Application of International REDD Agreements to California’s REDD Offset Program

1. Application of International REDD Agreements to California’s REDD Offset Program Diana Movius Senior Policy Analyst Center for Clean Air Policy (CCAP) ********* NACW APRIL 10-12 SAN FRANCISCO

2. About CCAP • DC-based think-tank • International and domestic climate and air policy • UNFCCC expertise • Developing country mitigation actions • REDD program since 2007 (US, Cambodia, Indonesia, Mexico, UNFCCC)

3. CA REDD should align with UNFCCC • International forest offset provisions of AB 32 can be viewed as a "proof of concept “of REDD credits in a compliance market. • California will undoubtedly influence global development and use of high-quality forest offsets. • REDD Offsets Working Group (ROW) and the Air Resources Board (ARB) should build from elements the United Nations Framework Convention on Climate Change (UNFCCC) REDD negotiations.

4. CA REDD should align with UNFCCC (2) • Standards that are too distinct from the international norm may raise transaction costs and discourage producers from generating offsets for the California market. • This will make it hard for California’s partner states to sell REDD credits not needed for compliance in California to other markets. • For many UNFCCC-related elements, California will need to add the specific criteria required to make the agreements implementable in practice. • Paper suggests how these concepts can be translated into implementable standards adopted by ARB

5. Important UNFCCC REDD topics • A three phase approach (discussed in the next section) • Environmental safeguards • Social safeguards • Governance safeguards • Additional considerations for subnational programs

6. Three Phase Approach (1) • Phase 1: National REDD strategy development, including national dialogue, institutional strengthening, capacity-building, and demonstration activities. • Phase 2 : Implementation of the policies and measures proposed in those national REDD strategies. • Phase 3 : Payment for performance on the basis of quantified forest emissions and removals against agreed reference levels.

7. Three Phase Approach (2)” • The international “three phase approach” to REDD is widely accepted and codified in the UNFCCC Cancun Agreements. • Subnational approaches (state level) are “interim” and “as appropriate.” • Three phase approach also applies to subnational activities in UNFCCC text. • Subnational REDD programs in California should be consistent with and support this larger framework.

8. Three Phase Approach (3)” • The REDD offsets to be purchased by California are the equivalent of phase 3 (“pay for performance”) within the three phase approach adopted by the UNFCCC, even at a state (subnational) level. • While California will likely not be directly involved in funding or helping phases 1 and 2, these are important in preparing developing countries to sell REDD offsets. • California should make offset requirements clear at the time of preparation phases 1-2 so that host countries make best use of their own funding.

9. Using Safeguards • UNFCCC safeguards typically expressed as principles. • Need to translate UNFCCC (Cancun) safeguards into implementable environmental, social, and governance standards that could be adopted by ARB (following slides). • In some areas, California will need to expand upon UNFCCC to promote high quality. • Some additional protections are needed to ensure that subnational offsets are real and additional. • accounting methods to quantify REDD • specification of plans to address degradation emissions • risks of leakage out of state • eventual consistency with the national program

10. Environmental Safeguards (1) REDD programs should guard against the conversion of natural forests to plantations (Cancun 2010). • More detailed reporting can help identify when such conversions are taking place. • Reporting on both gross and net emissions • Activity-based MRV: • 1) forests being converted to non-forest land, • 2) forests remaining as forests (potentially with changes in sequestration levels) and, • 3) non-forests becoming forests.

11. Environmental Safeguards (2) • REDD should protect biodiversity. • New payment program • Develop standardized biodiversity indicators • REDD programs should “address the risk of reversals” (or provide permanence) • Reserve (e.g., Climate Action Reserve) • Increasingly ambitious crediting • Temporary certified emissions reductions (T-CERs).

12. Environmental Safeguards (3) • Subnational reference emissions levels and reference levels should harmonize with the national ones. • Meet the same minimum baseline requirements as under UNFCCC, • Establish a transparent system to harmonize with national level baselines • Both deforestation and degradation should be integrated into long-term plans to address drivers.

13. Environmental Safeguards (4) • Requiring the use of Tier 2 or Tier 3 IPCC accounting methods. • California can ensure a higher degree of accuracy in the credits generated and sold for compliance under AB32. • Special care is needed when REDD offsets cover deforestation but not degradation. • Subnational entities should have a publicly available plan for reducing the time period during which deforestation will be in phase 3, but degradation is in phase 2

14. Social Safeguards (1) • Meeting social safeguards must be measurable • Indicators on how the program may negatively or positively impact communities; • consultation and consent of local peoples, • data for land tenure and benefits distribution. • Dispute resolution systems • By phase 3, publicized, and transparent. • Further, any inadequacies identified during phase 2 should have been addressed. • Consider adequacy of dispute resolution mechanisms in moving from phases

15. Social Safeguards (2) • Payments distributed at the local level. Payments to affected local communities and constituencies is considered accepted practice in REDD (though is not codified in UNFCCC). • Benefits distribution indicators. Subnational regions should report transparently on benefits distribution, and ensure compatibility with national reporting procedures.

16. Governance Safeguards • Government-wide programs to identify and re-evaluate the drivers of deforestation. • This should be in place by phase 3. • Programs and policies to address failures, including a contingency plan. • By phase 3, governments should be able to identify failures and have a plan to address them.

17. Multilateral Example: Carbon Fund, Forest Carbon Partnership Facility Subnational implementation must meet the same guidelines as national implementation. Subnational REDD must: • Be undertaken at a significant scale; • Be consistent with (emerging) national REDD strategies; • Ensure that emissions reductions can be measured and reported; • Be consistent with the national RL/REL; • Be integrated into a national institutional framework that will manage and coordinate subnational programs; and • Provide for an assessment of and measures to minimize leakage, non-permanence, and other relevant risks.

18. Additional considerations • It is unlikely that in multilateral arenas, subnational jurisdictions will be allowed to meet less-stringent rules on safeguards, RELs/RLs, and MRV than those established for national approaches. • Most multilateral and bilateral REDD activities that allow for subnational REDD implementation acknowledge that it is a step towards full national implementation.

19. Questions about the GCF • The UNFCCC COP has limited guidance on subnational implementation: safeguards, phases, interim measure. • The Governor’s Climate and Forest Task Force (GCF) agreement does not discuss the issue of safeguards. Does the GCF see intlsafeguards as part of its charge? • Do GCF participants view subnational REDD as an interim measure? Does it view a phased approach?

20. Summary Recommendations • California should maintain compatibility with international negotiations and decisions. • California should take steps beyond those agreed in Durban and Cancun for subnational REDD to make safeguards implementable in practice. • This helps achieve high quality for both subnational REDD approaches and phase 3 pay-for-performance activities. • CCAP urges California to set a high bar for quality offsets.

21. Next Steps • CCAP will participate in the stakeholder outreach and comment efforts of ROW and ARB • Research on how to administer a CA REDD offsets program in a steamlined manner • Available online: paper for an offset program building on the UNFCCC, World Bank, and independent analyses. • Separate checklist of suggested offset requirements

22. Thank YouDiana Moviusdmovius@ccap.orgwww.ccap.org