Global Forest Carbon Supply Considerations: Learning from the FCPF Program Forest Carbon Partnership Facility “Modeling Costs and Volumes of GHG Offsets” workshop RFF and EPA, Washington DC 5/12/09 Ken Andrasko, World Bank/Carbon Finance Unit Areas with high net change in forest area between 2000 and 2005 • Global forest cover -- 3,952 million ha, 30 percent of world’s land area • Net forest area loss 7.3 million ha/yr vs. 8.9 million ha/yr in the 1990s FAO, 2006 Carbon balance land use change and forestry sector by region Positive Values = Emissions • Emissions climbing Tr. Asia • But reductions possible: China, Trop Amer • Which future path will be taken? Tr. Am USA Tr. Africa China Source: Houghton (2003) Key Questions for Global Forest Offsets • What activities are eligible? • Where, and when? Summary of Issues • At what cost (implemented on ground) • How will they be measured and monitored? • How can implementation considerations be addressed, to bring tonnes to market?: eg, governance, indigenous peoples, REDD program delivery infrastructure Global Economic Model Results Identify Quantities and Prices: But Not Implementation Potential. FCPF program exploring HOW to develop REDD national programs Source: Brent Sohngen slide , this workshop Global Forest Carbon Range of REDD costs Estimate: Global model estimations based on DIMA, GTM and GCOMAP Source: Kinderman et al, 2008; Union of Concerned Scientists. www.ucsusa.org Question: Which Opportunity Set are We in? What Are Requirements to Bring Tonnes to Market? Global Forest Carbon Range of REDD costs Source: Brent Sohngen slide , this workshop Reference Case Assumptions Are Critical: e.g., Updating GCOMAP Reference Case to FAO 2005: Change in Carbon Density (t C/ha) Region GCOMAP (2006) GCOMAP (2008) % Change Africa 74 98 33% Central America 71 124 75% South America South-east Asia 142 124 -13% 68 101 48% Source: COMAP (2008) carbon density data derived from biomass and carbon density values by country and region in FAO 2005 Global Assessment of Forests (FAO 2005). The Challenge: How to translate political will in climate negotiations, country experience to date (mostly failures), carbon finance concept, and field realities … into REDD action? Basic building block concepts: REDD Challenge - Reducing emissions from deforestation is feasible – if a country can design a feasible REDD strategy, implement it, and sustain it. - Country is critical scale for REDD… But subnational implementation likely - Emissions reductions measured from agreed reference case– each country - Carbon finance feasible – but will vary by country - Governance issues & stakeholder consultations are critical - Co-benefits of REDD may include rural livelihoods, biodiversity conservation, development plan ning Forests and Climate Change: World Bank-Managed Instruments Carbon Funds Climate Investment Funds $2.3 billion* ~ $6 billion BioCarbon Fund (BioCF) Forest Carbon Partnership Facility (FCPF) Forest Invesment Program (FIP) $90 million Target= $385 million** Target= $500 million? Growing Forests Partnership (GFP) $15 million * $2.6 billion if FCPF is included ** $185 m Readiness Fund + $200 m Carbon Fund. Only Readiness Fund operational ($107 million) The Phases & Financing of REDD • Payments • Performance-based FCPF Carbon Fund, Norway, GFCM (?), carbon market (?) FIP, UN-REDD, CBFF, GEF, ODA FCPF Readiness Fund, UN-REDD, CBFF, GEF, ODA Maintenance Reforms & Investments Readiness • Forest governance and information • Sustainable forest management • Investments outside forest sector • Reference Scenario • REDD Strategy • Monitoring System World Bank‟s Forest Carbon Partnership Facility, FCPF: Announced Bali, 12/07. Declared operational: 6/26/08 The FCPF: Two Funds Readiness Mechanism Carbon Finance Mechanism READINESS FUND CARBON FUND Capacity building Payments for Emission Reductions ~ now $150 