Forest Carbon Partnership Facility

August 28, 2009

Update

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1. General Presentation on REDD

What is REDD?

• “Reducing Emissions from Deforestation and Forest Degradation in Developing Countries”

• Attempt to recognize role of forests in climate change mitigation– Forests are needed to achieve +2°C

objective– 20% of the problem 20% of the

solution?

• Discussed in UNFCCC negotiations as part of ‘post-2012’ climate regime– Excluded from Clean Development

Mechanism– Allowed for Annex I countries and under

Joint Implementation– No forest activities in the EU Emissions

Trading Scheme

Following traditional development paths, most countries lose most of their native forests

Following traditional development paths, most countries lose most of their native forests

North Amazon Basin

South Amazon BasinEurope

North America

North East AsiaSouth Asia

Time

Nati

on

al fo

rest

co

ver

Atlantic forest

South East Asia

Oceania

West Africa

Source: Zarin, 2009

Forest Transition Curve

Congo Basin

REDD can form a bridge on forest transition curveREDD can form a bridge on forest transition curve

Nati

on

al fo

rest

cover

Time

Forest transition path

REDD bridgeREDD bridge

Source: Zarin, 2009

REDD: National or Sub-national?

• For the bridge to be built, REDD should be at the heart of national development policy– REDD is not a substitute for development policies

• Other reasons REDD should be handled at the national level– Projects may not achieve necessary scale– Leakage from projects– Benefit-sharing mechanisms may be necessary

• REDD implementation may have to start at sub-national level to gain experience and before sufficient financing is available

REDD or ‘REDD plus’?

• Bali Action Plan calls for “policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries”.

• A broader definition of REDD adds methodological and financial issues, but removes perverse incentives– Limiting financial compensation to

reduced deforestation/degradation may discourage early action

Maintenance

Capacity, Reforms & Investments

ReadinessFCPF Readiness Fund, UN-REDD, CBFF, GEF, ODA

IDA/IBDR, FIP, UN-REDD, CBFF, GEF, ODA, AAU set-aside, REDD Bonds (?)

FCPF Carbon Fund, Norway, GFCM (?), carbon market (?)

• Diagnostic• Reference Scenario• REDD Strategy• Monitoring System

• Institution strengthening• Forest governance and information• Sustainable forest management• Investments outside forest sector

• Payments• Performance-based

The Three Phases of REDD

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2. The Forest Carbon Partnership Facility (FCPF)

FCPF = A Partnership to Make REDD Happen

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Two Mechanisms

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Readiness Mechanism

READINESS FUND

Capacity Building

(2008-2012)

Carbon Finance

Mechanism

CARBONFUND

Payments for Emission

Reductions(2010-?)

Target ~$185 millionAvailable $110 million

Target ~$200 millionAvailable $51 million

CARBON FUND

PARTICIPANTS

1. European Commission

2. Germany3. Norway4. The Nature

Conservancy5. United Kingdom

DONOR

PARTICIPANTS

1. AFD2. Australia3. Finland4. Japan5. Netherlands6. Norway7. Spain8. Switzerland9. United

Kingdom10.United

States

Financial Contributors to the FCPF

37 REDD Country Participants Selected

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FCPF Governance

Participants Committee (PC)Participants Committee (PC)

Facility Management Team

(Bank)

Facility Management Team

(Bank)

Technical Advisory Panels

Technical Advisory Panels

Carbon Fund Participants Committee

Carbon Fund Participants Committee

Participants AssemblyParticipants Assembly All Eligible REDD Countries, Donors and Buyers

- Forum for exchange of information- Meets at least annually - Opportunity for ‘subgroups’ to meet and discuss experiences, elect their representatives

Primary decision making body, including all policy issues

Decision making on specific carbon transactions

ObserversObservers

ReadinessFund

(Bank as Trustee)

CarbonFund

(Bank as Trustee)

Bank facilitates partnership and ensures compliance with Policies (incl. Safeguards)

REDD COUNTRIES

BoliviaCosta RicaDRCGabonGhanaGuyanaMadagascarNepalPanamaVietnam

CONTRIBUTORS

AFDAustraliaGermanyJapanNetherlandsNorwaySwitzerlandTNCUnited KingdomUnited States

OBSERVERSForest-Dependent Peoples, Private sector, International

Organizations, NGOs, UNFCCC Secretariat, UN-REDD Programme

Composition of First Participants Committee (Oct.08-Oct.09)

Carbon Funds

$2.3 billion*

Climate Investment Funds

~ $6 billion

BioCarbon Fund

(BioCF)

$90 million

Forest Carbon Partnership Facility

(FCPF)

Target= $385 million**

Forest Invesment Program

(FIP)

Target= $500 million?

