Today is the second and final day of the Oslo REDD Exchange. Yesterday’s post featured the World Bank’s Paula Caballero demonstrating that she has perfected the art of speaking for 10 minutes without actually saying anything much.
Today’s post features Ellysar Baroudy, coordinator of the Forest Carbon Partnership Facility at the World Bank, talking about the FCPF in the Democratic Republic of Congo.
Baroudy explains a bit about how the FCPF fund readiness and the Carbon Fund will provide performance based payments. She acknowledges the gap in funding: “What we don’t have in the funds themselves, are the investments that are needed to make things happen”.
But the Democratic Republic of Congo has managed to scrape together some funding from the Central African Forest Initiative, the Forest Investment Programmes, the Global Environment Facility, USAID, KfW, and the private sector. Of course, Baroudy doesn’t want us to think that this funding gap is a cock up on the part of the World Bank. According to Baroudy it is “exciting in terms of thinking through what can be done from the different financing streams”.
On 16 May 2016, DRC completed a revised Emission Reductions Program Document (ER-PD). You can read it here. Baroudy invites us “to partake in” this “rich” document. All 297 pages of it.
Baroudy is flaky on benefit sharing and safeguards. She gives an evasive response to questions from Transparency International, the Environmental Investigation Agency, and Rainforest Foundation Norway about the failings of DRC’s Emission Reductions Program Document. The DRC government knows that it still “needs to put in place some of the significant pieces.” So Baroudy can dismiss the criticisms because the ER-PD isn’t complete.
“Rome wasn’t built in a day,” Baroudy tells us.
In any case, the ER-PD doesn’t have to be perfect before the Carbon Funds signs the Emission Reduction Payment Agreement. “There is a potential for signing of an Emission Reduction Payment Agreement based on conditions,” Baroudy says. Which is hardly reassuring, is it?
You can watch the entire session here:
Peter A Minang, World Agroforestry Centre-ICRAF: Ellysar, you’ve been in the process I think since the beginning. Raising money is of course not the easiest thing to do for such a large programme. It’s huge. How have you been managing that, to gather all the commitments you have, US$176 million commitments, I think, in potential funding? What have been the challenges and how are you envisaging keeping this going with some kind of performance based, you know, management payment? Because patience might run out, right? Over to you, please.
Ellysar Baroudy, World Bank: Thanks Peter. Good morning everybody, it’s a pleasure to be here and to share the stage with fellow colleagues all attempting to work on, it’s the first programme that we’re trying to do a such a scale.
So in terms of finance, I’d like to say a couple of things. In terms of the Forest Carbon Partnership Facility, we have funding for different phases of REDD, we have funding for the first phase which is readiness, which DRC has benefited from and I think has been a very solid foundation.
But Peter, I’m going to focus on what you asked about performance based payments, which is the Carbon Fund of the Forest Carbon Partnership Facility. And if I think back to where we were three years ago there was really very little that we could say, we were really in a phase of putting the structures in place, that would allow us to make payments to countries like DRC and others, that were interested in receiving these funds.
In the last year and a half we opened a pipeline and we have 18 countries like DRC attempting to benefit from this kind of payment. But when you think of the payment we have, we basically have very upstream funding for readiness and we have the downstream funding for payments, but what we don’t have in the funds themselves, are the investments that are needed to make things happen, and I think what’s been interesting in the case of the DRC has been the ability to really bring together different streams of funding from various sources, both public and private.
There is currently, I mean the DRC mentioned from the readiness fund benefits from about US$8.8 million, which is really helping to set foundations. We do have, or the programme has already raised around US$54 million for investments, the biggest contributor there is the Central African Forest Initiative, CAFI, but also the Forest Investment Programmes, so they roughly are the majority of their funding, but there’s also funding from GEF, and bilaterals, so USAID and KfW.
So I think this is a current theme we see in all our programmes where there is a diversity of funding coming together, I think what’s interesting in DRC, they also have US$10 million from private sector already raised, and an anticipated US$15 million also.
