1. Harnessing the carbon market to sustain ecosystems and alleviate poverty BioCarbon Fund Overview BioCarbon Fund Overview BioCF Project Training Seminar Washington, DC July 11, 2005

2. World Bank Carbon Finance Products Italian Carbon Fund. $80 million (open to Italian participation). Italian Multi-shareholder. Multipurpose. Netherlands Clean Development Facility. ~ $172 million. Netherlands Ministry of Environment. CDM energy & infrastructure projects. BioCarbon Fund. $51.3 million (open). Multi-shareholder. JI and CDM LULUCF projects. Community Development Carbon Fund. $128.6 million (closed). Multi-shareholder. Small-scale CDM energy projects. Prototype Carbon Fund. $180 million (closed). Multi-shareholder. Multi-purpose. Total funds pledged: ~ US$937 million Netherlands ECF Netherlands European Carbon Facility. ~ $40 million with IFC. Netherlands Ministry of Economic Affairs. JI projects. Spanish Carbon Fund. ~ $220 million (open to Spanish participation). Spanish Multi-shareholder. Multipurpose. Danish Carbon Fund. ~ $64 million (open to Danish participation). Danish Multi-shareholder. Multipurpose.

3. BioCarbon Fund: Rationales Improved land use is part of the solution to climate change (deforestation causes 20% of CO2 emissions) Open carbon market to rural communities (excluded if CDM restricted to energy & infrastructure) Inform debate (so far too ideological, not enough based on facts) Create synergies among Conventions (money channeled through UNFCCC can foster sister conventions) UNCCD

4. Goals Atmospheric: Reduce GHG concentrations over baseline Cost-effective: Buy low-cost climate change mitigation opportunities Social: Improve livelihoods (employment, income, know-how) Environmental: Conserve biodiversity, rehabilitate land Adaptation: Increase social and ecological resilience of local communities

5. Two Windows Second Window Explore “beyond Kyoto” CDM: Forest management, revegetation, agricultural land management No carbon credits First Window Kyoto-compatible CDM: Afforestation /Reforestation + Biofuels Carbon credits to meet Kyoto obligations

6. Tranches and Windows Second WindowFirst Window Tranche One (operational) Land Restoration Tranche (to be opened) Marine Tranche?

7. Portfolio – First Window In-fill planting for forest restoration Community forestry Agroforestry Biofuels

8. Portfolio – Second Window Forest restoration & conservation Reduced tillage Revegetation

9. Project Portfolio ~ 140 Project Idea Notes received At ~ $50 million, BioCarbon Fund needs ~ 20 projects 21 leading candidates identified and under further preparation (Carbon Finance Documents) ~ 12 Mt CO 2 e by 2017 (including Windows 1 & 2) Enough for a fund of ~ $60 million! 17 projects cleared

10. 17 Projects Cleared Albania Assisted Natural Regeneration Brazil Reforestation around Hydro Basins China Pearl River Watershed Management Colombia San Nicolas Agroforestry Colombia Silvopastoral Rehabilitation Costa Rica Coopeagri Dominican Republic Rio Blanco Reforestation East Africa Small Group and Tree Planting Honduras Pico Bonito Madagascar Biodiversity Corridor Mexico Seawater Agroforestry Nicaragua Precious Woods Niger Acacia Community Plantations Philippines Watershed Rehabilitation Trinidad and Tobago Nariva Wetland Restoration Uganda Nile Basin Reforestation Ukraine Chernobyl Reforestation

11. Participation & Timeline Tranche One operational since May 2004 13 Participants: $51.3 M Okinawa Electric; Government of Canada; Government of Italy; Tokyo Electric; Eco-Carbone; Agence Française de Développement; Government of Spain; Government of Luxembourg; Idemitsu Kosan; Sumitomo Joint Elec. Power Co.; Sumitomo Chemicals; Japan Petroleum Exploration; Japan Iron and Steel Federation 2.5% catch-up payment from March 31, 2005 1-2 more Participants for Tranche One by August 31, 2005 Closure of Tranche One and opening of Tranche Two by August 31, 2005

12. How the Fund Works Industrialized Governments and Companies EITs and Developing Countries $ $ Technology Finance $ Technology Finance CO Equivalent 2 Emission Reductions CO Equivalent 2 Emission Reductions

13. Governance International Bank for Reconstruction and Development is Trustee of the BioCF; BioCF does not have legal entity Fund Manager = Bank Staff, heading the Fund Management Unit Participants (investors) represented by a Participants ’ Committee approving projects, budgets, and giving general guidance Fund Management Committee = 5 Bank managers screening projects Host Country Committee for all Carbon Funds

14. BioCF Website Website will be used intensively to communicate with Participants, project sponsors and public Contains a description of each cleared project Contains a FAQs section on the BioCarbon Fund Will contain a discussion of some of the LULUCF specific issues, as they arise in the various projects (additionality, leakage, permanence, social and environmental benefits and risks) Contains a page on “ Useful LULUCF Resources, ” which links to other organizations, market information, methodological and regulatory aspects, etc.