An initiative of the ACP Group of States funded by the European Union

Global Climate Change Alliance: Intra-ACP Programme

Training ModuleClimate Change Finance

Module 6 – Introduction to REDD

Ms Isabelle MamatySenior Expert

Climate Support Facility

Module Structure

REDD in international negotiations

REDD implementation challenges

REDD funding resources

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Role of Forests in Climate change

Forests are causes of climate change through its deforestation and sources of mitigation climate change as sinks of GHGs.

Forest destruction and land use change accounts for 24% of GHG emissions and loss of biodiversity

Forests are a natural store of CO2

Activities reducing deforestation are cost effective ways of reducing GHG emissions

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Forests in international negotiations

Emissions from forest and (land use) not included in the Kyoto Protocol

COP 11 in Montreal in 2005: First discussion

COP 13 -Bali Roadmap in 2007: agreement on a decision to reduce emissions from deforestation during COP 15.

COP15 Copenhagen: Accord 2009

Cancun 2010: recognition on the need to halt (and not only reduce) deforestation

Next COP 2012: Issue still under discussion at international level

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REDD Concept Evolution

Basic idea is to create a financial value for the carbon stored in forest

RED stands for Reduction emissions from Deforestation (Montreal and Nairobi 2005-2006)

REDD stands for Reducing emissions from Deforestation and forest Degradation (Bali, 2007)

REDD+ includes REDD Forest conservation + Sustainable management of forests + Enhancement of forest carbon stocks (Bali & Poznan 2007-2008)

REDD++is for REDD + Land use for agricultural activity

REDD “readiness" concerns efforts made by a country with the support of multilateral or bilateral initiatives to build its capacity to be ready for a REDD + mechanism (Copenhagen , 2009)

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REDD key Challenges

Reference levels Leakage Permanence Safeguards Governance Measuring, reporting and verifying (MRV) Finance

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Reference levels

Reference levels issue raises the question of when (and how) to start crediting emission reductions?

There is no agreed formula for how to set reference levels (baseline):o Historical baseline : rate of deforestation and degradation (DD)

and the resulting CO2 emissions over the past yearso Business as usual (BAU) scenario: how would emissions from

DD evolve without the REDD activity o Crediting baseline (i.e like an emissions quota)

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Leakage

Leakage is the phenomenon in which efforts for reducing emissions in one place shifts them to another location or sector where they are uncounted and perhaps uncontrolled

Many points are under consideration for dealing with leakage such as: Monitoring impacts within and outside project boundaries Attribution of market leakage (estimate international leakage) National versus project-level: how large are the leakage risks?

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Permanence

Permanence generally addresses the extent to which forest can permanently store carbon

Ways of dealing with the permanence issue:

Under CDM, the issue is currently resolved via the use of temporary credits (t-CERs), that must be replaced at the end of their certified period : This makes land-use based carbon credits comparatively LESS attractive

Joint implementation (JI) and many voluntary instruments do not use this concept of tCERs but address permanence through insurance, or requirements to set aside an amount of permanent credits

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Safeguards (1)

7 safeguards have been listed under the Cancun agreement for the REDD + implementation:o consistency with existing forest programmes and international

agreemento transparent and effective national forest governance structures; o respect for the knowledge and rights of indigenous peoples and

local communities; o full and effective participation of relevant stakeholders; o protection of natural forests and biodiversity; o addressing the risk of reversals (‘permanence’); o and addressing the risk of displacement of emissions

(‘leakage’)

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Safeguards (2)

New policies and approaches have been or are being developed by institutions such as Forest Carbon partnership facility, GEF and UNREDD based on world Bank policies

However, there is a need for harmonised and strengthened standards based on: o the effective protection of knowledge and rights of, and clear

benefits for, indigenous peoples and local communities, and the implementation of the FPIC principle;

o the effective protection of natural forests and native biodiversityo measurable progress towards transparent and effective

governance; ando compliance with relevant international conventions and

agreements 11

Governance

Governance raises the question: “How do you ensure that REDD will not adversely impact the rights and livelihoods of the millions of people who live in or around forests, especially in poorly governed states? “

Sound governance is highly linked to the successful implementation of the safeguards

