130 All projects claim that preventive measures will
127 128 129 130
127 cdm, ‘Project 0547 : Facilitating Reforestation for Guangxi Watershed Management in Pearl River Basin’, 10 November 2006,
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131 132 133 hectares.134 136 135 136
131 cdm Shengle Mongolia Project, pdd, at 45. The following two projects claimed they would ensure that ethic minority groups have equal rights to access development oppor- tunities: cdm Pearl River Project, pdd, at 104; and cdm Northwest Sichuan Project, pdd, at 86. The cdm Southwest Sichuan Project stated that it would design and implement the project according to the local people’s tradition of using and protecting trees; see its pdd, at 62–3. 132 cdm Pearl River Project, pdd, at 13 and 73; cdm Northwest Guangxi Project, pdd, at 24 and 90. 133 Lan Yi, ‘What Accelerate the Drought in Guangxi? The Secret of The Fast-Growing Eu- calyptus Forest’, Greenpeace, 20 April 2010,
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If the host country considers that there is a significant negative environ- mental and social risk from a cdm project, it should require the project to con- duct an eia or sia.137 Yet, of the five registered cdm forest carbon projects in China, only the cdm Shengle Inner Mongolia Project conducted an eia, whereas none of them conducted an sia.138 Moreover, the sole eia was not certified by third parties. There is evidence, as I have indicated, that the cred- ibility and accuracy of pdd claims are dubious. Further independent assess- ment should be conducted into whether the preventive measures promised in pdds can effectively deal with the risks, and an independent assessment should be made of whether the measures have actually been implemented. does are independent and mandatory assessment bodies for cdm projects, as stipulated in the cdm’s rules.139 However, the rules do not require does to conduct substantial reviews on sustainability issues in the pdds—the veri- fiers only review the formal aspects of the documents,140 such as whether an environmental or socio-economic impact analysis is included.141 does do not assess whether the included analysis is accurate, adequate, or credible.
4.2 Financial Barriers and Motivations Through analysis of the pdds, I found that foreign forest carbon projects faced common financial barriers. First, the local people were too poor to afford the 137 138 139 140 141 cost142 of establishing plantations.142 Second, commercial loans and government
137 Sections D and E, cdm-ar-pdd-form, supra note 126. 138 Two projects did not conduct a new eia or sia but utilized an existing eia and sia for an- other project, because that project covered the project areas. See cdm Pearl River Project, at 74 and 81; and cdm Northwest Guangxi Project, at 91 and 104. 139 unfccc, ‘Decision 5/cmp.1: Modalities and Procedures for Afforestation and Reforesta- tion Project Activities under the Clean Development Mechanism in the First Commit- ment Period of the Kyoto Protocol (Former cop Decision 19/cp.9)’, fccc/kp/cmp/2005/8/ Add.1 2005, Annex, para. 10. 140 Ibid., para. 12(c). 141 cdm-eb55, ‘Annex 1: Clean Development Mechanism Validation and Verification Manual’ (2008), at 26; and cdm, ‘Clean Development Mechanism Validation and Verification Stan- dard’, Version 6.0P, cdm-eb65-A04-stan (2011), at 32–3. 142 Small-scale Reforestation for Landscape Restoration at the south of the Gaoligongshan Nature Reserve in Tengchong County of Yunnan Province (2006) (hereinafter cdm Tengchong Project), pdd, at 32 and 48; Small-scale Afforestation for combating Desertifi- cation at Kangping County, Liaoning Province, China (2007) (hereinafter cdm Kangping Project), pdd, at 24; PetroChina Xinjiang Oilfield Emission Reduction and Afforestation Project (2007) (hereinafter cdm Petro Xinjiang Project), pdd, at 22; and Multiple-purposes Reforestation on Degraded Lands in Longyang, Yunnan, P.R. China (2008) (hereinafter cdm Longyang Project), pdd, at 39.
