BioCarbon Fund Harnessing the carbon market to sustain ecosystems and alleviate poverty What is a...

BioCarbon Fund

Harnessing the carbon market to sustain ecosystems and alleviate poverty

What is a forest?

Definition of a ForestDefinition of a Forest

The FAO 1998 definition is the core definition in international discussions

IPCC & ultimately Decision 11/CP.7 is based on it

But with some important differences

Different readings of a Different readings of a texttext

Book Review in Field and Stream – “This picturesque account of the day-to-day life of an English gamekeeper is full of considerable interest to outdoor-minded readers. Unfortunately, one is obliged to wade through many pages of extraneous material. In this reviewer’s opinion the book cannot take the place of J.R. Miller’s Practical Gamekeeping”

The Book : Lady Chatterley’s Lover

FAO 1998 definitionFAO 1998 definition

Land with tree crown cover (or equivalent stocking level) of more than 10 percent and area of more than 0.5 hectares (ha). The trees should be able to reach a minimum height of 5 meters (m) at maturity in situ. May consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground; or open forest formations with a continuous vegetation cover in which tree crown cover exceeds 10 percent. Young natural stands and all plantations established for forestry purposes which have yet to reach a crown density of 10 percent or tree height of 5 m are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention or natural causes but which are expected to revert to forest.

Includes: forest nurseries and seed orchards that constitute an integral part of the forest; forest roads, cleared tracts, firebreaks and other small open areas; forest in national parks, nature reserves and other protected areas such as those of specific scientific, historical, cultural or spiritual interest; windbreaks and shelterbelts of trees with an area of more than 0.5 ha and width of more than 20 m; plantations primarily used for forestry purposes, including rubberwood plantations and cork oak stands.

Excludes: Land predominantly used for agricultural practices

UNFCCC Definition UNFCCC Definition Decision 11/CP.7Decision 11/CP.7

“Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest;

Proportion of wooded land captured by a percent cover threshold

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Brazil

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World

Prepared I.R. Noble, O'Brien & RoderickBased on DeFries et al

J.Geophys.Res. 100,20867-82

High v. low thresholdsHigh v. low thresholds

High (e.g. >60% crown cover) In tropics & temperate

would still include most forests

Also most degraded lands would be non-forest and therefore available for afforestation/reforestation

Agro-forestry would probably not meet the forest definition

Low (e.g. >10% crown cover) FAO base definition

Captures open woodlands

In the tropics much degraded, wooded land would already be classified as forest and thus, not available

Agro-forestry will usually meet definition, but must check if pre-project cover exceeded 10%

10% projected crown 10% projected crown covercover

Crown cover = canopy cover = crown closure

Percentage of ground covered by a vertical projection of the outermost limits of the natural spread of the foliage of plants. Cannot exceed 100%

10% projected crown 10% projected crown covercover

At what scale is cover At what scale is cover measured?measured?

ExcludeExclude

Select thresholds - Justify FAO Select thresholds - Justify FAO differencesdifferences

Each Party included in Annex I shall, for the purposes of applying the definition of “forest” as contained in paragraph 1(a) above, select a single minimum tree crown cover value between 10 and 30 per cent, a single minimum land area value between 0.05 and 1 hectare and a single minimum tree height value between 2 and 5 metres. The selection of a Party shall be fixed for the duration of the first commitment period. The selection shall be included as an integral part of its report to enable the calculation of its assigned amount pursuant to Article 3, paragraphs 7 and 8 in accordance with decision 19/CP.7, and shall include the values for tree crown cover, tree height and the minimum land area. Each Party shall justify in its reporting that such values are consistent with the information that has historically been reported to the Food and Agriculture Organization of the United Nations or other international bodies, and if they differ, explain why and how such values were chosen.

National definitionsNational definitionshttp://www.fao.org/forestry/foris/webview/forestry2/index.jsp?http://www.fao.org/forestry/foris/webview/forestry2/index.jsp?

siteId=5621&sitetreeId=22027&langId=1&geoId=0siteId=5621&sitetreeId=22027&langId=1&geoId=0

Not all nations submit information to FAO based on the FAO definition. FAO “reclassifies” these data to standardise them to 10%

DNA must report selection of DNA must report selection of selected thresholdsselected thresholds

7. All provisions of section F of the modalities and procedures for a CDM, contained in the annex to decision 17/CP.7, shall apply mutatis mutandis to afforestation and reforestation project activities under the CDM.

8. A Party not included in Annex I may host an afforestation or reforestation project activity under the CDM if it has selected and reported to the Executive Board through its designated national authority for the CDM:

(a) A single minimum tree crown cover value between 10 and 30 per cent; and

(b) A single minimum land area value between 0.05 and 1 hectare; and

(c) A single minimum tree height value between 2 and 5 metres.

9. The selected values referred to in paragraph 8 (a)–(c) above shall be fixed for all afforestation and reforestation project activities under the CDM registered prior to the end of the first commitment period.