Guidelines and frameworks for monitoring governance have been developed by many institutions such as World Band, FAO, UNREDD but there is a need for harmonisation of policies and common indicators

Experiences from other initiatives could be useful: o EU FLEGT process has developed expertise in strengthening and

assessing forest governance and in promoting participatory approacheso World Resources Institute developed indicators to monitor and

assess forest governance 12

Measuring, reporting and verifying (MRV) (1)

MRV raises the following questions: o How do you measure, report and verify emission reductions from forests? This

is especially challenging for measuring reductions in forest degradationo What mechanisms are needed – and who will operate them – to measure

changes in rates of deforestation, leakage, permanence, the implementation of safeguards and the impacts on governance?

Carbon emissions from deforestation and degradation are estimated from changes in two important variables: (i) area of deforestation and degradation; and (ii) carbon stock densities per unit area which needs to: o Use remote sensing technologies combined with ground measurementso Establish a forest inventories

Constraints in developing countries : o Limited availability of technical equipment but also of know - howo Limited knowledge of carbon stocks contained in alternative forest types

and forest uses 13

Finance

The Eliasch Review estimated that $17–33 billion a year was required by 2030 to halve emissions from the forest sector

The general assumption is that finance of this magnitude could only be generated through the inclusion of forest carbon credits in a global carbon trading scheme, thus providing enterprises (or countries) with the opportunity of offsetting their own emissions by purchasing (cheaper) credits for forest carbon emission reductions

it is virtually impossible to see a global forest carbon market emerging

before a new global climate agreement enters into force

Forest carbon markets currently in place, however – a mixture of national and voluntary schemes – are growing, and provided an estimated $178 million for REDD+ activities in 2010

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Implementing REDD +

The aim of REDD+ is a national programme addressing forest sector emissions as a whole, thus minimising any risk of leakage

however, that in many cases it will be more practicable to begin REDD+ in only part of the country (sub-national actions) as an interim strategy.

Given the complexity of developing programmes to manage a country’s entire forest sector, a three-phase approach has evolved, and was codified at the Cancun UNFCCC conference in 2010

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Steps for REDD Implementation proposed in Cancun

Three - phase approach agreed at Cancun:o Phase 1: ‘development of national strategies or action plans,

policies and measures, and capacity-building’ (‘REDD readiness’) o Phase 2: implementation of strategy, including further capacity-

building, testing MRV, payments for ‘results-based demonstration activities’

o Phase 3: fully implemented programme with a pay-for-performance system

Countries can start anywhere they like along the spectrum The steps should include local and national stakeholder consultations

and may require other measures such as the clarification of national land, forest and carbon tenure rights

All steps are likely to need institutional, technical and human capacity-building.

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REDD funding sources

A wide range of multilateral and bilateral initiatives have been established to channel finance to the REDD activities, mainly to fund REDD readiness activities

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Major multilateral Initiatives

World Bank’s Forest Carbon Partnership Facility (FCPF) Readiness Fund and Carbon Fund

World Bank’s Forest Investment Programme (FIP) UN-REDD Programme (FAO, UNDP, UNEP) Congo Basin Forest Fund (CBFF) Amazon Fund Indonesia Climate Change Trust Fund Global Environment Facility

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Major bilateral Initiatives

Australia’s International Forest Carbon Initiative Norway’s International Climate and Forest

Initiative (also main donor to Amazon Fund, UN-REDD)

Other donor funds not only REDD+, including Germany’s International Climate Initiative and UK’s International Climate Fund*

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REDD in practice (1): results of assessments studies

Number of assessments and comparative studies on REDD initiatives came to the following conclusion:

Proliferation of different initiatives and funds Lack of coordination, between the multilateral initiatives Long lead times and complicated procedures result in low

disbursement rate of the majority of these funds Difficulty in addressing the three-phase approach agreed

in Cancun: particularly there is a wide divergence of opinion on when the country are likely to be “ready”.

