Rainforests brought back to life as 'carbon trading' takes off

New forests could blossom in tropical zones from Brazil to India as one of the more creative ideas produced by the Kyoto protocol begins to bear fruit. Someone has finally hit on a way to make money out of conservation.

Behind the idea is the fact that all Kyoto signatories are required to reduce their emissions of greenhouse gases, in particular carbon dioxide, or face heavy fines - but if they cannot bring themselves to cut the emissions, they can buy "carbon credits" from countries or companies that are doing so.

The system works because greenhouse gases are a problem for the world, not merely for countries where the emissions take place. Likewise "carbon sinks", the forested areas that reduce the net quantity of global carbon emissions, can be anywhere.

As reported in The Independent yesterday, a bloc of 10 Third World countries styling themselves the Rainforest Coalition, led by Papua New Guinea and Costa Rica, are to lobby the United Nations conference on climate control in Montreal this weekend to launch a system whereby such countries will be paid at the going carbon-credit rate for preserving their forests. At present this is $20 (£11.50) for one credit, which is the equivalent of a one-ton unit of carbon dioxide.

Not to be outdone, a newly launched London-based finance company dealing in the "new carbon economy" has raised £68m from international investors to pour into raising new forests on land that has been logged out.

Carbon Capital, founded by Edward Seyfried last year, has established eight carbon trading partnerships around the world, from Brazil to China by way of Uganda, Kenya and India. "Each of the partners is seeking to generate their own carbon credits cheaply and sell them on," Mr Seyfried said. In total, the eight projects cover 450,000 acres of land that was formerly forested.

The first project, run by a company called Carbon Positive, is getting under way in Para, Brazil:seedlings are due to be planted out in the coming weeks, during the expected wet, mild weather. Decades ago, the forest in Para was cut down and a rubber plantation, owned by one of the big American automobile companies, was put in its place. But, within a year, the rubber trees were killed off by blight and the plantation was abandoned.

After three years, the pilot project will be examined by the officials of the Kyoto protocol's Clean Development Mechanism to see if it fulfils stringent criteria. Not only must the new forest replicate the biodiversity of the original one, but 20 per cent of the land must be devoted to commercial schemes that make sense, and money, for the local people. As Mr Seyfried says: "It's no good kicking people off their land so they simply go and deforest somewhere else."

If the officials give the project a certificate, the area of new forest will be enormously expanded. Mr Seyfried says: "Commercial solutions to global problems are better than charitable ones. We are trying to arrange it so that the Brazilian squatter farmer gets as much out of these schemes as the fat, cigar-chomping London banker."