So the dynamics are exciting in terms of thinking through what can be done from the different financing streams. And these will be used to undertake activities that should hopefully lead to emission reductions and that will trigger a payment from the Carbon Fund, once those emission reductions are verified. And the expectation is that it would be, you know, a minimum of around US$50 million that could be activated and which the DRC plans to reinvest, partly at least, in the Mai Ndombe region.
So I think there’s an interesting model there for sustainability that we’re talking about. There’s a lot of interesting dynamics in how this financing within a larger national framework and strategy and national funds for DRC.
So I think it’s exciting, but I think the onus often comes back down to the country in terms of how to bring the finance streams together, and I think this is a challenge we’re seeing in many countries. And I think in DRC we have a nice example of this, financing streams coming together, but that’s not something we’re seeing everywhere, yet.
Peter Minang: You talked a little bit about the US$50 million that could be available, in the end for performance based payments and you talked about reinvestments within the Mai Ndombe province. Is there any, at the moment, any thinking around how the performance payments could be done? Has there been any thinking about how that will be managed the performance based payments itself, but also is there any benefit sharing mechanism attached to the programme now? At least in terms of the thinking around that. Could you shed some light on those issues please?
Ellysar Baroudy: No, happy to, thanks Peter. Erm, on the er, I mean I mentioned US$50 million but it’s a ball park, but one thing I didn’t mention is next week we have the Carbon Fund meeting that will actually consider both DRC and Costa Rica’s, the first two countries that are coming forward for consideration to the portfolio, so I think that’s a super exciting phase.
Also the 18, I mentioned earlier, you know I said where we had come from and I forgot to say where we were going. So I think that’s a huge milestone for consideration. So that’s where the Carbon Fund participants will deliberate.
If anyone is interested, in learning the details, I mean the emission reduction programme document is online. These are amazing documents that actually spell out how the country is planning to do what it wants to do, I mean we heard a summary from Victor [Kabangele Wa Kadilu, Coordinator, National REDD+ DRC] but these documents are very rich, so I’d really invite people to partake in them. Because I think it’s interesting to see the structures, the institutions, so we talked about the transparency, and I think where we’ve come from in terms of the foundations, I couldn’t agree more.
And so I think in terms of Carbon Fund and performance based payments, these are going to be based on years of work, and solid foundations, and I’m hoping that you know the structures that countries are putting together will deliver on what those er payments, on the payments.
One thing you asked about in terms of er, the US$50 million, which I use as a ball park, there’ll be decisions on that, er, we have, and the benefit sharing issues etc, I think Victor mentioned himself, we are working within the country structures, er, there is a national fund, but we are also aware of capacity issues, and we’re basically working with DRC to have what we are terming a programme management unit which will be a firm potentially that will have a track record of fiduciary management and help build and bring together the funding into the national fund so that there is er, an integration if you like in these different financing streams within the er, vision of the country.
And I think this is all part of the openess, the process to think through how this can be done in a very solid manner, because you know there’s a lot of reputational issues on the line.
Very quickly, you’re looking at your watch, the benefit sharing mechanisms, again, these are partly fleshed out in the programme design documents. The country will work on those going forward as well, and there is the benefit sharing scheme with 50% roughly er, to be reinvested in the programme, and then the, the remainder, er, to be, er, shared, but I think the importance here isn’t just the monetary benefits, but really the programme should bring the development benefits, with so many other plusses associated with it, and I think that’s an important component people don’t often think enough about.
Peter Minang: Thanks a lot, that really clarifies a number of things.
Ellysar Baroudy: There was a question on financing for indigenous peoples and capacities, so within the climate funds we have we’ve got capacity building programme in the Forest Carbon Partnership Facility, which and as well as the Forest Investment Programme, and they operate in different countries, and in DRC the Forest Investment Programme has the DGM which has already been referred to which is specific financing for indigenous peoples, so I think that has been, it’s close to US$1 million, US$800,000 that is dedicated to indigenous peoples from the FIP.
So I just gave a global envelope, but the Forest Investment Programme is divided into different investments and there was also a piece for private sector co-investment and there’s a piece specifically for indigenous peoples.
