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“Carbon Fund Participants note their current willingness to pay up to US$5/t CO2e”

Yesterday, I wrote about a discussion in the World Bank’s Forest Carbon Partnership Facility about the price of REDD credits and how much the Carbon Fund was prepared to pay.

I noted that this was an important discussion – far too important to take place behind closed doors. The discussion is whether to have a fixed price for REDD credits, or whether each country should negotiate its own price. Private sector observers pointed out that “a clear price signal should be sent quickly”. Countries hoping to sell REDD credits pointed out that setting up REDD projects is costly (although they aren’t sure exactly how costly).

By coincidence, a few hours after the post was finished, I received an email with the chair’s summary of the most recent meeting of the Carbon Fund. The summary includes the following statement from Carbon Fund Participants:

In order to provide guidance to REDD Country Participants for their ER Program development, including the preparation of their ER-PD, and acknowledging the policy guidance on pricing methodologies in FMT Note 2012-8 (Recommendations of the Working Group on the Methodological Framework and Pricing Approach for the Carbon Fund of the FCPF) adopted by the PC at PC12 in Santa Marta as well as the views expressed by observers at this CF10 meeting, the Carbon Fund Participants note their current willingness to pay up to US$5/t CO2e.

The Carbon Fund Participants note that the final price is subject to negotiation, so this is not an agreement to a fixed price for REDD credits. But for the countries hoping to sell REDD credits, it’s worse than that. It looks to me like a statement that the price may be less than US$5, but it won’t be more.

Lloyd Gamble of WWF US is the Northern Civil Society representative and Augustine B. Njamnshi of BDCP Cameroon is the Southern Civil Society representative at the Carbon Fund meetings. Both have observer status. The chair’s summary of the meeting explains that they raised concerns about the statement on pricing REDD credits:

CSOs indicated their view that the CFPs’ issued statement on “willingness to pay” is not fully consistent with the Pricing Elements in the Guiding Principles for the Pricing Approach adopted by PC12 and suggested that this issue should be raised in a broader forum.

Whatever a “broader forum” might be, this seems like a pretty weak response.

As a recent report from the Forest Peoples Programme and FERN points out, the FCPF’s over-riding goal is to have developed market-based REDD programmes before the UNFCCC’s new global climate policy and financing regime, which is expected to come into force in 2020.

This is reflected in the closing statement of the chair’s summary of the tenth Carbon Fund meeting. The chair, incidentally, is Duncan Marsh of The Nature Conservancy.

CF10 marked accelerated progress in development of the Carbon Fund pipeline and increased competition from REDD Countries presenting early ideas for eventual selection into the Carbon Fund pipeline. With a total of eight program proposals selected, including three new ones at CF10, the pipeline is now two-thirds filled and a diverse and high-quality portfolio is under development. CF10 embodied the character of the FCPF that provides a unique “space” to pilot large-scale REDD+ programs while sharing and building on the collective knowledge, skills and experience public and private CFPs, REDD+ Countries and Observers in a spirit of partnership. With the UNFCCC negotiating meetings having just concluded a few days prior across the River Rhein in Bonn, the important role of the Carbon Fund to deliver on-the-ground, practical insights for piloting performance-based mechanisms for REDD+, along with the role of the UNFCCC to a provide long-term international policy framework, has become even more relevant and accentuated.

Of course with a price of US$5 per REDD credit, oil palm plantations won’t face much competition from REDD. And where REDD does go ahead, it seems unlikely that complex issues like land tenure, indigenous peoples’ rights, or equitable distribution of benefits will be addressed in any meaningful way.

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  1. The combined liquid fuels from an average MT of crude oil will produce a minimum of 2,263MT of CO2 when consumed. We know, on a daily basis, exactly the market price for crude oil and hence the market cost of each MT of CO2 produced. Today the market price of crude is $104 per barrel so the market cost of CO2 emissions is about $45.95/MT CO2e

    Mine is a very basic calculation that serves to illustrate that the offer of £5/CO2e is no where near the required amount to off-set CO2e costs. My view is that there is no reason why the cost of CO2e cannot be benchmarked to the price of crude oil on a daily basis using a level of agreed calculation exactitude.

    Not that moving any where close to a “Carbon Standard” for currency would attract those enjoying the luxury of the current global currency value manipulations.



    2.Petroleum has a specific gravity of 0.88 which means 1 litre weighs 0.88 kilograms.

    We know that:
    1 barrel [US, petroleum] = 158.9872972 litre

    So 1 barrel weighs:
    158.9872972 * 0.88 = 139.908821536 kilograms

    1 metric ton is 1000 kilograms:
    139.908821536 / 1000 = 7.1475121 Barrels/MT


  2. Yes let me show the idea, i heard in Indonesia they clear the forest for planting Palm oil.
    In Cambodia i attend signing ceremony on REED agreement at Mondol kiri on January 2013. Many people join the ceremony like Deputy provincial governor, forestry cantonment ,community from 20 communities.and Dr sarah milne , Dr Sango from ANU.
    but after signing on REED project agreement and until now , the situation still the same before no one come to buy , and the forest loosing every day,
    how about REED? Me and the communities not understand about REED project or they only one communities to protect forest?
    The REEd project not serious in Cambodia?