July 20. 2010:Last week Guyana and Norway agreed to establish a very interesting partnership: the so called Guyana REDD+ Investment Fund (GRIF). Started last year in Copenhagen, a couple of countries decided to push the most promising climate mitigation action called ‘Reducing emissions from deforestation and degradation – in short REDD+ where the Plus stands for sustainable forest management, carbon enrichment and conservation.
Copenhagen - Paris - Oslo
First meeting after Copenhagen was organized by France President Sarkozy in Paris in March 2010 followed by a globally recognized Forests and Climate Conference which took place in Oslo in May 2010. At this conference Guyana’s President Bharrat Jagdeo and Norway’s Prime Minister Jens Stoltenberg signed an agreement for a bilateral cooperation in REDD+ which finally led to the GRIF. Of course, Norway will act as the donor country and Guyana as the recipient country.
What’s the particular special of this deal?
There are two topics which make this deal very special. Of course, Norway also pledged 1 billion USD to Indonesia for REDD+ activities, but Indonesia is a country which is battling with deforestation. But Indonesia is a so called ‘high forest area, high deforestation (HFHD)’ country. So it’s clear to everybody that the money going from Norway to Indonesia is money to directly combating deforestation and forest degradation. But not so for Guyana. Guyana has a lot of forests but didn’t have in the past and doesn’t have recently a problem with deforestation. Guyana is a so called ‘high forest area, low deforestation’ (HFLD) country.
Paying for curbing deforestation without a deforestation problem?
So, some of you would argue: Why to pay money to a country with very low deforestation rates in the sake of combating deforestation? This is one of the main issues all around REDD (and in some circumstance to LULUCF as well). I will not go into detail of this problem – but I will give my readers a thought to think about: Guyana has taken care of its forests in the past and is still taking care of these forests. This is the reason why Guyana doesn’t have a problem with deforestation. The opposite happened and happens in Indonesia. So Indonesia is getting money for doing environmentally bad things while Guyana missed out because of being environmentally sound – do you really think this is fair? Or, you can see it differently as well: who hinders Guyana to immediately start massive land use change activities for industrial production of soy beans (which leads to massive deforestation).
Sustainable forest management is king
So this is the first deal ever which pushes the ‘Plus’ part of REDD+. That bilateral cooperation between Guyana and Norway is not primary targeting ‘deforestation’ it is targeting sustainable forest management and conservation (to a lesser extend carbon enrichment as well).
Global climate finance brings sparkling new cooperation
But there is a second remarkable topic which marks this deal very special. When President Jagdeo and Prime Minister Stoltenberg decided to establish the GRIF they did the first voluntary climate finance trust fund on a bilateral base. As far as I have understood, all core negotiations where done without involving any international organizations like UN or IFI’s. After having wrapped up the core of the bilateral cooperation the countries asked the World Bank to act as the fund manager.
“We started the work with the World Bank and we think to a large extent they wanted to use old tools, old development tools in a very new situation and therefore both partners, Norway and Guyana, agreed that this couldn’t work”, President Jagdeo said.
President Jagdeo hit the nail on the head with this statement because it highlights the most important issue of this agreement: This is the starting point of a complete new type of development cooperation agreements between the industrialized and the developing world. It is pure bilateral, it is an agreement which brings incentives to both sides, it supports complete transparency by earmarking of all and everything and it brings environmentally sound development while combating climate change. I am sure World Bank will have ready a new toolset for fund management ASAP.
Why to pay for curbing deforestation?
“Compared to the cost of cutting industrial GHG emissions, which can exceed US$ 50 per ton CO2e in many countries, REDD provides opportunities to reduce emissions at much lower cost,” explains Nathalie Olsen, of IUCN’s Economics and Environment Programme and co-author of the study. “But a lack of information at the local level is proving a stumbling block to attracting greater financial and political commitment.”
Whats about safeguards for this new type of climate finance cooperation?
Last but not least some of you would ask for the safeguards of these new types of bilateral cooperations in climate finance.
Guyanese MINISTER of Finance Dr. Ashni Singh, has an answer:
He said that the Government believes that the UNFCCC should establish the standards for safeguards, but this issue remains un-solved in UNFCCC negotiations. “To develop a globally replicable model and therefore help to advance the negotiations, the Governments of Guyana and Norway will invite a series of internationally reputable institutions to act as GRIF partner entities– starting with the Inter-American Development Bank, the World Bank, Conservation International, the World Wildlife Fund, and all members of the United Nations family. Others will be determined over time,” the Minister said.
He said that pending the creation of a UNFCCC set of safeguards for climate finance, the internationally accepted safeguards of any one of these organizations will be deemed acceptable.
December 2010: It seems there is still some trouble regarding World Bank tools
President Bharrat Jagdeo said, “Having a generous donor and a progressive forest country is not enough. When payments are being made from the developed to the developing world, we need institutions that are able to move beyond the old-fashioned ODA thinking, which does not have a good track record of delivering timely solutions”. He spoke of the difficulties experienced by Guyana and Norway in establishing the Guyana REDD+ Investment Fund (GRIF) and said that if Guyana and Norway could not make it work, nobody could. President Jagdeo said that global institutions needed to evolve quickly, if they are to play a critical role in helping countries to take action on climate change. Failure of these global institutions to act in a timely manner can undermine the political momentum and support for addressing climate change.
“Although we have fulfilled the condition to receive payment from Norway a year ago….we have not seen a single cent expended as yet on the projects that are so vital to transformation,” he said at the event organized by Avoided Deforestation Partners.
In late 2010 the Rainforest Alliance was selected as the independent entity to review progress reports prepared by Guyana as required by the Guyana-Norway forest protection agreement. Under the agreement Norway has provided Guyana with US $30 million to limit forest-based greenhouse gas emissions by protecting its rainforests.
May 2011: The Nature Conservancy comes up with an interesting proposal in REDD+ payments for HFLD-Countries
A “stock-flow” approach to reference emissions levels for REDD+ is a simple and workable option for establishing environmentally sound, efficient, and equitable incentives to reduce deforestation and forest degradation. It meets the needs of a broad set of Parties and therefore might be broadly acceptable in UNFCCC negotiations on reference levels. Further, the “stock-flow” approach offers a structured path for negotiations that avoids political gaming at the expense of environmental integrity. Countries that reduce their flow of emissions from deforestation and degradation below a historical reference emissions level would be eligible for payments as part of the results-based (or “third”) phase of REDD+. This might include market, market-linked, and non-market sources. A portion of payments for emissions reductions would be put into a “stabilization fund” that would re-allocate payments to countries based on forest carbon stocks. This approach would provide balanced incentive payments to conserve forests in both historically high- and low-deforestation countries, while maintaining a level of environmental integrity necessary for progress towards global REDD+ goals.
REDD+ for low deforestation countries: How to solve this issue?