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Critical theme - Moving forward with REDD+ (part two)
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Critical theme - Moving forward with REDD+ (part two)

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The presentation of Matt Leggett, of Global Canopy Programme, to the IIED-hosted Moving ahead with Reducing Emissions from Deforestation and forest Degradation (REDD+) workshop on 9-10 April 2014.

The presentation of Matt Leggett, of Global Canopy Programme, to the IIED-hosted Moving ahead with Reducing Emissions from Deforestation and forest Degradation (REDD+) workshop on 9-10 April 2014.

The presentation, made as part of a series of Critical Themes delivered by experts at IIED, focused on Moving forward with REDD+, and the readiness, role of the private sector, finance and political commitment.

More information on the Global Canopy Programme's work: http://www.globalcanopy.org/.

Further details of the workshop and IIED's work on REDD+ are available via http://www.iied.org/coverage-moving-ahead-redd-prospects-challenges-workshop.

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Critical theme - Moving forward with REDD+ (part two) Critical theme - Moving forward with REDD+ (part two) Presentation Transcript

  • ©2014 GLOBAL CANOPY PROGRAMME 1 Moving forward with REDD+ between 2015-2020…
  • ©2014 GLOBAL CANOPY PROGRAMME 2©2014 GLOBAL CANOPY PROGRAMME • To meet 2 degrees limit – global deforestation levels need to be significantly reduced. • There is a lack of demand for REDD+ emission reductions in the ‘interim period’ between 2015 and 2020. • EC target: 50% reduction in deforestation levels by 2020 = equal to a max of 9,900 MtCO2e from forests and land use between 2015 and 2020 • Can be achieved through a combination of measures taken by forest countries and the private sector: 1. Domestic policy and regulatory reform in forest countries 2. Overseas development assistance between governments (including performance based payments) 3. Payments in exchange for fungible REDD+ emission reductions THE PROBLEM
  • ©2014 GLOBAL CANOPY PROGRAMME 3©2014 GLOBAL CANOPY PROGRAMME • To meet 2 degrees limit – global deforestation levels need to be significantly reduced. • There is a lack of demand for REDD+ emission reductions in the ‘interim period’ between 2015 and 2020. • EC target: 50% reduction in deforestation levels by 2020 = equal to a max of 9,900 MtCO2e from forests and land use between 2015 and 2020 • Can be achieved through a combination of measures taken by forest countries and the private sector: 1. Domestic policy and regulatory reform in forest countries 2. Overseas development assistance between governments (including performance based payments) 3. Payments in exchange for fungible REDD+ emission reductions THE PROBLEM
  • ©2014 GLOBAL CANOPY PROGRAMME 4©2014 GLOBAL CANOPY PROGRAMME • Who will buy these REDD+ emission reductions? • Current counterparties between 2015 and 2020: 1. California ETS 2. BioCarbon Fund 3. FCPF Carbon Fund 4. KfW REDD+ Early Movers Programme 5. Voluntary pre-compliance market • Total existing potential demand = 253 MtCO2e • This is less than 3% of the total 9,900 MtCO2e REDD+ emission reductions needed to meet the EC target THE PROBLEM
  • ©2014 GLOBAL CANOPY PROGRAMME 5©2014 GLOBAL CANOPY PROGRAMME • BUT lets assume that some of the 9,900 MtCO2e needed may be achieved through (1) policy and regulatory reform; (2) ODA between governments (including performance based payments). • Let’s call it 75% to be generous (or 7425 MtCO2e) • If we estimate the remaining 25% (2475 MtCO2e) of the 9,900 MtCO2e reductions needed is paid for by exchanging fungible REDD+ credits in an international trading mechanism. • This means that supply is still 3-10 times larger than the current demand of 253 MtCO2e THE PROBLEM
  • ©2014 GLOBAL CANOPY PROGRAMME 6©2014 GLOBAL CANOPY PROGRAMME Demand vs. Supply
  • ©2014 GLOBAL CANOPY PROGRAMME 7©2014 GLOBAL CANOPY PROGRAMME Demand vs. Supply
  • ©2014 GLOBAL CANOPY PROGRAMME 8©2014 GLOBAL CANOPY PROGRAMME Demand vs. Supply
  • ©2014 GLOBAL CANOPY PROGRAMME 9©2014 GLOBAL CANOPY PROGRAMME Without interim demand: 1. Little incentive for tropical forest countries to generate long term emissions reductions 2. Little incentive for the private sector to invest in REDD+ without demand. 3. This will delay action towards a post 2020 compliance regime. And ultimately increase the future cost of tackling climate change. Why is lack of interim demand a problem?
  • ©2014 GLOBAL CANOPY PROGRAMME 10©2014 GLOBAL CANOPY PROGRAMME A strategic intervention is needed by donor country and tropical forest country governments, and public financial institutions, to unlock public/private investment in REDD+ activities by scaling up interim demand. Objective is to: 1. Increase demand for REDD+ emission reductions before 2020. 2. Catalyse private sector investment in activities generating REDD+ emission reductions before 2020 The Solution
  • ©2014 GLOBAL CANOPY PROGRAMME 11©2014 GLOBAL CANOPY PROGRAMME The strategic intervention should stimulate demand by: 1. Creating performance-based financial incentives to enable forest countries to enter long term contracts to reduce emissions by offering greater certainty over the price/volume of REDD+ credits. 2. This will catalyse private sector investment in activities that generate REDD+ emission reductions by creating investable conditions and a track record for REDD+. 3. Mimicking other successful interventions, such as the GAVI and its Advanced Market Commitment (AMC). 4. Utilising existing funds and mechanisms for delivery, such as the FCPF, Green Climate Fund, etc. The Solution: What?
  • ©2014 GLOBAL CANOPY PROGRAMME 12©2014 GLOBAL CANOPY PROGRAMME 1. Raise minimal public sector capital for interim period (including already committed capital, e.g. Indonesia LoI with Norway), leveraging maximum possible from private sector 2. Offer greater certainty over price and volume of REDD+ emission reductions, using price floors, ERPAs, options contracts, to stimulate private sector investment 3. Offer upfront concessional finance, insurance, technical assistance, etc, to support the ‘supply side’ 4. Channel funding from the public sector through existing structures, such as the FCPF, GCF, national funds (e.g. FREDDI) or others The Solution: How?
  • ©2014 GLOBAL CANOPY PROGRAMME 13©2014 GLOBAL CANOPY PROGRAMME 1. It can attract private finance 2. It saves public sector money in the long term 3. It supports the development of a post-2020 framework 4. It helps meet existing climate agreements 5. It builds on money already spent on REDD+ Readiness 6. It can pilot the GCF or other funds/mechanisms in development The Solution: Why?
  • ©2014 GLOBAL CANOPY PROGRAMME 14©2014 GLOBAL CANOPY PROGRAMME • Aim: – address the lack of finance and demand for REDD+ emission reductions between 2015 and 2020 (when a global climate change agreement is anticipated). • Method: – facilitate, by the UNFCCC COP20 in Lima in December 2014, an agreement among REDD+ donor country governments to set up an intergovernmental interim forest finance working group, to: 1. Examine ways to spend the funding that has already been committed by donor country governments 2. Investigate the need for additional public funding 3. Examine the capital-raising options, deployment instruments and the institutional frameworks – support the delivery of recommendations, by the working group, by COP21 in Paris in December 2015 The Interim Forest Finance Project
  • ©2014 GLOBAL CANOPY PROGRAMME 15 Thank you