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Bio Carbon Fund

Bio Carbon Fund. Harnessing the carbon market to sustain ecosystems and alleviate poverty. What is a forest?. Definition of a Forest. The FAO 1998 definition is the core definition in international discussions IPCC & ultimately Decision 11/CP.7 is based on it

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Bio Carbon Fund

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  1. BioCarbonFund Harnessing the carbon market to sustain ecosystems and alleviate poverty What is a forest?

  2. Definition of a Forest • The FAO 1998 definition is the core definition in international discussions • IPCC & ultimately Decision 11/CP.7 is based on it • But with some important differences

  3. Different readings of a text • Book Review in Field and Stream–“This picturesque account of the day-to-day life of an English gamekeeper is full of considerable interest to outdoor-minded readers. Unfortunately, one is obliged to wade through many pages of extraneous material. In this reviewer’s opinion the book cannot take the place of J.R. Miller’s Practical Gamekeeping” • The Book :Lady Chatterley’s Lover

  4. Land with tree crown cover (or equivalent stocking level) of more than 10 percent and area of more than 0.5 hectares (ha). The trees should be able to reach a minimum height of 5 meters(m) at maturityin situ. May consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground; or open forest formations with a continuous vegetation cover in which tree crown cover exceeds 10 percent. Young natural stands and all plantations established for forestry purposes which have yet to reach a crown density of 10 percent or tree height of 5 m are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention or natural causes but which are expected to revert to forest. Includes: forest nurseries and seed orchards that constitute an integral part of the forest; forest roads, cleared tracts, firebreaks and other small open areas; forest in national parks, nature reserves and other protected areas such as those of specific scientific, historical, cultural or spiritual interest; windbreaks and shelterbelts of trees with an area of more than 0.5 ha and width of more than 20 m; plantations primarily used for forestry purposes, including rubberwood plantations and cork oak stands. Excludes: Land predominantly used for agricultural practices FAO 1998 definition

  5. UNFCCC Definition Decision 11/CP.7 “Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest;

  6. UNFCCC Definition Decision 11/CP.7 “Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest;

  7. UNFCCC Definition Decision 11/CP.7 “Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metresat maturity in situ.A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest;

  8. UNFCCC Definition Decision 11/CP.7 “Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest;

  9. UNFCCC Definition Decision 11/CP.7 “Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest.Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest;

  10. High (e.g. >60% crown cover) In tropics & temperate would still include most forests Also most degraded lands would be non-forest and therefore available for afforestation/reforestation Agro-forestry would probably not meet the forest definition Low (e.g. >10% crown cover) FAO base definition Captures open woodlands In the tropics much degraded, wooded land would already be classified as forest and thus, not available Agro-forestry will usually meet definition, but must check if pre-project cover exceeded 10% High v. low thresholds

  11. 10% projected crown cover Crown cover = canopy cover = crown closure Percentage of ground covered by a vertical projection of the outermost limits of the natural spread of the foliage of plants. Cannot exceed 100%

  12. 10% projected crown cover

  13. 10% projected crown cover

  14. 10% projected crown cover

  15. At what scale is cover measured? Exclude

  16. Select thresholds - Justify FAO differences • Each Party included in Annex I shall, for the purposes of applying the definition of “forest” as contained in paragraph 1(a) above, select a single minimum tree crown cover value between 10 and 30 per cent, a single minimum land area value between 0.05 and 1 hectare and a single minimum tree height value between 2 and 5 metres. The selection of a Party shall be fixed for the duration of the first commitment period. The selection shall be included as an integral part of its report to enable the calculation of its assigned amount pursuant to Article 3, paragraphs 7 and 8 in accordance with decision 19/CP.7, and shall include the values for tree crown cover, tree height and the minimum land area. Each Party shall justify in its reporting that such values are consistent with the information that has historically been reported to the Food and Agriculture Organization of the United Nations or other international bodies, and if they differ, explain why and how such values were chosen.

  17. National definitionshttp://www.fao.org/forestry/foris/webview/forestry2/index.jsp?siteId=5621&sitetreeId=22027&langId=1&geoId=0 Not all nations submit information to FAO based on the FAO definition. FAO “reclassifies” these data to standardise them to 10%

  18. DNA must report selection of selected thresholds • All provisions of section F of the modalities and procedures for a CDM, contained in the annex to decision 17/CP.7, shall apply mutatis mutandis to afforestation and reforestation project activities under the CDM. 8. A Party not included in Annex I may host an afforestation or reforestation project activity under the CDM if it has selected and reported to the Executive Board through its designated national authority for the CDM: (a) A single minimum tree crown cover value between 10 and 30 per cent; and (b) A single minimum land area value between 0.05 and 1 hectare; and (c) A single minimum tree height value between 2 and 5 metres. 9. The selected values referred to in paragraph 8 (a)–(c) above shall be fixed for all afforestation and reforestation project activities under the CDM registered prior to the end of the first commitment period.

