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5.6. Voluntary markets for afforestation, reforestation and avoided deforestation

5.6. Voluntary markets for afforestation, reforestation and avoided deforestation. Daniel Murdiyarso, CIFOR. Outline. Introduction What is a voluntary market? Examples of compliance markets Example of voluntary markets Example of voluntary carbon projects. Introduction.

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5.6. Voluntary markets for afforestation, reforestation and avoided deforestation

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  1. 5.6. Voluntary markets for afforestation,reforestation and avoided deforestation Daniel Murdiyarso, CIFOR

  2. Outline • Introduction • What is a voluntary market? • Examples of compliance markets • Example of voluntary markets • Example of voluntary carbon projects

  3. Introduction • A/R CDM was designed to comply with legally binding Kyoto Protocol to mitigate climate change • The rules and modalities follows the Marrakech Accord • So far only one A/R CDM project is approved out of more than 1000 CDM projects • REDD is entering its readiness phase • Learning the lesson from A/R CDM process and its complexity, voluntary A/R and REDD markets are emerging

  4. What is a voluntary market? • The markets that do not need to comply with any rules that are legally binding (for example the Clean Development Mechanism, CDM under the Kyoto Protocol) • To demonstrate their integrity, the markets voluntarily follow accounting and verification systems applied in the compliance markets • Produce Verified Emission Reduction (VER) rather than Certified Emission Reduction (CER) in A/R CDM

  5. Voluntary markets for Afforestation/Reforestation (A/R) CDM • PCF • all sectors • with loan component • CDCF - for small scale project • sector: energy, urban, waste, agroforestry • prioritizes the Least Developed Countries • Contract price US$ 26-28/tC • BCF - Land-use, Land-use Change, and Forestry • (LULUCF) sector • to improve people livelihoods • to avoid erosion and desertification • Contract price US$ 12-16/tC

  6. RED financing: buyer’s/donor’s view Buyer/Donor’s view • Price/impact per $ • Quality of product • Biodiversity conservation • Social equity • Permanence • Sovereign risk • Fungibility in markets • Credit for early action • Political feasibility Possible buyers/donors • Development agencies/Banks ($40 B/y) • Bilateral donors ($80 B/y) • Kyoto market (low B/y) • Voluntary markets (lower B/y) • NGOs ($100s M/y)

  7. RED financing: seller’s view Seller’s view • Capacity building • Upfront payments for transitional costs • Guarantee of continuing funding for maintenance • Bundle with other Payments for Environmental Services • Social equity • Political feasibility Differing circumstances • Active deforestation • Potential future deforestation • Early action to reduce deforestation • Forest degradation

  8. Examples of compliance carbon markets ETS=Emission Trading SchemeNSW=New South WalesCCX= Chicago Climate Exchange

  9. Biodiversity Markets Water Markets Carbon Markets Examples of voluntary (carbon) markets Updated very frequently $ 373,980,629 $ 373,655,115 $ 92,344,370 Cost (US$) Land Other   642,600   n/a US Conservation Banking 238 Endangered Species Credits 307.5 acres 308.81 wetland credits US Wetland Banking 27,792,900 Source: Ecosystem Marketplace

  10. Example of voluntary carbon projects (1/2)

  11. Example of voluntary carbon projects (2/2)

  12. Carbon certification • Voluntary Carbon Standard (VCS) • Initiated by the Climate Group, the International Emissions Trading Association and the World Economic Forum • Established in late 2005 • Climate, Community and Biodiversity (CCB) Standards • Initiated by Conservation International • First Edition standard was launched in 2005 • Advised by CIFOR, CATIE and ICRAF • The Gold Standard • Initiated by WWF, SSN and Helio International • The Gold Standard for CDM projects was launched in 2003

  13. Voluntary Carbon Standard (VCS) • Standardize and provide transparency and credibility to the voluntary offset market. • Enhance business, consumer and government confidence in voluntary offsets. • Create a trusted and tradable voluntary offset credit; the Voluntary Carbon Unit. (VCU) • Stimulate additional investments in emissions reductions and low carbon solutions • Experiment and stimulate innovation in emission reduction technologies and offer lessons that can be build into future regulation. • Provide a clear chain of ownership over voluntary offsets that prevents them being used twice. This is achieved through multiple VCS registries and a central project database that is open to the public.

  14. Climate, Community and Biodiversity (CCBA) Standards • Identify projects that simultaneously address climate change, support local communities and conserve biodiversity. • Identify projects that promote excellence and innovation in project design. • Mitigate risk for investors and increase funding opportunities for project developers. • CCB Standards certification can help projects garner international credibility and locate additional support and resources.

  15. The Gold Standard • Help investment in additional sustainable energy projects • Ensure significant and lasting contributions to sustainable development • Provide assurance that investments have environmental integrity • Increase public support for renewable energy and energy efficiency

  16. Thank you for your attention

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