GCF Working Group 2: Coordination &

Accounting

Governors’ Climate & Forests Task Force

Aceh Meeting – May 18-19, 2010

Tony Brunello California Department of Natural ResourcesWilliam Boyd GCF Secretariat & University of Colorado Law School

Overview

Update on WG 3 status and activities Key issues Update on 2010 activities

Report from Sacramento technical workshop on REDD regulatory design

GCF action items for 2010-2011

Working Group 2 - Update

Mato Grosso was lead in 2009; California is current lead; GCF secretariat has been supporting – need additional support

Sacramento Technical Workshop on REDD Regulatory Design generated options paper and recommendations for WG 2 consideration

Beginning work on nesting & reconciliation of projects-level activities with state/province performance – need more private sector input

Exploring models for multi-stakeholder processes and safeguards

Working Group 2 – Key issues

Crediting pathways State-level accounting Nesting & reconciliation

of project activities with state/province accounting

Monitoring, reporting & verification (MRV) State-level performance Nested project

performance

Safeguards Environmental Protection of interests Benefit sharing

Multi-stakeholder processes

Enforceability Linkage agreements

CREDITING PATHWAYSTWO POTENTIAL PATHWAYS

Credits issued by approved state/province REDD programs based on performance relative to crediting baseline and accepted into compliance systems

Direct crediting by compliance system to nested projects that are reconciled with state-level accounting – need more clarity on nesting architecture and reconciliation

STATE/PROVINCE BASELINES

Emissions reference level – starting point based on historical data (5 to 10 years) with adjustments for stocks to account for different circumstances

Crediting baselines – X% reductions from emissions reference level by 2020 with additional requirement to maintain a certain percentage of stocks

MONITORING, REPORTING, VERIFICATION (MRV)

Regulations should not be too prescriptive

Regulations should articulate key principles/criteria for MRV (and baseline determination) Consistent with IPCC guidance and guidelines Use of spatially explicit remote sensing Quantification of uncertainty + conservative approach

that uses bottom of uncertainty range

Nested project MRV handled through approved third-party methodologies - Regulations establish some high-level criteria for nested REDD projects

Accounting for leakage at both state/province and nested project levels

SAFEGUARDS: PRINCIPLES & CRITERIA

Need to take account of principles & criteria already under development via stakeholder processes in states/provinces

Environmental: Maintain flexibility to deal with other REDD+ activities if/when

they become eligible

Protection of interests: Focus on ensuring due regard for rights/interests and

full/effective participation in activity design and implementation

Look to ongoing efforts under REDD+/CCBA; UN REDD; FCPF; etc.

Benefit sharing: Benefits not limited to credits/revenues from REDD activities Focus on generating direct benefits; participation;

transparency on how REDD flows are managed; institutional mechanisms as part of state/province REDD programs

Safeguards: Operational

Regulations require MRV for all safeguards; MRV also on the revenue flows (public and private)

Need certainty on review process – too much uncertainty will inhibit investment

Regulations identify safeguards that satisfy regulatory principles and criteria and invite third-party standards organizations to submit standards for approval

Regulations then require independent third-party certification of nested projects and/or programs against the approved standards

Enforceability

Focus on reversal risk

Temporary crediting problematic

Liability on covered entities problematic

For sector-based crediting require credit buffers as part of linkage agreements + residual liability rules (liability on state/province issuing credits?), insurance, etc.

For nested projects – potential reversals could be managed under project accounting standard or under sectoral accounting framework

WG 2 – Key Objectives for 2010-2011

Further elaboration of design of subnational REDD programs

Developing recommendations on nesting and reconciliation of project-level activities with state/province performance

Developing model linkage agreement to link state/province REDD programs with compliance markets

Further elaboration of safeguards and benefit sharing frameworks

Enhancing stakeholder input and participation; developing models for multi-stakeholder processes that can be adapted to different jurisdictions

Working Group 2Recommended Action Items for Aceh Meeting

Compile design recommendations for subnational REDD programs in report for review and approval at GCF September 2010 meeting to be finalized as GCF Report for COP 16

Initiate private sector sub-working group on nesting and reconciliation of project-level activities with state/province performance with report ready for September 2010 GCF meeting

Initiate process to develop model linkage agreement (2010-2011)

Initiate process to develop lessons and recommendations from multi-stakeholder processes