Leah Good, Transparency International: I’m interested to hear a little bit more about the accountability of the safeguard system, so specifically what redress mechanisms you have in place, in the case that complaints arise regarding, well particularly the safeguard system or the MRV. So how that works at a national level and how that feeds back up to the Carbon Fund?
Susanna Breitkopf, Environmental Investigation Agency: We did take a look at the actual ER-PD that is online, and we are also sharing our concerns online, and you can find there if you want to come to me afterwards. I have a question, it’s mostly I think to Elly about the Carbon Fund rules and the conditions under which you’d be ready to enter into negotiations for an ERPA [Emission Reduction Payment Agreement]. We did not find in the ER-PD a land tenure assessment, that is required by the Carbon Fund. We also did not find a benefit sharing plan. We did not find a complaints mechanisms outlined. I wanted to know what is the bottom line here. How long will you be allowing to delay these things, you know, to be developed until you agree to an ER-PD and enter negotiations.
Monica Camacho, Rainforest Foundation Norway: I have a question: The Methodological Framework of the FCPF requires authorising land tenure in the programme design before signing an ERPA, and we have seen several studies, recently one from the Environmental Investigation Agency that determines that this requirement has not been fulfilled in its totality. So the concrete question is, is the FCPF going to approve this programme without this requirement and considering that DRC is the first country coming into the Carbon Fund, is it not going to set maybe a bad precedent if we approved a programme without land tenure rights in place? Thanks.
Ellysar Baroudy: OK, I think the questions related mainly to safeguard processes in a way and what happens in terms of grievance redress mechanisms and a number of comments on pieces of the programme that aren’t potentially fully developed. That’s what I’ve understood. So for example it was mentioned an incomplete benefit sharing plan etc.
I mentioned the Carbon Fund next week does consider both DRC and Costa Rica. It doesn’t mean next week that an Emission Reduction Payment Agreement is signed. I think the country knows that it needs to put in place some of the significant pieces, so in that respect I would expect that you would see a benefit sharing plan more fleshed out, and I’m looking to Victor, who is nodding in respect to that.
And no, in terms of what’s been done, I think Victor mentioned earlier on that this proces is going alongside a number of reform processes, including on land assessments.
And so I think you know Rome was not built in a day. These are massive programmes.
There is a lot of work to be done, but I think the foundations are there as I mentioned and there is a process that still needs to be undertaken to put the pieces in place. There is a potential for signing of an Emission Reduction Payment Agreement based on conditions, if that’s not satisfactory, but that will be subject to discussion within the funds and I say, this is an open process that you’ll be able to follow. And even when we do get the concerns, it’s not just the programmes posted, but as you’ve mentioned it’s also the concerns that are posted.
So, I think it’s important Peter to just emphasise that it’s an open discussion and process that is important.
Peter Minang: Thank you. That’s really important. Thanks.
P.S. Maria Brockhaus of CIFOR asked a question about how the FCPF programme intends to address drivers of deforestation such as the expansion of palm oil and rubber plantations. It’s a good question. Baroudy chose not to answer the question. Jeremy Freund of Wildlife Works gave an extremely odd reply:
Maria Brockhaus, CIFOR: Thank you very much for your excellent presentations. I’m wondering how you are preparing for drivers of deforestation that are beyond the smallholders, that I think you are well prepared for. And I’m asking that because oil palm, rubber, other pressures will come very soon in the future, how do you ensure sustainability of this project, and the efforts you have, and especially the attention you pay to smallholders, when there are perhaps bigger large-scale drivers of land conversion coming strongly into the country. And how do you ensure, what kind of mechanisms are you envisioning that really ensure that you have a response to these drivers as well in the design. Thank you.
Jeremy Freund, Wildlife Works: So there definitely are drivers in this programme that go beyond smallholders that go beyond subsistence agriculture. One of the things that the programme does need to work into its design and this gets a little bit beyond the technical design, but one of the things that needs to be provided is incentive for investment. And the way that can be done really is to have a robust benefit sharing plan, because all the stakeholders within the programme would need to have some sort of incentive in order to be a part of it, so a large extractive business would not be interested in joining the programme if there wasn’t some sort of reason for doing that.