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143 transnational144 forestry and timber companies.151 These companies have been 145 146 147 148 149 150 151
143 cdm Southwest Sichuan Project, at 33–4. 144 Interview with a researcher at Chongqing Forestry Science Research Institute, supra note 64. 145 cdm Pearl River Project, pdd, at 4; cdm Northwest Guangxi Project, at 3. 146 cdm Shengle Mongolia Project, at 2 and 16. 147 ccba and vcs, ‘Project 1332: Reforestation project in Yingjing County, Sichuan Province’ (2014) (hereinafter Yingjing Project), Project Description, at 41. 148 vcs, ‘Project 1162: Jiangxi Province Le’an County Forest Farm Carbon Sink Project’ (2014), Validation Report, at 14–15; cdm Tengchong Project, at 32; and cdm Northwest Sichuan Project, at 98. 149 cdm Longyang Project, at 3; cdm Petro Xinjiang Project, at 14; and vcs, ‘Project 1361: Re- forestation Project in Qinghai Province 2012, China’ (2015) (hereinafter Qinghai Project), Project Description, at 15. 150 cdm Southwest Sichuan Project, at 24; and Panda Project, Validation Report, at 32. In- terview with employee A of the Zhang Jia Yao Forest Farm, former operator of the cdm Kangping Project, at Kangping County, Shenyang City, Liaoning Province, China (30 June 2015). 151 For instance, cdm, ‘Project 4653: Kachung Forest Project: Afforestation on Degraded Lands’, 4 April 2011, pdd, at 4; and cdm, ‘Project 7949 : Namwasa Central Forest Reserve Reforestation Initiative’, 31 January 2013, pdd, at 2.
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4.3 Sustainability Problems in Project Practices Based on project-site visits, interviews, and a literature review, I uncovered four environmental and social problems in the practice of forest carbon proj- 152 153 154 155 156ects in China.
152 Centre for Science and Environment, ‘Cheap Fix: The Rush to Make Profits out of Carbon- Fixing Engenders Another Kind of Colonialism’ (2000),
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4.3.1 Use of Inappropriate Tree Species Problems with the selection of tree species became evident during interviews at the cdm Kangping Project. The project is located within the Zhangjiayao national forest farm, in Kangping. A farm employee said that Keio University, who was the investor, set conditions on what kinds of tree to plant.157 Populus was required, for its broad leaves and high carbon-sequestration capacity. This species is popular in monoculture plantation in China and other parts of the world, because it grows fast and has a high timber yield.158 However, Popu- lus did not grow well at Kangping, because it needs abundant water, where- as Kangping is dry.159 After the termination of the project, management and monitoring at the plantation ceased. Eventually, many of the seedlings died. Engineer Xiao, who is the project coordinator at Shenyang City’s Forest Bu- reau, said that the investors and the farm have silently reached an agreement on the plantation’s demise, by not claiming any damages or remedy.160 If a tree species with draught resistance had been selected for the Kangping Project, the survival rate would have been higher in the first few years of plantation work. Another employee at Zhangjiayao national forest farm, said that the farm had planted Pinus sylvestris and Acer mono on the dry land.161 Pinus sylvestris has many drought-resistant characteristics, has a high survival rate on dry land, and contributes to sand fixation.162 However, Mr Wang pointed out that these
157 158two species have a life span of only ten and twenty years, respectively.163 159 160 161 162 163
