Goal 9: Reward countries and jurisdictions that, by taking action, reduce forest emissions—particularly through public policies to scale-up payments for verified emission reductions and private-sector sourcing of commodities

Key Messages

  • Since 2014, pledges and commitments for results-based finance for forest emissions reductions have grown by more than US$6.4 billion. Disbursements continue to lag behind, amounting to just US$440 million, as many countries are still in the process of preparing large-scale REDD+ programs in line with donor requirements. At COP21, Germany, Norway and the UK collectively pledged to provide more than US$5 billion over the period of 2015-2020 for reported and verified emission reductions. Norway’s International Climate and Forest Initiative (NICFI) made the largest majority of commitments and disbursements of the bilateral partnerships.
  • Recent progress in the formulation of REDD+ programs points to a potential uptake in the speed of RBF disbursements.
  • Between 2013 and 2015 the forest carbon market grew from US$152 million to US$762 million, according to Forest Trends data. Carbon volumes traded increased from over 25 MtCO2– equivalents (MtCO2e) in 2013 to just under 88 MtCO2e in 2015. Much of this growth can be attributed to several transactions in the Australian Emissions Reduction Fund, which made up 69% of total transactions tracked in 2015.

 

 

OVERVIEW OF GOAL AND INDICATORS

Goal 9 seeks to encourage and reward tropical forest countries and jurisdiction through financial incentives for their verified emissions reductions (VERs) in the forestry sector. In the 2015 report, we defined two indicators, with Indicator 1 focusing on public Results-based Finance (RBF) and Indicator 2 on payments by private sector entities as part of carbon market transactions (Table 9).

 

table 9

 

In 2015, the private sector gave important signals in support of sourcing of commodities to reward countries for efforts that lead to reduced emissions. In December 2015, Marks & Spencer’s and Unilever announced a new “produce-and-protect” approach with the intent to prioritize commodity sourcing from areas that have designed and are implementing jurisdictional REDD+ initiatives.(43) These developments may lead to a new indicator in 2017.

 

 

FINDINGS

Criterion 1: International payments for VERs

Indicator 1.1: Payments for VERs through public sources

Between 2014 and 2016, donors made new commitments for REDD+ RBF of almost US$6.4 billion, and disbursed roughly US$440 million of this amount (Figure 7). At COP21 in Paris, the governments of Germany, Norway and the United Kingdom (GNU) collectively pledged to support countries that reduce emissions from deforestation and forest degradation with more than US$5 billion over the period of 2015-2020.(56) The majority of commitments over the past two years were made by Norway’s NICFI (around US$481 million).xvi Additional pledges for Germany’s REDD for Early Movers Program (REM), and two World Bank administered funds (the Forest Carbon Partnership Facility (FCPF) and the BioCarbon Fund) amounted to US$916 million. Also, nearly US$100 million of REM and US$146 million of BioCarbon Fund commitments made up pledges for a new partnership between GNU and Colombia.(57) Furthermore, the Norwegian Government has been responsible for almost all disbursements (US$430 million) made since 2014, largely using proxy-based verification of results. The remaining disbursements were made by the REM. In total, the US$6.4 billion is a combination of pledges and commitments whereby countries have either pledged money to a fund nominally or have since deposited that pledge to the fund as a commitment (Figure 7).

 

figure 7

 

Progress in the formulation of national and jurisdictional REDD+ programs

Recent developments indicate that ‘readiness’ investments may soon start to yield payments for emissions reductions. Earlier in 2016, FCPF participants approved the final stage of program submissions by the DRC and Costa Rica, the “Emissions Reductions Programme Document” (ER-PD) that lead the way to contract negotiations. Several other countries are expected to submit their ER-PDs at the next Carbon Fund meeting in December 2016. In 2015, the governments of Germany, Norway and the UK signed an agreement to make US$100 million in RBF available to Colombia under the German REM Program.

 

Criterion 2: Value of purchases of VERs

Indicator 2.1: Payments for VERs through voluntary and compliance carbon markets

Since 2013, the value of the forest carbon market increased by more than five times from US$152 to 762 million in 2015 (Figure 8). Volumes grew from 25 to 88 MtCO2e transacted. This expansion can largely be attributed to the compliance market and transactions in the Australian Emissions Reduction Fund, accounting for more than 60 MtCO2e transacted in 2015. In contrast, the voluntary market, after a small increase in 2014, saw a decline to 2009 levels (18.2 MtCO2e) in 2015.

In 2015, voluntary offsets were mostly bought from Latin America (worth US$21 million), followed by Africa (US$19.5 million) and Asia (US$13.1 million). Apart from Australia, the compliance market originated credits mainly from the Californian cap-and-trade program (US$63 million). The carbon price for voluntary credits increased from US$4.7 per ton in 2013 to US$5.4 in 2014 and decreased to US$4.9 in 2015. The average price for compliance credits increased from US$9.7 to 12.7 from 2013-14. In 2015, it ranged from US$3.1 for the New Zealand emission trading scheme to US$9.7 for the Australian and the Californian cap-and-trade-programs.

 

graph6

 

 

DATA DEVELOPMENTS AND GAPS

Regular public and accessible updates on all commitment and disbursement values of all RBF programs would improve the progress assessment towards this goal.