1. CBD DIALOGUE SEMINAR ON SCALING UP FINANCE FOR BIODIVERSITY QUITO, MARCH 8 2012 The Yasuni ITT Initiative and Net Avoided Emissions 1

2. 2 Lessons Learned: Environmental Policy and Mechanisms International Mechanisms: Yasuni- ITT, Net Avoided Emissions Fiscal Mechanisms: Green Taxes Domestic Incentives: Program for Environmental and Social Remediation (PRAS), Sociobosque (Conservation) Ecuador’s Constitution (2008): Rights of nature. (Art. 71) Environmental services will not be subject to appropriation. (Art. 74) National Plan for “Good Living” (Buen Vivir) (2009-2013): Sustainable management of natural heritage. (Policy 4.1. ) Diversification of the national energy matrix. (Policy 4.3.)

3. 3 Yasuni National Park Biodiversity Non-contacted Indigenous Communities Reserves of crude oil

4. 4 The Yasuni – ITT Initiative International Compensation: $3,600 million dollars in 13 years Barrels of oil underground: 840 million Net Avoided Emissions: 407 million tons CO 2 eq Biodiversity protection Respect of the Rights of Indigenous Peoples Transition to «good- living» (buen vivir) and Rights of Nature Support Yasuni (UNDP Fund): mdtf.undp.org/yasuni

5. 5 What is Net Avoided Emissions (NAE)? Mechanism of Synergies for the Fulfillment of Multiple Objectives in the context of sustainable development Net Avoided Emissions are those Green House Gas (GHG) emissions which could occur within each country’s economy but are avoided. New climate change mitigation market and non-market (bilateral), sectorial crediting mechanism (compliance with ex ante baseline setting), supplementary to developed country actions for accomplishment of mitigation commitments. Its application in CBD allows for biodiversity protection in areas where green house gas emissions are avoided (for example by leaving fossil fuels underground) Economic value associated to the service of avoiding emissions, equivalent to the market price of total tons of CO2eq avoided, plus the additional component of biodiversity protection.

6. 6 Net Avoided Emissions (NAE) Objectives: Establishment of Synergies Synergies for the fulfillment of Multiple Objectives in the framework of Sustainable Development Climate Change Mitigation Biodiversity Protection Climate Change Biodiversity Desertification Indigenous peoples Incentives and fulfillment of mitigation commitments Real net reduction of total global net GHG emissions Incentives for the protection of sensitive areas.

7. 7 Net Avoided Emissions (NAE) Design: Governance Independent Mechanisms (Bilateral, Regional) Centralized Mechanisms (Under supervision of the United Nations Framework Convention on Climate Change; Convention on Biological Diversity) «NAE» Hybrid Mechanism Decision-making: 1. NAE Executive Board: -Under orientation and authority of the Conference of the Parties. -Methodologies, accreditation, registry. 2. NAE Steering Committee: -A1 and non-A1 country representatives, private sector, local communities. -Transparency, representativity, local communities interests and funds use supervision.

8. 8 Net Avoided Emissions (NAE) Design: Cost-effectiveness (opportunity cost) Análisis Multicriterio de la Iniciativa Yasuní ITT. María Cristina Vallejo et Al. (Programa Yasuní) http://www.ambiente.gob.ec/sites/default/files/users/dvelalcazar/ANALISIS_MULTICRITERIO_YITT.pdf MULTICRITERIA EVALUATION OF THE YASUNI ITT INITIATIVE Opportunity Cost:Ranking of Alternatives: A= Yasuni ITT BTT= Exploitation Scenario 1 BITT= Exploitation Scenario 2

9. 9 Net Avoided Emissions (NAE) Design: Cost-effectiveness The Yasuni-ITT Initiative: enhancing cost-effectiveness of, and promoting, mitigation actions, Document for UNFCCC: -Views on the evaluation of various approaches in enhancing the cost-effectiveness of, and promoting, mitigation actions Submissions from Parties (7 April 2011) - Submission from Ecuador Mitigation actions in Ecuador (Land-use sector) Region/ Country Cost (USD/CO 2 eq ton) Source Yasuni-ITTEcuador$0,015 – $0,02 Submissions Form Parties (07/April/11) Yasuni ITT Cost-Effectiveness (Ecuador), UNFCCC Socio Bosque (sim. REDD)Ecuador$0,24Ortega-Pacheco et al. (2010) PROFAFOR (sim. MDL)Ecuador$1,42Wunder and Alban (2008) Offsets ForestsEcuador$1,22Antinori and Sathaye (2007) Offsets ForestsGlobal$0,38Antinori and Sathaye (2007) 1,4% cost/CDM ton CO2eq

