The Private Sector and REDD+ : Trends, Challenges and Opportunities

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Using the REDD+ supply chain as an analytical framework and
drawing on information gathered through expert meetings and interviews with over 40 developing-country REDD+decision-makers and implementers, the research examined:
• In the REDD+ supply chain, who are the private sector players and what are their motivations and types of
interventions?
• What are the current challenges for private sector engagement in REDD+?
• How can private sector engagement in REDD+ be enhanced

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The Private Sector and REDD+ : Trends, Challenges and Opportunities

  1. 1. The Private Sector and REDD+ : Trends, Challenges and Opportunities Florence Bernard, Programme Associate, ASB Partnership for the Tropical Forest Margins Tony La LaViña, Facilitator, Informal Group on REDD+ of LCA Alfred Gichu, REDD+ Readiness Coordinator, Kenya Forest Service Armin Sanhoevel, CEO, Allianz Climate Solutions GmbH Jonathan Shopley, Managing Director, The CarbonNeutral Company 29TH NOVEMBER 2012DOHA CLIMATE CHANGE CONFERENCE
  2. 2. The Private Sector and REDD+ :Trends, Challenges and Opportunities Florence Bernard ASB Partnership for the Tropical Forest Margins 29TH NOVEMBER 2012 DOHA CLIMATE CHANGE CONFERENCE
  3. 3. Improving REDD+ outcomes by fosteringsuccessful private sector engagement 1 2 3
  4. 4. The REDD+ Supply ChainPrimary Distributionproduction Processing and trading Consumption
  5. 5. INVESTMENTWho Form of Intervention MotivationInvestment funds Direct investment with Re-sale for profit within project developers voluntary or pre-complianceBanks markets Pre-buying carbon credits through purchase Gain of experience in agreement REDD+Emissions-intensive Pre-buying carbon Voluntary credit offsettingindustries credits through purchase agreementLarge multinational Grant Corporate Socialfirms Responsibility (CSR)Medium- to large- Direct investment Business for profitsized carbon offsetprivate firms
  6. 6. PROJECT DEVELOPMENT AND IMPLEMENTATIONWho Form of Intervention MotivationMedium to large-sized Development and • Niche of activitiescarbon offset private implementation of • Business for profitfirms REDD+ projectsLarge multinational Co-implementation of • Corporate Socialfirms REDD+ projects Responsibility (technical expertise and • Greening their image / technological capacity) Branding
  7. 7. CARBON CREDIT TRADING AND RETAILINGWho Form of Intervention Motivation Trading and retailing / Re-sale for higher prices inFinancial firms Intermediary between the future investor and producer
  8. 8. CARBON CREDIT PURCHASINGWho Form of Intervention Motivation Purchase agreement • Voluntary carbonEmissions-intensive offsettingindustries • Pre-compliance • CSRLarge multinational • Brandingfirms
  9. 9. VALIDATION AND CERTIFICATIONWho Form of Intervention MotivationAudit firms, Audit • Business for profitCertification firms • Niche of activity
  10. 10. CAPACITY-BUILDING AND TECHNICAL ADVISORYWho Form of Intervention Motivation Technical expertise • Business for profit regarding deforestation • Niche of activity and degradationConsulting firms mapping via remote sensing analysis; capacity building; law advisory
  11. 11. Key findings• Functions not mutually exclusive; a private sector actor can wear several “hats” simultaneously• Private sector involvement is critical for scaling up investment in REDD+, fostering innovation in REDD+ and addressing drivers of deforestation.• Top 3 motivations: 1. Re-sale of carbon credits, 2. Voluntary carbon offsetting or pre-compliance purposes, 3. Corporate Social Responsibility, Branding• Emergence of a strong secondary forest carbon market• Growing involvement of financial institutions
  12. 12. Challenges to Private Sector Involvement1) Uncertainty on long-term and robust demand for REDD+ credits • Central role of UNFCCC to ensure demand for tradable REDD+ credits 2)Lack of a clear regulatory and policy framework •Strong policy signal and policy clarity needed: national REDD+ strategies, national emission targets, clearly defined roles
  13. 13. Challenges to Private Sector Involvement3) Unclear land tenure and Carbon ownership systems• FPIC with the communities, clear Benefit Sharing Mechanisms4) Lack of a Legal Basis for Private Investment• Due diligence in the investment process• Insurance and Risk-Sharing Mechanisms• Appropriate Dispute Settlement Arrangements5) Appropriate Social and Environmental Safeguards
  14. 14. Potential strategies to stimulateprivate sector involvement in REDD+• Enhancing investment though compliance carbon markets• New and emerging compliance markets : California and South Korea’s cap-and-trade systems, Australia’s new climate legislation and Japan’s Bilateral Offset Credit Mechanism
  15. 15. Potential strategies to stimulateprivate sector involvement in REDD+• Crediting using a nested framework• Direct issuance of performance-based payments to the private sector• Enables crediting of subnational projects independently from the overall national performance• Integrated, jurisdiction-wide accounting frameworks within a country
  16. 16. Potential strategies to stimulateprivate sector involvement in REDD+• Engaging the Private Sector in National-Level Strategies • Involvement of sector actors as both private drivers of deforestation (e.g., timber, mining), as well as potential investors • Shaping an overall policy framework that is win-win-win for all parties
  17. 17. motivations and types of interventions? • What are the current challenges for private sector engagement in REDD+? • How can private sector engagement in REDD+ be enhanced?Thank You !In exploring these key areas, the research aims to increase the scope and scale of effectiveprivate sector involvement in REDD+. The research concludes that while challenges exist,private sector involvement can help bridge the financing gap between public sectorfinancing and developing country needs, as well as make vital contributions to REDD+ http://www.iisd.org/climate/land_use/redd/publications.aspxinitiatives by providing technical expertise. http://www.asb.cgiar.org/homepageClick on the corresponding cover below to download your copy:The three-year initiative, Building REDD+ Policy Capacity for Developing CountryNegotiators and Land Managers, was delivered with the generous support of theNorwegian Agency for Development Cooperation (Norad) as part of its Climate andForest Initiative civil society support program.

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