FINANCING REDD+ AND GREEN CLIMATE FUND*

5fe714a62d2417e54a50d9a48eeea001Result Based Financing (RBF) was a new addition to the REDD+ domain, incorporated during COP.19 under the Warsaw Framework for REDD+. This new set of financing instruments is designed for disbursing payment against pre-determined performance indicators (both carbon and non-carbon benefits and performance). However, the Warsaw Framework does not address non-carbon benefits of REDD+ or provide methodological guidance on non-market-based approaches for defining performance indicators while implementing REDD+ program interventions. Parties continued discussions of these aspects of REDD+ at the 40th session of the Subsidiary Bodies to the UNFCCC (SB 40) as well as during the meetings of Subsidiary Body for Scientific and Technological Advice (SBSTA). Unfortunately, there is very little progress on this agenda item, and further consideration of these issues was postponed to future sessions. Encouragingly, there are a few promising progresses with respect to the modality of the result based financing of REDD+, which is expected to be linked to the Green Climate Fund (GCF). The key development on this financing modality is presented below.

  1. Parties agreed while developing the Warsaw Framework for REDD+ that the GCF would play an important role in channelling REDD+ payments to developing country governments, and that results-based payments will depend partially on the submission of a reference level for review by experts from an assessment team. Assessment guidelines and procedures were also established, so that developing countries know how their reference levels will be evaluated.
  1. In addition, developing countries wanting to participate in GCF REDD+ activities will have to establish national forest monitoring systems (NFMS) as a basis for estimating forest-related greenhouse gas (GHG) emissions if they do not yet have such systems in place. Changes in emissions levels will be measured against respective national reference levels. In addition, parties officially mandated a link between safeguards (such as respecting livelihoods, the rights of indigenous peoples and local communities, and biodiversity) and payments. REDD+ beneficiaries must submit summaries identifying strategies to address the safeguards framework. Furthermore, all information submitted, including data on payments should be posted on an “information hub” that parties requested the Secretariat to create.
  1. During the fifth part of the second session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP 2-5) and the Ministerial Dialogue on the Durban Platform, the need to capitalize the GCF was underscored. Much anticipation around whether the GCF will be able to provide the necessary financing for REDD+ surrounds the ongoing efforts to operationalize the Fund. Some parties suggested COP 20 should open a REDD+ window in the GCF. During the TEM on land-use, the GCF reported that its initial focal areas include REDD+ implementation and sustainable forest management (SFM).
  1. At the seventh Board Meeting of the GCF, the final six items needed to operationalize the Fund were agreed, including an initial Results Management Framework (RMF). The RMF, as it applies to REDD+, differentiates itself from the Warsaw Framework in that it will also be used for ex ante payments. However, plans for more specific guidance on REDD+ are in the pipeline, as the Board requested the Secretariat to “develop a logic model and performance framework for ex post REDD+ results-based payments, in accordance with the methodological guidance in the Warsaw Framework for REDD+, for consideration at the third Board meeting of 2014.” As an operating entity of the financial mechanism of the UNFCCC, the GCF’s REDD+ approach should be in line COP decisions.
  • Complexities:

The board meeting of GCF and UNFCCC’s meetings (SB, SBSTA, ADP etc.) did not create an enabling environment for motivating financial institutions (donor countries, UN funds, multi-laterals fund like FCPF etc.) to operate under a single umbrella of REDD+ finance. Rather, the FCF stated during it last board meeting that entities not beholden to the UNFCCC COP, however, can continue to operate as they please. The Forest Carbon Partnership Facility (FCPF), which was originally intended to sunset once the GCF became operational, has recently completed a methodological framework for its Carbon Fund based on its experience thus far, and there is no indication that the FCPF will twilight soon. Likewise, UN-REDD, at its recent policy board meeting, adopted a roadmap for the development of a new strategy beyond 2015. Meanwhile, the Food and Agriculture Organization of the UN (FAO) takes its own approach to REDD+, based on its Strategic Framework.

Donor countries also continue to offer REDD+ funds to developing forest countries through bilateral agreements, making their own stipulations as they do so. Norway, through its Climate and Forest Initiative, and Germany, through its REDD Early Movers Program, have taken this approach while REDD+ issues were being sorted under the UNFCCC. Despite the adoption of the Warsaw Framework, donor countries inclined to do so cannot be prevented from making bilateral deals under their own terms and conditions. The primary implication of having various scattered institutions distributing REDD+ finance is that developing countries, their capacity already stretched, have to follow different rules, produce different documents and reach different benchmarks depending on where they turn for REDD+ financing.

With this background, question marks surround the future of REDD+ financing. Some cooperative efforts, such as between UN-REDD and the FCPF, to consolidate financing are yielding positive results for REDD+ readiness, but as financing is scaled to move beyond the readiness and pilot programme phases, will cooperation and coordination efforts be scaled as well? Will the capitalization of the GCF lead to a convergence of REDD+ finance under the GCF?

There is no clear lead to find answers of these questions. The only hope is that parties agreed to continue considering these difficult questions (including the methodological issues related to non-carbon benefits) in 2015 at SBSTA’s 42nd session and to discuss non-market-based approaches at SBSTA 41, to be held in Lima, Peru (FCCC/SBSTA/2014/L.8).

 Lima Expectation:

 Expectations are high for COP 20, which will convene in Lima, Peru, in December, as it is the last negotiating session of the COP before a new legal instrument is to be agreed in Paris in 2015. In Bonn, some developing countries expressed support for including REDD+ in the negotiations of a global agreement, in particular the inclusion of the Warsaw Framework for REDD+. Keeping Lima in mind, UNFCCC parties and the GCF can take a number of actions between now and Lima to build confidence in the efficacy and authority of the guidance created at COP 19. From capitalizing the GCF, to submitting reference levels, to completing the GCF’s “logic model and performance framework,” showing the Warsaw Framework in action will be the most expedient way to encourage convergence to its methodology.

Keshav C Das

New Delhi, August 08, 2014.

[1] Source: http://climate-l.iisd.org/policy-updates/the-direction-of-redd-financing-merging-ahead/

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