Implementing REDD in Papua, Indonesia Presentation to ANU Seminar June 16, 2008 Marisa Meizlish Director, Advisory Services

Presentation Overview  Introduction to New Forests Pty Limited  Conservation as an alternate business model  New Forests’ work in Papua  Implementing a REDD project with the Government of Papua  Next steps  Remaining questions

New Forests Pty Limited Forest investment management and advisory services company headquartered in Sydney Opening Asian office in Kota Kinabalu, Sabah in June 2008 Most of New Forests investments include forestry plus eco-assets but increasingly focus on eco-assets as direct investments Specialize in Australia, New Zealand, the Asia-Pacific region and the United States; approximately $200 million in assets under management Raised $100 million Eco-Products Fund in 2007 (source of Funds for project in Papua)

Valuing natural forests Global forest conversion in tropical regions – soy, palm oil, beef, timber Biodiversity, carbon stocks, watershed management are being lost International move towards pricing nature – carbon markets, biodiversity investment models, water/salinity credits

The International Carbon Market is Growing Rapidly

Global Carbon Market in 2007

Conservation in Global Carbon Markets  Kyoto trading mechanisms only allow for reforestation/afforestation projects  EU ETS does not allow forestry offsets of any type  Emerging market in California allows reforestation/afforestation, improved forest management and conservation  U.S. Lieberman-Warner bill has provision for “set asides” under the domestic cap for investment in international forest conservation  Australia ETS rules not yet defined but national efforts to reduce regional deforestation have been initiated > general trend toward greater inclusion of forestry project types and commitment to forest conservation

Potential Value of Conservation – 2007 became a watershed year Avoided deforestation remerged as part of global Kyoto negotiations Culminated in the Bali Roadmap (Kyoto COP13) – “policy incentives and positive incentives” to reduce deforestation World Bank Forestry Carbon Partnership Facility Government commitments (i.e. Australia, Norway) looking at options for funding tropical forest conservation Voluntary Carbon Standard – market entry for high-quality REDD credits

New Forests Study: Conservation as an alternate business model

Implementing a Voluntary REDD Project in Papua  New Forests presented a paper at Bali Kyoto COP in Dec comparing conservation scenarios to returns from land uses driving deforestation  Developed methodologies & baselines that supported hypothetical REDD projects  Made acquaintance with Gov. Barnabus Suebu through research work, Bali COP and Emerald Planet (Indonesian counterparty)  Conceptualized a REDD project for Papua with governor, NGOs and forestry department  Signed Memorandum of Understanding in May 2008

MOU: New Forests & Government of Papua PurposeCreation of a REDD project that provides a commercial basis for forest conservation and sustainable development to the people of Papua TermsNew Forests will be granted a 10-year lease (Environment Forest Services Utilization License – IUPJL) for the purposes of developing the project and marketing carbon credits - “implementation phase” Subsequently, land will be placed under a perpetual conservation lease – maintenance in perpetuity

MOU: New Forests & Government of Papua Project 1. site selection – have world heritage biodiversity value Development(CI Hot Spot), under Development immediate threat of deforestation or conversion

MOU: New Forests & Government of Papua Project 2. consult with stakeholders Development 3. establish a Conservation Management Plan, operating plan and monitoring plan 4. develop a Project Design Document (carbon methodology) 5. develop a carbon business plan 6. execute legal agreements 7. attain VCS & CCBA accreditation and register credits 8. market and sell carbon credits

MOU: New Forests & Government of Papua Legal & FinancialEstablish a perpetual Trustee responsible for monitoring and enforcing the Conservation Management Plan. Carbon revenues endow a trust that will make annual distributions as conservation objectives are met (20% of gross carbon revenues) Distributions will finance monitoring and management in perpetuity and provide financial support to local communities, i.e. health, education and economic development. Profits after endowment and project costs split between the Papuan Government, New Forests and Emerald Planet.

Immediate Next Steps  Site selection  Pre-marketing by New Forests has begun to develop business plan – already have interested buyers but conditional on VCS accreditation  Achieve VCS accreditation & registration – 12-month process but buyers willing to engage in conditional purchase contracts because of high demand  Develop endorsements/partnerships with NGO and scientific community  Establish synergies with national government and other forest conservation efforts in Indonesia

Remaining Questions for REDD New Forests’ Advisory business has been researching legal, commercial and technical issues in REDD project design Seeking to continue development of architecture for REDD project development –business as usual models for carbon loss from logging and oil palm –integration of project-based and national level baselines –commercial modelling of project investment structures, credit release schedules and credit pricing –studies of the social impacts/benefits and management of endowment funds associated with REDD projects –studying the supply/demand dynamic of REDD investments, including potential maximum supply rates of REDD credits and relative supply of REDD against different pricing scenarios & project types in ETS

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