Overview of REDD Project CycleOverview of REDD Project Cycle

Richard McNallyRichard McNally

Pro Poor REDD Project Launch Dalat Pro Poor REDD Project Launch, Dalat

12/01/2010

ContentsContents

1 REDD P j t ?1. REDD Projects?

2. Steps in the Project cycle

3. Some Key tasks

1. REDD Projects

• REDD viewed as cost effective way to produce CERs high interest from buyers:g y

– Copenhagen Accord [REDD a priority]– Voluntary Carbon Standard REDD guidance– Climate Action Reserve [avoided conversion][ ]

• However after COP 15 unclear compliance markets and REDD

• Voluntary markets already exist

• Common in many countries (e.g. Cambodia, Laos, Indonesia, Malaysia etc)

• Future: bring together voluntary and compliance markets (nested approach)

• REDD Projects differ from traditional ODA Forest Projects:

– Potentially much larger source of financing

Implementation horizon of 20 to 100 years– Implementation horizon of 20 to 100 years

– Requires ongoing, active management, with consequences for under performanceconsequences for under-performance

– Create a legal asset with an economic value – a potentially tradable ‘carbon credits’ which must potentially tradable ‘carbon credits’ – which must represent real, measurable tons of carbon

2. The Project Phases

Project phases don’t always have concrete start and end points; deliverables at each stage

Various inputs (time, funding, or expertise) are required at specific points of the process

Project Idea

Project Design

Project start up & implementation

Validation andi t tiregistration

Verification

1. Project IdeaProject Idea Note (PIN) or concept

t

Identify project area: Geographic boundaries of activities? Private or public land? Is land eligible for carbon project?

jnote

Private or public land? Is land eligible for carbon project?

Identify potential partners: Landowners, communities, t NGO tpartner NGOs, etc.

Examine legal feasibility: Who owns CO2 credits? Is j ll d d i l l ? Wh h project allowed under national law? What are the

requirements to implement?

k h ldBegin stakeholder engagement: What groups will be affected?

Determine preliminary feasibility: Can the project work?

Identification of goals and objectives

Legal feasibility

•Secure land tenure? C ? Partnership structure

Project Idea

•Biodiversity priorities, social benefits, emissions reductions

W k h d

Carbon rights? Legal framework for PES?

•Lawyer, Consultancy or NGO

Partnership structure

•Definition of roles, responsibilities, financial agreements•Workshops and partner

meetings, 1-2 months

•Costs: Travel and logistics

NGO

•Costs: Consultant fees

financial agreements

•Project leader and partners 2-6 months

•Costs: Travel, meetings, lawyers

Project Idea Fundraising from donors and partners Project

Initial community and landowner consultations

•Landowners and local governmentBackground information compilation

p Project Design

•Landowners and local government receptive to project?

•Costs: Travel, meetings

•Bio-geophysical info, site information, socioeconomic analysis

•Costs: Staff time, consultant fees

Some key issues Project Idea

Fundraising is important during the early stages of j t d l t i (ODA) t diti l project: e.g. development agencies (ODA), traditional

conservation donors, and early-stage investors

G i i i i d i hi Government interaction is important during this stage to ensure buy-in and support: National or state laws may need clarification to proceedy p

Compiling background information early is important to developing concept notes and proposals p p g p p pfor funding: Funders increasingly want to see realistic carbon calculations early in the investment phase and stakeholder buy-iny

Project Design Document (PDD)2. Project Design Document (PDD)

Define activities and interventions: How will the j di f ? l ?

j g

project protect standing forests? partner role?

Determine expected emissions reductions: What carbon pools will be measured? How often?

Consult with local communities and stakeholders: What are the social and environmental impacts? How will the project respond to stakeholder concerns?

Analyze the financial costs and legal issues: What are the up-front costs and what are the expected financial flows over the life of the project? What agreements p j gmust be signed?

Activities definition

•Species selection, planting

Carbon baseline analysis

p , p gplans, alternative livelihood activities

•Forestry expertise, community

•Forest and land stratification, biomass plots

Project Design Document (PDD)

•Integration of project andy p , yengagement

•Costs: Consultant or partner costs, travel and meetings

•Forestry consultant 3-6 months

•Costs: Consultant fees

•Integration of project and baseline pieces

•Experienced consultant

ProjectDesign

g•Cost: Consultant fees

Financial planning should commence early & is an ongoing process during the project design phase.

S i l l d l iFundraising from

Developing legal agreements with partners solidifies partner commitments & expectations.

Project methodology selection and application

Spatial land use analysis

•Site boundary, deforestation analysis

•GIS and remote sensing capacity, 6-

donors and investors

Implementation

•Selection or development of methodology, calculation of ERs, monitoring plans

GIS and remote sensing capacity, 612 months

•Costs: Data, images, consultancy

•Consultant; 6-18 months

Project Design Document Project DesignProject Design Document j g

Could follow VCS, CAR, (not CDM) standards; Could follow VCS, CAR, (not CDM) standards;

What are the expected GHG benefits of the project?

