1. I NFORMAL WORKSHOP ON N ON - PERMANENCE 1 N ON - PERMANENCE IN THE B ROADER P ICTURE OF LULUCF AND THE UNFCCC

2. I NFORMAL WORKSHOP ON N ON - PERMANENCE 2 Introduction to BioCarbon Fund Tranches 1 and 2 - about $90 million: $76 million for CDM A/R $8 million for other LULUCF activities (voluntary carbon markets) $6 million for technical assistance / readiness (BioCFplus) Multi-shareholder (public and private)

3. I NFORMAL WORKSHOP ON N ON - PERMANENCE 3 Introduction to BioCarbon Fund (cont’) Resources earmarked mainly to CDM A/R in a variety of carbon sequestration technologies  More than half of the resources supporting environmental restoration – soil, forest, water sources  21 projects, 17 involving multiple farmers as main partners  13 projects are Government and non-profit-led  8 projects are led by private sector Tackling an inequitable distribution of projects Different types of A/R activities: Plantations for fuelwood, paper mills Agroforestry Assisted natural regeneration Watershed protection Land restoration More than half of the resources supporting environmental restoration – soil, forest, water sources 21 projects 13 projects are Government and non- profit-led 8 projects are led by private sector

4. I NFORMAL WORKSHOP ON N ON - PERMANENCE 4 Mitigating climate change through a variety of land use activities – examples Assisted Natural Regeneration Ethiopia Humbo – farmer managed natural regeneration on severe degraded community lands Albania – assisted natural regeneration of degraded lands Afforestation / Reforestation DRC Ibi Bateke – agroforestry on degraded savannah, and charcoal & fuelwood production India & China – maintenance of watersheds Uganda – timber production on degraded lands Chile & India – timber production on severely degraded lands REDD+ Madagascar – creation of a sustainable use protected area, with local conservation and management activities Sustainable Land Management Kenya – adoption of sustainable agricultural land management practices by small-holder farmer groups to increase crop yields, farm productivity and soil carbon sequestration

5. I NFORMAL WORKSHOP ON N ON - PERMANENCE 5 Moving forward and currently open for new contributions Launched 2004 $90m (public & private) Investment/donor thesis based on delivery of carbon credits 20 plus projects/pilots in multiple countries – average size ~5k ha for reforestation ~ 30k for agriculture, ~ 100k for REDD Successful delivery of credits BioCF T3BioCF T1 & T2 Target $200m+ donor fund, leveraging private sector 4-5 jurisdictional ‘landscape’ level projects – min. size 100k ha. Blended climate and development impacts Innovative & flexible financial structure(s) (Re)aligning public and private sector interests

6. I NFORMAL WORKSHOP ON N ON - PERMANENCE 6 21 Pioneering projects spanning more than 16 countries Supporting restoration of close to 150,000 hectares of degraded land More than 10 methodologies developed Several firsts: – 1 st A/R CDM methodology developed – 1 st A/R CDM project registered – 1 st A/R CDM credit issuance BioCarbon Fund experience with CDM A/R

7. I NFORMAL WORKSHOP ON N ON - PERMANENCE 7 Summary on land use in Clean Development Mechanism – Where have we ended up (UNFCCC data April 2013) CDM as a whole 6,699 projects registered Over 1.2 Bn CERs issued today CDM A/R 44 A/R projects registered Around 5.6 million tCERs issued from 7 projects First tCERs issued in 2012 – per the rule (one verification per commitment period) VCS AFOLU: More than 60 projects registered and issuing VCUs Projects include ARR, REDD, Agriculture

8. I NFORMAL WORKSHOP ON N ON - PERMANENCE 8 W HAT HAVE WE LEARNED FROM THE C LEAN D EVELOPMENT M ECHANISM ON N ON - PERMANENCE

9. I NFORMAL WORKSHOP ON N ON - PERMANENCE 9 Background: Non-permanence vs. reversal vs. under- performance The inherent susceptibility of terrestrial carbon to re- release stored carbon Non- permanence Release of carbon after a credit has been issued or payment has been made that causes the carbon stock to drop below what has already been credited or paid Creating a debit against previously issued credits / paid emission reductions Reversal Loss of carbon before credits have been issued / payments have been made Not a debit or reversal per se but a diminishment in the number of emission reductions that are generated during that period Under- performance

10. I NFORMAL WORKSHOP ON N ON - PERMANENCE 10 Background: illustration of terms based on A/R activities Release of carbon stocks

11. I NFORMAL WORKSHOP ON N ON - PERMANENCE 11 Background: illustration of terms based on A/R activities First measurement Second measurement

12. I NFORMAL WORKSHOP ON N ON - PERMANENCE 12 Background: illustration of terms based on A/R activities First measurement Second measurement At the time of the second measurement there is less carbon. If credits where issued against the first measurement, this would be a reversal

13. I NFORMAL WORKSHOP ON N ON - PERMANENCE 13 Background: illustration of terms based on A/R activities First measurement Second measurement

