CBD DIALOGUE SEMINAR ON SCALING UP FINANCE FOR

BIODIVERSITY

QUITO, MARCH 8

2012

The Yasuni ITT Initiative and Net Avoided Emissions

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Lessons Learned: Environmental Policy and Mechanisms

International Mechanisms: Yasuni- ITT, Net Avoided Emissions

Fiscal Mechanisms: Green Taxes

Domestic Incentives: Program for Environmental and Social Remediation (PRAS), Sociobosque (Conservation)

Ecuador’s Constitution (2008): •Rights of nature. (Art. 71) •Environmental services will not be subject to appropriation. (Art. 74) National Plan for “Good Living” (Buen Vivir) (2009-2013): •Sustainable management of natural heritage. (Policy 4.1. ) •Diversification of the national energy matrix. (Policy 4.3.)

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Yasuni National Park

Biodiversity

Non-contacted Indigenous

Communities

Reserves of crude oil

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The Yasuni – ITT Initiative

International Compensation: $3,600 million

dollars in 13 years

Barrels of oil underground:

840 million

Net Avoided Emissions: 407 million tons CO2eq

• Biodiversity protection

• Respect of the Rights of Indigenous Peoples

• Transition to «good-living» (buen vivir) and Rights of Nature

• Support Yasuni (UNDP Fund): mdtf.undp.org/yasuni

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What is Net Avoided Emissions (NAE)?

Mechanism of Synergies for the Fulfillment of Multiple Objectives in the context of sustainable development

Net Avoided Emissions are those Green House Gas (GHG) emissions which could occur within each country’s economy but are avoided.

New climate change mitigation market and non-market (bilateral), sectorial crediting mechanism (compliance with ex ante baseline setting) , supplementary to developed country actions for accomplishment of mitigation commitments.

Its application in CBD allows for biodiversity protection in areas where green house gas emissions are avoided (for example by leaving fossil fuels underground)

Economic value associated to the service of avoiding emissions, equivalent to the market price of total tons of CO2eq avoided, plus the additional component of biodiversity protection.

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Net Avoided Emissions (NAE) Objectives: Establishment of Synergies

Synergies for the fulfillment of Multiple Objectives in the framework of Sustainable

Development

Climate Change Mitigation

Biodiversity Protection

• Climate Change

• Biodiversity

• Desertification

• Indigenous peoples

• Incentives and fulfillment of mitigation commitments

• Real net reduction of total global net GHG emissions

• Incentives for the protection of sensitive areas.

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Net Avoided Emissions (NAE) Design: Governance

Independent Mechanisms (Bilateral, Regional)

Centralized Mechanisms (Under supervision of the United Nations Framework Convention on Climate Change; Convention on Biological Diversity)

«NAE» Hybrid Mechanism

Decision-making: 1. NAE Executive Board: -Under orientation and authority of the Conference of the Parties. -Methodologies, accreditation, registry. 2. NAE Steering Committee: -A1 and non-A1 country representatives, private sector, local communities. -Transparency, representativity, local communities interests and funds use supervision.

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Net Avoided Emissions (NAE) Design: Cost-effectiveness (opportunity cost)

Análisis Multicriterio de la Iniciativa Yasuní ITT. María Cristina Vallejo et Al. (Programa Yasuní) http://www.ambiente.gob.ec/sites/default/files/users/dvelalcazar/ANALISIS_MULTICRITERIO_YITT.pdf

MULTICRITERIA EVALUATION OF THE YASUNI ITT INITIATIVE

Opportunity Cost: Ranking of Alternatives:

A= Yasuni ITT BTT= Exploitation Scenario 1 BITT= Exploitation Scenario 2

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Net Avoided Emissions (NAE) Design: Cost-effectiveness

The Yasuni-ITT Initiative: enhancing cost-effectiveness of, and promoting, mitigation actions, Document for UNFCCC: -Views on the evaluation of various approaches in enhancing the cost-effectiveness of, and promoting, mitigation actions Submissions from Parties (7 April 2011) - Submission from Ecuador

Mitigation actions in Ecuador

(Land-use sector)

Region/Country

Cost (USD/CO2eq

ton) Source

Yasuni-ITT Ecuador $0,015 – $0,02 Submissions Form Parties (07/April/11) Yasuni ITT Cost-Effectiveness (Ecuador), UNFCCC

Socio Bosque (sim. REDD) Ecuador $0,24 Ortega-Pacheco et al. (2010)

PROFAFOR (sim. MDL) Ecuador $1,42 Wunder and Alban (2008)

Offsets Forests Ecuador $1,22 Antinori and Sathaye (2007)