157 Interview with employee A of the Zhang Jia Yao Forest Farm, supra note 150. 158 Shengzuo Fang, ‘Silviculture of poplar plantation in China: A review’, 19(10) Chinese Jour- nal of Applied Ecology 2308 (2008), at 2308; and Gail Taylor, ‘Populus: Arabidopsis For For- estry: Do We Need a Model Tree?’, 90(6) Annals of Botany 681 (2002), at 681. 159 Jianwei Zhang, Zongsuo Liang, Ruilian Han, Qun Sun, and Langjun Cui, ‘Water Use Effi- ciency and Water Consumption Characteristics of Poplar Under Soil Drought Conditions’, 28(5) Journal of Plant Ecology 630 (2004), at 636; and Timothy J. Tschaplinski, Gerald A. Tuskan, G. Michael Gebre, and Donald E. Todd, ‘Drought Resistance of Two Hybrid Popu- lus Clones Grown in A Large-Scale Plantation’, 18(10) Tree Physiology 653 (1998), at 656. 160 Interview an engineer from the Forest Bureau of Shenyang City, Liaoning Province, China (9 July 2015). 161 Interview with employee B of the Zhang Jia Yao Forest Farm, former operator of the cdm Kangping Project, at Kangping County, Shenyang City, Liaoning Province, China (30 June 2015). 162 Shenyang Institute of Applied Ecology, Chinese Academy of Science, ‘Opening Ceremony of the Natural Sand Pinus Sylvestris Research Base’,
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4.3.2 Forest Disasters An expert from Beijing I interviewed revealed that some forest carbon projects have experienced a variety of disasters—anthropogenic, biological, and me- teorological.164 For example, small-scale but frequent forest fires were experi- enced at a forest carbon project in the south of China, because local people, in accordance with tradition, burned paper products to worship their ances- tors.165 Biological disasters (e.g. pests) also occur in China on a large scale and with severe harm.166 A cdm forest carbon project in Guangxi repeatedly expe- rienced frost and drought conditions, which detrimentally affected plantation activities.167
4.3.3 Unequal Benefit-Sharing among the Local Farmers The cdm Kangping Project, prior to termination, was located in a national for- est farm, owned by the state. The investment in the project was transferred to the farm and not to the local farmers. The latter were involved in the project, receiving payment for seeding and tending to the plantation. However, the additional income was very low. The local farmers earned around one yuan ( between 10 and 20 cents) for tending each tree.168 It was nevertheless still considered a desirable job by the local farmers, but only families and acquain- tances of the farm employees could get hired to do it.169 164 165 166 167 168 169
164 Interview with a forest scientist of the Research Institute of Forestry Science and Tech- nology Information, Chinese Academy of Forestry, Beijing, China (16 June 2015). This in- stitute can certify carbon flux in forest carbon projects in China; see Carbontree, ccer Carbon Credits Validation and Verification Entity: Research Institute of Forestry Science and Technology Information in the Chinese Academy of Forestry (ccer 碳汇审定与核 证机构:中国林业科学研究院林业科技信息研究所)
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Abuse of the power of appointment also occurred in one of the earliest do- mestically financed forest carbon projects. The project area belonged to the community of Koutou Village, in Fangshan District, in Beijing. The land was managed by a production brigade made up of the village’s Party members and a villagers’ committee. Local villagers confirmed that most of them were not involved in the plantation work.170 Workers who performed that work were from other villages and even other provinces.171 The employment of forest guards was limited to a particular family that was close to the members of the villagers’ committee.172 The committee may have had two reasons to hire workers from the outside: first, it would help conceal any corrupt activities, be- cause project expenses would remain unknown to the local villagers; second, it would be difficult to investigate the financial status of the project following its completion, when the outside workers had gone and could not be tracked down by investigators to determine the salaries they received for plantation work.
