1. The FAO Advisory Committee on Paper and Wood Products held its Forty-fifth Session in Canberra, Australia on 17and 18 April 2004. Mr James Griffiths chaired the session, which was attended by 38 participants from 18 countries, including 15 members (Annex 1). This report summarizes the main results of discussions.
Item 1. Opening of the Session and welcome addresses by representatives of the Government of Australia and FAO
2. Mr James Griffiths, Chairman of the Committee, opened the Session and Ms Belinda Robinson, Chief Executive Officer of the Australian Plantation Products and Paper Industry Council (A3P), welcomed the participants. Ms Robinson noted that the meeting coincided with the celebration of the creation of A3P, which is the merger of the plantations sector with the paper manufacturing industry in Australia. In this context, she mentioned that a number activities had been organized to follow immediately after the ACWP meeting, including paper industry’s technical conferences and a two day international investment symposium. She thanked all the participants for having travelled from so far afield to take part in the meetings.
3. Mr Wulf Killmann, Director, Forest Products and Economics Division, FAO, welcomed all participants on behalf of Dr Jacques Diouf, Director-General of FAO. He expressed the Organization’s appreciation for the hospitality offered by the host government and the Australian Plantation Products and Paper Industry Council. He stressed the importance FAO attaches to the advice received from the industry sector through this Committee, as well as its contribution to the Forestry Department’s work programme. Furthermore, he recalled the role of the Committee as a forum for discussion and as a neutral facilitator. Mr Killmann then welcomed new Committee member, Mr Rafael Gaviola, President of the Argentinean Pulp and Paper Producers Association.
4. Mr Daryl Quinlivan, Executive Manager, Fisheries and Forestry, Department of Agriculture, Fisheries and Forestry, welcomed the participants to Canberra. With regards to UNFF 5, he mentioned the need to demonstrate tangible progress in sustainable forest management – which continues to be a burning issue in Australia. He recognized the important role that FAO plays, as Chair of the Collaborative Partnership on Forests (CPF) in facilitating cooperation and the effective use of limited resources to help ensure positive progress in forestry. Mr Quinlivan informed the participants about the various activities Australia is carrying out in the Asia Pacific region in support of forestry development through bilateral and multilateral approaches, as well as through participation in the international forestry dialogue.
Item 2. Adoption of the provisional agenda
5. The Agenda was adopted (Annex 2), with the proposal to move item 11 and 12 immediately after item 7.
Item 3. Review of actions taken by FAO on the recommendations made at the 44th Session of the Committee
6. Mr Wulf Killmann reviewed the activities undertaken by FAO, and their relevance to the recommendations made by the Committee at its previous Session. The recommendations addressed the following issues:
i) Illegal Logging): FAO, jointly with ITTO, is conducting a project to analyse experiences and derive lessons that could be of benefit for future actions aimed at improving governance in the sector. A set of guidelines is under development to help governments organize their control of illegal activities in forestry. An expert meeting will take place at the end of 2004 to discuss the guidelines. The Committee and ICFPA were encouraged to nominate an expert to participate in the discussions. In addition, a data base is under preparation on assessment of extent and design of corrective measures against illegal acts in forestry in various countries. The Committee was also advised that discussions were expected to take place on 16 and 17 September in Geneva about illegal logging in the UNECE region, including Europe, CIS countries, Canada and USA. The meeting would focus on Eastern Europe.
ii) Global Forestry Convention: CEPI presented an excellent paper on the potential of a legally binding instrument addressing the most important issues. Next year, UNFF will come to an end and will report to ECOSOC on its accomplishments. The possible options on what could happen after UNFF were presented, noting that FAO does not take a position on this issue but provides technical support to member countries.
iii) Certification: In June 2003, FAO convened a closed meeting for the Chief Executive Officers of eight different certification schemes around the world. The meeting was successful in that it increased mutual respect and understanding amongst the CEOs. The need for a second meeting later on this year was discussed.