How will they be estimated, and how will they be monitored after implementation?

Where exactly will the project take place?

Is the project truly additional?

What social and environmental impacts (intentional What social and environmental impacts (intentional or unintentional) might the project bring about?

Some Key IssuesProject DesignProject Design

Financial planning led by the project catalyst, but will Financial planning led by the project catalyst, but will involve close interaction with many project partners (funders, potential carbon buyers, communities, etc.)

Legal agreements signed with partners formalize relationships and creates long term commitments

Community and stakeholder meetings are the most important aspect to a project’s long term success

Baseline work, application of methodology, and PDD development often carried out by same group

Spatial analysis, including REDD baselines, requires experience in remote sensing

3. Validation Project and registration

Project validated

Third party auditor will determine:Third-party auditor will determine:• Has the project used an appropriate methodology?

Has it been applied correctly?

• Have the appropriate steps been followed? Have stakeholders been consulted? Have local laws been

h ld?upheld?

• Is the project calculating its expected emissions d ti tl ? H th b li b reductions correctly? Has the baseline been

determined correctly? Is the number of expected ERs correct?

Trees planted or 4 Implementation forests protected4. Implementation

Si d i l t ll l d d t • Sign and implement all landowner and partner agreements: lease land, negotiate site protection or maintenance contracts, government agreements

• Implement project activities:– Implement forest protection activitiesp p– Patrolling or monitoring, fire prevention, Conservation

Incentive Agreements, etc.– Design alternative livelihood and community benefit g y

activities

• Monitor project impactsp j p– Monitor deforestation rates in project site– Monitor and mitigate leakage– Monitor Social and ecological impactsMonitor Social and ecological impacts

ImplementationCommunity engagement and education

C it b ildi ( j t

Validation

•Validation by•Capacity building (project basics and activity-specific)

P j t t

Validation by standard (CDM, VCS, CCBA)

•Approved DOE

Monitoring underway

•Indicators and variables and data protocols

•Project partners, community groups, and local government

C t M ti

Approved DOE (auditor) 2-4 months

•Cost:

selected, data collected

•Project developer and partners monitor for the

•Costs: Meetings, trainings, travel

Cost: Consultant fees life of project

Carbon marketing and sales

Implementation

VerificationLegal agreements in place

•Landowner and government t b

Project activities

•A/R: Nursery construction,

Verification

Demonstrate compliance withagreements, carbon

marketing and sales contracts, and benefit sharing structure

y ,seed collection, site preparation

•REDD: Activities to address

compliance with standard and project design

A d DOE ( dit )structure

•Stakeholders and partners

•Cost: Staff and legal time

D+D, community livelihoods Approved DOE (auditor) 2-4 monthsCost: XXX

Some Key Issues Implementation

Project start up can begin slightly before validation, but activities and locations need to be fixed as early as ypossible. Once a project is validated, changes are harder or more expensive to make

If communities do not see an immediate benefit, interest in project will fade quickly - Alternative livelihoods activities must begin at the Alternative livelihoods activities must begin at the

same time, or prior to, forest protection activities- Requires up-front funding (prior to any carbon

revenues) to implement any alternatives revenues) to implement any alternatives - Capacity building is important for communities

Legal agreements regarding financial issues (carbon Legal agreements regarding financial issues (carbon marketing, revenue and benefits sharing, etc) should be reached as early as possible to avoid misunderstandings

5 V ifi tiProject implemented

properly and5. Verification properly and emissions

reductions achieved

Third-party verifier (auditor) will determine:

– Has the project been implemented according to Has the project been implemented according to the project design and methodology?

– Did the project do what it said it would?

– Has monitoring occurred as planned?– Quantity of real emissions reductions? Leakage

monitored and/or mitigated?monitored and/or mitigated?

– What social and environmental impacts (expected or unexpected) have occurred mitigated?or unexpected) have occurred mitigated?

– Have the benefits been realized? Negative impacts mitigated?

Time requiredProject Phase

Project Idea 1-2 months

ngProject Design 6-18 months

ndra

isin

Validation and Registration 6 months

Fu

rket

ing

6 months

Implementation

Mar Life of project =

30+ years

Annual Monitoring & Verification

(every 5 yrs) 6 months

A hypothetical project structure - relationships of partners and deliverablespartners and deliverables

NGO Partner 1

Field biomassGIS work Consultant

Financial management

Marketing of carbon credits

Project developerGovernment agency 2

•Many ‘moving parts’

(catalyst)agency 2•Partners and responsibilities are inter-dependent

•Project requires clear understanding and strongLegal consultant or

NGO partnerMethodology

and PDD

NGO partner 3Project requires clear understanding and strong agreements

Capacity building and communication

Legal analysis

and PDDDOE (auditor)

Government agency 1 Community Validation

3. Some Key Tasks3. Some Key Tasks

1) Remote Sensing (Quyen)2) Forest Inventory and Carbon Stock ) y

Assessment (Viet anh)3) Policies and Measures (Tim)3) Policies and Measures (Tim)4) Community Initiatives (Essam, James)