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5.1. Introduction to mitigation mechanisms and markets

5.1. Introduction to mitigation mechanisms and markets. Bruno Locatelli, CIRAD-CIFOR. Objectives. To give a brief overview of mitigation mechanisms and carbon markets. Payments for Ecosystem Services. Water regulation. Biodiversity. Forests. Scenic beauty. Carbon. Livelihood support.

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5.1. Introduction to mitigation mechanisms and markets

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  1. 5.1. Introduction to mitigation mechanisms and markets Bruno Locatelli, CIRAD-CIFOR

  2. Objectives • To give a brief overview of mitigation mechanisms and carbon markets

  3. Payments for Ecosystem Services Water regulation Biodiversity Forests Scenic beauty Carbon Livelihood support What are the carbon markets?

  4. increasing carbon pools Creating plantations Carbon Project Benefit Developing agroforestry Baseline Years Forest • avoiding losses of carbon pools Carbon Reducingdeforestation With conservation Benefit Baseline (Deforestation) Years • reducing emissions caused by forest activities Less energy, oil, fertilizers... Energy Reminder: How forestry can mitigate CC (It is NOT a political definition) • producing biomaterials and bio energy

  5. Carbon mechanisms: History • 1992: UNFCCC • 1997: Kyoto Protocol • Cap-and-trade and flexibility mechanisms (e.g., CDM) • Carbon markets • 2001: Marrakesh Agreements • Role of forests in the CDM defined • 2005: Kyoto enter into force • 2010 (?): Agreement on REDD?

  6. Diversity of carbon markets Kyoto: ET and JI (between Annex I countries) European Market ETS Canada Oregon JVETS (Japan) RGGI CCX WRCAI Clean Development Mechanism(*) Voluntary markets (*) Kyoto market Other cap-and-trade markets Voluntary markets GGAS (New South Wales) Annex I Non Annex I

  7. Carbon mechanisms and markets for forests • increasing carbon pools Creating plantations ARCDM Developing agroforestry Voluntary Markets • avoiding losses of carbon pools Reducingdeforestation REDD+? May also cover A/R • reducing emissions caused by forest activities CDM(energy) • producing biomaterials and bio energy

  8. Emission Trading (ET) Annex I country tC tC Project tC JointImplementation(JI) Annex I country $ $ $ Annex I country Clean Development Mechanism (CDM) Project Non-Annex I country Kyoto Protocol at a glance Emission reduction commitment(for 2008-2012 :95% on average of 1990 level) Flexibility mechanisms National Efforts Annex I country = industrialized country Non-Annex I country = developing country

  9. Forests in the CDM • Eligible activities • Only Afforestation and Reforestation (may include Agroforestry) • Land without forest on December 31, 1989 • Modalities • Additionality and baseline • Methodologies • Permanence and temporary credits • Complexity and transaction costs • Scale issues • Current status (April 2008) • 1 registered forestry project (among 987 CDM projects in total) • 10 approved methodologies

  10. Avoided Deforestation • Also called • RED (Reduction of Emissions from Deforestation) • REDD (… and Degradation) • Tropical deforestation = 17.4% emissions • Not included in any agreement (e.g. not in the CDM) • In 2005: start of new discussions on RED • Main issues: • Fund vs. markets, controversies on linking REDD to cap-and-trade markets • What to reward (efforts, reductions compared to a baseline…)? • Impacts on sustainable development, redistribution of benefits) • Monitoring • Bali 2007: agreement on pilot actions • World Bank's Forest Carbon Partnership Facility • Many bilateral initiatives • REDD+ • Reduce emissions from deforestation and forest degradation • Forest conservation, sustainable forest management, enhancement of forest carbon sinks

  11. Forests in the carbon markets Transactions with projects (forest and non-forest) are growing fast But the share of forestry projects is very low (1% for the CDM) (Capoor & Ambrosi, 2007) Reasons: no connection CDM-ETS, delay in forest-related CDM decisions, lack of awareness of markets, complexity of the CDM rules.

  12. Voluntary markets • Comparative advantage for forestry projects • 37% of transactions are with forestry projects (Hamilton et al., 2007) • Survey of 71 brokers (Gardette et Locatelli 2007) • 61% deal with forestry projects • 24% exclusively with forestry projects • Reason: • Mostly image and PR issues • No restrictions on activity types • Avoided Deforestation, Reforestation, Agroforestry… • No well-defined modalities • But standards are emerging • Climate, Community, Biodiversity (CCB) • Voluntary Carbon Standard (VCS)

  13. Discussion • How can USAID and other donors help remove some of the barrier to access to these markets?

  14. Thank you for your attention

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