A major study had been undertaken on “Trade and sustainable forest management – impacts and interactions”. It was due for publication in June 2004.
iv) Communication: FAO, together with IUFRO and other international bodies, has attempted to strengthen its information system and to develop FORIS (Forest Resources Information System) as an umbrella information system. An electronic communication tool was under preparation with a view to keeping Committee members advised about current forestry developments relevant to the industry.
In this context, it was proposed to discuss how the private sector could participate in the forthcoming meeting of the Committee on Forestry (COFO) and take the opportunity to organize a side event.
v) Sustainable forests products: FAO continues to promote the use of sustainably produced forest products. A new study is planned to further analyse the environmental benefits of the use of forest products.
vi) Climate Change: FAO supported the UNFCCC Secretariat in its work on harvested wood products as carbon sinks and contributed to a document on reporting and accounting of carbon in harvested wood products. Furthermore, FAO was one of the lead authors for the “good practice guidance” prepared by the Intergovernmental Panel on Climate Change, which was approved at the Ninth Conference of the Parties, held in Milan in December 2003. FAO continued its work on capacity building on the interface between forestry and climate change for foresters and climate change negotiators in Latin America, Africa and Asia.
vi) World Forestry Congress: FAO actively participated in the side event organized by ICFPA and a presentation was made on forest products production and trade.
Comments from the Committee regarding FAO’s activities
7. The Committee expressed its appreciation for the progress made in implementing the recommendations made at the last session.
8. Regarding private sector participation in COFO, the Committee agreed to consider its participation either through the organization of a side event and/or through the respective government delegations. Last COFO (2003) was characterized by a number of side events, which were appreciated and well-attended by delegates, since these provided further opportunities for discussions. ICFPA, as a registered NGO in FAO could also consider the organization of a side event, after evaluation of the various international events scheduled for the next 12 months.
9. Committee members confirmed their interest in participating in the Expert Meeting on Guidelines for Ensuring Forest Law Compliance, and agreed to propose a participant to FAO. Expertise is available within the companies or their associations.
10. The Committee appreciated FAO’s work on the topic of “Trade and sustainable forest management – impacts and interactions”, and recommended that the main findings be presented during the European Paper Week organized by CEPI in November 2004.
11. As concerns forest certification, the Committee stressed the importance of linking FAO’s efforts on mutual recognition with the forest dialogue. FAO took note of this proposal.
12. The Committee confirmed its interest in the study on the socio-economic and environmental effects of forest based products substitution which FAO is planning to undertake, and offered to collaborate with FAO in developing the study outline and providing follow up to its development.
Item 4. The role of ACPWP and ICFPA
13. Mr Avrim Lazar made a presentation on the opportunities for building on synergies between FAO and ICFPA. He pointed out that, over time, ICFPA has been building up the role of a global representation of the private forest industries sector. Between ICFPA and the ACPWP, there is an overlap both as regards membership and, to a certain extent, functions. The distinction between the two, however, remains clear: ICFPA is the voice of the private sector on international matters related to forest and paper products, taking positions and actions as required. The ACPWP is a neutral partner and serves as a bridge between the private and the intergovernmental sector. The agenda items discussed in ICFPA and ACPWP meetings are very similar if not identical, but the functions are different. In order to avoid duplication, and to streamline and build on synergies, it was recommended that the conclusions from the ICFPA meeting should form the basis of to the ACPWP. The Committee stressed the importance of promoting strengthened interaction between the two bodies. It noted that, even where different views exist about issues of common interest, there are many opportunities for collaboration. The Committee also discussed the specific role of the ACPWP in relation to private sector initiatives. For instance, the private sector could issue press releases mentioning FAO’s position on specific issues of interest to the sector, or FAO could act as a neutral and credible interpreter to other stakeholders (NGO’s, press, the public at large) supporting those arguments with shared views.