* $2.6 billion if FCPF is included** $185 m Readiness Fund + $200 m Carbon Fund. Only Readiness Fund operational ($107 million)

Growing Forests Partnership (GFP)

$15 million

Forests and Climate Change:World Bank-Managed Instruments

• BioCarbon Fund (BioCF, operational since 2004)– Demonstrate carbon finance mechanisms for reforestation,

forest protection and agriculture

• Forest Carbon Partnership Facility (FCPF, since 2008) – Build readiness for Reducing Emissions from Deforestation

and Forest Degradation (REDD)– Pilot performance-based payments

• Forest Investment Program (FIP, under design)– Pilot investment models for REDD

• Growing Forests Partnerships (GFP, since 2008)– Empower local stakeholders to engage in local, national and

global processes on forests

and, of course, the IDA and IBRD operations on forests & NRM

Forests and Climate Change:World Bank-Managed Partnerships

FCPF: The Big Picture

• Pioneered REDD readiness preparation process

• Countries actively preparing for readiness

• Due to high demand, REDD Country participation increased from 0 to 20 to 37

• 37 REDD Country Participants

• 10 Donor Participants

• 5 Carbon Fund Participants

• 6 Observers

• Others• Brazil (South-South cooperation)• Global Environment Facility• World Bank Institute• Technical assistance service

providers

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Established collaborative partnership & transparent platform for meaningful

exchanges on REDD issues

Readiness Organization

• What does it mean to ‘do REDD’?

• Created templates/processes to facilitate Readiness:– Process of country submissions and reviews:

• Readiness Plan Idea Note (R-PIN)

• Readiness Preparation Proposal (R-PP)

• Readiness Package (R-Package)

– Reviews by • Technical Advisory Panel

• World Bank team

• Participants Committee + Observers

– Application of environmental and social due diligence framework

• Strategic Environmental and Social Assessment (SESA)

– Consultation and Participation guidance 19

Launched Indigenous Peoples Capacity Building Program

Small grants to IP organizations to build REDD capacity at regional, national levels ($200,000 per year for 5 years).

$181,444 committed in FY09 based on proposals received from indigenous organizations and managed by them: COICA (Amazonia)- organize regional workshops, produce

reference document on REDD as contribution towards Copenhagen

IPACC (Africa)- organize regional/national workshops, produce toolkit on REDD to train trainers at country level

COONAPIP (Panama)- organize 11 workshops for info exchange, arrive at common position on REDD & government’s proposal to FCPF 20

Advanced Partnership with UN-REDD Programme

• Formal agreement to cooperate approved by PC Oct. 2008

• Joint missions– DRC (2), Indonesia (2), Panama (2), PNG, Vietnam

• Joint presentations/discussions– CoP14– Norwegian Parliament– Council on Forestry– Informal Working Group on Interim Finance for REDD

• Progress in harmonizing processes– R-Plan/R-PP and NJP– Guidance on consultation and participation– Common Roster of Experts– Cooperation on MRV guidance

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Next Meetings

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• October 26-28/29, 2009 (Washington)• Participants Assembly• Participants Committee 4

• March 2010 (Gabon)• Participants Committee 5

• June 2010 (?)• Participants Committee 6

FCPF and the UNFCCC

• FCPF must help, not harm the political process– Cannot prejudge financial or methodological outcomes– Tests and informs

• Demonstration activity on REDD (Bali Action Plan)

• Mentioned in the negotiations text [bracketed]

• Post-Copenhagen: if REDD is included, what will be the role of the FCPF?– Continue as a pilot?– Expand to other implementing agencies (like GEF or

CIFs)– Morph into one of the global mechanisms?– Role of the UNFCCC vs. the Bank’s Board of Executive

Directors?

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The FCPF and the UNFCCC

THANK YOU

www.forestcarbonpartnership.org

www.carbonfinance.org

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