Oct. 29 (Bloomberg) -- Carbon-dioxide credits that may be issued under a new UN forestry climate agreement may be worth less after text that protected forests was removed last month, investors said.

The proposal made during climate talks in Bangkok didn’t include wording to protect natural forests from being used to cultivate managed woodlands, which may reduce demand for the credits, said the Carbon Markets & Investors Association, an emissions-trading lobby group whose members include Deutsche Bank and JP Morgan.

“Safeguards for biodiversity were diluted in ways which might at first appear harmless, but in fact leave the door open for credits to be awarded to projects which destroy intact pristine rainforest,” Christian del Valle, a London-based director of environmental markets at BNP Paribas, said today by telephone.

The proposal will be discussed in Barcelona next week during final climate negotiations before almost 200 countries gather in Copenhagen in a bid to reach agreement on terms for an accord that will extend or replace the 1997 Kyoto treaty, the current climate-protection agreement. Measures to slow deforestation may be included.

Carbon credits would be generated from projects tied to reducing emissions from deforestation and forest degradation in developing countries, known as REDD. The changes in text mean that rainforests could be destroyed and replaced with managed woodland plantations, according to the CMIA.

Stopping Deforestation

The REDD mechanism would generate carbon credits from preventing loss of forests. Trees curb greenhouse gases blamed for climate change because they store carbon dioxide from the air as they grow. Cutting down forests and letting trees rot or burn accounts for about a fifth of greenhouse-gas emissions.

The program is “not meant to provide monetary reward for converting natural forest to forest plantations,” Rebecca Chacko, director for climate policy at Conservation International, a not-for-profit group based in Washington, said by telephone today. Chacko was at the negotiations in Bangkok.

Brazil, Mexico, India and Norway want to change the treaty to include protection, CMIA said. The European Union failed to support stronger language during the Bangkok talks.

“There is confidence that the EU will follow through with their earlier statements and push for the safeguards text to be reinstated into the REDD working draft in Barcelona,” said del Valle, who is also vice chairman of the forestry working group at the CMIA.

To contact the reporter on this story: Catherine Airlie in London at cairlie@bloomberg.net

Last Updated: October 29, 2009 13:06 EDT