REDD (Certification) Schemes Framing the Issues

By Eveline Trines [email protected]

www.Silvestrum.com

4 March 2009

Presentation Outline

• Voluntary Market Standards • Voluntary Carbon Standard (VCS) • Climate, Community and Biodiversity Standard (CCBS) • CDM versus VCS • Regulated Market: UN Post-2012 • REDD Methodologies

Markets / Standards

• Regulated market: UNFCCC / KP / CDM / UN-REDD • Voluntary market: – Voluntary Carbon Standard (VCS) – Climate, Community and Biodiversity Standard/Alliance (CCBS/A) – Carbon Fix Standard (CFS) – Etc.

Voluntary Market:

Project Design & Carbon Accounting Issues

Credibility of GHG Reductions

– Quantification & Monitoring – – – – – Permanence & Leakage Additionality Impacts (Env. & Soc.Econ.) Risk assessment & Buffer Registry System

Project Design, plus Social and Environmental Impacts

– Community – – – – Biodiversity Water Climate Adaptation Association with other standards

Voluntary Carbon Standard

• Global benchmark standard for voluntary carbon projects • Developed by The Climate Group, the International Emissions Trading Association (IETA), the World Business Council for Sustainable Development (WBCSD) and a range of business, government and non-government organizations • Designed to be as robust as Kyoto Protocol’s Clean Development Mechanism (CDM), while attempting to reduce costs and bottlenecks • Covers new sectors (e.g., IFM, ALM, REDD) and creates permanent, fungible credits (VCUs)

VCS AFOLU Categories

– Afforestation, Reforestation and Revegetation (ARR) – Agricultural Land Management (ALM) – Improved Forest Management (IFM) – Reducing Emissions from Deforestation and Forest Degradation (REDD) – New project categories, to be launched this year, e.g.: – Peatlands – (Conservation)

tC ha -1

IFM IFM RED ALM R AR

Forest definition

time

Forest Land Non-Forest Land Forest Land

The Climate, Community & Biodiversity Standards

The Climate, Community & Biodiversity Standards

As a project design standard - Validate high-quality project design - Stimulate investment in project development - Attract investors interested in multiple benefits - Attract co-funding from Govts, foundations, etc.

- Encourage integrated design As a multiple-benefit verification standard - Combine with carbon accounting standard (CDM, VCS), which verifies quantified emissions reductions & removals - Verify positive biodiversity and community impacts and ensure best practices - Demonstrate multiple benefits to investors and screen out unacceptable projects

The Climate, Community & Biodiversity Standards

•Includes: Independent 3 rd party validation and Verification at least once every 5 years.

•Does not in itself generate carbon credits.

VCS versus CDM

Major differences

• More activity types allowed under the VCS • The VCS has permanent carbon credits (in stead of temporary) • Risk assessment that results in a buffer: carbon reserve of credits that cannot be traded • More efficient relation with verifier (validation and verification one go, number of inspections flexible)

Project Type Eligibility

VCS Afforestation/Reforestation (A/R) Revegetation Forest restoration Improved Forest Management (IFM) Reducing emissions from Deforestation and Forest Degradation (REDD) Agricultural Land Management (ALM) √ √ # CDM √ √ √ √ √ √ √

Addressing Permanence / VCS Buffer Approach

– Re-verification optional, but incentivized… • 10% of project’s buffer released every 5 yrs at re-verification (as project demonstrates longevity and risk mitigation) – Buffer (insurance) approach  • no buyer or seller liability • creates permanent, fungible credits (VCUs) – Periodic “truing-up” ensures total portfolio carbon losses over time are • adjust buffer values and/or risk criteria as needed

UNFCCC Post 2012

What happens post-2012 in the regulated market?

• Acknowledgement of contribution of deforestation to global climate problem => REDD • Political will to include it in a future climate regime • Option to increase the participation of developing countries • National approach (versus project-based activities of CP1): voluntary sectoral target • Numerous methodological issues and even more policy issues: but if the political will exists….

What is being done?

• A 2 year period to work on methodological issues and to undertake demonstration activities (2008 and 2009) • Work towards official decision text that is to be adopted December 2009 in Copenhagen

REDD: Reducing Emissions from Deforestation

Annual emissions due to deforestation Average emissions level during the base period Flux (tC yr -1 ) A B Reduction in emissions in comparison to the average base period emission level Base period t 0 t 10 CP1 CP2 Time (yr)

Schematic representation of the compensated reduction proposal. The solid line indicates annual emission levels due to deforestation. The dotted horizontal line is the average emissions level during the base period. Area A is the reduction in emissions during the 1 st commitment period below the base period’s emission level. Area B is the same but in the 2 nd commitment period, if there was to be one. (

Trines et al., 2007)

Frontier Configuration

Humans and their infrastructure are encroaching into areas with relatively little human activity.