Offsets Forests Global $0,38 Antinori and Sathaye (2007)

1,4% cost/CDM ton CO2eq

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Net Avoided Emissions (NAE) Design: Safeguards

Use of funds for Mitigation and

Adaptation Activities

Compensation for the environmental service provided (not for the

opportunity cost)

Implementation in developing

countries

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Net Avoided Emissions (NAE) Design: Advantages with regards to existing mechanisms

• Real reduction of the global level of emissions in the long term

• Protection of Biodiversity as a supplemental objective

• Use of existing institutions

• Development of methodologies for baselines per sector, etc. based on existing experiences

• Bilateral or Market compensation

• Respeto a los marcos legales domésticos

• Equity and sovereignty in benefit distribution:

• Benefits for local communities

• Access to funds generated by the mechanism

• Sovereignty in project presentation and benefit distribution

Net Avoided

Emissions

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Net Avoided Emissions (NAE) Design: Equity and Benefit Distribution

Benefits for local communities:

Respect of the rights of indigenous peoples

Protection of ecosystems and livelihoods

Access to funds generated by the mechanism: Climate change mitigation and adaptation activities in the context of sustainable development, potential for biodiversity protection

Sovereignty for the presentation of projects and distribution of benefits:

Participation of the implementing party government

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Net Avoided Emissions (NAE) Design: Environmental Integrity (efficacy)

Perma-nence

and Leakage

-Reflected in the long term (Guarantee certificates, limited resource stock)

-Leakages control

Additio-nality

-Baselines per sector -Clear definition of scope

-Host country participation

Co-benefits

Verifica-tion

-International standards

-Institutional arrangements (UN board, national committee)

-Climate Change -Biodiversity -Indigenous Peoples -Desertification -Heritage

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Next Steps

CoP Biodiversity (CBD)

CoP Climate Change (UNFCCC)

-Discussion of the Mechanism for Synergies and implementation of biodiversity component:

-Instruments for biodiversity valuation

-Institutional arrangements

-Discussion of Modalities and Procedures

-Pilot schemes and Mechanism operationalization

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THANK YOU

Daniel V. Ortega Director of Environment and Climate Change

Ministry of Foreign Affairs, Trade and Integration Quito, Ecuador

dortega@mmrree.gob.ec medioambiente@mmrree.gob.ec

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Annex 1: The Yasuni ITT Initiative - Deforestation Component

The Yasuni-ITT Initiative: enhancing cost-effectiveness of, and promoting, mitigation actions, Document for UNFCCC: -Views on the evaluation of various approaches in enhancing the cost-effectiveness of, and promoting, mitigation actions Submissions from Parties (7 April 2011) - Submission from Ecuador

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Annex 2: Cost-effectiveness of mitigation actions in Ecuador (Land-use sector)

NPV (desc. Rate 6%)

NPV (desc. Rate 12%)

Type Activity Emissions

(million ton CO2eq)

Cost (million USD)

Cost (USD/ton CO2eq)

Cost (million USD)

Cost (USD/ton CO2eq)

Yasuni-ITT Programmatic/avoidance

Oil extraction 407 20,78 0,017 18,38 0,015

Deforestation (max.)

820 24,53 0,02 21,85 0,018

Socio-Bosque Projects/ sequestration

Deforestation 26,9 7,9 0,24 7,9 0,24

PROFAFOR CDM-like Reforestation 2,23 6,54 0,58 6,54 0,58

The Yasuni-ITT Initiative: enhancing cost-effectiveness of, and promoting, mitigation actions, Document for UNFCCC: -Views on the evaluation of various approaches in enhancing the cost-effectiveness of, and promoting, mitigation actions Submissions from Parties (7 April 2011) - Submission from Ecuador

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Annex 3: Net Avoided Emissions (NAE) at the United Nations Framework Convention on Climate Change (UNFCCC)

80. Decides to consider the establishment, at the seventeenth session of the Conference of the Parties, of one or more market-based mechanisms to enhance the cost-effectiveness of, and to promote, mitigation actions, taking into account the following:

(e) Ensuring a net decrease and/or avoidance of global greenhouse gas emissions» (1/CP.16)

• UNFCCC Conference of the Parties N° 16 (Cancun, 2010)

«79. Emphasizes that various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries, must meet standards that deliver real, permanent, additional and verified mitigation outcomes, avoid double counting of effort, and achieve a net decrease and/or avoidance of greenhouse gas emissions” (Draft decision [-/CP.17] AWG-LCA)

• UNFCCC Conference of the Parties N° 17 (Durban, 2011)