Small and Medium Forest Owners to Access Carbon Credit Market

The Government signed an agreement with private entities to open the carbon credit market to small and medium forest owners.

This is a Cooperation Agreement for the Promotion of Forest Projects associated with Standards and Climate Finance, a public-private initiative that seeks to lay the groundwork for private sector participation in carbon markets, accessing their financing and meeting climate standards.

According to the Executive Branch, the agreement marks a milestone for the country by incorporating practices already consolidated internationally, where carbon markets have become a key tool to accelerate climate action and mobilize private investment.

In Chile, this type of credit industry has not deepened, so the signing of this agreement would open a new stage to enable multipurpose forest projects that capture carbon emissions, integrating small and medium owners into this market with environmental benefits.

The Minister of Economy and Energy, Álvaro García, valued the agreement, stating that "we hope it initiates a new stage for Chile's forestry development (...). Furthermore, here we are very appropriately combining three key dimensions for us: productive development, climate action, and territorial strengthening."

"On one hand, it stimulates the growth of the forestry sector, key to the economy. On the other hand, it supports small forestry producers with specialization and, therefore, has a great social impact," he added.

For his part, the General Manager of Corma, Antonio Minte, commented that "although the agreement is framed in seeking financing alternatives to resume planting through carbon markets, it is primarily an agreement for Chile, which needs to resume planting and increase its forested area."

In more detail, according to the Ministry of Economy, Development, and Tourism, the initiative will promote afforestation and reforestation projects with native and non-native species, the recovery of soils and forests affected by fires, increasing carbon capture, which will contribute to meeting the country's climate goals, such as carbon neutrality by 2050.

The participation of small and medium forest owners is a central axis of the agreement. They will be able to access complementary income from carbon markets, strengthening the rural and regional economy with higher environmental standards.

In this context, the Vice President of Corfo, José Miguel Benavente, commented that "it is a treaty, a work that has taken a long time, and the idea is for it to endure over time to provide opportunities to develop, sophisticate our export basket, and also position Chile in international markets related to this sector, which is tremendously fundamental for employment, investments, and the growth and well-being of all of us."

In turn, the Minister of the Environment, Maisa Rojas, stated that "this is a very concrete demonstration of how the Framework Law on Climate Change is acting as an umbrella with its two objectives: on one hand, to be carbon neutral by 2050 at the latest, but also resilient to the effects of climate change."

Regional Guilds

The regional and national president of Pymemad, Michel Esquerré, stated that it is a positive measure, but too late. "It is a delayed reaction where the Minister of the Environment, Maisa Rojas, after 4 years, comes to ratify something that should have been done on the first day of her term, where it must be recognized that it is a positive measure they have taken for climate change and carbon capture, in which trees are a vector for reducing dependence on oil."

"If the Government promotes planting by small and medium owners, there will no longer be many abandoned fields, with good quality management and plantations, cleanings, and firebreaks. Small and medium forest owners number around 30 thousand in the Biobío region."

Michel Esquerré recalled that "the hectares of plantations lost by small and medium owners due to fires occurring from 2017 to date in the country amount to 300 thousand, of which between 70% and 80% correspond to owners in the Biobío region."

Regarding the implementation of subsidies for forest plantations at the regional level, the president of Pymemad updated that what exists is an initiative by the Regional Government of $9 billion over three years to promote plantations by small and medium owners, which would be managed through Conaf, where they would take charge of plantations on preferably forest soils, 'which is a tremendous step for the State to later do something centralized for all regions.'"

Alejandro Casagrande, regional president of Corma Biobío and Ñuble, highlighted that "we have the responsibility to maintain this dialogue instance with the new authorities, and to bring these new tools, such as the carbon market, so they can be a real financing alternative, especially for small and medium owners, who currently lack support to recover their forests affected by fires and to create new forests on forest-suitable lands devoid of them."

"Carbon credits are a complex tool, but with the commitment of all institutions, public and private, we trust that the possibilities of achieving this common purpose are much more likely," he added.

Governance and Financing to Scale Projects

The agreement establishes a public-private governance aimed at reducing coordination gaps, designing operation and financing models, and enabling financial instruments associated with carbon credit certification. Among the challenges addressed are the need to achieve scale, reduce transaction costs, and secure long-term financing for forest projects.

Likewise, it contemplates the development of a five-year roadmap, which will be updated annually, and the systematization of learnings to make them publicly available and facilitate the replicability of the initiatives.

Work Started in 2024

This agreement is the result of collaborative work started in 2024, within the framework of the dialogue promoted by the Government on the challenges of the forestry sector, the goals of the Nationally Determined Contribution (NDC 2025-2035), and the commitments of the Biobío Industrial Strengthening Plan.

Source:Diario Concepción