Item 5. Recommendations of the Committee to FAO for 2004 – 2005
14. Mr Henson Moore, Chair of ICFPA summarized the proposed recommendations to the Committee:
• Illegal logging: FAO to work with industry experts in a working group to develop definitions on illegal logging and to assist and gather data on the extent of illegal logging;
• Plantations: FAO to communicate positive aspects of forests plantations to the public, governments and other stakeholders;
• Communication: FAO to enhance communication and cooperation with the private industry sector, in particular on climate change issues.
15. Considering the reduced human and financial resources of FAO in general and the Forestry Department in particular, the need to prioritize the Committee’s recommendations was recognized. The Committee therefore agreed on the following recommendations to FAO for the activities of the next 12 months:
• To facilitate the process of harmonization of illegal logging related definitions. An expert consultation should be organized with the participation of forest industries and NGOs;
• To develop a framework for best practices for Corporate Social Responsibilities (CSR) with emphasis on social aspects, including poverty alleviation;
• To develop, in close collaboration with ICFPA, a draft code of best practices for plantation forestry;
• To continue efforts to improve interaction between ACPWP and ICFPA, recognizing the different functions of each forum and strengthening the work of existing working groups in both bodies.
16. It was further recommended that the exchange of information between ACPWP and the private sector be enhanced.
Item 6. Illegal acts in forestry: definitions process
17. Latest developments on the illegal logging debate were presented by Olman Serrano, as was the FAO response to the recommendations made by the Committee at its 44th Session, to facilitate dialogue and discussion in this area. Options for future activities related to the definitions process were presented for consideration by the Committee, taking into account the recommendation already presented by the Committee and listed under paragraph 16.
18. While fully supporting the process of harmonizing illegal logging related definitions, the difficulty involved in developing a common definition was recognized. It was therefore recommended to try to keep the definition as simple as necessary, in line with that used by the EU and supported by CEPI1, and clearly describe its complexity, including issues related to illegal trade, transportation, corruption, as well as the need to improve rule of law or governance.
19. The committee further recommended involving major stakeholders in the process, recognizing the need to keep the number of experts to a maximum of approximately 40 people. The deliverables would be the submission of a draft framework which would be shared with selected groups of experts, including private sector representatives, nominated by ACPWP members. A second version of the draft would be produced based on comments received and this would be the background material for an expert consultation with major stakeholders.
Item 7. Role of forest industry in poverty alleviation
20. At the preparatory meetings held in Rome and Brussels in 2003, Committee members recommended that FAO elaborate further on the role of the forest industry sector in poverty alleviation, as a follow up of the 44th session’s discussions in Oaxaca on the subject. The 2003 presentation and discussion focused on various options that the forestry sector could consider in order to contribute to improving the world’s food security. Gary Bull, professor at the University of British Columbia, this year presented global picture of concrete actions taken by the forest products industry to contribute to poverty alleviation, followed by examples from the forestry sector in Brazil, presented by Mario Leonel, Executive Director of BRACELPA. Options were presented for consideration by the Committee of ways to design a common set of principles consistent with themes identified by the members, industry associations and the UN.
21. The Committee recognized the industry’s need to improve communication with the public and the international community regarding efforts made not only to alleviate, but also to avoid poverty. People’s wellbeing resulting from industry’s activities is not recognized. The Global Reporting Initiative (GRI) and the Global Compact Initiative were discussed, and it was agreed that the forest and paper industries would required a set of credible principles so as better to measure their efforts in social aspects.
22. Therefore, the Committee recommended that FAO, in close collaboration with the private sector, develop a framework for best practices for Corporate Social Responsibilities (CSR) with emphasis on social aspects, including poverty alleviation.
23. The Committee emphasized the need recognise that any activities undertaken by the industry related to poverty alleviation in particular, or people’s wellbeing in general, is an interaction between business and society. It is based upon a conducive business climate that leads to investment. This business climate should include proper governance, sound financial structure and institutions, a taxation structure that allows a return to investors, efficient environmental regulations, a trading system without barriers. These are, in fact, the greatest contributors to poverty alleviation. FAO, as an independent broker, could analyse national policies impacting industry’s ability to alleviate or avoid poverty.
