Harnessing the carbon market to sustain ecosystems and alleviate poverty

BioCarbon Fund BioCarbon Fund OverviewOverview

BioCF Project Training SeminarWashington, DC

July 11, 2005

World Bank Carbon Finance World Bank Carbon Finance ProductsProducts

Italian Carbon Fund. $80 million (open to Italian participation). Italian Multi-shareholder. Multipurpose.

Netherlands Clean Development Facility. ~ $172 million.

Netherlands Ministry of Environment. CDM energy & infrastructure projects.

BioCarbon Fund. $51.3 million (open).

Multi-shareholder. JI and CDM LULUCF projects.

Community Development Carbon Fund. $128.6 million (closed).

Multi-shareholder. Small-scale CDM energy projects.

Prototype Carbon Fund. $180 million (closed).

Multi-shareholder. Multi-purpose.

Total funds pledged: ~ US$937 million

Netherlands ECF

Netherlands European Carbon Facility. ~ $40 million with IFC.

Netherlands Ministry of Economic Affairs. JI projects.

Spanish Carbon Fund. ~ $220 million (open to Spanish participation). Spanish Multi-shareholder. Multipurpose.

Danish Carbon Fund. ~ $64 million (open to Danish participation). Danish Multi-shareholder. Multipurpose.

BioCarbon Fund: RationalesBioCarbon Fund: Rationales

Improved land use is part of the solution to climate change (deforestation causes 20% of CO2 emissions)

Open carbon market to rural communities (excluded if CDM restricted to energy & infrastructure)

Inform debate (so far too ideological, not enough based on facts)

Create synergies among Conventions (money channeled through UNFCCC can foster sister conventions) UNCCD

GoalsGoals

Atmospheric: Reduce GHG concentrations over baseline

Cost-effective: Buy low-cost climate change mitigation opportunities

Social: Improve livelihoods (employment, income, know-how)

Environmental: Conserve biodiversity, rehabilitate land

Adaptation: Increase social and ecological resilience of local communities

Two WindowsTwo Windows

Second Window

Explore “beyond Kyoto”

CDM: Forest management, revegetation, agricultural land management

No carbon credits

First Window

Kyoto-compatible

CDM: Afforestation /Reforestation + Biofuels

Carbon credits to meet Kyoto obligations

Tranches and WindowsTranches and Windows

Second WindowFirst Window

Tranche One (operational)

Land Restoration Tranche (to be opened)

Marine Tranche?

Portfolio – First WindowPortfolio – First Window

In-fill planting for forest restoration

Community forestry

Agroforestry

Biofuels

Portfolio – Second WindowPortfolio – Second Window

Forest restoration & conservation

Reduced tillage

Revegetation

Project PortfolioProject Portfolio

~ 140 Project Idea Notes received

At ~ $50 million, BioCarbon Fund needs ~ 20 projects

21 leading candidates identified and under further preparation (Carbon Finance Documents)

~ 12 Mt CO2e by 2017 (including Windows 1 & 2) Enough for a fund of ~ $60 million!

17 projects cleared

17 Projects Cleared 17 Projects Cleared

Albania Assisted Natural Regeneration Brazil Reforestation around Hydro Basins China Pearl River Watershed Management Colombia San Nicolas Agroforestry Colombia Silvopastoral Rehabilitation Costa Rica Coopeagri Dominican Republic Rio Blanco Reforestation East Africa Small Group and Tree Planting Honduras Pico Bonito Madagascar Biodiversity Corridor Mexico Seawater Agroforestry Nicaragua Precious Woods Niger Acacia Community Plantations Philippines Watershed Rehabilitation Trinidad and Tobago Nariva Wetland Restoration Uganda Nile Basin Reforestation Ukraine Chernobyl Reforestation

Participation & TimelineParticipation & Timeline

Tranche One operational since May 2004

13 Participants: $51.3 M Okinawa Electric; Government of Canada; Government of Italy;

Tokyo Electric; Eco-Carbone; Agence Française de Développement; Government of Spain; Government of Luxembourg; Idemitsu Kosan; Sumitomo Joint Elec. Power Co.; Sumitomo Chemicals; Japan Petroleum Exploration; Japan Iron and Steel Federation

2.5% catch-up payment from March 31, 2005

1-2 more Participants for Tranche One by August 31, 2005

Closure of Tranche One and opening of Tranche Two by August 31, 2005

How the Fund WorksHow the Fund Works

Industrialized Governments

and Companies

EITs and Developing Countries

$$TechnologyTechnology

FinanceFinance $$TechnologyTechnology

FinanceFinance

CO EquivalentCO Equivalent22

Emission Reductions

CO EquivalentCO Equivalent22

Emission Reductions

GovernanceGovernance

International Bank for Reconstruction and Development is Trustee of the BioCF; BioCF does not have legal entity

Fund Manager = Bank Staff, heading the Fund Management Unit

Participants (investors) represented by a Participants’ Committee approving projects, budgets, and giving general guidance

Fund Management Committee = 5 Bank managers screening projects

Host Country Committee for all Carbon Funds

BioCF Website BioCF Website

Website will be used intensively to communicate with Participants, project sponsors and public

Contains a description of each cleared project Contains a FAQs section on the BioCarbon Fund Will contain a discussion of some of the LULUCF

specific issues, as they arise in the various projects (additionality, leakage, permanence, social and environmental benefits and risks)

Contains a page on “Useful LULUCF Resources,” which links to other organizations, market information, methodological and regulatory aspects, etc.