4.3.4 Local Farmers’ Participation Forest carbon projects in China cannot always guarantee that local people will be consulted. Consider, for instance, the Yingjing Project, which is located near Longcanggou Township.173 The project did not need to consult any local peo- ple about the use of the land, because it is operated in a state-owned national forest farm. Financially, the farm is independent. The farm hired people from outside to do the plantation work, and no income from the forest carbon proj- ect made it to the township.174 Regarding decision-making, neither the Long- canggou villagers nor the administration of the village have been involved.175 The situation was similar to the former cdm Kangping Project, where project
170 171 172 173 174 175
employees of the farm. However, the old lady, who lives in a village near the farm, said that no farmers in her village are involved in any work of the farm. 170 Interview with villagers of Koutou Village in Qinglong Lake Town of Fangshan District in Beijing, China (15 June 2015). 171 Ibid. 172 Ibid. 173 Yingjing Project, ccba, Validation Report, Report No: qt-shc1115/11;12/437, 24 June 2013, at 44; and Conservation International, ‘Sichuan Giant Panda Habitat Vegetation Restora- tion Project’ (四川大熊猫栖息地植被恢复项目),
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income went directly to the farm. There, too, the local farmers were not in- volved in any decision-making about the project. Yet, plantation work in these project areas undoubtedly had an impact on the living conditions of the local people. Therefore, they should have been engaged in the forest carbon proj- ects, even if the relevant land belonged to the state. By comparison, farmers were more involved in a project in Huangshan City, whose lands belong to the local communities.176 This carbon-sequestration project is spread across five provinces, including Huangshan county in Anhui province.177 The farmers’ land-use rights were contracted out to a few con- tractors. The contractors are directly involved in the project’s forestry work. Regarding decision-making, a so-called Participatory Rural Appraisal method was adopted to consult the local farmers, as required by the funding provider, the World Bank.178 This project is not a typical forest carbon project, as its car- bon sequestration is not measured against a widely recognized carbon certi- fication schemes. Its carbon sequestration was not intended to be traded, but was developed for demonstration and out of genuine concern for environmen- tal protection.179 The evidence from my interviews suggests that the project practitioners respected the investor’s request to undertake measures to ensure public participation. Hence, linking funding with sustainable outcomes cre- ates an incentive for project practitioners to achieve those outcomes.
4.4 Conclusions from Empirical Research Based on my analysis above, I draw the following conclusions about the sustain- ability performance of foreign forest carbon projects in China. First, contrary to the project self-descriptions in the pdds, the projects do not always contrib- ute to improving the environment. They sometimes lead to unsustainable en- vironmental results. Projects may underperform compared to their plantation plans, especially when there is a lack of supervision of projects’ environmental and social impacts from the Chinese government and third parties. In addition, there are commonalities in the financial barriers facing foreign forest carbon projects in China, including high establishment and transporta- tion costs, and high financial risks. Two factors can lead to a shortage of for eign 176 177 178 179
176 Interview with a government official of the Tanjiaqiao County, Huangshan City, Anhui province, China (15 July 2015). 177 World Bank, ‘China: Integrated Forestry Development Project’ (Washington, dc: World Bank, 2010),
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5 Conclusion
This article set out to assess the national legal/policy framework for the sus- tainability of foreign forest carbon projects in China. The analysis shows that the government has set ambitious goals to enlarge the forested area in the country and to improve forest quality over the decades to come. Although rel- evant policy documents are not always mutually consistent, they do establish goals to protect biodiversity and enhance public participation to secure sus- tainability in the forest sector. Therefore, the political environment is generally favourable for sustainable forest carbon projects in China in the future. In contrast with the favourable policy environment, the legal framework does not sufficiently promote sustainable forest carbon projects. On the posi- tive side, the cdm implementation regulations impose a favourable levy on forest carbon projects to encourage practitioners. This is in line with China’s policy ambitions. However, China lacks implementation regulations for redd projects. Procedures and criteria in China’s cdm implementation regulations lack transparency for assessing the sustainability of cdm projects. Additional- ly, Chinese laws on forest and land are not equipped with special clauses deal- ing with the environmental and social risks of forest carbon projects. Overall, China’s climate policies on biodiversity conservation, poverty alleviation, and public participation in forest carbon activities are not reflected in these laws and regulations. Turning to the legal instruments that directly assess the sustainability per- formance of projects, namely sustainability assessments, I find several short- comings. In China, the regulatory eia and private forest certification schemes can assess the sustainability of forest carbon projects. Although the eia process
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