Afforestation and Afforestation and deforestationdeforestation

“Afforestation” is the direct human-induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources;

“Reforestation” is the direct human-induced conversion of non-forested land to forested land through planting, seeding and/or the human-induced promotion of natural seed sources, on land that was forested but that has been converted to non-forested land. For the first commitment period, reforestation activities will be limited to reforestation occurring on those lands that did not contain forest on 31 December 1989;

These definitions have no practical difference

ActionsActions

EB appears to be seeking strong evidence that the area was indeed not a forest in 1990

Seek Actual measurements from just prior to 1990

Note that measurements taken after 1990 may be disputed

Aerial photography and/or ground photography Documented historical evidence This is especially important if the area did have some tree

cover What if tree cover became more dense post 1990 but then

thinned?

Changes since 1990Changes since 1990

Technically only 1990 matters Introduced to stop a deforestation followed by

reforestation scam

If forest has either naturally regenerated or has been facilitated by humans, then this must be taken into account in the baseline

Might similar “reforestations” be expected in the absence of the project

SummarySummary

Ensure that DNA in your country has made a decision on the thresholds and has conveyed this to the UNFCCC Secretariat including any variation from FAO

That you have documentation showing that the project site was not a forest in January 1990

If you are excluding existing forest patches from the project area, that these are well mapped (GPS or surveyed)

That you have defined some rules for the mapping of exclusion areas (project boundaries)


BioCarbon FundBioCarbon FundtCERs v. lCERstCERs v. lCERs

Ian NobleIan Noble

CP 1 CP 3CP 2 CP 5CP 4 CP 6

CP 12

lCERs – verified every 5 years•New lCERs for increased sequestration•Verifier to measure increase or decease since previous verification

tCERs -- expire at the end of next commitment period•Carbon sequestered within project area re-measured every 5 years and new certificates issued

BioCF

To 2017

To 2037 - Seller’s contractual obligation to sequester and facilitate verification

Special Purpose Vehicle managed by Participants

CP etc

CP 1 CP 3CP 2 CP 4

Non-Permanence RisklCERs Decreases replaced by AAU, CER, ERU, RMU or lCERs “from the same project activity”

tCERs Seller simply has fewer tCERs to sell in the commitment period. Previous tCERs expire at end of the commitment period.

CP 1 CP 3CP 2 CP 5CP 4 CP etc

CP 12

Replacement Risk•At end of crediting period a lCER must be replaced by an AAU, CER, ERU or RMU

Implications of the Replacement Rule

•Seller has no obligation or incentive to retain the sequestered carbon

•May even have contractual obligation to harvest to offset costs of replacement

tCERs v lCERstCERs v lCERs

Many have favoured lCERs Longer contract with seller to store carbon which is more

compatible with goals of the BioCF Verification costs of tCERs and lCERs are probably similar tCERs are likely to have additional fees and taxes associated

with there 5-yearly re-certification Decision can be on project by project basis But, tCERs may have a continuing value for BioCF buyers that

can be sold on after 2017 (later slide) And, tCERs appear to offer more flexibility to sellers And, tCERs may be simpler to use if there is a risk of losses of

carbon from a project

Cover for Non-Permanence and Cover for Non-Permanence and Replacement RisksReplacement Risks

FMU will purchase CERs (permanent credits i.e. non LULUCF)

To be delivered in the second CP This will allow buyers to make a choice in the

third commitment period (2018 – 2022) whether they will continue to seek verification of their LULUCF purchases

tCERs – this creates few problems lCERs – not possible to “re-use” lCERs that are no

longer in a “retirement account” – i.e. meeting a commitment.

tCERs v. lCERs from the seller’s tCERs v. lCERs from the seller’s viewpointviewpoint

lCERs will have lower transaction costs Due to tax applied to certification process

Possibly >2% applied once to lCERs and 2 or 3 times through to 2017 on tCERs

These costs will probably be charged against the project monitoring costs

Post 2017 – costs subject to negotiation with the buyers

tCERs v. lCERs from the seller’s tCERs v. lCERs from the seller’s viewpointviewpoint

tCERs Require the same measuring and monitoring effort as

lCERs

But must be re-certified every CP with associated tax except in small scale projects

But if buyers decide to discontinue the verification process (ie they replace their tCERs with CERs), then the sellers can place the tCERs on the market for new buyers

tCERs v. lCERs loss of carbon from tCERs v. lCERs loss of carbon from projectproject

lCERs

Verification shows loss of carbon (not enough carbon to cover existing credits)

Replacement requirement is allocated proportionally to all accounts

Replacement must be with a CER, AAU, ERU or RMU (lCERs from “same project” are allowed, but the verification has shown these not to exist!)

Thus, difficult to exert any “first call” rights

tCERs v. lCERs loss of carbon from tCERs v. lCERs loss of carbon from projectproject

tCERs

Verification shows loss of carbon (not enough carbon to cover existing credits)

We simply replace (issue new tCERs) from our pool of tCERs across all project.

VERs and tCERs & lCERsVERs and tCERs & lCERs

The BioCF will usually purchase VERs At a negotiated price

This includes access to the rights to use the stored carbon until 2037

Over this period the Fund management Unit will manage appropriately for which ever CER is chosen

Price of a tCERPrice of a tCER

Price of tCER as proportion of a CER

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Expected price of CER in 5 years

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% of current


Remember: This is one of the simpler components of LULUCF.

Don’t Panic!

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