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14 December 2011

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Forest finance
Climate change & REDD
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Durban talks both good and bad for REDD+, says expert

Durban, South Africa - The U.N. climate change talks in Durban resulted in a mixed bag for REDD+: progress on how to set reference emissions levels, progress on defining how to measure emission reductions stemming from forestry initiatives, but a weak decision on social and environmental safeguards for the program, and no advances on sources of long-term funding, according to CIFOR’s leading climate scientist.

“We are now seeing the technical obstacles to REDD fall by the wayside and the decisions made on REDD in Durban are a vote of confidence in the progress that the scientific community has made over the last few years. However, we do not have progress on the ‘politics behind the money’ and without this we cannot talk about sustainability of REDD,” said Louis Verchot, CIFOR Principal Scientist.

Erik Solheim, Environment and International Development Minister for Norway, the leading global REDD+ donor, described the forest conservation scheme as the biggest success story so far in global climate change negotiations, but called for countries to be “more daring” in their efforts to cut emissions and slow climate change.

The Durban summit, officially the longest UN climate meeting since 1995, was held up due to disputes over a decision to extend commitments under the Kyoto Protocol. While delegates representing 194 nations agreed to a second commitment period beginning in 2013, the legal framework has yet to be decided and no new emission reduction targets were made.

“If there is no certainty of long-term emission reduction requirements and an international framework in which offsets could function, there is also no certainty about any market opportunity for REDD.”

However, as confidence in the verification of carbon offsets grows, the private sector may increase their financial support role of REDD+ programs, said Mary Nichols of the California Air Resources Board. California’s recently legislated cap and trade program may allow companies to buy carbon credits to offset part of their emissions from outside the US and allow funding to flow into REDD+ schemes as early as 2015.

In the meantime, an increasing number of new donors have started to support REDD+, said Kenneth Andrasko of the World Bank’s Carbon Finance Unit. “The past two years have seen considerable donor contributions to multilateral REDD+ initiatives … the concept is gaining hold more broadly.”

The negotiations on REDD+ centred around four key areas: finance, safeguards, reference levels, and monitoring, reporting and verifying (MRV) of carbon emissions from forest activities. Progress on safeguards, reference levels, and MRV were achieved quite early in the negotiations, while a piecemeal decision on REDD+ finance only came about after much deliberation.

**Decision on REDD+ finance a “mediocre outcome”**

The draft REDD+ text put forward to negotiators last week by the UNFCCC’s ad-hoc working group on the Long-term Cooperative Action (LCA) was light on financing details, with most of the difficult decisions about specific rules that will govern financial mechanisms put off until next year’s climate summit in Qatar (read the LCA’s decision on finance from COP17 here).

“There’s going to be submissions of views from the parties, an expert workshop, a technical report by the Secretariat of the UNFCCC, and then all these texts will be put before the COP next year for a draft decision. So we still have one more year of uncertainty to go,” Verchot said.

While the REDD+ draft text on finance was accepted quite early in the talks, discussions on whether the next year’s decisions on finance will be based on markets, funds or a combination of possibilities prolonged the negotiations, he said.

Due to the delay of a robust decision on long-term finance, Verchot said he believes the talks did little to reduce uncertainty around REDD+ markets. Few observers expect to see a REDD+ market emerge this side of 2020, he said.

“Markets will still go forward as experimental but there is only so long that people will continue to experiment. We know there will be some sort of emission reduction requirements so that is at least reassuring, but it still is a mediocre outcome on finance.”

**A robust MRV system may help REDD+ be considered in the Clean Development Mechanism**

A major win for REDD+ at Durban was the decision on robust reference emissions levels, Verchot said.

This may help REDD+ become similar to the Clean Development Mechanism (CDM), a scheme that allows projects in developing countries to earn emission reduction credits, which can be used by industrialised countries to meet part of their emission reduction targets mandated under the Kyoto Protocol.

While there has been some concern that allowing forestry credits into emissions trading schemes could flood the market and see developed countries buying up credits rather than reducing their own emissions, it may provide a critical source of funds for REDD+ developers to help push the scheme forward.

Kyoto’s first commitment period excluded forest conservation and avoided deforestation from the CDM, due to major concerns over the enormous monitoring efforts required. However, the development of robust MRV systems will hopefully address this, Verchot said.

“It is not clear yet how REDD+ relates to Kyoto because it is not part of the CDM; however, the robust MRV systems that have been achieved may help REDD+ gain access into this mechanism in the future,” he said.

However, it is unlikely that discussions around this will begin before 2020, he said, as the EU’s emissions trading scheme (EU-ETS) — the largest multi-national, greenhouse gas emissions trading scheme in the world — “will not consider anything about REDD until 2020”.

“In 2008 when the EU considered whether they would allow REDD+ into the ETS, they felt that a lot more discussion needed to happen as there were concerns about the permanence of emissions reductions from REDD, and how to measure and report achieved emissions reductions in forestry.”

“With the decision on MRV at Durban, we are one step closer to making REDD+ robust enough to be part of a more comprehensive climate deal,” Verchot said.

**Progress on safeguards stalled until we see some “strong language”**

According to Florence Daviet of the World Resources Institute, the negotiations on safeguards played out in two arenas: technical discussions about guidance for safeguard reporting, and also in the LCA discussions on REDD+ finance (read the decision on safeguards and MRV here).

The wording on how developing countries must report how they have implemented social, environmental and governance safeguards has been weakened, Verchot said, adding that this was most likely at the behest of developing countries, many of which lack the capacity to meet complex and costly donor requirements.

However, the lack of robust safeguard reporting rules may deter investors who want to ensure projects are properly monitored and do not threaten the rights of forest communities or damage the environment.

“There is a clear risk that REDD, without a credible system for safeguards, will not get sufficient funding, neither from public sources nor from private investors,” said Nils Hermann Ranum, head of policy and campaign division at Rainforest Foundation in a recent Reuters report.

While the negotiations led to only minimal additional guidance being made available to countries on safeguards, a link between the source and type of financing and safeguards requirements was acknowledged in the LCA’s decision on finance (see paragraphs 63, 64, 66, and 67).

“The language is vague, but statements like these link the safeguards and REDD+ finance more closely together … (at least) clearer than it had been in Cancun,” Daviet said.

However, it still offers a lot of loopholes due to the weak decision on safeguards, Verchot warned.

“One would have hoped to see stronger language referring to performance and remedial measures in cases of under-performance.”

**Challenges and opportunities for REDD+ in the lead up to COP18**

The biggest challenge going forward with REDD+ is still going to be finance, said Verchot.

“Until we have some sort of clarity about how money is going to flow and the size of emission reductions we expect to achieve with that, it is going to be very difficult to move into full-scale implementation of REDD+. There are a few countries that are already ready to move forward into phase three of REDD+ implementation, so we really need to get the ball rolling on this issue.”

Looking ahead, Tony La Vina, who facilitates REDD+ negotiations within the COP, is optimistic: “We now have a decision on safeguards and a decision on MRV … pretty good decisions I think, obviously not perfect, that will move us forward to implementation of REDD at the national level which is really what this is all about.”

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