A two day meeting is currently taking place at the Columbia Law School in New York of the Private Sector Advisory Group to the Green Climate Fund. On the agenda is the Green Climate Fund’s funding of forestry projects.
One the first day of the meeting, speakers included Agustin Silvani from Conservation International, Barry Ulrich from The Nature Conservancy, and Josefina Braña-Varela from WWF. Needless to say, critics of REDD, or carbon trading, were not invited to speak.
The Green Climate Fund and REDD
The Green Climate Fund has three ways of funding forest carbon projects.
In October 2017, at its 18th meeting, the board of the Green Climate Fund decided to pilot results-based payments for REDD. Over a five year period, the Green Climate Fund will pay up to US$500 million for REDD.
The board’s 20th meeting in July 2018, noted that while the pilot programme is open for applications, so far the Green Climate Fund has not received any. But the Fund expects to receive “approximately three Concept Notes” by the end of 2018.
Annex XI to the decisions of the board’s 18th meeting is a “Draft terms of reference for the pilot programme for REDDplus results-based payments”.
Paragraph 15 of Annex XI states that the ownership of emissions reductions will not be transferred to the Green Climate Fund. If they wish, countries can use the emissions reductions to meet the targets in their Nationally Determined Contribution, but,
The proposals should indicate the measures to be taken to ensure that such emissions reductions will not be transferred and/or used for any other purposes (e.g. offsetting).
In addition to this pilot programme for REDD, the Green Climate Fund’s website currently lists eleven forest and land use projects that it is funding:
And the GCF recently offered US$500 million to “unlock private sector finance in developing countries”. Several of the proposals that the GCF shortlisted are carbon trading proposals.
The Private Sector Advisory Group and REDD
The Private Sector Advisory Group is working on a paper to be presented at the next Green Climate Fund board meeting scheduled for 17 to 20 October 2018. REDD-Monitor has seen a draft copy of the paper, titled “PSAG recommendations on mobilization of private sector finance to progress the GCF forestry-related results areas”. The draft is dated July 2018.
One of the PSAG’s recommendations is to “Integrate carbon markets into GCF projects”.
The PSAG paper states that, “Forests are also the largest carbon sinks globally.”
But a paper published in Science last year found that in fact tropical forests release way more carbon each year than they remove from the atmosphere. The shocking reality is that forests are no longer a carbon sink.
The PSAG refers to the New York Declaration on Forests which aims to “At least halve the rate of loss of natural forests globally by 2020 and strive to end natural forest loss by 2030.”
The paper doesn’t mention that global tree cover loss reached a record in 2016 of 29.7 million hectares. Neither does it mention that 2017 was the second worst year for tree cover loss.
This graphic from Global Forest Watch illustrates tree cover loss from 2001 to 2017:
Instead, the paper comments that, “Because of actions coming out of these commitments, deforestation rate in countries including Brazil has dropped in the past decade.” But in recent years, deforestation in Brazil has increased dramatically.
The PSAG paper recommends three “key areas” for the Green Climate Fund to focus on.
1. Global commodity supply chains
The PSAG suggests “engaging multinational corporations” such as Cargill, Unilever, and Starbucks to encourage companies to source only “deforestation free” products.
CIFOR recently published a paper looking into companies’ zero deforestation commitments. George Schoneveld, one of the authors, comments that,
“On paper the commitments are great, and they use the right terms and are fairly comprehensive in their scope, but by and large companies have yet to fully think through how they’re going to deliver on them.”
A 2017 report by Oxfam came to a similar conclusion. Oxfam also highlights the importance of the rights and livelihoods of local communities in establishing deforestation free supply chains.
The PSAG paper makes no mention of the difficulties with deforestation free commitments, and the word “rights” does not appear anywhere in the paper. And there is no mention of palm oil companies in Southeast Asia using “shadow companies” to conceal their links to forest destruction.
2. Ownership of forest carbon credits
The PSAG complains that “the forest carbon market is still in its relative infancy”, and that sales of carbon credits have “failed to reach the levels necessary to sustain forest projects”.
Predictably, the PSAG is in favour of carbon trading. Equally predictably there is no discussion of the problems with carbon trading – particularly the fact that carbon trading does not reduce greenhouse gas emissions, instead shuffling them from one place to another.
It’s a vicious circle. Carbon trading allows continued emissions from burning fossil fuels, which means more climate change. As climate change gets worse, forest fires are increasing, meaning that the carbon stored in forests is increasingly released to the atmosphere – in turn accelerating climate change.
Nevertheless, the PSAG argues that the Green Climate Fund should subsidise REDD carbon markets, in order to “de-risk investment and generate demand”.
The paper notes that the Green Climate Fund values REDD emission reductions at US$5 per tonne, and comments that,
“this price level to compensate the implementation of REDD+ programs does not cover the foregone economic revenue that could have otherwise been accrued, through activities including logging that cause deforestation.
In other words, US$5 per tonne for keeping forests standing cannot possibly compete with clearing the forest and setting up a palm oil plantation.
The paper states, “Sending the right price signal adds to the attractiveness of forest investments’ risk-return profile, therefore is conducive to crowd in private finance.” But the PSAG does not explain how the Green Climate Fund is supposed to “set the right price signal”, or what the price of carbon should be.
3. Blended finance with results-based payments
The PSAG paper refers to the Green Climate Fund’s October 2017 decision to fund REDD and argues that this “could be applied as a model for promoting private sector investment”.
The paper states that,
In this context, blended finance could be a proper fit to reduce risk and catalyse private investment. Flexible use of instruments such as forest bond or subordinate debt allows the private sector to be involved in REDD+ projects in a proactive and expedite way.
Conflict of interest
The PSAG’s recommendations are very much in line with the policies of the BINGOs who have been invited to speak at the meeting in New York.
Conservation International and WWF face a blatant conflict of interest.
On the one hand both organisations are taking part in the PSAG meeting to push the Green Climate Fund in the direction of carbon trading.
On the other hand, Conservation International is running a “sustainable landscapes” project in Madagascar which will receive a total of US$53.5 million from the Green Climate Fund.
WWF is running a project in Bhutan that will receive US$26.6 million from the Green Climate Fund.
Conservation International, together with the Environmental Defense Fund, has applied for funding from the Green Climate Fund to create a “REDD+ Acceleration Fund” that will buy REDD emissions reductions. The description of the REDD+ Acceleration Fund on the Green Climate Fund’s website is almost identical to the proposals from the Private Sector Advisory Group:
The Fund will use a blended finance structure to mobilise private investment, including from the air transport sector, for existing REDD+ programs, beginning with the Ghana and Chile, in order to reduce emissions from the forestry sector, and prevent deforestation.