24. The importance of effective capacity building programmes was emphasized by the Committee as being one of the most critical elements relating to poverty alleviation.
Item 8. Forestry and Climate Change: emerging carbon markets
25. Carbon sinks remain a topic of interest to the private forest and paper products sector. At its 44th Session, the Committee explored means of collaboration between FAO and ICFPA on the subject. Committee members also recommended that FAO assist the private sector in playing an active role as a link between the industry and the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat, and present opportunities to the sector for its participation in the carbon market. Robert Tippmann, an expert on forestry and climate change from EcoSecurities, London, presented some of the challenges and opportunities for the forest and paper products industry to participate in clean development mechanism (CDM) activities and other opportunities in the emerging carbon markets. Ms Teresa Presas, Managing Director of CEPI, moderated a panel discussion amongst Luis Costa Leal, Director General of the Portuguese Pulp and Paper Association, Henson Moore, President and CEO of the American Forest and Paper Association, Richard Stanton, Policy Manager, Australian Plantation Products and Paper Industry Council (A3P), and Robert Tippmann.
26. The panel discussed the following questions:
a) CDM or other carbon sequestration projects are very complex and very costly. Is there any way to simplify them so that the complexity does not deter potential investors?
The panel explained that methodologies for CDM projects are still being developed and that once methodologies have been approved by the CDM Executive Board, these can be used for other projects and adapted to specific project characteristics. It was emphasized that one of the main aspects of concern to the private sector is its enormous suspicious about the way the negotiations related to forest projects are taking place. There is no trust between negotiators, foresters or the private sector and as a result, modalities and definitions become very complicated. Lack of trust is the basic cause of all these complexities. There are a number of uncertainties in investments because of the numerous steps in the process. Baseline and additionality are very difficult to establish and define. There is lack of clarity about how CDM projects are going to work. For an investor, it is still very unclear. Considering these shortfalls, the true cost of carbon credits for the user would be very high. The example of Australia was mentioned, being a country which is not a signatory of the Kyoto Protocol. It was explained that the vast majority of forest and forest products companies are not actively involved in the carbon market. In addition to the uncertainty, there is also the complexity factor. It was reported that some companies might be keen to get involved in carbon sinks projects, but they still have many reservations. Another reason for such reservations is the lack of consistency between the different schemes. There is a wide range of schemes or programmes that have been developed and implemented, including the New South Wales Green House Gas Bench Marks Scheme, which gives the opportunity for sink credits. Every one of these schemes lists the same issues: bench marks, leakage, boundaries, etc., but every scheme has different rules making it complex for investors. The panel stressed the need to harmonize the schemes.
b) Given the limitation of the 1% of base year emissions, what are the possibilities for forest companies to enter those “Certified Emissions Reductions” (CERs) markets?
The panel commented that if the system is to operate the way it is meant to, the idea should be to use a market based mechanism to find the least cost means of abatement or reducing emissions. If the least cost means is to grow trees, then why is there any cap of what forests sinks can do? A similar cap has been imposed also in the New South Wales scheme, perhaps because of the lack of certainty, lack of confidence or lack of credibility associated with these forests sinks. Unless something can be done to address that communication or reputation angle, then it really won’t matter what the threshold is. In addition, the panel mentioned that, at the end of the project, the company that bought the emission reduction credits will have to pay them back again. Forestry in this respect does not solve the problem. It only saves time for the companies to reduce their emissions. The panel recognized this as one of the reasons for having a certain cap, in that it gives the impression that a company’s cannot do whatever they like by just growing trees all over and pretend that the emission problem is solved. The issue instead is to reduce emissions and this is not done by planting trees. It is a temporary tool for companies to set up investments in time. The debate on forestry and climate change has not been presented in a transparent way, in an attempt to convey the impression that forestry could solve all problems. The application of the Kyoto Protocol and climate change policies are most inevitably the results of a great deal of complex bureaucracy and an obvious consequence of using bureaucrats as negotiators. The private sector should contribute to project design in a more effective way.
