Prospects for progress on REDD at COP17 and the role of the private sector
For two weeks this December, a cast of thousands will come together under the umbrella of United Nations Framework Convention on Climate Change or UNFCCC, to once again try to agree an international agreement to tackle climate change. This short note looks at one area of those negotiations: Reducing Emissions from Deforestation and Degradation or REDD (in fact known as REDD+, with the + connoting certain other mitigation activities that are now recognised under the concept, such as the enhancement of forest carbon stocks). REDD+ negotiations have been one of the success stories of recent years, with tangible progress made. There remain tough discussions though.
REDD+ at Durban - the background
A new mechanism to incentivise the preservation of forests has been a topic under UNFCCC negotiations for a number of years. The Bali Action Plan in 2007 (which set out the framework and objectives of the negotiations that were intended to culminate in Copenhagen in 2009) included REDD+ as a distinct element for negotiations. Even as the negotiations in Copenhagen were breaking down, progress continued on the development of an almost-agreed draft text providing clear guidance on principles. Despite some difficult challenges throughout the subsequent year, a significant portion of this text and associated principles was taken forward at the Cancun negotiations in December 2010. This resulted in the key outcome of Cancun, the Cancun Agreements, including detailed text which provided clarity on principles such as:
- participation under the mechanism should be voluntary and in accordance with a country's capabilities and national circumstances;
- a definition of the scope of the activities that captures all REDD+ activities (that is, activities relating to deforestation, forest degradation, enhancement of forest carbon stocks, forest conservation and sustainable management of forests);
- the safeguards relevant to REDD+ activities, including the prevention of leakage, ensuring participation of stakeholders such as indigenous peoples and ensuring existing forests are not converted to plantations;
- the elements to be developed by developing countries wishing to participate, such as national action plans, forest reference levels and monitoring and reporting systems;
- recognition that a country's ability to participate under the mechanism should proceed in phases which move from capacity building to implementation and finally to results based actions; and
- a work program for UNFCCC technical bodies to assist the mechanism to become operational.
REDD+ Finance - unfinished business for Durban
Whilst the Cancun Agreement text remains a high point in the development of an international REDD+ mechanism, there is one big caveat. Following long and eventually unresolved arguments over the sources of finance for REDD+, the Cancun Agreement tasked the negotiators at Durban to resolve this. Earlier in the year, a REDD+ working group was convened under the UNFCCC negotiation process to consider this in the build up to Durban - particularly the financing options for the full implementation of the results-based actions.
Tony le Vina, the successful chair that has assisted the development of consensus text at both Copenhagen and then at Cancun, chairs this work stream. The last set of full discussions on this topic before Durban was held in Panama in September. The Norton Rose Group has been involved in these discussions though a variety of forums. Our interest, along with many others, is to understand what these discussions and any resulting decision means for the private sector. In particular, what signals will be made to indicate that there is a role for ethical investors prepared to support REDD+ activities - whether as a component of an international carbon market or via a variety of other means by which the financial strength of the private sector can be leveraged. This was often at the heart of the disagreements at Cancun with some countries, such as Bolivia, having strong views that the private sector should have no role in REDD+ finance, particularly via a carbon market mechanism.
Some of the themes that came out at the Panama discussions included:
- a number of countries expressing support for REDD+ finance coming from a variety of sources, including the private sector;
- numerous countries also supporting that a decision on REDD+ financing should happen at Durban - although some countries are concerned with progress on REDD+ getting too far ahead of other negotiating streams; and
- that there is strong support for a dedicated funding window for REDD+ under the Green Climate Fund that is intended to be further progressed at Durban.
On the basis of these discussions the chair of the working group has issued a non-binding text for countries to use to frame their comments before Durban. This does not prescribe any particular solution but rather outlines the different elements that could be included in a text by:
- noting the various sources discussed (such as public funds, Green Climate Fund, existing multilateral and bilateral channels, market-based mechanisms and a flexible combination of such funds and market-based sources); and
- laying out placeholders for other text relating to elements such as the need for different types of finance for different phases of REDD+, linkages to the technical work being undertaken (discussed further below) and other financing instruments being developed under the UNFCCC discussions.
Countries are now currently developing submissions on this in order to try and resolve the broad principles of REDD+ finance.
Other workflows at Durban on REDD+
The Cancun Agreements also provided a formal start for the technical body of the UNFCCC(known as SBSTA) to start work on developing more detailed methodological guidance on matters key to implementing REDD+. Of the many tasks given to SBSTA, key areas of work included:
- guidance on systems for providing information on how safeguards referred to in REDD+ elements of the Cancun Agreements are addressed and respected;
- modalities relating to forest reference emission levels and forest reference levels (which are key to underpinning the incentives that may flow to REDD+ countries); and
- modalities for measuring, reporting and verifying actions relating to REDD+ (another element that would be key to the release of incentives for results based REDD+ actions).
After discussions in Bonn earlier this year, SBSTA called for submissions on these issues. A robust number of countries had made submissions by the end of September (with 21 submissions received by SBSTA but those submissions representing the views of over 70 countries). The Herculean task for the SBSTA discussions in Durban is to convert these into a document that can make progress on those matters that can be agreed and set out further more nuanced actions on those that cannot.
Likely outcomes at Durban for REDD+
Climate change negotiations need good news stories to maintain the political will to move forward despite the challenging international financial context. REDD+ remains a potential international mechanism capable of providing that through further progress at Durban. However, in forums beyond the formal international negotiations, developing countries have made it clear that continued progress being made at the domestic level can only continue if there is a strong sense that the rewards for such work are going to be there. Significant progress on REDD+ finance is therefore needed to maintain progress and continue to build trust between key stakeholders.
As legal advisors acting across a range of initiatives and projects relating to REDD+, we are active participants in international negotiation forums - seeking to ensure that environmentally robust international mechanisms are deployed that can provide a substantive role for reputable long term investors. If you wish to discuss the prospects of this occurring and what it means for your business then please get in touch with the team in Durban.
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