The Yasuni ITT Initiative and Net Avoided Emissions CBD DIALOGUE SEMINAR ON SCALING UP FINANCE FOR BIODIVERSITY QUITO, MARCH 8 2012 1 Lessons Learned: Environmental Policy and Mechanisms 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.) International Mechanisms: Yasuni- ITT, Net Avoided Emissions Fiscal Mechanisms: Green Taxes Domestic Incentives: Program for Environmental and Social Remediation (PRAS), Sociobosque (Conservation) 2 Yasuni National Park Biodiversity Non-contacted Indigenous Communities Reserves of crude oil 3 The Yasuni – ITT Initiative Net Avoided Emissions: 407 million tons CO2eq • Biodiversity protection • Respect of the Rights of Indigenous Peoples • Transition to «goodliving» (buen vivir) and Rights of Nature Barrels of oil underground: 840 million • Support Yasuni (UNDP Fund): mdtf.undp.org/yasuni International Compensation: $3,600 million dollars in 13 years 4 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. 5 Net Avoided Emissions (NAE) Objectives: Establishment of Synergies Synergies for the fulfillment of Multiple Objectives in the framework of Sustainable Development • • • • Climate Change Biodiversity Desertification Indigenous peoples Climate Change Mitigation • Incentives and fulfillment of mitigation commitments • Real net reduction of total global net GHG emissions Biodiversity Protection • Incentives for the protection of sensitive areas. 6 Net Avoided Emissions (NAE) Design: Governance Decision-making: Independent Mechanisms (Bilateral, Regional) 1. NAE Executive Board: -Under orientation and authority of the Conference of the Parties. -Methodologies, accreditation, registry. «NAE» Hybrid Mechanism Centralized Mechanisms (Under supervision of the United Nations Framework Convention on Climate Change; Convention on Biological Diversity) 2. NAE Steering Committee: -A1 and non-A1 country representatives, private sector, local communities. -Transparency, representativity, local communities interests and funds use supervision. 7 Net Avoided Emissions (NAE) Design: Cost-effectiveness (opportunity cost) MULTICRITERIA EVALUATION OF THE YASUNI ITT INITIATIVE Ranking of Alternatives: Opportunity Cost: A= Yasuni ITT BTT= Exploitation Scenario 1 BITT= Exploitation Scenario 2 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 8 Net Avoided Emissions (NAE) Design: Cost-effectiveness 1,4% cost/CDM ton CO2eq Mitigation actions in Ecuador (Land-use sector) Region/ Country Cost (USD/CO2eq ton) Source Submissions Form Parties (07/April/11) Yasuni ITT Cost-Effectiveness (Ecuador), UNFCCC Yasuni-ITT Ecuador $0,015 – $0,02 Socio Bosque (sim. REDD) Ecuador $0,24 Ortega-Pacheco et al. (2010) PROFAFOR (sim. MDL) Ecuador $1,42 Wunder and Alban (2008) Offsets Forests Ecuador $1,22 Antinori and Sathaye (2007) Offsets Forests Global $0,38 Antinori and Sathaye (2007) 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 9 Net Avoided Emissions (NAE) Design: Safeguards Implementation in developing countries Use of funds for Mitigation and Adaptation Activities Compensation for the environmental service provided (not for the opportunity cost) 10 Net Avoided Emissions (NAE) Design: Advantages with regards to existing mechanisms Net Avoided Emissions • 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 11 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 12 Net Avoided Emissions (NAE) Design: Environmental Integrity (efficacy) Permanence and Leakage -Baselines per sector -Clear definition of scope -Host country participation Additionality Verification -Reflected in the long term (Guarantee certificates, limited resource stock) -Leakages control -Climate Change Co-Biodiversity benefits -Indigenous Peoples -Desertification -Heritage -International standards -Institutional arrangements (UN board, national committee) 13 Next Steps CoP Biodiversity (CBD) -Discussion of the Mechanism for Synergies and implementation of biodiversity component: -Instruments for biodiversity valuation -Institutional arrangements CoP Climate Change (UNFCCC) -Discussion of Modalities and Procedures -Pilot schemes and Mechanism operationalization 14 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 15 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 16 Annex 2: Cost-effectiveness of mitigation actions in Ecuador (Land-use sector) NPV (desc. Rate 6%) Type Activity Oil extraction Programmatic/ Yasuni-ITT Deforestation avoidance (max.) Projects/ Socio-Bosque Deforestation sequestration PROFAFOR CDM-like Reforestation NPV (desc. Rate 12%) Emissions Cost Cost Cost Cost (million ton (million USD) (USD/ton CO2eq) (million USD) (USD/ton CO2eq) CO2eq) 407 20,78 0,017 18,38 0,015 820 24,53 0,02 21,85 0,018 26,9 7,9 0,24 7,9 0,24 2,23 6,54 0,58 6,54 0,58 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 17 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) 18