The panel commented that the interest of companies in this has to be considered in the long term. In the long run, industry is required to reduce emissions in different ways. Using offsets, such as sinks in CDM, delays retooling that is necessary. If first commitment period requirements are met through CDM or other schemes, when it comes to the second commitment period, companies would be at the same stage as at the beginning, and emissions efficiency would not be improved. From industry’s perspective, where reductions are necessary, meeting the first commitment period reductions through retooling is far more desirable than meeting them through planting trees. The panel emphasized the fact that there is a different perspective from non Annex 1 countries, having no requirement for reductions and for whom marginally economic afforestation or reforestation projects could become economic, if they can find a market for their carbon credits (a market in an Annex 1 country). The Committee expressed concern about long term market distortion as a result of the Kyoto Protocol. For example, a developing country investing in technology to reduce emissions, could sell the credits to an Annex 1 country. This is considered a transfer of costs. The developing country producer could produce more economically than the developed country. The issue about how to rebalance this in the long term without a non-tariff barrier between developing and developed countries was mentioned, as otherwise there is a risk of paper companies migrating to developing countries. The ACPWP Secretariat recalled the fact that CDM projects try to combine two different goals. The first one is emissions offset and the second is support to sustainable development. Over 25% of the greenhouse gas emissions are a result of land use and forestry. It is therefore a serious issue in the forestry sector.
c) The performance of projects is central to demonstrating that CDM activities can contribute to climate change mitigation and provide positive development objectives. How much experience has there been of such projects achieving those objectives? And what are the chances that such projects can succeed under CDM?
The panel recalled that experience in forestry sink projects started in early ‘90s. The latest assessment made by the World Resources Institute in 2003 reports some 71 carbon sequestration projects worldwide in different development stages, CDM and non CDM, as well as experience with activities implemented jointly before Kyoto. A number of positive experiences with private sector involvement were mentioned, for example, in conservation projects in Latin America, but there were also negative examples with large scale monocultures and problems with local populations.
d) Is there a market for other forestry activities in addition to afforestation and reforestation under CDM, such as reduced impact logging, forest management, forest conservation?
The panel noted that there are opportunities for additional markets, but the main issue is whether CDM is more valuable than others. The question was raised about why individual companies should be interested in participating in these mechanisms, and why they should go abroad instead of implementing activities locally, considering that the gain will be the same. It should be considered how far special projects can be accounted nationally. These projects can increase the total carbon kept in the forest ecosystems in the country, so that the country could benefit from it. The panel illustrated this with the case of Portugal, where the authorities are not in favour of carbon sinks ownership. The pulp and paper industry in Portugal has 200,000 ha. of land. An assessment has been made of how much the carbon stock could be increased by improved management, but that increase in stock cannot be used for the benefit of companies. The government lacks the will to set mechanisms that allow additional benefits. It was pointed out that the European Community rules do not allow this either. Examples were mentioned, such as increasing rotation periods, use of protection areas, etc. The panel mentioned the need for a political process supporting such additional carbon sink opportunities.
e) What can be the role of FAO ino promoting strategic partnerships and CDM project development? How can FAO facilitate the identification and promotion of possible projects for the private sector?
The panel recommended that FAO contribute by providing information on processes that are underway, such as the ISO process in setting standards, which could affect the accounting of carbon in forestry sinks. In other words, by advising theses processes on the technical and scientific side and supporting the simplification or harmonization of information related to on-going activities. The ACPWP Secretariat confirmed that FAO will continue its involvement in capacity building in non-Annex 1 countries as well as its support to member countries through the National Forest Programmes Facility. It recalled that CDM involves also bio-energy and not only forestry. When it comes to forestry projects, CDM projects should be part of national planning.
