Policy Challenges in the Woodfuel Sector

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Policy Challenges

Wood-based fuels contribute substantially to the total energy consumption in most developing countries - particularly in Africa, where firewood and charcoal account for more than 80% of the energy used. Most of this energy is used domestically for cooking and heating.

Although governments and decision-makers at national level may declare their intent to align national policies with international standards, the practical implementation, enforcement and monitoring are often insufficient. This holds true particularly for wood-based fuels. National forest policies all too often fail to address issues relating to the supply of woodfuel, and energy policies tend to label wood-based fuels as a ‘backward’ and ‘primitive’ source of energy – one that is to be replaced with fossil fuels or electricity as soon as possible. In consequence, the issue is commonly overlooked – even discriminated against – in forest and energy policies alike.

In most developing countries, the off-take of firewood and charcoal is not regulated in practice, much less are forests managed in a sustainable manner. Where firewood and charcoal are sold, market prices almost always reflect extraction costs only. Landless domestic migrants and the poorest segments of urban populations typically spearhead the commercialization of firewood and charcoal, because they have few other choices. Middlemen and retailers play a catalyst role, mostly in larger cities. Under such conditions, the only limit to firewood ‘production’ is when it is no longer economically viable to transport fuel from where it is grown to where it is used.

Such extraction regimes may hardly be called sustainable. They usually result in rapid depletion of forest resources, with deforestation spreading in concentric circles around urban consumption hotspots. The poorest and most vulnerable segments of society are first to be cut off from much needed basic energy services as market prices for firewood and charcoal (even if they reflect extraction costs only), grow beyond their means.

Non-regulated exploitation, along with its adverse environmental and social impacts may, in essence, be ascribed to policy and government deficits. Solving the problem requires the adoption of policies that promote sustainable production and the modernization of the woodfuel sector.

Modernization of the woodfuel value chain

Modernization of the woodfuel value chain is a complex undertaking requiring targeted policy interventions, governance support and deliberate value-chain development with a view to formalising energy business, promoting production and sustainable management of forests and woodlands, and levelling the playing field for a wider range of resource-dependent stakeholders.
To this end the formulation of an official strategy on biomass energy expressing a government’s acknowledgement of its contribution to improving energy access alongside “modern” energy sources such as LPG and kerosene and (to a minor extent) electricity is required. The Biomass Energy Strategy (BEST) Initiative -a joint effort of the EUEI Partnership Dialogue Facility together with GIZ- supports African governments to develop national biomass energy strategies that set out rational and implementable approaches to manage the biomass energy sector (internet link).
Establishing a biomass energy strategy should not be viewed as an isolated exercise but as an integral part of an inter-sectoral development process. An ideal biomass energy strategy should ensure that resources are used without negative social, economic and environmental consequences. This requires balancing the supply and demand of biomass energy. While the energy sector is responsible for energy supply and demand, a number of other sectors have a niche in biomass energy issues. These include besides forestry, agriculture, environment, industry, health, population, gender and education.
The challenge of the BEST process is to launch a participatory process with all relevant stakeholders, so as to pull resources together in order to provide sustainable and affordable options for the poor and thus contribute to a supportive policy framework.
The Biomass Energy Strategy (BEST) Guide is providing useful information for policy makers and energy planners and can be downloaded at the following address: www.euei-pdf.org/fileadmin/user_upload/Publications/BEST-Guide-2011-en.pdf 

Security of Tenure

One of the principal policy challenges outlined above, that of unregulated access to forest resources and unchecked exploitation, is directly linked to forest resource tenure. Tenure arrangements are highly specific to a country’s political and legal system, social order and historic development. This must be adequately reflected in wood-fuel policies. In many cases, forest resource tenure does not equate to total land ownership.

Ownership is defined as the exclusive legal right to a thing: (i) the right to possess, (ii) the right to exclusive use, (iii) the right to manage and / or dispose of the property, (iv) the right to income, (v) the right to security, (vi) the absence of term, and (vii) the liability to execution. While (forest) land ownership frequently rests with the state, rural households or communities may lay claim to a wide range of rights of access, management and use (both statutory and customary).

It is widely recognized that security of tenure is one of the most significant framework conditions necessary for sustainable forest management (see also From Exclusion to Ownership? 2008, Rights and Resources Initiative). Recent comparative studies show clearly the relationship between insecure tenure, poor economic performance, social instability, degradation of natural resources, and critical biodiversity losses (USAID (2007): Land Tenure and Property Rights Regional Report; Vol. 2.1 East and Central Africa).
 