Safeguards and governance: improving standards of forest governance should be considered as a process that involved all stakeholders

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REDD in practice (2): results of assessments studies

Stakeholders engagement: difficulty at national level in identifying and coordinating civil society and forest community representatives on the ground

Knowledge transfer : beneficiary countries reported the difficulty in identifying reliable and up-to-date sources of information

Low engagement of private sector National ownership: limited ownership of the REDD +

process to a very small staff within particular ministries in many developing countries

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REDD in practice (3): summary funding

All sources of REDD+ finance together from 2008 - November 2011 account for 13% total climate finance with $446 million approved and $252 million disbursed (disbursement rate of 56.5%)

Eliasch Review recommendations: ‘REDD readiness’ – $4 billion over five years for forty

forest nations ($20m / country / year) $17–33 billion a year by 2030 for fully fledged REDD+

mechanism achieving a 50% reduction in deforestation

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REDD in practice (4): Multilateral initiatives funding ($m)

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Initiative Pledged Deposited Approved Disbursed

FCPF (RF)229.6 229.6 27.2 9.1

FCPF (CF)204.5 179.3 1.44 0.2

FIP644 459 51.0 3.2

UN-REDD150.8 118.2 108.1 90.9

Congo Basin Forest Fund 165 165 75.0 12.1

Amazon Fund1032.2 57.5 141.6 42.5

Indonesia CCTF18.6 8.9 6.3 5.5

Total2444.7 1217.5 410.6 163.5

Total % pledged100 49.8 16.8 6.7

REDD in practice (5): regional distribution

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Region Approved in US$ million

Disbursed

In US$ million

Asia 94 88 (93%)– major recipient: Indonesia 42 40 (95%)Latin America 178 73 (41%)– major recipient: Brazil / Amazon Fund 143 49 (34%)

Sub-Saharan Africa 11947

(39.5%)– major recipient: DRC 66 16 (24%)

REDD in practice (6): Lack of Coordination

Lack of coordination between the multilateral initiatives in terms of communication and developing common approaches on :

safeguards MRV Administrative processes

Few efforts of coordination are made such as: Establishment of the REDD+ Partnership in 2010 as a global

platform to improve effectiveness, efficiency, transparency and coordination of REDD + initiatives and financial instruments (e.g. a Voluntary REDD+ Database)

FCPF and UN-REDD share a common template for national proposals for funding but still follow different processes in many cases

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REDD in practice (7): Market-based Instrument

Forestry projects under CDMo Forestry projects limited to afforestation or reforestation, REDD project

not eligibleo Time-limited credits due to concerns over permanence and given that

wood eventually decays and releases its carbon into atmosphereo Less than 1% of CDM projectso most of the CDM forestry credits have been generated (and purchased

by ) projects proposed by the BioCarbonFund (public-private initiative)

Forestry projects under Voluntary Marketo REDD projects represented the highest volume of voluntary projects in 2010

with 29% of projects. o Methodologies for REDD exist in the voluntary carbon market

o Forest-only standards made up one third of all active standards in 2010

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Brief presentation of Major bilateral Initiatives

Brief presentation of Major bilateral Initiatives

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Forest Carbon Partnership Facility (FCPF)Forest Carbon Partnership Facility (FCPF)

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Forest Carbon Partnership Facility (FCPF)

World Bank programme, operational in 2008 FCPF has dual objectives through

Readiness Fund: FCPF aims to build capacity for REDD + in developing countries

Carbon Fund: FCPF aims to test a programme of performance –based incentive payments in a small pilot performance-based payments in a small number of pilot countries

37 forest developing countries are participants to FCPF 11 candidate countries Participants Committee: main decision-making body which

includes: 14 donors, 14 REDD+ countries, observers

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FCPF Readiness Fund

Main activity : REDD+ readiness Eligibility:

o IBRD/IDA member in tropics/sub-tropics

o Significant forest area / carbon stock

oHigh relevance of forests in economy

oHigh current/project deforestation

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FCPF Readiness Fund: activities

FCPF readiness fund supports participating country in:o Developing national reference scenarios for REDD+.o Adopting a national REDD+ strategy that reduces

emissions, conserves biodiversity and enhances the livelihoods of forest-dependent indigenous peoples and other forest dwellers.

o Designing and implementing accurate measurements and MRV systems to enable reporting on emissions from deforestation and forest degradation.

