1. REDD (Certification) Schemes Framing the Issues By Eveline Trines Eveline.Trines@Silvestrum.com www.Silvestrum.com 4 March 2009

2. 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

3. 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. Markets / Standards

4. 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 Market: Project Design & Carbon Accounting Issues

5. Voluntary Carbon Standard

6. 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)

7. 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)

8. Forest Degradation Devegetation Revegetation Afforestation Reforestation Forest Management Forest Land Non-Forest Land Intact Forest tC ha -1 time Forest definition IFM R AR Agricultural & Grassland Management ALM RED

9. The Climate, Community & Biodiversity Standards

10. 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

11. Includes: Independent 3 rd party validation and Verification at least once every 5 years. Does not in itself generate carbon credits.

12. VCS versus CDM

13. 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)

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

15. Addressing Permanence / VCS Buffer Approach –Project risk assessment to determine buffer withholding percentage, placed in shared VCS buffer pool –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 covered by buffer pool adjust buffer values and/or risk criteria as needed –CC AR forestry projects can participate in VCS buffer to generate permanent credits

16. UNFCCC Post 2012

17. 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….

18. 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

19. Time (yr) Base period Flux (tC yr -1 ) Average emissions level during the base period CP1CP2 t0t0 t 10 Annual emissions due to deforestation AB Reduction in emissions in comparison to the average base period emission level 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) REDD: Reducing Emissions from Deforestation

20. Frontier Configuration Humans and their infrastructure are encroaching into areas with relatively little human activity. AB Frontier No-Forest Forest

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

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

23. 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.

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

25. 1987 2003 Bolivia East of Santa Cruz Governed Deforestation

26. Forest degradation Deflect forest degradation and increase carbon stocks Deforestation Rehabilitation after deforestation (Sustainable) Forest Management Time -> Carbon -> Reality at the national level is a mix of phenomena Project-based activities?

27. 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

28. Fund based vs market based Nation wide vs project based 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. 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 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

29. Can the Regulated Market learn from the Voluntary Market?

30. 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. Need for Different Methodologies for Different Activities

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

32. 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

33. Stratification Baseline GHG emissions from forest degradation Monitoring of deforestation and forest degradation Uncertainty analysis … Framework document Draft VCS Modules

34. Communicating vessels 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…. Non-sinks Developed countries Sinks Developing countries 2 o C “…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

35. 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.)

36. 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. REDD standard requirements....

37. THANK YOU! Eveline.Trines@Silvestrum.com AND THEN MAYBE..... We can continue to enjoy this!