On the technical side, FAO has been supporting Central American countries with capacity building in the development of CDM forestry small scale projects. In addition, FAO is starting collaboration with the World Bank through the implementation of the Bio-carbon Fund. The panel concluded that carbon markets are still emerging and more work needs to be done for a better understanding of CDM projects.
Item 9: The international dialogue on forest certification
27. The Committee recommended at its 45th Session that FAO continue its work on the process of mutual recognition and other forms of cooperation between the different forest certification schemes. Wulf Killmann briefly presented the current status of forest certification and proposed for the Committee’s consideration concrete actions that FAO could take to facilitate the process. The following questions were considered for discussion:
• Could Criteria and Indicator processes become bridging tools between trade and sustainable forest management (SFM)?
• Are the assessment approaches of schemes helpful?
• Where should Mutual Recognition go?
28. On the second question, the Committee recognized the risk of having a proliferation of assessments schemes. It noted that the CEPI matrix approach is very successful, and is also a good information tool. The FERN and the WB/WWF assessment were described as single sector processes. It was reported that, according to a recent Forest Dialogue meeting, there is an agreement by various stakeholders to commission a peer review study that would contrast the different assessment approaches. The Committee commented about some governments carrying out their own assessment for their procurement guidance and regulations, or NGO’s developing assessments to advise private companies about the use a specific system. It was agreed that this is not necessarily a technical issue, but a political one.
29. The Committee commented on the risks and opportunities if criteria and indicators become a bridging tool between trade and SFM. It argued that there would be a risk that when this option is introduced into a trade policy environment and that there could be non-tariff barriers created by exclusive reliance on one scheme or assessment criteria, but there would also be an opportunity for recognition of the whole concept of SFM. The Committee noted that, on one hand, an understanding of what constitutes a credible certification scheme to high standards has not been developed, and, on the other hand, it goes to the heart of WTO and the whole provision of non-discrimination of production processes and methods. It was concluded therefore that criteria and indicator processes could become bridging tools, but it is not yet the right time. It was mentioned that there is a risk in introducing a number of trade distortions into the market place, without the appropriate involvement of the industry, as the discussion should not be limited only to environmental organizations and governments. The Committee recommended that FAO make additional efforts to assist in understanding the nexus between criteria and indicator processes and trade and SFM.
Item 10. Discussion on pertinent issues raised during presentations and recommendations
30. The Committee agreed on the following recommendations to FAO:
• Illegal logging – definitions process;
• Best practices for CSR, under the consideration of social aspects, since environmental aspects are already well covered;
• Draft code of best practices for plantation forestry.
Item 11. Date and place of the next session
31. The Committee proposed to meet next in 2005 in Vancouver, in conjunction with the “Summit 2005: Future of the Forest Products Industries”. The date proposed was the week starting 8 May, subject to confirmation by FAO and members.2
Item 12. Nomination of new Chairperson and Vice-Chairperson
32. The Committee nominated Mr Boris Tabacof, President of the Brazilian Pulp and Paper Association, as the new ACPWP Chairperson and Mr Yoshihiko Saeki, President of the Japan Paper Association, as Vice-Chairperson for the period 2004 – 2006.
Item 13. Any other Business
33. Dr Gary Bacon, Chairman of the 22nd IUFRO World Congress Organizing Committee provided an overview of the IUFRO Congress, to be held in Brisbane, Queensland, in August 2005.
34. James Griffiths thanked the Advisory Committee for its support during his years as Committee member (since 1997) and particularly during the last two years as Committee Chairman.
1 CEPI supports the definition of illegal logging as “when timber is harvested in violation of national laws.”
2 Following later discussions, it was agreed to hold the 46th ACPWP Session on 31 May 2005 in Vancouver, with a preparatory meeting on 29 May. The Summit will be held from 1 to 3 June 2005.