Wood-based fuels are no exception to this rule. Open access and unregulated use allow the growing scarcity of wood resources to go unnoticed – or else obscured until overexploitation has exhausted forest resources to the point of deforestation and economic non-feasibility.

Firewood is typically harvested from woodlands and degraded secondary forests adjacent to settlement areas. Despite this, forest fringe communities rarely hold title to the forest resources they depend on for their daily subsistence. Unlike timber plantations, valuable high forests, or protected forests, areas of this kind are neither privately owned, nor do they attract the high level attention of local governments, forest authorities or civil society. At the same time, rural communities do not have the means to lay claim to the lands which, in many cases, they have always accessed as of right, but for which their rights are insufficiently documented.

This situation creates a formidable disincentive for investments in sustainable forest management. It explains why unchecked exploitation and informal production and marketing are difficult to replace with more transparent and equitable arrangements. Several actions need to be taken to support the strategic shift from demand-driven exploitation to production-oriented management:

• Identification, documentation and subsequent reconciliation of claims to forest areas,
• Mapping, demarcation and cadastral registration of forest areas, including those dedicated to sustainable production of wood-fuel (documenting land ownership, by producing documents, diagrams, sketches, plans, charts, and maps)
• Clear assignation of rights, obligations and responsibilities (including decision-making authority) in respect of forest resources, both within communities (for both men and women), and pertaining to third parties,
• Establishment/empowerment and capacity development for community-based institutions in charge of forest resources,
• Agreed and documented approaches to conflict-resolution and enforcement mechanisms.

No blueprint or easy options are available to solve tenure related problems and challenges. In each case, tailored solutions must be designed through careful analysis of the prevailing political, legal-regulatory, administrative, socio-economic, socio-cultural, and historical contexts. Multi-stakeholder consultations can help foster ownership, and reduce the potential for land-use conflicts. For further reading, see: Strategies for Strengthening Community Property Rights Over Forests, Lessons and Opportunities for Practitioners, Andy White, and Alejandra Martin - 2002 Forest Trends. There are three basic types of instruments to support tenure reform and to promote tenure security are highlighted below:

• Promotion of joint management arrangements to foster good relations on fragmented forest areas, and establishment of Forest Management Units (FMUs) sufficiently large to enable Sustainable Forest Management (SFM) through forest owners’ associations, cooperative arrangements, Public-Private Partnerships (PPP)
• Incentive systems (regulatory as well as financial), and gaining public support through advisory and assistance schemes, credit schemes, tax-holidays, payments for environmental services (PES)
• Capacity development through a diverse range of measures ranging from community empowerment and advocacy to practical management training and organisational / marketing support (e.g. through design and promotion of value chains etc.).

Regulation and Control

Sustainable Forest Management requires long-term investment and commitment. Investment includes mobilization of capital and labour, and a willingness to forego short-term profits in favour of long-term benefits. Regulatory instruments are needed to safeguard tenure rights for those living there, and to promote transparency, accountability and equity in revenue collection and benefit sharing.

Strategies to put production and marketing of wood-based fuels on a sustainable footing need to distinguish between two basic scenarios:

1. localised collection and low-impact harvesting of fuelwood by rural communities for household consumption, and
2. commercialised logging, charcoal burning and transport by professional retailers for urban consumption.

The latter scenario, in particular, creates serious challenges for forest resource protection and rural development alike. Retailers and freight hauliers generally use more efficient harvesting technologies and transport than rural communities and households. They commonly enlist the help of otherwise unemployed, landless people. In doing so, they are quickly able to deplete forest resources by removing large quantities of wood. Further, they usually target accessible forest areas within reach of urban consumption hotspots, adding to the concentration effect. Many cities and larger settlements, particularly in Sahelian Africa, are concentrically ringed by deforestation zones that expand for as long as transport distances remain economically feasible. Rural communities, on the other hand, have no means of either checking unregulated access to their forest resources, or demanding their fair share of the proceeds.

For these reasons, unregulated and commercialised use of wood-based fuels creates the need for intervention and corrective action. It also lends itself to more effective control and regulation, as there are only a limited number of roads that can transport wood-based fuels. By comparison, rural communities can use more extensive and decentralised systems based on the granting of cutting permits.

