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Thursday, February 12, 2009 South-South Collaboration Workshop

Amazonas, Brazil

Marisa Meizlish Director New Forests Advisory Inc +1-415-321-3301 mmeizlish@newforests.com.au

Amazonas Workshop: Readiness for REDD

Experiences from Papua, Indonesia

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Outline

1.  Introduction to New Forests

2.  Context for Papua Project

3.  Papua project summary

4.  Project characteristics

a)  Governance

b)  Baseline

c)  Consultation / social

d)  Link to national strategies

e)  Distribution of benefits

f)  Financing

5.  Lessons learned & conclusions

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1. New Forests

•  Private for-profit forest investment management and advisory services firm

•  Headquartered in Sydney, Australia, with offices in Washington, D.C., San Francisco and Kota Kinabalu, Malaysia

•  Investments primarily in Australia, New Zealand and the Asia Pacific region

•  REDD: began studying in 2007 and developing the Papua project in 2008; hope to achieve certification (Voluntary Carbon Standard) in 2009

•  Developing other smaller REDD projects as part of larger investments

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2. Papua Project Context

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2. Papua Project Context: Deforestation Drivers

•  90% of world’s palm oil exports come from Malaysia & Indonesia

•  300,000 ha converted per year globally

•  Luxury products (cosmetics, shampoos, food) & biofuels

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2. Papua Project Context: REDD Markets

Mechanism  Market Mitigation – Forestry 

Project-Based / Credits (“market”) 

National Accounting (“non-market”) 

Regulatory

2008: $118B 3.9 BtCO2 

UNFCCC CDM – Only Reforestation “CDM” – REDD post-2012 ? 

Reforestation / Deforestation 

REDD post-2012 – ? 

Domestic Regulatory Markets (i.e. U.S.,

Australia, Canada) 

Reforestation Forest Management 

REDD – ? 

Reforestation / Deforestation 

Voluntary

2008: $499M 100 MtCO2

Business Commitments / Marketing /  

Personal Choice 

Reforestation Forest Management 

REDD not relevant 

•  Voluntary market projects can move the REDD market forward while complex regulatory mechanisms are negotiated

•  Develop technical methodologies and new business models

•  Ultimately, REDD will survive or fail in regulatory markets

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3. Papua Project Summary

Mamberambo

Mimika

•  Began with Memorandum of Understanding between Governor Suebu & New Forests, May 2008

•  Government nominated 3 concession areas – 2 were prioritized after desktop review

•  June 2008, site visits to begin feasibility and project design

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3. Papua Project Summary

•  Project framework

o  Baseline assumes conversion to palm

o  Approximately 28MtCO2e conserved under project scenario

o  Voluntary carbon sales – Voluntary Carbon Standard (VCS) & Climate, Community & Biodiversity Alliance Standards (CCBA)

o  Revenues to local foundation, government & investors

o  Local partner with political & implementation experience

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4a. Governance

•  MOU for joint development of REDD project: “commercially sustainable model for forest conservation and community development”

•  Applying for provincial license that will grant carbon rights to New Forests

•  Term sheet defines financial arrangements

•  Regency and district governments provide local political and logistical support

•  Papua Carbon Foundation receives revenue from credit sales to fund community development & forest protection activities

o  Governed by Advisory Committee with local stakeholders and relevant experts

Gov. Suebu signing MOU, May 2008

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4b. Baseline •  No existing methodologies for Avoiding

Planned Deforestation - areas with low rates of historical deforestation require technical rigor

•  Other areas of province have higher deforestation rates but causal “link” needs to be established

•  Limited data and existing quantitative analysis of deforestation drivers

Where we are now:

•  Understanding data requirements needed to establish biophysical and economic feasibility of conversion

•  Understanding modeling requirements to demonstrate likely rates of deforestation

•  Evaluating in-house capabilities and resource needs

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4c. Consultation Process

•  Dozens of small villages in both project areas – primarily small scale agriculture, sago palm harvesting, hunting & fishing

•  Loosely organized through district & regency governments

•  In June 2008 met with local governments and held village meetings in conjunction with local NGOs and met with dewan adat (tribal council)

•  “Oxygen” project

Village meeting in Bagusa, Mamberamo, June 2008

Meeting with regency & district government officials and village elders in Mimika, June 2008

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4c. Consultation Process

•  Initial feedback at all levels of was positive

•  Written letter of support from head of dewan adat in Mamberamo

•  However, questions remain regarding community development aspirations, project activities and socio-economic considerations relevant to project design and implementation

Receiving letter from head of dewan adat in Casanoyagia, Mamberamo, June 2008

•  Free, Prior & Informed Consent crucial to ensure successful project and social & environmental outcomes

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4c. Consultation Process •  Free, Prior & Informed Consent

o  Limited guidance & standards

o  Work with best experts with field experience in community engagement for forestry in Papua and Indonesia

o  Intention to provide full information about the project and potential outcomes & risks

o  Decisions and debate at the community level to accept or reject the project

•  Help shape the objectives and management plan for the Papua Carbon Foundation

•  Further establish channels of communication between impacted communities and government

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4d. Link to National Strategies •  Indonesia is extremely active in REDD

o  More than 20 REDD projects in development in the country

o  Participant in the UN-REDD Programme and the World Bank Forest Carbon Partnership Facility

o  Bilateral agreements with Germany (Forest and Climate Change Program) and Australia (Forest Carbon Partnership)

o  Governors of Aceh & Papua (and several Brazilian states) have signed an MOU with US governors for inclusion of REDD credits in emerging carbon schemes

•  Unclear how these activities will interact on a technical level (i.e. carbon accounting)

•  However, biggest questions now are legal and financial

o  Draft national legislation issued in mid-2008 and national government is now working to revise and finalize legislation – June 2009

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4e. Distribution of Benefits •  Beneficiaries at village, district, province and national level

•  Private investment necessitates returns

•  Primary distribution channel is the Papua Carbon Foundation

o  annual disbursements to fund community development and forest protection activities – determined by FPIC process

o  Advisory Board comprising representatives of community stakeholders and relevant experts

•  Remaining revenue: government, investors & project managers

New Forests & Emerald Planet staff with provincial Forestry Department staff and government officials in

Mamberamo, June 2008

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4f. Project Financing •  New Forests represents private

investors interested in financial and environmental returns

•  Skilled in monetizing environmental assets associated with forestry investment

•  Well aligned with Papua’s objectives and project parameters

•  Returns delivered through credit sales over time

Managing Directors of New Forests and Emerald Planet meeting with Governor Suebu, May 2008 c

•  Upfront costs shared among project partners

•  Long-term commitment to sustainable resource use in Indonesia

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5. Lessons Learned •  Projects in areas with low rates of deforestation have high hurdle

to establish evidence-based baselines

•  Area, such as Papua, where this is limited data availability make this even harder

•  Legal uncertainty for REDD projects outside national-level demonstration activities – right to transact credits?

•  Also face technical uncertainty – project vs. national level baselines?

•  FPIC is time consuming and requires dedicated resources – lack of standardized guidance

Difficult to get early project financing where there is no established legal & methodological frameworks

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6. Conclusions •  Private investment can play pivotal role in more challenging

REDD areas that attract less public & multilateral funding

•  Will take on the risks as long as there is some certainty on fundamental issues: o  Legal right to transact in carbon

o  Legal arrangements for revenue sharing among government agencies/levels

o  Legal recognition of project activities within national-level activities

•  Donor / grant / multilateral finance remains important for information gathering, data analysis and FPIC/community engagement

Arial view of Mimika site, June 2008

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