From the Editors
The Ecosystem Marketplace's Forest Carbon News
Tracking Terrestrial Carbon
Tag – you're in! Guatemala, Indonesia and Peru were selected for the Forest Carbon Partnership Facility's (FCPF) Carbon Fund pipeline last week, unlocking up to $650,000 per country to develop an emissions reductions program.
The Carbon Fund holds a total of $465 million that could be paid to developing countries that reduce deforestation against a national baseline (REDD+). Eight other countries – Chile, Costa Rica, the Democratic Republic of Congo, Ghana, Mexico, Nepal, the Republic of Congo and Vietnam – were already in the pipeline.
Buyers in the Carbon Fund have expressed their willingness to pay $5/tCO2e, but the final price will depend on the Emission Reductions Payment Agreements (ERPAs) negotiated with each country. Peru's maximum contract volume is 6.4 million tonnes of emissions reductions (MtCO2e) while Guatemala may be paid for up to 21 MtCO2e, according to resolutions from the Carbon Fund meeting.
Indonesia's maximum, however, is yet to be determined. The FCPF provisionally included the country in the pipeline but asked Indonesian officials to work out some issues before moving forward, including explaining how it will develop a consolidated reference level and how emissions from peat will be included. Indonesia's 'One Map' initiative attempts to address the problem of inconsistent data on deforestation rates.
Indonesia's program would draw on grants from the FCPF and other organizations to get off the ground. But an interim financing plan (called 'FREDDI') under the national REDD+ agency aims to act as a "fund of fund" for readiness, and would also be used to voluntarily purchase offsets certified to private carbon standards. Officials estimate that phase two of the program would cover institution building, part of its operational costs and a programmatic fund at an estimated cost of $150 million. Funding for the program in phase three is projected at about $800 million on a pay-for-performance basis.
The FCPF also discussed whether to extend its funds beyond the current 2020 end date. Its Facility Management Team recommended the Carbon Fund's term be extended to at least December 2025, or December 2027 if any more countries are added to the pipeline. This will allow for some wiggle room on timing, especially in light of the recent announcement by Germany, Norway and the United Kingdom (UK) to fund up to 20 large-scale REDD programs.
Ecosystem Marketplace's State of the Forest Carbon Markets 2014 report will have much more information about the FCPF and other financial mechanisms that countries are looking to tap to support their REDD+ initiatives. And we're mining lots of interesting new information this year, including a closer look at buyer motivations and activities, and robust data on the co-benefits of forest carbon programs, from employment to endangered species protection.
We're $50k away from being able to publish this year's report in a few weeks' time. Can we count on your support? Please take a look at this sponsorship prospectus for more information, and contact Molly Peters-Stanley (Director of Ecosystem Marketplace) or Allie Goldstein (Forest Carbon Associate) with any interest. We'd be happy to discuss sponsorship opportunities with you in more detail.
More stories from the forest carbon market are summarized below, so keep reading.
—The Ecosystem Marketplace Team
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