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FCPF - Readiness fund -Application process – Step 1

Step 1- Preparation of the Readiness Plan Idea Note (R-PIN) includes: o Background information on forestry, deforestation,

current policieso Potential further programmes: forest governance,

land tenure and land use regulations, building institutional capacity for REDD+

o Other relevant cross-sectoral policies: poverty reduction, agriculture

o Stakeholder consultation processeso Challenges to implementationo Potential monitoring and implementation systemso Plan and tentative budget

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Application process - Step 2: Readiness Preparation Plan (R-PP)

Document template: Component 1: Organise and Consult

• 1a. National Readiness Management Arrangements• 1b. Stakeholder Consultation and Participation

Component 2: Prepare the REDD Strategy• 2a. Assessment of Land Use, Forestry Policy and Governance• 2b. REDD Strategy Options• 2c. Arrangement for REDD Implementation• 2d. Social and Environmental Impacts

Component 3: Develop a Reference Scenario Component 4: Design a Monitoring SystemComponent 5: Schedule and BudgetComponent 6: Design a Program Monitoring and Evaluation

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Application process - Step 3: Readiness Package

Preparation of a country’s Readiness Package (R-Package) occurs when the majority of activities proposed in the R-PP have been implemented

R-Package is designed to move the country on to phase 2 of REDD + (e.g. implementation of strategy, including further capacity-building, testing MRV, payments for ‘results-based demonstration activities’ based on Cancun three-phase approach)

The scope of the R-Package is aimed to encompass the complete set o activities performed in the context of readiness, not just FCPF -funded ones.

R-PPs have not been exclusively funded through the FCPF However in the context of FCPF, endorsement of the R-Package is

required before However the content and assessment of the R-Package is still

under development 34

FCPF carbon fund - objectives

Operational - May 2011 Payments for verified emission reductions –

i.e. part of REDD+ phase 2 activities Aims to leverage private finance – though

difficult in lack of a compliance market that accepts forest carbon or REDD credit

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FCPF Carbon fund: selection

About five participants will be qualified initially, after the review of the FCPF Participants Committee based on:o Potential for sustainable emissions reductionso Scale of implementationo Consistency with compliance standardso Potential to generate learning valueo Benefit-sharing mechanisms, broad community supporto Transparent stakeholder consultations

30m – $40m / country over five years Procedures for the selection, of the participants and the

disbursement of funds are still being drawn up Endorsement of a country’s Readiness Package will be a

prerequisite for participation to the Carbon Fund

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FCPF Carbon fund activities

Support in four main categories: o General economic policies and regulations (taxation, subsidies,

rural credit, certification, law enforcement).o Forest policies and regulations (taxation, subsidies, certification,

concession regimes, securing land tenure and land rights, forest law, governance and enforcement, zoning, protected areas, payments for environmental services (PES)).

o Forest management (forest fires, reduced impact logging, reforestation).

o Rural development (community development, rural electrification, community forestry).

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FCPF Carbon fund: applying for funds

Country programme proposal will be assessed based on the following criteria: o Potential for generating high-quality sustainable emissions reductions and

social and environmental benefits;o Scale of implementation;o Consistency with emerging compliance standards under the UNFCCC and

other regimes;o Potential to generate learning value for the FCPF and other participants;o Clear and transparent benefit-sharing mechanisms with broad community

support; ando Transparent stakeholder consultations.

Process is still under way and will be similar to the Readiness Fund with Emissions reductions Programme Idea Notes (ER-PINs) and Emission Reduction Programme Documents leading to Emission reduction Programme Agreements (ERPAs)

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Forest Investment Programme (FIP)Forest Investment Programme (FIP)

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Forest Investment Programme (FIP): background

One of World Bank’s Climate Investment Funds (CIFs), operational July 2009

Aim: financing to developing countries for readiness reforms and public and private investments; much larger sums than FCPF

Will close when new UNFCCC financial architecture is finalized

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FIP membership and governance

FIP Sub-Committee is the main decision-making body:o 6 donor countrieso 6 eligible recipient countrieso Observers