14. I NFORMAL WORKSHOP ON N ON - PERMANENCE 14 Background: illustration of terms based on A/R activities First measurement Second measurement In this case, if credits where issued against the first measurement, the release of carbon would affect the performance of the activity but not necessarily lead to a reversal

15. I NFORMAL WORKSHOP ON N ON - PERMANENCE 15 When the Modalities and Procedures for CDM A/R were designed, there was concern about potential reversibility and non-permanence of carbon stocks as a result of human activities, disturbances, or environmental change To deal with the risk of non-permanence, the CDM has taken a temporary crediting approach CDM A/R: Approach taken to address reversals

16. I NFORMAL WORKSHOP ON N ON - PERMANENCE 16 n n+5 n+10 n+15 Years Net tCO 2 e n n+5 n+10 n+15 Years tCERs lCERs Net tCO 2 e Temporary Certified Emission Reductions (tCERs) are issued for current carbon stocks and expire at the end of the commitment period following the one during which they were issued Long-term Certified Emission Reductions (lCERs) are issued for increase in carbon stocks and expire at the end of a project’s crediting period (lCERs). Current approach in CDM A/R: temporary credits

17. I NFORMAL WORKSHOP ON N ON - PERMANENCE 17 The replacement credit rule increases the risks for buyers of forest credits and increases transaction costs Prices (lower than CERs) were hard to accept by sellers Virtually no interest in lCERs Temporary crediting as an approach to address non-permanence of A/R projects has limited effectiveness and reduces the demand for forest credits (e.g., banned from largest EU-ETS market) CDM A/R: Lessons learned from dealing with temporary crediting Lessons learned from A/R CDM projects can be enriched with experiences from the voluntary carbon market where other approaches to non-permanence are used

18. I NFORMAL WORKSHOP ON N ON - PERMANENCE 18 Reversals at a landscape perspective Reducing deforestation and forest degradation Improved agricultural practices Reducing reliance on non- renewable biomass for energy Reforestation

19. I NFORMAL WORKSHOP ON N ON - PERMANENCE 19 Reversals might differ for different land use activities Type of activity CharacteristicsPermanence considerations Relevant project type (Examples) Emission reductions Avoids land use conversion, disturbance or management activity that would otherwise occur and release stored carbon into the atmosphere Emissions may simply be delayed if disturbance is deferred, rather than stopped (fire) REDD+, avoided conversion of wetlands, grasslands, or croplands Carbon sequestration Changes land use or management to store more carbon on site Carbon stocks or newly sequestered carbon can be re- emitted to the atmosphere as CO 2 Afforestation/Reforestati on, carbon stock enhancement, agricultural soil management, wetlands and grassland restoration

20. I NFORMAL WORKSHOP ON N ON - PERMANENCE 20 Different types of Reversal Risk Unintentional Reversals Natural Disturbances: Fire, wind, floods etc Intentional Harvesting, Land clearing, abandonment etc.

21. I NFORMAL WORKSHOP ON N ON - PERMANENCE 21 Sources of Reversal Risk Source of ThreatRisk of Loss Due ToRisk Category Internal to Project/Program Intentional Unintentional High Opportunity Cost Change in Financial Viability Inadequate ER Program Management Institutional Inadequate Community Engagement Inadequate Land and Resource Tenure Political Uncertainty and Conflict Natural Disturbances Fire Pest and Disease Extreme Weather Geological Risk

22. I NFORMAL WORKSHOP ON N ON - PERMANENCE 22 Complicated LULUCF puzzle is developing CDM SBSTA REDD+ SBSTA COP SBSTA/SBI Agriculture SBSTA? NAMAs (credited?) SBSTA COP Parties reporting under Convention Comprehensive accounting SBSTA

23. I NFORMAL WORKSHOP ON N ON - PERMANENCE 23 Temporary crediting as an approach to address non-permanence of A/R projects has limited effectiveness and reduces the demand for forest credits The voluntary market has found solutions to make credits from LULCUF activities fungible with other sectors, mainly through the use of buffers CDM carbon capture and storage projects are able to generate permanent credits Questions Should LULUCF under the CDM create permanent credits comparable to other sectors?

24. I NFORMAL WORKSHOP ON N ON - PERMANENCE 24 How does the discussion on non-permanence in the CDM affect other LULUCF related agenda items? Is a more integrated approach required to develop a complete picture for dealing with non-permanence and reversals and that allows Parties to address land-use in an integrated manner? Questions Links with discussions on non-permanence under the CDM to other LULUCF related topics

25. I NFORMAL WORKSHOP ON N ON - PERMANENCE 25 So can we go from this…

26. I NFORMAL WORKSHOP ON N ON - PERMANENCE 26 …to this when dealing with non-permanence and reversals?

27. I NFORMAL WORKSHOP ON N ON - PERMANENCE 27 M ARCO VAN DER L INDEN E MAIL : M VANDER L INDEN @ WORLDBANK. ORG F OR MORE INFORMATION ON THE B IO CA RBON F UND, PLEASE CONTACT : E LLYSAR B AROUDY E MAIL : E BAROUDY @ WORLDBANK. ORG WWW. CARBONFINANCE. ORG Thank you