Reducing Emissions from Deforestation

in Developing CountriesCOP-11 Agenda Item #6

the katoomba group

São Paulo, BrazilOctober 4, 2006

www.RainforestCoalition.org

Papua New Guinea

Climate Objective

Carbon-Neutralwhile fulfilling our social and economic priorities.

Land Use: Net rates of deforestation must be slowed, halted and reversed – Costa Rica, China

Transportation: Replace carbon intense fossil fuels with clean-burning technology and renewable bio-fuels – Brazil, Holland.

Energy: Sufficient hydro potential and natural gas to fuel our economic growth aspirations.

Environmentally and Socially Sustainable Economic Growth

Problem

UNFCCC and KP: No Meaningful Solutions

Deforestation: No incentive to Reduce Emissions from deforestation

Transportation: No real incentive for National transition to clean and renewable fuels in transportation

Energy: CDM offers too much red-tape and low carbon prices to facilitate energy shifts at small scale.

Emission Sources

Obstacles

Deforestation Drivers

Agriculture: Soya, Coffee, Cocoa, Sugar, etc.

Logging: Low value exports, unsustainable practices.

Development: Roads, power-lines, social services, etc.

Population: Urbanization + growth drives above.

Perverse Incentives!

Rainforest Coalition

Bolivia Central African Rep. Chile Congo Costa Rica DR Congo Dominican Republic Fiji Gabon Guatemala Nicaragua Panama Papua New Guinea Solomon Islands Vanuatu

Rainforest Coalition

Interregional Policy Development & Consensus

Latin America

Caribbean

South AmericaAfrica

Asia

CfRN

COP-11 Agenda #6: Summary

Deforestation: Real Threat to Climate Stability

Emissions: Resulting Emissions are Significant

Policy & Incentives: Seek flexible basket of ‘voluntary’ instruments to accommodate national situations. Market forces drive most deforestation and Emissions Markets may hold key to solution.

Process: Parties refer to SBSTA with goal to reach recommendations by 2007

Climate Change: Multilateral Cooperation

Common but Differentiated Responsibilities

Industrial to Developing: Maintain philosophy of mandatory reductions that finance voluntary instruments by developing nations. Support Sustainable Development.

Amongst Developing: Immense difference between developing countries. Need flexible ‘basket’ of voluntary emissions reduction instruments – in present form, CDM alone is not enough.

North to South

Flexible Basket of Positive Incentives

COP-11 Agenda #6: Positive Incentives

Flexible Basket of Voluntary Incentive(Diversity of National Circumstance)

Official Development Assistance Approach (ODA)

Voluntary National Approach (Voluntary ‘Annex C’?)

Flexible Scale Approach – National Circumstance

Aggregate under UNFCCC: Bilateral and/or Multilateral Funds and Emissions Trading Agreements

Optional Protocol within UNFCCC

VoluntaryMulti-Staged

Not Mutually Exclusive

The Brazil Proposal:General Observations

Support Objective Voluntary National Base Scenario Credit / Debit System

Questions Demand Pricing Logic ODA – cash flow stability

COP-11 Agenda #6: Price vs. Objectives

CER Positioned as ‘cheap’

mechanism Carries ‘performance’ risk

– buyer must replace credit Lower ‘atmospheric value’

– supplemental credit

AAU/ERU National Fixed targets Minimal transactional risk Higher ‘atmospheric value’

REDD (Annex C?) Voluntary Reductions National Scale Performance Risk minimized High ‘atmospheric value’ Higher ‘Social value’

Organic or Fair Trade

Price

Atmospheric & Social Objectives

COP-11 Agenda #6: Value → Social Benefit

Significant source of carbon emissions currently outside frameworks.

Increases the flexibility of developing countries through a ‘national’ approach.

Significant new revenue streams to addresses poverty in rural areas with clear metrics to access effectiveness.

Underpins MDG objectives related to environment, poverty, gender equality, health, etc.

Major biodiversity conservation benefits

Supports efforts against desertification and soil erosion

Leads to watershed protection and potable water supply

COP-11 Agenda #6: Additional: Deeper Cuts

AAU --- JI --- CDM

AAU --- JI --- CDM

KP1(- 6%)

KP2(- 10%?) + REDD - 5%?

REDD+

Additional

New Total: -15%?

NEW CREDITS = DEEPER CUTS

Drivers: Leading drivers are identifiable. Must overcome perverse incentives and opportunity costs of alternative land uses -- both locally and internationally. In most cases, higher carbon ‘incentives’ will drive greater emissions reductions from deforestation.

Solution Possible: Technology, methods and markets available now to accurately measure changes in carbon stocks and trade relevant credits at a National scale. Challenge is implementation (standards, policy, etc.)

Key Messages

Policy & Incentives: Diversity of ‘national circumstances’ justifies a flexible set of positive incentives -- ODA may be important to get started quickly, but markets are likely the best sustainable finance solution.

Future: Deforestation must feature prominently in future climate stability actions. Continue cross-regional consensus -- Bolivia, Central African Republic, Congo, Costa Rica, Dominican Republic, DR Congo, Gabon, Ghana, Guatemala, Honduras, Indonesia, Kenya, Lesotho, Nicaragua, Panama, Peru, Papua New Guinea.

International funding needed immediately for analysis, capacity building,

& pilot market activities.

Key Messages