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Forest Carbon Partnership Facility

Page history last edited by PBworks 12 years, 4 months ago

 

FOREST CARBON PARTNERSHIP FACILITY

FOR DUMMIES

 

What is the Forest Carbon Partnership Facility?

Developing and industrialized countries have asked the World Bank to develop a framework for piloting activities to reduce carbon dioxide emissions from deforestation and forest degradation. The proposed framework, called the Forest Carbon Partnership Facility (FCPF), would use a system of policy approaches and positive incentives and provide the “venture capital” for a future, large-scale system of positive incentives for reducing emissions from deforestation and degradation. The Facility would consist of two mechanisms: (i) the Readiness mechanism would finance capacity building in countries with tropical and subtropical forests to increase countries’ capacity to harness a future system of incentives for REDD; (ii) in some of these countries, the Carbon Finance mechanism would pilot performance-based carbon purchases to pay for reduced or avoided emissions of greenhouse gases from deforestation and degradation.

 

What is the relationship between forests and climate change?

Land use change, especially deforestation, contributes to 18% of global greenhouse gas (GHG) emissions.  In Indonesia, 84% of all carbon emissions come from land use change and forestry (deforestation, forest fires and peatland degradation); this helps to make the country one of the world’s largest GHG emitters.  In turn, climate change can affect forests and land use through drought, sea-level rise and changing rainfall patterns.  The Stern Report on the economics of climate change identifies reducing deforestation as one of the most cost-effective ways to lower greenhouse gas emissions.

 

What is REDD?

REDD (reduced emissions from deforestation and degradation) is a proposal for providing incentives to countries that reduce their carbon emissions by lowering the rate of deforestation and degradation of forests. Under the current Kyoto Protocol, only afforestation and reforestation activities are eligible and would exclude REDD.  The concept is now being negotiated for inclusion in the future climate regime.  Incentives such as carbon payments can be an impetus for more sustainable forest management and related reforms in forest governance by providing a sustainable revenue stream.

 

Who would participate in the Facility?

So far, about 20 developing countries or regions from Latin America, Africa and Asia-Pacific have expressed interest in participating in the Facility, and four industrialized countries have pledged financial support or are in the process of deciding the amount of their contribution.

 

How much money is involved and when would it be available?

The target capitalization of the Facility is $300 million, and its expected life is about 10 years. It is intended that the Facility will become operational in December 2007 at the time of the 13th session of the Conference of the Parties to the UNFCCC in Bali, Indonesia.

 

How would the Facility work?

The governance structure and procedures of the Facility are still under discussion.  Current thinking is that, there would be a Readiness Fund for capacity building and a Carbon Fund to purchase emissions reductions from pilot projects.  A “Participants Committee” of stakeholders would establish criteria for participation as well as general procedures.  A “Buyers Participant Committee” would determine the carbon payment level for each transaction, with guidance from the Participants Committee.

 

Why should Indonesia be interested in the Facility?

If the forest carbon market develops, Indonesia could potentially earn $400 million to $2 billion per year from it.  For that scenario to be realized, the country must develop credible mechanisms for monitoring forest carbon and avoiding deforestation.  The Facility would help to finance the costs of needed capacity building and piloting of experiences.  Indonesia is well-positioned to participate as it has taken the lead on preparing involvement in a REDD system.

 

 

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