Thursday, June 11, 2015 marked the final day of the latest round of UNFCCC negotiations in Bonn — another step in the direction toward an anticipated new climate agreement to be achieved next December at COP 21 in Paris.
UNFCCC parties were expected to accomplish two goals during the Bonn negotiations: to streamline the 90-page negotiating draft agreement that was approved in Geneva last February; and to clarify which key issues were more consensual, and which key issues remained highly contested and required high level political negotiation in the months ahead. Both goals would facilitate upcoming negotiations of the agreement to be finalized and signed in Paris.
In the aftermath of the 11-day Bonn meeting, the general feeling among observers was one of frustration with the slow pace of the process. Parties were only able to reduce the draft text from 90 to 85 pages , and they avoided any meaningful substantive discussions on key issues such as finance and compliance, thus failing to simplify the next steps of the negotiation.
One exception was the discussion on REDD+, the mechanism to mitigate GHG emissions from deforestation and forest degradation, which became the bright spot of the June 2015 Bonn climate talks.
Ten years after first discussing the mitigation of GHG emissions from deforestation in 2005, parties have agreed not only to formally include a REDD+ mechanism in the next climate agreement, but have also settled on the main features of such a mechanism, including: the type (markets or non-market sources) and timing (results-based or ex-ante) of finance; the recognition of non-carbon benefits; and the inclusion of social and environmental safeguards.
Let’s explore what parties have agreed to on the type of finance for REDD+ projects, and the recognition of non-carbon benefits.
REDD+ mixed finance and recognition of non-carbon benefits
The REDD+ mechanism agreed to in Bonn establishes that mitigation of forest related emissions can be financed from various funding sources, both public and private, with market-based finance being clearly established as complementary to other sources such as climate funds as well as multilateral and bilateral assistance. This mixed approach to finance is a stark contrast to the original 2005-2007 idea of REDD+, which was supposed to be primarily a market-based mechanism.
The first proponents of REDD+ among developing countries envisaged the mechanism as a tool to tap into what was expected to be sizeable global carbon markets created by the Kyoto Protocol (KP) market mechanisms. Early supporters of REDD+ among developed countries were interested in using carbon credits from low cost mitigation of forest emissions to offset their own KP targets. Many obstacles forced REDD+ to evolve into the mixed mechanism that was agreed to last week. On the demand side, a significant global market for carbon credits with worthwhile prices is yet to materialize, ten years after the KP. On the supply side, it became clear that most developing countries would require the creation or reform of extensive — and costly — domestic regulatory systems to enable their tapping into carbon markets to mitigate forest emissions. Finance for these preparatory measures would need to come from other sources, primarily from bilateral and multilateral donors. In the Bonn REDD+ framework, finance for projects will possibly come from the Green Climate Fund (GCF), from other funds created by bilateral and multilateral donors, and also from private donors. The door was left open for the possibility of REDD+ projects to also tap into carbon markets in a complementary way, if countries so choose.
Another roadblock for a market-driven REDD+ mechanism has come from principled resistance by relevant constituencies and also by countries such as Brazil and Bolivia, which strongly opposed the idea of commodifying forest ecosystems. Under the Bonn Framework developing countries may opt to finance REDD+ projects entirely from non-market funds. Many of these same principled constituencies successfully pushed for the idea that if the carbon benefits of REDD+ were to be sustainable, the UNFCCC forest mitigation mechanism would have to include support for the protection of non-carbon benefits (NCBs) such as biodiversity and improved quality of life for forest communities, especially indigenous peoples. NBCs were included despite the lingering concerns that opening UNFCCC financial flows to promote non-carbon benefits could divert countries from the main goal of securing reduced GHG emissions.
If the REDD+ framework agreed to in Bonn is confirmed in Paris next December, a mechanism originally based on a market-approach to specifically reduce carbon emissions from deforestation will have evolved into a mixed-financed model to invest in carbon and non-carbon benefits. REDD+ shows how the design of global governance instruments can be highly flexible and responsive to evolving circumstances.
What’s ahead?
Although the agreement on the REDD+ framework for COP 21 in Paris was rightly lauded as an important milestone, much was left to be detailed during implementation — especially on the provisions regarding social and environmental safeguards, and the operationalization of results-based projects and ex-ante joint mitigation on REDD+. The monitoring, reporting and verification of implementation will thus be key to ensuring that the forest mechanism will effectively enable a positive carbon balance in this sector, while preserving the environment and rights of forest communities and indigenous peoples living in these forests.
