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Carbon Sinks Projects in Bank Operations: Practicalities and Policy Issues

Explore eligibility and challenges in carbon sinks projects within bank operations. Case studies from Brazil, Romania, and Mexico. Discusses feasibility, certification, forest rehabilitation, and community forestry. Address uncertainties and policy considerations.

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Carbon Sinks Projects in Bank Operations: Practicalities and Policy Issues

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  1. Sinks Projects in Bank Carbon Finance Operationsand Issues Arising The Kyoto Protocol: Eligibility of Carbon Sinks Projects 15 November, 2001

  2. The Deals • Advanced in Preparation • Brazil “Plantar”: Sustainable Fuelwood and Charcoal • Romania Afforestation • Concept Note Stage • Mexico, Oaxaca Hillsides Agroforestry • Has detailed feasibility study and demonstration farms • Brazil Amazon, Agroforestry • Part of ongoing PPG7 operations

  3. Brazil Plantar • 23,000 ha of clonal high yield Eucalypts on end of third rotation low yielding plantation lands and pasture • FSC certification on existing plantations • 473.8ha of cerrado ecosystem rehabilitation from degraded plantations and pasture • Vision of 100,000 ha landscape management project integrating production, rehabilitation and conservation forestry • Prelimary Validation; PAD draft, Terms Sheet for carbon purchase; mid December carbon contract

  4. Romania • 7,000 ha of robinia and poplar on degraded agricultural land owned by State (1/3) and local communities (2/3) • Permanent conservation forest rehabilitation on pasture land and a Danube River island reserve • Protection against erosion + biodiversity benefits • Community forestry program with issues of ownership and management • Project Concept Note by end-December, PCF carbon purchase by June 2002

  5. Mexico • Oaxacan Hillsides: 35-55% slope • Agroforestry replacing slash and burn models with 0-400t/ha soil loss and permanently degraded forest or grasslands • Altitude determined tree crops and packages (no-till, legume crops etc, apples, peaches, walnuts, coffee) • 1-4 t Carbon/ha/yr from dry to moist zones • Project preparation (PIN/PCN) phase; carbon neutral program financing

  6. Eligibility Issues • PCF Preference: • a conventional CDM baseline approach where the without project case is subjected to baseline study, MVP, and independent validation (as per Plantar case) • Screening criteria to include in baseline and for validation • Possible Uncertainties and Constraints? • Narrow definition of Afforestation and reforestation? What seems acceptable and what are the key definitional issues • Example: Starting point cannot be an existing forest regardless of increasing carbon density unit area • What is the definition of a forest? Who determines? • Less than 10-30% closed canopy, and trees from 1-5m high?

  7. Policy Issues • Conversion of native forests • Presumably can’t clear native forest to plant plantation • Linking 3.3/3.4 requirements in accounting for sinks to CDM eligibility?, e.g. 1990 land use status? • Permanence? Time horizons? Buyer or Seller liability? Note Plantar case. • Leakage: how to control, monitor, and condition carbon finance on outcomes? Practicalities of imposing this burden on private sector or community level.

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