  19. “Afforestation” is the direct human-induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources; “Reforestation” is the direct human-induced conversion of non-forested land to forested land through planting, seeding and/or the human-induced promotion of natural seed sources, on land that was forested but that has been converted to non-forested land. For the first commitment period, reforestation activities will be limited to reforestation occurring on those lands that did not contain forest on 31 December 1989; Afforestation and deforestation These definitions have no practical difference

  20. “Afforestation” is the direct human-induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources; “Reforestation” is the direct human-induced conversion of non-forested land to forested land through planting, seeding and/or the human-induced promotion of natural seed sources, on land that was forested but that has been converted to non-forested land. For the first commitment period, reforestation activities will be limited to reforestation occurring on those lands that did not contain forest on 31 December 1989; Afforestation and deforestation These definitions have no practical difference

  21. Actions • EB appears to be seeking strong evidence that the area was indeed not a forest in 1990 • Seek • Actual measurements from just prior to 1990 • Note that measurements taken after 1990 may be disputed • Aerial photography and/or ground photography • Documented historical evidence • This is especially important if the area did have some tree cover • What if tree cover became more dense post 1990 but then thinned?

  22. Changes since 1990 • Technically only 1990 matters • Introduced to stop a deforestation followed by reforestation scam • If forest has either naturally regenerated or has been facilitated by humans, then this must be taken into account in the baseline • Might similar “reforestations” be expected in the absence of the project

  23. Summary • Ensure that DNA in your country has made a decision on the thresholds and has conveyed this to the UNFCCC Secretariat including any variation from FAO • That you have documentation showing that the project site was not a forest in January 1990 • If you are excluding existing forest patches from the project area, that these are well mapped (GPS or surveyed) • That you have defined some rules for the mapping of exclusion areas (project boundaries)

  24. BioCarbon FundtCERs v. lCERsIan Noble Harnessing the carbon market to sustain ecosystems and alleviate poverty

  25. BioCF To 2017 To 2037 - Seller’s contractual obligation to sequester and facilitate verification Special Purpose Vehicle managed by Participants CP 1 CP 2 CP 3 CP 4 CP 5 CP 6 CP etc • lCERs – verified every 5 years • New lCERs for increased sequestration • Verifier to measure increase or decease since previous verification • tCERs -- expire at the end of next commitment period • Carbon sequestered within project area re-measured every 5 years and new certificates issued CP 12

  26. CP 1 CP 2 CP 3 CP 4 Non-Permanence Risk lCERs Decreases replaced by AAU, CER, ERU, RMU or lCERs “from the same project activity” tCERs Seller simply has fewer tCERs to sell in the commitment period. Previous tCERs expire at end of the commitment period.

  27. CP etc CP 1 CP 2 CP 3 CP 4 CP 5 • Replacement Risk • At end of crediting period a lCER must be replaced by an AAU, CER, ERU or RMU • Implications of the Replacement Rule • Seller has no obligation or incentive to retain the sequestered carbon • May even have contractual obligation to harvest to offset costs of replacement CP 12

  28. tCERs v lCERs • Many have favoured lCERs • Longer contract with seller to store carbon which is more compatible with goals of the BioCF • Verification costs of tCERs and lCERs are probably similar • tCERs are likely to have additional fees and taxes associated with there 5-yearly re-certification • Decision can be on project by project basis • But, tCERs may have a continuing value for BioCF buyers that can be sold on after 2017 (later slide) • And, tCERs appear to offer more flexibility to sellers • And, tCERs may be simpler to use if there is a risk of losses of carbon from a project

  29. Cover for Non-Permanence and Replacement Risks • FMU will purchase CERs (permanent credits i.e. non LULUCF) • To be delivered in the second CP • This will allow buyers to make a choice in the third commitment period (2018 – 2022) whether they will continue to seek verification of their LULUCF purchases • tCERs – this creates few problems • lCERs – not possible to “re-use” lCERs that are no longer in a “retirement account”– i.e. meeting a commitment.

  30. tCERs v. lCERs from the seller’s viewpoint • lCERs will have lower transaction costs • Due to tax applied to certification process • Possibly >2% applied once to lCERs and 2 or 3 times through to 2017 on tCERs • These costs will probably be charged against the project monitoring costs • Post 2017 – costs subject to negotiation with the buyers

  31. tCERs v. lCERs from the seller’s viewpoint • tCERs • Require the same measuring and monitoring effort as lCERs • But must be re-certified every CP with associated tax except in small scale projects • But if buyers decide to discontinue the verification process (ie they replace their tCERs with CERs), then the sellers can place the tCERs on the market for new buyers

  32. tCERs v. lCERs loss of carbon from project lCERs • Verification shows loss of carbon (not enough carbon to cover existing credits) • Replacement requirement is allocated proportionally to all accounts • Replacement must be with a CER, AAU, ERU or RMU (lCERs from “same project” are allowed, but the verification has shown these not to exist!) • Thus, difficult to exert any “first call” rights

  33. tCERs v. lCERs loss of carbon from project tCERs • Verification shows loss of carbon (not enough carbon to cover existing credits) • We simply replace (issue new tCERs) from our pool of tCERs across all project.

  34. VERs and tCERs & lCERs • The BioCF will usually purchase VERs • At a negotiated price • This includes access to the rights to use the stored carbon until 2037 • Over this period the Fund management Unit will manage appropriately for which ever CER is chosen

  35. Price of a tCER Discount % of current

  36. Remember: This is one of the simpler components of LULUCF.Don’t Panic! Harnessing the carbon market to sustain ecosystems and alleviate poverty

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