Corporations investing in Latin American forest conservation projects would receive tax breaks under legislation now pending in the U.S. Congress.

U.S. Sen. Sam Brownback of Kansas has authored the International Carbon Sequestration Incentive Act, which would give companies a $2.50 tax credit for each ton of carbon they sequester through greenhouse gas-reduction efforts in Latin America and other developing regions.

Brownback says the bill would provide companies an important financial incentive to protect the environment voluntarily—rather than establish mandatory greenhouse emissions limits, which he opposes.

“Until now, the only real approach seriously considered to address climate change was an international treaty, which would limit the amount [of carbon dioxide] coming from your car, your business and your farm,” Brownback said. “My approach encourages offsetting greenhouse gases through improved land management and conservation—and by engaging developing nations rather than cutting them out of the process.”

Environmentalists have voiced support for Brownback’s bill, but they consider the legislation a first step toward—not an alternative to—mandatory limits of the type spelled out in the 1997 Kyoto Protocol.

“There’s no way that tax incentives or voluntary measures are going to generate the emission reductions we need to stabilize the climate,” says Jeff Fiedler, climate change policy specialist at the Natural Resources Defense Council. “But these kind of tax incentives are great because they get people thinking in the right direction and they begin to develop technologies we need for these projects. We’re going to need to take a first step.”

Under Brownback’s bill, companies that invest in carbon sequestration projects lasting at least 30 years could get tax benefits of up to 50% of their investment, or receive a package of insurance and International Monetary Fund loans for the projects.

U.S. companies already have begun funding sequestration efforts. The following, for instance, invested in Latin American projects with the help of The Nature Conservancy, an environmental nonprofit in Arlington, Virginia:

- In Brazil, Central and South West Corp. of Texas contributed to a $5.4 million reforestation project starting this year in the Guaraqueçaba Environmental Protection Area.

- In Bolivia, American Electric Power, BP Amoco and PacifiCorp funded a $9.6 million effort in 1997 to double the size of the Noel Kempff Mercado National Park.

- In Belize, Wisconsin Electric power, Detroit Edison, Cinergy, PacifiCorp, Suncorp, and a consortium of a dozen companies called UtiliTree Carbon Co. funded a $5.6 million carbon sequestration project in the Rio Bravo Conservation and Management Area in 1995.

Brownback’s legislation would encourage more such efforts, says Tia Nelson, deputy director of The Nature Conservancy’s climate change project. By helping governments in the tropics fight deforestation, she says, the bill would help eliminate the second largest source of carbon dioxide after industrial emissions.

Says Nelson: “If you can value an environmental service, you are creating an economic incentive we’ve struggled for years to find.”

Under Brownback’s bill, a panel of representatives from the U.S. Forest Service, the Department of State and various NGOs would have to evaluate the projects. The projects would be ranked according to how they protect native forests and forests not cut for at least 10 years, preserve biodiversity, prevent greenhouse emissions and check soil erosion.

It’s unclear how the program would treat monoculture tree plantations, which absorb carbon dioxide but also threaten biodiversity; that issue likely would be taken up by the forest service panel.

“You have to do more than plant trees,” says Douglas Meyer, spokesman for The Nature Conservancy. He cites the Noel Kempff project, in which logging rights have been retired and local residents trained in producing such low-impact agricultural products as palm hearts and orchids. Project leaders say that by reducing logging and farming in the park, they can realize a net benefit of 6 to 8 million metric tons of carbon over 30 years, equivalent to the carbon dioxide emissions of 500,000 cars.

International pressure is growing to limit greenhouse gas emissions, but the U.S. Senate has been hostile to the notion of emissions limits, refusing to ratify the Kyoto Protocol. And bills to credit early-action emission cuts have drawn fatal opposition from industry groups.

What might make Brownback’s bill more palatable to industry, however, is that it doesn’t mention future limits on greenhouse gas emissions. Its co-sponsors include high-profile opponents of Kyoto—among them Sen. Robert Byrd of West Virginia, a major coal state.

“Brownback’s bill is another example of lower-scale endeavors which some people say could be an alternative,” says Michael Toman, senior fellow at Resources for the Future, a Washington, D.C.-based think tank. “It’s asking a lot less, but may be more politically feasible.”