10. 10 Net Avoided Emissions (NAE) Design: Safeguards Use of funds for Mitigation and Adaptation Activities Compensation for the environmental service provided (not for the opportunity cost) Implementation in developing countries

11. 11 Net Avoided Emissions (NAE) Design: Advantages with regards to existing mechanisms Real reduction of the global level of emissions in the long term Protection of Biodiversity as a supplemental objective Use of existing institutions Development of methodologies for baselines per sector, etc. based on existing experiences Bilateral or Market compensation Respeto a los marcos legales domésticos Equity and sovereignty in benefit distribution: Benefits for local communities Access to funds generated by the mechanism Sovereignty in project presentation and benefit distribution Net Avoided Emissions

12. 12 Net Avoided Emissions (NAE) Design: Equity and Benefit Distribution Benefits for local communities: Respect of the rights of indigenous peoples Protection of ecosystems and livelihoods Access to funds generated by the mechanism: Climate change mitigation and adaptation activities in the context of sustainable development, potential for biodiversity protection Sovereignty for the presentation of projects and distribution of benefits: Participation of the implementing party government

13. 13 Net Avoided Emissions (NAE) Design: Environmental Integrity (efficacy) Perma- nence and Leakage -Reflected in the long term (Guarantee certificates, limited resource stock) -Leakages control Additio- nality -Baselines per sector -Clear definition of scope -Host country participation Co- benefits Verifica- tion -International standards -Institutional arrangements (UN board, national committee) -Climate Change -Biodiversity -Indigenous Peoples -Desertification -Heritage

14. 14 Next Steps CoP Biodiversity (CBD) CoP Climate Change (UNFCCC) -Discussion of the Mechanism for Synergies and implementation of biodiversity component: -Instruments for biodiversity valuation -Institutional arrangements -Discussion of Modalities and Procedures -Pilot schemes and Mechanism operationalization

15. 15 THANK YOU Daniel V. Ortega Director of Environment and Climate Change Ministry of Foreign Affairs, Trade and Integration Quito, Ecuador dortega@mmrree.gob.ec medioambiente@mmrree.gob.ec

16. 16 Annex 1: The Yasuni ITT Initiative - Deforestation Component The Yasuni-ITT Initiative: enhancing cost-effectiveness of, and promoting, mitigation actions, Document for UNFCCC: -Views on the evaluation of various approaches in enhancing the cost-effectiveness of, and promoting, mitigation actions Submissions from Parties (7 April 2011) - Submission from Ecuador

17. 17 Annex 2: Cost-effectiveness of mitigation actions in Ecuador (Land-use sector) NPV (desc. Rate 6%) NPV (desc. Rate 12%) TypeActivity Emissions (million ton CO2eq) Cost (million USD) Cost (USD/ton CO2eq) Cost (million USD) Cost (USD/ton CO2eq) Yasuni-ITT Programmatic/ avoidance Oil extraction40720,780,01718,380,015 Deforestation (max.) 82024,530,0221,850,018 Socio-Bosque Projects/ sequestration Deforestation26,97,90,247,90,24 PROFAFORCDM-likeReforestation2,236,540,586,540,58 The Yasuni-ITT Initiative: enhancing cost-effectiveness of, and promoting, mitigation actions, Document for UNFCCC: -Views on the evaluation of various approaches in enhancing the cost-effectiveness of, and promoting, mitigation actions Submissions from Parties (7 April 2011) - Submission from Ecuador

18. 18 Annex 3: Net Avoided Emissions (NAE) at the United Nations Framework Convention on Climate Change (UNFCCC) 80. Decides to consider the establishment, at the seventeenth session of the Conference of the Parties, of one or more market-based mechanisms to enhance the cost-effectiveness of, and to promote, mitigation actions, taking into account the following: (e) Ensuring a net decrease and/or avoidance of global greenhouse gas emissions» (1/CP.16) UNFCCC Conference of the Parties N° 16 (Cancun, 2010) «79. Emphasizes that various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries, must meet standards that deliver real, permanent, additional and verified mitigation outcomes, avoid double counting of effort, and achieve a net decrease and/or avoidance of greenhouse gas emissions” (Draft decision [- /CP.17] AWG-LCA) UNFCCC Conference of the Parties N° 17 (Durban, 2011)