Strategies to promote sustainable production of wood-based fuels thus hinge on framework conditions which encourage woodfuel merchants to supply their trade from sustainably managed forest areas, and discourage unregulated harvesting. The ‘Rural Fuel Wood Markets’ approach, introduced in Niger, Mali and Chad, with World Bank support, provides a case in point. Under this system, participating communities commit themselves to SFM on forest areas through land-use contracts with public authorities. Following allocation of officially-approved harvesting quotas, each community receives ‘coupons’ up to the amount of wood stipulated in their contract. They are entitled to sell equivalent amounts of wood or charcoal to merchants, and thus generate direct income from forest management. On inspection by forest authorities along transport routes, fuelwood merchants or freight hauliers must produce coupons as proof of origin in order to avoid the payment of surcharges payable for fuelwood taken from unregulated sources (charges levied on properly sourced wood or charcoal are significantly lower). Charges collected by forest authorities are subsequently disbursed under a benefit-sharing scheme that covers the operational expenses of the forest inspectorate, maintains a forest rehabilitation fund, and provides additional income for the participating communities.

This approach, while providing good market incentives for sustainable forest management, is entirely dependent on strong public institutions to ensure effective control, revenue collection, and transparency in benefit-sharing.      

Law Enforcement

Policy formulation and design of regulatory instruments is ineffective unless backed up by strong institutions capable of law enforcement. Approaches such as the ‘Rural Fuel Wood Markets’ scheme depend upon transparent fulfilment of management contracts, protection of tenure rights, and road checks of woodfuel transport on the main entry roads to urban areas. Enforcement capacity equally depends on professional skills, equipment, and institutional integrity. Unless staff are internally monitored and paid competitive salaries, the systems described are susceptible to corruption and abuse. Similarly, worthwhile market incentives, some form of enforcement, and a high level of integrity are needed within the rural communities involved.Development support geared towards enhancing woodfuel policies and designing regulatory frameworks conducive to both forest resources protection and poverty alleviation must go the extra mile to build up viable institutional frameworks, if a lasting impact is to be achieved. 

Financing through Carbon Management

Forest resources in general have the capacity to absorb and store carbon dioxide, and exert influences on climate dynamics through evapotranspiration (= sum of evaporation and tree/plant transpiration from the earth's land surface to atmosphere) and albedo (= extent to which a tree diffusely reflects light from the sun) effects. The degree to which this happens is subject to a wide range of determining factors, biotic (caused by living organisms) and abiotic (caused by chemical and physical factors), anthropogenic (derived from human activities) and others. Above all, it is highly specific to site conditions, tree species composition, and growth dynamics. It is therefore difficult to quantify the global forest resources’ contribution to the mitigation of climate change. According to generalised estimates, terrestrial ecosystems absorb as much as three billion tonnes of anthropogenic CO₂ emissions annually, and global forests (covering approximately 30 per cent of the total land area) are believed to store more than double the amount of carbon in the atmosphere. As climate change unfolds, more frequent hot and dry seasons increase the risk of forest fires and pest outbreaks – turning net sinks into sources of CO₂ emissions.

In general, mature natural forests close to, or at, their peak have absorbed their full quota of carbon, with very little or no net-absorption of carbon dioxide. Juvenile forests, on the other hand, store significantly lesscarbon, but due to their still dynamic growth, they absorb substantial amounts of CO₂ from the atmosphere. The same applies to managed forests which, due to continuous or periodic timber harvesting, are constantly kept in a juvenile state (provided that they are managed sustainably). Forest degradation directly affects and diminishes both a forest’s storage and absorption capacity. Deforestation not only releases CO₂ stored in standing trees, but leads to rapid decomposition of organic matter in the topsoil – adding to the negative effect.

Forestry may contribute to the fight against climate change in four ways:

1. expansion of forest cover through afforestation and reforestation
2. improved forest management to optimise carbon-storage capacity in existing forests
3. replacement of less-environmentally friendly products and fuels with timber products and wood-based fuels from sustainably managed forests
4. reduced emissions from deforestation and forest degradation.  

Wood-based fuels are typically harvested from woodlands, shrublands or degraded secondary forests adjacent to settlement areas. Due to the prevailing vegetation characteristics, density, site conditions and pressure of use, the capacity of fuelwood forests to absorb or store carbon dioxide will tend to be modest. This applies to natural forests as well as woodfuel plantations, which are often located on marginal sites, unsuited for more economically attractive production. Biomass accumulation per hectare is therefore lower in typical fuelwood forests than it is in mature high forests.

Nevertheless, the sustainable management of wood-based fuels creates significant opportunities to protect and stabilise existing woodlands, to restock degraded and barren areas exposed to threats such as soil erosion and surface run-off, and to conserve and rehabilitate carbon stocks and the absorption potential of forest areas. Wood-based fuels from sustainably-managed sources can provide carbon-neutral energy that may replace less environmentally-friendly energy sources, and be more accessible to the poorest sectors of society.

