REPORT: The 194 signatories to the Paris Agreement on Climate Change ensured that it highlighted the importance of forests in reaching the 2° goal and encouraged each other to take action through the framework they had agreed to in 2013 – the Warsaw Framework for REDD+ (WFR). While many countries have included some consideration of the forest sector in their Nationally Determined Contributions (NDCs), we have not yet seen REDD+ implementation and support integrated into national plans at the scale necessary to reach the goal of the Paris Agreement.
REDD+ Is Ready
Under Article 6 of the Paris Agreement, the cooperative approach mechanism that is most consistent with the vision of results-based finance for REDD+ is the international transfer of mitigation outcomes (ITMOs). Parties have the freedom to create cooperative agreements for REDD+ now, as long as they take the necessary steps to follow the rules and guidelines set out in the Warsaw Framework for REDD+ while addressing the broader accounting implications related to NDCs. Examples of ‘ITMO-like’ deals for REDD+ already exist. Parties should build off these examples, including the experience of the World Bank Forest Carbon Partnership Facility’s Carbon Fund and bilateral deals involving Norway, Germany and others.
Avoiding Double Counting
A transfer of emissions reductions from one country to another requires “corresponding adjustments” to the Parties’ national GHG inventories. Problems in accounting are more likely to arise when ITMOs are generated at the subnational level in the host country (supplier). Countries need to register and track ITMOs. However, there is debate over the advantages of using a centralized system versus more flexible, national systems that meet agreed-upon standards. In the Warsaw Framework, the Parties agreed to establish a centralized system under the UNFCCC secretariat that would publish information on the results of REDD+ activities and corresponding results-based payments. While this entity, called the Lima REDD+ Information Hub, would not satisfy all the needs of a registry and tracking system, it can serve as a foundation upon which countries can develop either a centralized system or guidance for designing national or multinational systems.
How Do ITMOs Relate to the Recipient’s NDC?
It is important that progress towards collective and national targets can be measured. It is therefore necessary that ITMOs can be quantified (in tCO2e) and that measurements are based on robust and transparent methodologies and information. The credibility of ITMOs is crucial to the success of REDD+ and global climate goals. Additionally, their use towards achieving NDCs must allow for higher ambition in the recipient countries’ mitigation actions. Countries that plan on using ITMOs to achieve their NDCs, must declare this as part of their plan. This will be important for assessing the ambition of domestic actions and ensuring that transfers are used to supplement, rather than substitute for, mitigation at home. To determine reasonable ambition, some Parties would like NDC quantification to be a precondition for use of ITMOs.
Parties fall into three categories regarding how ITMOs are addressed in their NDCs:
- For Category 1 Parties, who have specified that their NDCs will be achieved through domestic action alone, the use of ITMOs should not replace (or offset) domestic contribution.
- For Category 2 Parties, those developed countries who have expressed their intent to use international market mechanisms to meet their NDC targets – including Australia, Canada, New Zealand, Switzerland, Turkey, and Ukraine – an increase in ambition (beyond domestic constraints) is presumably factored into their NDCs. However, this could be better assessed if NDCs were quantified. In this type of NDC, countries can account for marginal abatement cost in the determination of how much of the NDC will be met by domestic vs. international mitigation actions. This increases economic efficiency, in terms of reduction in tCO2e per dollar.
- Category 3 includes countries, such as Japan, who have not clearly stated whether they will, or will not, include ITMOs in the accounting of their NDC. These countries should clarify their intentions regarding accounting for mitigation achieved beyond their national borders.
Achieving the goals of the Paris Agreement requires an increase in global ambition, which requires a scaling-up of incentives for developing countries to halt and reverse the trend in deforestation and forest degradation. Building on the Warsaw Framework for REDD+ and the experience of the Forest Carbon Partnership Facility, countries can forge cooperative agreements with forest nations to create an economic demand for REDD+ outcomes under Article 6 of the Paris Agreement. Ensuring the credibility of these outcomes (or ‘credits’) will be crucial to the success of REDD+ as a results-based incentive mechanism. Robust and transparent methodologies and information, with independent verification, are key to achieving and maintaining this credibility. Additionally, through specifying whether and how ITMOs will be used to achieve NDCs, countries can make it possible for third parties to ensure that these transfers are being used to scale up ambition, rather than replace domestic action. The quantification of national contributions will also assist in this verification process. The rules crafted by the international community on accounting, transparency and cooperative approaches will have profound impacts on the success of REDD+ and hence the ability to mitigate a quarter of global emissions in a timely and cost-effective manner. Fortunately, we have almost a decade of experience to guide us and the global, political imperative to act now.
REDD+, based on the history of its development through UNFCCC negotiations and implementation, has already had to address many interrelated issues, including capacity building, monitoring systems, measurement, reporting and verification (MRV), finance, market and non-market approaches, adaptation, and NDCs. The future of REDD+ depends on how these same issues will be addressed through the CMA’s upcoming program of work. As Parties begin shaping the negotiating agenda, they should be considering the linkages (operational and political) that underlie the success of the high-level negotiations in Paris. Paying close attention to the linkages between and among agenda items should help to avoid entrenching old negotiating silos that, in the past, made it difficult to maintain momentum established on a carefully balanced political agreement.