Learning Event No 2, Session 1 from Agriculture and Rural Development Day (ARDD) 2011

The BioCarbon Fund Land Use Change and Carbon Markets Ellysar Baroudy Agriculture Day, December 3, 2011Harnessing the carbon market to sustain ecosystems and alleviate poverty

Who we are and what we do…§  Public / Private Fund§  Dedicated to land use mitigation activities – but hard to draw rigid line as also adaptation value§  Mainly a compliance fund – purchasing credits from CDM projects – but also working in voluntary space§  Over 25 projects in the portfolio§  But fund does not only purchase carbon – it helps develop infrastructure needed for transaction §  Develops carbon accounting methodologies §  Develops tools to assist project developers §  Provides technical assistance

Overview of Carbon Market n  Focus on land use – where we are today Compliance Market (UNFCCC and EU)What is Kyoto Protocol Kyoto Long-term EU-ETS Voluntaryallowed: (CDM) Protocol Cooperative European Market (JI) Action Trading (Copenhagen Scheme Accord)Today Afforestation/ All land use N/A N/A AFOLU, Reforestation (A/ including A/ R) R, REDD+, IFM ALMBeing A/R As above REDD+ N/A As abovediscussed Croplands Grasslands Agriculture Wetlands (less SFM advanced)

2010: Overall market stalls (in billion US$) 144 142EU ETS Allowances 135Other AllowancesPrimary CDMOther OffsetsSecondary CDM 63 31 110.72004 2005 2006 2007 2008 2009 2010

A global market driven by the EU ETS 1.0Participation of each market 72% EUAs 84% 0.5 2% Secondary CDM 23% Primary CDM 13% 1% 0.0 3% Others 2% 2005 2006 2007 2008 2009 2010

Some numbers…§  For Markets, it is important to note:§  Regulated market is huge compared with voluntary market §  Voluntary market overall is 0.3% of value of regulated market§  Overall values (2010): §  Regulated market: $142 billion §  Voluntary (total): $393 million §  Voluntary (forestry): $127 million§  The European market is the largest and most significant – but it does not allow land-based credits

Significant Evolution over Timen  In 2004…. n  No market to speak of n  No carbon accounting methodologies n  No specialized auditors n  No guidance on undertaking such projects n  Few capacities for implementationn  In 2011… n  Numerous viable projects: Mainly A/R and REDD+ n  Methodologies increasing in number (A/R, REDD, Soil C) n  Much more developed infrastructure: service providers, auditors, guidance n  Considerations for going from project level to scale (who will finance?) n  Increasingly more considerations for integration of land-use activities within a landscape

Carbon Markets – Outlook?n  Some positive movement from previous 2 UNFCCC meetings in specific areas, such as REDD+ (although rules still to be elaborated); on reforestation and agriculture there have been interesting development to widen scopen  Uncertainty for UNFCCC agreement remains up to Durbann  Only significant positive market signal beyond 2012 is from EU-ETS, favorable for ERs from LDCs, but EU-ETS bans land-use creditsn  Uncertainty for some national cap and trade legislation (e.g., US, Japan) that could boost demand for credits from developing countriesn  Some cap and trade schemes in operation favorable to forestry and agriculture (e.g, New Zealand, Australia)n  Increasing discussion of bilateral agreements but mechanisms are not clear (e.g., Japan); nor is it clear if there will be linkages for these system beyond the bilateral dealn  Voluntary market has rebounded and is increasing in volume and value. Relative to regulated market still smalln  However, can anyone foresee a world without CO2 constraints?

Huge Environmental & Social Co-BenefitsPre-2005 2010Ø  Pioneering new financial instrument for sustainable developmentØ  Mitigation and adaptation role with significant local environmental and social benefitsØ  Important to further incentivize better land managementØ  Agriculture is an integral part of landscape; leaving it out makes no sense – not from the mitigation objective, nor from pragmatic implementation

Additional Resourcesn  WB Carbon Finance Unit: www.carbonfinance.org Lessons Learned from 10 years of Carbon Finance Brochure on CDM reform State and Trends of the Carbon Marketn  BioCarbon Fund: www.biocarbonfund.org Summary of all BioCF projects BioCF Lessons Learned from Afforestation and Reforestation Clean Development Mechanism Projects

Learning Event No 2, Session 1 from Agriculture and Rural Development Day (ARDD) 2011

by CCAFS | CGIAR program - Climate Change, Agriculture and Food Security on Dec 07, 2011

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Learning Event No 2, Session 1 from Agriculture and Rural Development Day (ARDD) 2011 — Presentation Transcript