In a major forestation project in the Chinese province of Guangxi, managers are using market instruments to fight climate change.

The latest U.N. climate report published by the United Nations paints a bleak picture of the planet's future. By 2100, the temperature could rise by up to 6.4 degrees. The ice at the polar caps and in Greenland would melt, the sea level would rise by up to 59 centimeters, many coastal regions would be flooded, and entire islands would disappear. Long periods of drought would cause severe famine resulting in thousands of deaths. Nearly all scientists agree that climate gases and especially carbon dioxide produced by humans are responsible for the greenhouse effect and rising temperatures.

The Clean Development Mechanism (CDM) plays an important role here. It permits industrial countries to earn emission reduction certificates by supporting climate protection projects in developing and emerging nations, thereby compensating for emissions in their own country. First, the mechanism calculates the volume of climate gases that would be produced if nothing changed. Then experts calculate how many greenhouse gases would be saved by appropriate climate protection projects. The project is funded by an industrial country from either public funds or private businesses. The state and the economy can thereby achieve their own climate protection targets and compensate for the rise in their own emissions. Alternately, investors can sell their certificates to other companies on markets specifically established for this purpose. CDM projects are subject to specific requirements. Independent testing companies must validate the projects before they are registered by the United Nations and their certificates are authorized for trading.

TÜV SÜD was the world's first service provider that was authorized to validate CDM projects in all 15 categories of the Kyoto Protocol, thereby handling the complete range of CDM projects for its customers, says Werner Betzenbichler, head of the Carbon Management Service Department at TÜV SÜD Industry Service. During the last six years, TÜV SÜD experts have handled around 400 projects. By now, more than 130 projects have been registered by the United Nations and authorized to participate in international emission trading.

One of the latest emissiontrading projects at TÜV SÜD is the world's first forestation project registered by the U.N. Climate Change Panel. In the southern Chinese province of Guangxi, funding from the World Bank BioCarbon Fund 

 has enabled natural-oriented forests to be planted in a water catchment area, which can then generate initial CO2 certificates. Around 770,000 tons of CO2 equivalent are to be stored here over 30 years. The CO2 effects are verified every five years before the United Nations awards certificates.

The local communities and their residents are involved in the project and benefit from it. They earn money from the sale of the certificates and are employed in forestation work being performed in two areas respectively 2,000 ha in size, where an almost subtropical monsoon climate prevails. Conifer and deciduous trees in the region will be mixed with resilient eucalyptus trees to reforest areas that humans have cleared. The process prevents soil erosion and supports biodiversity because the mountainous terrain is home to protected species, including the Chinese pangolin and clouded leopard, an animal of prey weighing up to 20 kilograms that feeds on monkeys.

Forestation and reforestation in developing and emerging countries play an important role in protecting the climate since growing trees can store large quantities of carbon, says Martin Schröder from the Carbon Management Service at TÜV SÜD. The successful implementation of the forestation project in China forms the basis for accreditation by the United Nations. In the future, we can supervise comparable projects in Asia, Central and South America, and East Africa, Schröder adds. Most contractors are institutional investors like the World Bank or governments, but also businesses in the energy industry. In addition to trading emission certificates, forestation and reforestation projects play an important role in other environmental aspects, such as water management and soil bed protection.