million ~$200 million FCPF: 37 Countries Selected SAR: 1 country Honduras EAP: Guatemala Suriname 7 countries Thailand El Salvador Cambodia Indonesia LCR: 15 countries Chile CAR Legend Equatorial Guinea Tanzania Africa: 14 countries Mozambique Countries selected (2008) Countries selected in March 09 FCPF Countries in REDD: Different scales of deforestation 1,800 Deforestation Rate (thousand ha per year - from 2000 to 2005) 500 High Rates of Loss (> 100,000 ha) 400 Medium Rates of Loss (50,000 to 100,000 ha) 300 Low Rates of Loss (< 50,000 ha) 200 Countries selected in March 2008 Countries selected in March 2009 PC meeting Guyana Suriname Vanuatu Vietnam El-Salvador Panama Chile Gabon Costa Rica Kenya Equatorial Guinea Republic of Congo CAR Colombia Mozambique Guatemala Madagascar Liberia Lao PDR Uganda Nicaragua Tanzania Nepal Peru Thailand Ghana PNG Ethiopia Argentina Cambodia Paraguay Honduras Cameroon Bolivia 0 Mexico 100 DRC Area Deforested (thousand ha/yr) Indonesia Source: FAO FRA 2005 FCPF National Readiness Plan Components Cross cutting Management Conceptual framework Policy • Consultations and participation • Investment and capacity building • National REDD working group •Readiness managmt. sys • Assessment of land use, policy & governance • REDD strategy • Methodology Implementation Reference scenario • Monitoring, reporting & verification • Impact assessment • REDD Implementation framework Detailed R-Plan guidance document available http://wbcarbonfinance.org/Router.cfm?Page =FCPF&FID=34267&ItemID=34267&ft=DocLib&ht=43249&dl=1 Emissions reference scenario FCPF Readiness What does „ready‟ mean? Where to Draw the Line between Readiness and Investments? National REDD strategy: 1. REDD strategy: how to reduce emissions? 2. REDD implementation framework 3. Stakeholder consultations Monitoring: 1. Design system 2. Conduct forest inventory 3. Capacity building 4. Carbon stock assessment: different levels Using default factors/existing inventory data Finance additional inventories, permanent plots Full assessment for forest degradation Governance: Implementation of Land-(use) reforms Legislative reforms Institutional reforms Improve law enforcement Financial sector reforms REDD is Context-Specific: Each country needs to assess its own context, potential for REDD, other land uses, & policy options to slow deforestation and provide co-benefits What REDD Strategy makes sense for each context?? Needs Address Deforestation Drivers & institutional setting Total Area: 147,181 Sq. Km. Population: 24 M NEPAL Different Drivers of Deforestation Need to Be Addressed In REDD Readiness Plans Drivers Source: WRI, http://earthtrends.wri.org/updates/node/303 Countries Likely to Define Location & Risk (additionality) of Deforestation, Spatially Resolved Note: national program likely to focus on key subnational Projects & areas … Early Thinking About Reference Case Setting: What is Needed for REDD?? At What Scale & Resolution?? Potential Typology For Reference Regional Case ?? Reference Case: 4-5 countries Subnational Reference Case Global Target Reference Case?: -Via negotiations? -- via analytic method? Issues: National Implementation Reference Case ??: - To implement global case Subnational Reference Case Global Objective Reference Case ?? (independent, via remote sensing?) Subnational Reference Case - National scale probably key for REDD and FCPF - Policy discussion focusing on global scale to date - How resolve relation between global, national & project?? - How to develop guidance?? Need Guidance on Reference Case Methods: Example: Brazil‟s Amazon Fund (Running historical average approach) AERi ,t PAEt ( HE i ,t Ei ,t ) National Baseline, Accounting & monitoring A nested approach when both national accounting and project approaches co-exist Inter-regional strategy and policies REGION 1: baseline & policies Multilevel distribution of funds & accounting REGION 3: baseline & policies REGION 2: baseline & policies Independent REDD Projects REDD Funds for Region 2 REDD payments to stakeholders Project 1 Transaction costs: land registry, M&E Project 2 … Indigenous Peoples Logging concessions Agricultural activities We TargetWill REDD ERs? Challenge:Q: Can REDD Need to Address Dynamic Land Use Change, Cost, & Governance Issues • REDD Opportunities Vary by Opportunity Cost (OC) of Land, C Density, and Threat of Deforestation REDD Problem Statement Deforestation Threat & C Density Class, for East Kalimantan (Gibbs and Brown, 2007) • Can we identify lowOC, medium – high C and deforestation threat lands, with low barriers to implementation, and target them for REDD ER activities? • What are priority governance concerns with these targeted lands and REDD strategies, by country? Gibbs, H. and S. Brown. 2007. Geographical Distribution of Biomass Carbon in Tropical Southeast Asian Forests: A Database. ORNL/CDIAC. 4. REDD Implementation Framework Addresses issues such as: Implementation Framework • National approach (national boundary) and/or subnational approaches (regional or project boundaries); • Defining who would be entitled to sell Emission Reductions or receive payments for ERs; • How payments to local communities, agencies, or others would be structured and managed-- for what deliverable? • Tracking REDD activities or projects and payments in a national carbon registry? • Clarifying specific land tenure or other legal arrangements or policies. FCPF Readiness: Early country cost estimates (based on R-PINs, discussions with REDD countries and independent estimates Average funding needed to reach Readiness? Average cost estimate from smaller/mid size countries: US$ 3.3 million (NOT included: large countries like Indonesia, DRC, Brazil, Peru) Need Document Defining Requirements for Forest Monitoring and Reporting for REDD, Gaps, & Cost Estimates + Work Plans to Improve. Existing NFI Capacity: -Field - remote sensing -- biodiversity •Little experience Identify REDD monitoring & reporting system requirements: Perform Gap Analysis : 2009-2013?: Provide Tech Assistance, Funding: -By country -China listed needs -- by REDD program -Build global guidance for “REDD -NRI include biomass, soils -- develop work plans -- build country capacity -- remote sensing data & processing -- eg, need more inventory plots? Finer resolution remote sensing? -Add biodiversity? -FCPF uses RPlan process to guide country capacity building & investment needs •* Experienced -Guidance -training FCPF Resources and Contacts • Guidance on specifics of R-Plan template is being added to FCPF website: www.forestcarbonpartnership.org. • Questions or comments to Ken Andrasko (kandrasko@worldbank.org, tel +1-202-473-8355) or Werner Kornexl (wkornexl@worldbank.org, tel +1-202458-7916). • When complete, submit R-Plan to: 1) World Bank Country Management Unit for your country; and 2) FCPF Facility Management Team at fcpfsecretariat@worldbank.org. THANK YOU! Kindermann et al. 2008 3-Model Comparison Table 3: Carbon price in $ t−1 CO2 necessary to generate a 10% and 50% reduction in deforestation in 2030 Area 10% Reduction GCOMA P DIMA 50% Reduction GTM GCOMA P DIMA GTM Central and South Ameri ca 3.17 8.03 1.48 15.85 24.48 9.70 Africa 1.05 3.5 1.63 5.24 12.30 9.60 6.47 8.73 1.24 32.33 19.56 8.31 1.70 4.62 1.41 8.52 20.57 9.27 Southeast Asia Globe Would National Registry approach help ?? - Could country “find” project in national registry?? - Relation to GHG national reporting, IPCC GPG methods, and REDD needs – need consistency Rest of forest landscape not project REDD forest to protect Registry of Specific Programs or Projects: High Precision MMV ? Proj x Proj W 600,000 t CO2/yr 230,000/yr Rest of Nation: lower precision ? Stratified lands type A Stratified lands type B Stratified lands type C 1,345,000 t Co2/y