Brazil and the United States, the two key players in the REDD negotiations, are now squaring off. Negotiations are down to the wire and one major division remains. Hold on as we head into U.N. speak. Here’s what is at the heart of the dispute:

Brazil, with the support of the European Union, is arguing that all deals on forests be conducted on a national basis — so any market mechanisms involved have to be conducted and overseen by national authorities.

The Brazilians argue this is the only way they can ensure that deforestation activities don’t simply move from one state to another, and the only way to stop this problem is at the national level.

The United States, with strong vocal support from Colombia, is arguing that such deals also be conducted on what they call a “sub-national” level — meaning that individual states or regions, depending on the country, should be allowed to cut their own forest deals, irrespective of whether they fall in line with national policy.

Brazil and the United States, the two key players in the REDD negotiations, are now squaring off. Negotiations are down to the wire and one major division remains.

This sub-level deal making, say opponents, only encourages shifting the problem of “deforestation into another state.”

Earlier this week, we spoke with Eduardo Braga, governor of the powerful state of Amazonas in the heart of the Amazon jungle, about his position. Braga has gone through something of a transformation on the question of “states rights” in Brazil.

Until recently he has been a strong supporter of Brazilian states being able to negotiate their own forest deals within their borders, which have become a primary revenue source for Amazonia and other heavily forested states.

In fact, last year Braga signed a Memorandum of Understanding with the state of California to cooperate on forest preservation projects and alternative energy technologies. The hope on both sides was that the forests of Amazonas could be used to offset emissions by California state industries on the arrival of tighter emissions controls expected next year.

This type of transaction may not be as simple now that Brazil’s states and federal government are presenting a united front on preventing such unilateral deals from happening. Braga told us that any American partner approaching Brazil with a carbon offset project would have to do their homework first.

“We are not going to support your emissions at the cost of the standard of living of our people.” That’s the difference now,” he said.

“If you do your homework and establish your target to reduce your emissions of greenhouse gases, then you can come to us to help mitigate further emissions,” he told us.

Brazil’s President Luiz Inacio Lula da Silva has conceded that carbon markets may play a limited role in preserving Brazil’s and other countries’ forests. But to get there, the Brazilian negotiators have added an interesting obstacle course and are calling the shots.

The REDD Ahead

In the latest REDD negotiations, and echoing Braga’s change of heart, Brazil has taken the position that if developed countries want to gain access to the countrys forests to offset their emissions, they must first demonstrate their own commitment to reducing greenhouse gases at home.

Specifically, Brazil is asking that no more than 10 percent of a developed country’s excess emissions can be written off against forest preservation schemes, and that this would only happen after those countries had already committed to reducing their emissions by 30 percent from 1990 levels.

So doing the math, a country with a stated 30 percent reduction goal would have to reach 33 percent to receive the keys to the carbon-rich magic kingdom of the Amazon.

According to Kate Dooley, a forest policy analyst for the UK-based NGO FERN (Forests and the European Union Resource Network), this offer is only on the table if developed countries stick to their commitments to continue negotiations on a binding global agreement under the Kyoto protocol.

Few close to the REDD talks believe these conditions will be met.

Over the next year, FRONTLINE/World and CIR will report on key issues of climate change in a joint project—Carbon Watch—focusing on the multi-billion-dollar carbon trading market. We’ll look at which proposals to reduce emissions by 2020 really add up; at the hidden interests behind these solutions; and the new industry players. This week, our reporters blog from the Copenhagen climate change summit.

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Mark Schapiro specializes in international and environmental stories. His award-winning work appears in all media: in publications such as Harpers, The Atlantic, Mother Jones and Yale 360; on television, including PBS FRONTLINE/World and KQED; on public radio including Marketplace; and on the web. He is currently writing a book for Wiley & Co. investigating the backstory to our carbon footprints. His previous book, "EXPOSED: The Toxic Chemistry of Everyday Products and What’s at Stake for American Power," reveals the health and economic implications of the tightening of environmental standards by the European Union.