Now that climate talks in Cancún, Mexico have concluded after producing modest advances, attention would be expected to shift to Durban, South Africa. There, delegates next year will try to draft a successor agreement to the Kyoto Protocol. But actually, many of the delegates decamping from Cancún on Dec. 11 had California on their minds.

That’s because under California’s Global Warming Solutions Act, the state must cut its greenhouse-gas emissions to 1990 levels by 2020, a reduction of 30% from current levels. More to the point, the California law allows 8% of the greenhouse reductions to be generated through participation in a system known as Reducing Emissions from Deforestation and Forest Degradation (Redd). Under Redd, polluters in the developed world—in this case California—would underwrite projects to curb deforestation in developing nations and could count the resulting greenhouse-emission cuts against their locally mandated limits.

“There may yet be a global deal that includes credits from Redd activities,” says William Boyd, a senior advisor to the Governors’ Climate and Forests Task Force, a subnational working group of 14 states and provinces from the United States, Brazil, Indonesia, Nigeria and Mexico that plan to cooperate on Redd. “But in the meantime, California is creating the world’s first compliance market for accepting such credits from large states and provinces in the developing, tropical-forest countries.”

UN process sluggish

UN-sponsored efforts to replace the Kyoto Protocol after 2012 have moved slowly since the fiasco of last year’s Copenhagen meeting. There, many delegates concluded that the UN process had reached its natural end. That said, this year’s Cancún meeting was more productive—and harmonious—than that in Copenhagen. It produced the first agreement by all the major economies to: reduce emissions with specific targets (albeit targets that are not yet legally binding); send US$100 billion a year by 2020 to help vulnerable countries adapt to climate change; and define steps developing countries should take to develop Redd programs.

Still, key issues remain unresolved. For example, negotiators agreed Redd should include market as well as subnational systems, under which states and provinces, as well as national governments, could participate. But they were unable to establish precise definitions of what a forest is or how the accounting of forest emissions should be conducted.

California, meanwhile, has moved forward. It is on target to begin reducing its emissions in 2012 and, most importantly from an international perspective, to start working out ways to include international Redd projects in its cap-and-trade system. “There’s still an enormous amount of work to be done over the next year or two to figure out how international Redd credits will enter the California system,” says task force member Boyd, a Redd expert and professor at the University of Colorado Law School. “But that window will exist.”

Given the size of California’s economy, the eighth largest in the world, the state’s climate program could provide significant funds to partner states abroad and help lay the foundation for Redd should a global climate regimen be adopted. The first areas likely to sell credits are Chiapas in southern Mexico and Acre on the far western side of Brazil. Both states signed memorandums of understanding on Nov. 16 to link up with California’s system.

Acre, with about 85% of its forest intact, is a world leader in developing payments for environmental services. For a decade, it has subsidized rubber tappers, whose low-impact work is seen as a bulwark against damaging activities such as cattle ranching. The program has helped save an estimated 12,000 square kilometers (4,600 sq miles) of Amazon rainforest.

Comprehensive approach

On Oct. 21, Acre passed a law extending technical assistance and investment to small farmers who protect forest and thereby provide carbon sequestration, watershed protection, biodiversity conservation and other environmental services. Named the System of Incentives for Environmental Services (Sisa), the law is expected to help farmers expand into activities, such as Brazil-nut production, that give locals a stake in forest protection. It resembles the type of system California seeks in which not only projects, but states as a whole, must demonstrate reductions in forest loss.

Chiapas, home to the 1.8-million-hectare (4.4-million-acre) Lacandon Jungle, is the site of Scolel Té project, which began in 1996 to capture carbon through forest regeneration, reforestation with native species and agroforestry. Administered by Ambio, a local non-governmental group, the project has sold credits in voluntary markets since 2002 to benefit peasant farmers in the highlands and in Lacandon.

Says Tracey Osborne, a post-doctoral fellow at the University of Arizona’s Institute of the Environment: “[Chiapas] would surely welcome additional funds for avoided deforestation from California, though I think it’s crucial that evolving California rules protect land tenure, land rights and the cultural uses of the land.”