By Chris Lang
Peru submitted its Readiness Plan Idea Note to the World Bank’s Forest Carbon Partnership Facility in June 2008. Twelve years and millions of dollars later, Peru has failed to meet a deadline to sign an Emission Reductions Payment Agreement. Peru has now cancelled its emissions reductions programme, and on 3 February 2021, the World Bank dropped Peru from the FCPF Carbon Fund portfolio.
In a progress report on the FCPF website, dated July 2020, Peru explains that,
The establishment of a financial mechanism to receive, administrate, and distribute emission reduction payments has taken more time than expected due to a complex decision-making process that requires multi-stakeholder participation and multi sectorial coordination, which has been further hindered by the COVID crisis.
In a recent note, the FCPF Facility Management Team explains the final unravelling of Peru’s Emission Reductions Payment Agreement:
At the CF22 meeting in November 2020 the FMT informed Carbon Fund Participants (CFPs) of the possible delay with the Peru ER Program in moving towards an ERPA.
It is recognized that the Government of Peru made efforts to advance the preparation of the ER Program during 2020, including on the several dialogues with the IPs and CSOs related to the ER Program. However, despite these efforts, Peru was lagging far behind in the completion of key documents such as those related to safeguards, benefit sharing plan, etc. In addition, Peru had still not shared their initial expectations from an ERPA through an ERPA Term Sheet by the initial ERPA signing deadline of November 30, 2020. Despite the extended deadline of January 31, 2021, it was evident that there was not enough time left for Peru to complete the preparation, negotiations, and approval process. As a result the World Bank and Government of Peru mutually agreed to cancel the ER Program.
The Peru ER Program has therefore been officially dropped from the FCPF Carbon Fund portfolio as of February 3, 2021.
Climate Emissions Reduction Facility
Despite the fact that Peru has been “officially dropped” from the Bank’s Carbon Fund, the World Bank has not necessarily ruled out buying emission reductions from Peru. A new Bank trust fund, the Climate Emissions Reduction Facility, could be used to buy emission reductions from Peru. This could also apply to other countries that carried out a readiness process but failed to agree an Emissions Reduction Payment Agreement with the Bank.
On 10 December 2020, the World Bank put out a press release that includes this paragraph:
The World Bank’s new Climate Emissions Reduction Facility (CERF), an umbrella fund for climate finance, will be the Bank’s first trust fund providing operational liquidity at scale for low-carbon development projects. Over a 10-year period, the facility will disburse results-based climate finance, helping developing countries shape low-carbon development pathways and encouraging donors to increase funding to achieve scale.
The FCPF website includes an undated note about a new World Bank trust fund: EnABLE (Enhancing Access to Benefits while Lowering Emissions). According to the FCPF,
EnABLE will support programs under the new Climate Emissions Reduction Facility of the World Bank’s Climate Change Funds Management Unit, including the BioCarbon Initiative for Sustainable Forest Landscapes (ISFL) and the Forest Carbon Partnership Facility (FCPF).
In 2019, Germany committed €20 million to EnABLE, since when the Bank has been working closely with Germany to develop EnABLE. A presentation during the 22nd Carbon Fund Meeting that took place in November 2020 describes EnABLE as a “new Multi-Donor Trust Fund (MTDF)”, the purpose of which is,
to address issues of social inclusion in implementation of the FCPF ER programs and Benefit Sharing Plans. The MDTF will also support social inclusion in other Result-Base Climate Finance programs of the Bank. It will run from 2020 to 2030. Capitalization is aimed at $200 million, with about $22 million pledged.
While the World Bank considers ways of making “results-based” payments to Peru for reduced deforestation, deforestation in the country continues to increase. In December 2020, an astronaut on the International Space Station took a dramatic photograph of gold prospecting pits in eastern Peru close to Tambopata National Reserve.
And in 2019, Peru lost 162,000 hectares of primary forest, according to Global Forest Watch:
This post is part of a series of posts on REDD-Monitor looking at REDD and environmental injustice in the Andes Amazon.