No-Forest

Frontier

A B

Forest

Deforestation: Yellow Non-Forest: Gray Blank areas: not available image Main Road

Deforestation: Yellow Non-Forest: Gray Blank areas: not available image

Mosaic Configuration

Human populations and associated agricultural activities and infrastructure (roads, towns, etc.) are spread out across the landscape and most areas of forest within such a configured region or country are accessible.

Example of Mosaic-type forest configuration (Jambi and Sumatera Selatan provinces, Indonesia) (Source: VCS)

Bolivia East of Santa Cruz

Governed Deforestation

1987 2003

Reality at the national level is a mix of phenomena

Project-based activities? Deflect forest degradation and increase carbon stocks Forest degradation Deforestation (Sustainable) Forest Management Rehabilitation after deforestation Time ->

Major challenge: How to operationalise the National Approach

Instruments/options at the avail of governments to REDD: – Improved and integrated land-use planning / zoning – Tax reforms (Mato Grosso, Brasil) – Improved farming techniques (higher yields per ha => less ha required) – Shift to Sustainable Forest Management (less emissions from degradation and less susceptibility to fire – e.g. Congo Basin) – Market-oriented activities/projects (e.g. BioBank, Malaysia) – Payment for Environmental Services (PES) systems (e.g Programa Socio Bosque in Ecuador) – REDD projects…

Project-type of activities, nested in a national approach

How can it be financed?

“…latest estimates from the Commission indicate that the net global incremental investment , both public and private, to reduce global greenhouse gas emissions • Fund based vs market based • Nation wide vs project based to a level compatible with the 2 ° C objective needs to increase to around EUR 175 billion per year in 2020 .”

Source: EU Council Conclusions 2 March 09

• Estimates of required resources impressive: unlikely that this can be generated only with a fund (voluntary pledging) • Combination of (Readiness) Fund & Market • Market only works if demand is created by high emission reduction targets • Other innovative options: auction top % of AAUs (Norwegian proposal); oblige industries/sectors to buy emission allowances in national ETS and ‘earmark’ revenues (Commission); contribution related to emissions or GDP or other index (Mexico); etc.

Can the Regulated Market learn from the Voluntary Market?

Need for Different Methodologies for Different Activities

• • • • The difference in types and spatial configurations must be taken into account in projecting rate/location, in designing and stratifying a ground-based inventory, and in addressing leakage.

However, some methodology components are the same.

“Modules” allow for minimizing redundancies.

Modules can be “docked” into a framework document.

Draft VCS Modules

Carbon pools

• Above-ground biomass • Below-ground biomass • Dead wood • Litter • Soil organic carbon • Harvested wood products

Sources of emissions

• Non-CO 2 burning • Non-CO 2 Nitrogen additions • Emissions from fossil fuel combustion • … emissions from biomass emissions from

Draft VCS Modules

Planned deforestation

• Baseline GHG emissions of planned deforestation • Activity shifting from avoided planned deforestation

Unplanned deforestation

• Baseline rate of unplanned deforestation • Baseline location of unplanned deforestation • Activity shifting from avoided unplanned deforestation • Leakage due to market effects

Draft VCS Modules

• Stratification • Baseline GHG emissions from forest degradation • Monitoring of deforestation and forest degradation • Uncertainty analysis • … • Framework document

Communicating vessels

Non-sinks Developed countries 2 o C Sinks Developing countries If we want to limit climate change, stabilize GHG concentrations , a particular amount of emission reductions has to be achieved, no matter how , no matter where , no matter by whom ….

“…latest estimates from the Commission indicate that the net global incremental investment , both public and private, to reduce global greenhouse gas emissions to a level compatible with the 2 ° C objective needs to increase to around EUR 175 billion per year in 2020 .”

Source: EU Council Conclusions 2 March 09

Many questions remain….

• What to do with “good behaviour in the past”? (e.g. Costa Rica) • And what if the worst is yet to come? (Congo Basin) • And what do we do with replacing high conservation value forests with e.g. oil palm? (Indonesia, Malaysia, PNG, etc.)

REDD standard requirements....

• • • • • • • Irrespective of whether we talk regulated or voluntary markets, a REDD standard must be: Robust Accommodate the diversity of circumstances that occur in “the field” Be able to fit in with national systems Respect and protect indigenous peoples’ rights and natural systems Reliably deal with the risk of non-permanence and leakage Demonstrate a deviation from business as usual (BAU) in relation to a reference period Generate credits that are accepted and ‘fungible’ (inter exchangeable) with the regulated and/or voluntary markets

Including this type of REDD credits allows UN Parties to jointly commit to higher overall emission reduction targets post

2012 ceteris paribus.

AND THEN MAYBE.....

We can continue to enjoy this!

THANK YOU!

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