By Climatico Contributor: Nick Oakes

Negotiators in Durban

Durban has mixed meanings for REDD+ finance (Source: UNclimatechange)

Durban finished with the now commonplace but contradictory sense of achievement and disappointment. Achievement that something has been agreed, disappointment that because expectations are so low, any agreement seems like an achievement. REDD+, however, has finished COP17 with a less pessimistic sentiment: plenty was agreed in terms of the technicalities, with accord on the measurement of reference levels of emissions, on environmental and social safeguards, and on MRV; but, as discussed last week, the accord between Parties on these issues has caused disquiet among NGOs.

Technicalities aside, it is perhaps more interesting to think about what COP17 means for REDD+ in bigger picture terms – how can it reengage with the discussions of a legal agreement, how will it be financed and what does it mean looking towards next year?

Stranded at sea

REDD+ has for some time been stranded from the mainland of negotiations, with little clarity on how the mechanism relates back to an international agreement. Or in a more literal sense, it sits in the COP texts on its own as a mitigation action separate to NAMAs. Alas, Durban has presented a slightly clearer picture of the direction and merging of the AWG-LCA track of the AWG-KP track over the next few years, and consequently some more clarity on the context in which REDD+ will form part of a future agreement.

Although still abstract, by “context” we mean that REDD+ could, for example, function largely in the same way as the flexible mechanisms do, the CDM and JI, as addendums to a protocol, or it could be a separate, additional mitigation theme, spanning multiple sources of funding or mechanisms. The latter seems to certainly be the case following Durban, but aside from being – quite literally – separate to NAMAs within the texts, a lot more can be gleaned by looking at the dynamics of the finance discussions.

Finance creeping

Finance made a modicum of progress at Durban, although nothing much was to be expected. Various options for sourcing have yet to be formally considered and objections still arise on the inclusion of the private sector as a source of finance.

Nevertheless, there is agreement that finance should be results-based and, more interestingly, there is text referring to both market based and non-market based approaches to finance. It is generally understood that market based approaches would largely entail the sale of rights to carbon stored in or sequestered by the forest and, as we know, the development of these markets outside of the voluntary sector is moving at a sub-glacial pace.

But exactly what non-market based approaches are is less clear. It should be noted here that we talk about market or non-market based approaches largely in the context of delivery of money, not necessarily the sourcing the money, which could come, for example, from a maritime carbon tax in the non-market based approaches or, perhaps more obviously, the sale of carbon credits in the market based approaches.

Attention non-market based approaches

Envisioning non-market based approaches can be a little ambiguous, but clues can be garnered by thinking about the expenditure patterns of major REDD finance programmes, such as the UN-REDD and the FCPF.

These programmes have spent the majority of money on the development of domestic policies for REDD, whilst also providing help on MRV, reference levels and safeguards infrastructure. At the same time, it is taking – and may continue to take – many years to ensure forest countries, donor countries and the mechanisms themselves are on the same page with regard to expectations of results and finance, thus delaying implementation of REDD+ activities.

Nevertheless, based on these experiences, it seems sensible to conclude that REDD+ finance is going to spend some time yet directed towards early stage technical and human infrastructure, and policy development.

In this sense, the ambiguity surrounding non-market based finance becomes a little clearer. It is, at the moment, publicly sourced and grant-based delivery finance towards REDD+ readiness, purely because this is where it seems to be most needed. The assumption, however, that grant-based finance is inexorably channelled towards early stage REDD+ policy and infrastructure development is far from the truth. There could be non-market based mechanisms that focus on the implementation phases of REDD+, such as subsidy and concessional loan programmes, or guarantee and crediting schemes.

Innovating attendant approaches

Indeed this slight untruth about non-market based approaches, and its conflict between non-market and market based finance should guide the discussions of REDD+ over the coming year. Since there is a lack of a compliance market demand for REDD+ carbon, because most forest countries are in the early stages of REDD+ development, and as it takes years to progress through each stage, Durban could mean that non-market remains a synonym for ‘grants going to REDD readiness’. However, Parties could – and should – move it beyond this connotation and consider how non-market based approaches can evolve, financing the later implementation stages in order to keep momentum and avoid stagnation in REDD+, particularly because Parties now plan to spend four years wrangling over emissions targets and their “legal force.”

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