Eight pilot countries:o Brazil, Burkina Faso, DRC, Ghana, Indonesia, Lao

PDR, Mexico, Peru Three potential further pilots:

o Philippines, Mozambique, Nepal 41

FIP: applying for Funds

The FIP’s eight pilot countries were identified from 45 expressions of interest;

Selection of pilot countries based on: Programme potential to contribute and adhere to FIP

objectives and principles Country preparedness and ability to undertake REDD

initiatives Existing pilot programme distribution across regions and

biomes, ensuring that pilot programmes generate lessons on scaling up activities

Five investment plans approved by FIP Sub-Committee – for Brazil, Burkina-Faso, DRC, Lao PDR and Mexico in 2011 42

UN-REDDUN-REDD

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UN-REDD: Background

FAO / UNDP / UNEP initiative, operational 2008 42 partner countries :

16 of them with national programmes: Bolivia, Cambodia, DRC, Ecuador, Indonesia, Nigeria, Panama, Papua New Guinea, Paraguay, Philippines, Republic of Congo, Solomon Islands, Sri Lanka, Tanzania, Viet Nam and Zambia.

The remaining are engaged with the programme in different activities such as observers to the Programme’s Policy Board, and through participation in regional workshops and knowledge sharing: Argentina, Bangladesh, Benin, Bhutan, Cameroon, Central African Republic, Chile, Colombia, Costa Rica, Cote d’Ivoire, Ethiopia, Gabon, Ghana, Guatemala, Guyana, Honduras, Kenya, Mexico, Mongolia, Myanmar, Nepal, Pakistan, Peru, South Sudan, Sudan and Suriname. 

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UN-REDD: Governance and activities

Programme Policy Board: main decision-making bodyo 3 full members from donor countrieso 3 full and 6 alternate from programme countrieso NGOs, indigenous peoples, UN agencies

Global programme – common approaches, analyses, methodologies, tools, data, best practices

National programmes available only to selected countries

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UN-REDD- National programmes

Aims:o Develop and implement MRV systemso Credible, inclusive national governance systems o Systems for management of REDD+ funding strengthenedo Indigenous peoples, local communities, civil society

organisations and other stakeholders participate effectively

o Multiple benefits of forests promoted and realised o REDD+ strategies and related investments catalyse shifts

to a green economy o Knowledge is developed, managed, analysed and shared

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UN-REDD – Applying for Funds

Must be UN-REDD partner country Regional balance of investment Prioritise according to:

o Contribution of UN-REDD to national readiness processo Effective engagement of UN agencies at country levelo REDD+ potential of the country (forest cover, annual rate of change,

potential importance of forests to poor)o Also must display commitment to UN-REDD principles: o Human-rights based approach to developmento Engagement of indigenous peopleso Social and environmental principles and criteriao Consistency with REDD+ safeguards….

Submission of the national program document: First review by the Secretariat and final decision by the Policy Board

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Application process – the national programmes template

Document template of the national programmes template (same as the FCPF Readiness Plan) :

Component 1: Organise and Consulto 1a. National Readiness Management Arrangementso 1b. Stakeholder Consultation and Participation

Component 2: Prepare the REDD Strategyo 2a. Assessment of Land Use, Forestry Policy and Governanceo 2b. REDD Strategy Optionso 2c. Arrangement for REDD Implementationo 2d. Social and Environmental Impacts

Component 3: Develop a Reference Scenario Component 4: Design a Monitoring System Component 5: Schedule and Budget Component 6: Design a Program Monitoring and Evaluation

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Turning words into action Turning words into action

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Discussion

Questions and answers Discussion and sharing of experiences

concerning REDD

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Are you a REDD partner? Do your country could benefit from REDD funding ? If yes what are the institutional and capacity needs in your organisation to do so?

Where to get the information?

Getting information from the REDD websites (e.g. UN-REDD )- visit of the website: http://www.un-redd.org

UNFCC REDD Platformhttp://unfccc.int/methods_science/redd/items/4531.php

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Case studies

Presentation of a National programmes document (under UN-REDD) or / a Readiness Plan (under FCPF) submitted by a country

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• Thank you

• Contact: Dr. Pendo MARO, ACP Secretariat pendomaro@acp.int or +32 495 281 494

www.gcca.eu/intra-acp