Forest Carbon Partnership Facility August 28, 2009 Update

2 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 North Amazon Basin South Amazon Basin Europe North America North East Asia South Asia Time National forest cover Atlantic forest South East Asia Oceania West Africa Source: Zarin, 2009 Forest Transition Curve Congo Basin

REDD can form a bridge on forest transition curve National forest cover Time Forest transition path REDD 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 Readiness FCPF 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

9 2. The Forest Carbon Partnership Facility (FCPF)

FCPF = A Partnership to Make REDD Happen 10

Two Mechanisms 11 Readiness Mechanism READINESS FUND Capacity Building ( ) Carbon Finance Mechanism CARBON FUND Payments for Emission Reductions (2010-?) Target ~$185 million Available $110 million Target ~$200 million Available $51 million

CARBON FUND PARTICIPANTS 1.European Commission 2.Germany 3.Norway 4.The Nature Conservancy 5.United Kingdom DONORPARTICIPANTS 1.AFD 2.Australia 3.Finland 4.Japan 5.Netherlands 6.Norway 7.Spain 8.Switzerland 9.United Kingdom 10.United States Financial Contributors to the FCPF

37 REDD Country Participants Selected 13

FCPF Governance Participants Committee (PC) Facility Management Team (Bank) Facility Management Team (Bank) Technical Advisory Panels Carbon Fund Participants Committee Carbon Fund Participants Committee Participants 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 Observers Readiness Fund (Bank as Trustee) Carbon Fund (Bank as Trustee) Bank facilitates partnership and ensures compliance with Policies (incl. Safeguards)

REDD COUNTRIES Bolivia Costa Rica DRCGabonGhanaGuyanaMadagascarNepalPanamaVietnamCONTRIBUTORSAFDAustraliaGermanyJapanNetherlandsNorwaySwitzerlandTNC United Kingdom United States OBSERVERS Forest-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 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 18 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 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 21

Next Meetings 22 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? 23 The FCPF and the UNFCCC

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