CDM	Clean Development Mechanism 'under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC)
A/R	Afforestation and Reforestation
LUCLUF	Land Use Change, Land Use and Forestry
REDD	Reduced Emissions from forest degradation and deforestation
VCM	Voluntary Carbon Market
tCER	Temporary Certified Emission Reductions
ICER	Long-term Certified Emission Reductions

Whilst beneficial in environmental and socioeconomic terms, these effects do not automatically translate into revenue-generation under the various international schemes and programmes designed to combat climate change. These include CDM A/R measures in the LUCLUF context, REDD measures, and VCM. While CDM A/R measures are currently recognized under the Kyoto Protocol, a framework for REDD is only just emerging; this framework is likely to be reflected in a post-Kyoto arrangement. VCM, by definition, operates outside the Kyoto context. All these instruments are structured around the storage and absorption capacity of forest resources.

CDM A/R projects are jointly conducted by industrialised countries obliged to reduce and/or offset their GHG emissions, and by developing countries without that obligation. Industrialised countries are entitled to claim up to one percent of their GHG emission reduction obligations through investments in CDM A/R projects. Strict procedural rules restrict CDM A/R measures to areas that are either free of forest cover, or cleared before December 31^st, 1998. CDM A/F measures generate either Temporary Certified Emission Reductions (tCER – for a period of 5 years) or long-term CERs (lCER – for an unspecified project implementation period) that can be traded internationally. CDM A/R projects are characterised by relatively rigid, strict procedural rules and requirements (definition of forests, demonstrated additionality, safeguards against leakage, demonstrated permanence); they carry high credibility and are internationally recognized. Certified emission reductions only reflect the accumulation of biomass over time (i.e. the growing stock), which means that logging activities – however sustainable – diminish a given forest area’s potential for generating CERs. The same applies to any accidental loss of forest cover due to fire, pests, storms etc.

The Bali Conference, December 2007 (UNFCCC – COP 13) adopted the ‘Bali Roadmap’ towards a post-2012 international agreement on climate change. It notably included REDD as an optional instrument under a post-Kyoto arrangement, which had hitherto been excluded due to difficulties in defining deforestation/forest degradation, determining a baseline, and safeguarding against leakage effects. At the Bali Conference, the Forest Carbon Partnership Facility (FCPF), headed by World Bank, was launched specifically to develop a framework for REDD implementation and to facilitate the transfer of international funds to countries facing deforestation threats. To these ends, the FCPF operates two basic instruments:

1. The readiness mechanism, which serves to prepare developing partner countries for their participation under the REDD scheme through the promotion of conducive political, legal-regulatory and administrative framework conditions required for REDD
2. The carbon finance mechanism, which is implementing pilot interventions in a limited number of selected countries.

REDD offers interesting options to link up carbon-sequestration more directly with biodiversity conservation and the promotion of sustainable rural livelihoods. Pinpointing forest areas that are suitable for recognition as ‘committed forests’ under the REDD scheme will be paramount (see also: International Forest Policies and Politics: Their Implications on Deforestation).

Finally, the VCM schemes afford options to countries which have not yet ratified the Kyoto-Protocol or which lack a national emission-trading system, and to projects which either operate outside the CDM, or are too small to justify the investment required for fully-fledged verification and monitoring. Various protagonists are demonstrating how VCM schemes can be used, including ‘ATMOSFAIR’, ‘PRIMA KLIMA’ and international environmental NGOs such as WWF and Conservation International. Numerous pilot measures are underway in a variety of developing countries (e.g. Madagascar, the Philippines, and Indonesia).No conclusive evaluation of these various initiatives are given here.

International carbon-sequestration arrangements and instruments are currently changing rapidly. Their application depends on a country’s ‘readiness’ in terms of such factors as a national forest inventory and monitoring systems, adequate regulatory frameworks and administrative capacity. Capacity building, knowledge transfer and awareness building are required to foster the formation of carbon markets in developing countries. These observations underline the need for a coordinated energy policy which takes account of policies in related sectors.

Additional information:

Bonan, Gordon B.: Forests and Climate Change: Forcings, Feedbacks, and the Climate Benefits of Forests. Science (320): 1444-1449.

Canadell, Joseph G. and Raupach, Michael R.: Managing Forests for Climate Change Mitigation. Science (320): 1456-1457.

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