Workshop on South‐South collaboration on REDD demonstration

1. Amazonas Workshop:
Readiness for REDD
Experiences from Papua, Indonesia
John Eckford
Senior Analyst
New Forests Advisory Inc
+1-415-321-3301
mmeizlish@newforests.com.au
Wednesday, March 18, 2009
South-South Collaboration Workshop
Amazonas, Brazil 1

2. 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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3. 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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4. 2. Papua Project Context
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5. 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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6. 2. Papua Project Context: REDD Markets
Mechanism
Driver Scope
Project-Level Country/State-Level
(“market”) (“non-market”)
International CDM – Only Reforestation Forest Stock Change
(UNFCCC) REDD post-2012 ? REDD post-2012 – ?
Regulatory
Reforestation
Domestic Reforestation /
Forest Management
(e.g. RGGI, WCI) Deforestation
REDD – ?
Reforestation
Businesses /
Voluntary Forest Management Not relevant
Individuals
REDD
• 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 6

7. 3. Papua Project Summary
• 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
Mamberamo
Mimika
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8. 3. Papua Project Summary
• Mamberamo
o REDD site is114,750 hectares
o 50% under risk of conversion
o Mamberamo Basin (8M ha) is largest
& least disturbed tropical humid forest
in Asia Pacific
o Low population density (12,000 people
in Basin)
o 95% forested – low deforestation rate
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9. 3. Papua Project Summary
• Mimika
o REDD site is111,344 hectares
o 33% under risk of conversion
o Borders the Freeport mine and
Lorentz National Park
o Low population density (<1000
people)
o Limited road access but encroaching
development in the regency
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10. 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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11. Still awake?
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12. 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 Gov. Suebu signing MOU, May 2008
• 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 12

13. 4b. Baseline
Characteristic Baseline Assumption
Threat of Zoning for conversion (VCS: “Avoiding Planned
Deforestation Deforestation”) – palm oil developers already
surveying areas & province has authority to
grant conversion licenses
Rate of Mamberamo: 60,000ha converted 2012-2022
Deforestation
Mimika: 37,000ha converted 2010-2020
Carbon Stock 792tCO2/ha (literature & field data)
Baseline Carbon Sequestration in growing palm plantation
subtracted from project carbon stock
Leakage Monitoring total areas zoned for conversion,
rate and likelihood of conversion
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14. 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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15. 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)
Village meeting in Bagusa, Mamberamo, Meeting with regency & district government officials
June 2008 and village elders in Mimika, June 2008
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16. 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, Receiving letter from head of dewan adat in
Casanoyagia, Mamberamo, June 2008
project activities and socio-
economic considerations
relevant to project design and
implementation
• Free, Prior & Informed Consent crucial to ensure
successful project and social & environmental outcomes
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17. 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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18. 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…
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19. 4d. Link to National Strategies
• Draft legislation issued in mid-2008 required national
government approval for all projects and 30% of credits
transferred to a newly established government commission
o Unclear whether this applied to private projects outside
national-level REDD demonstration activities
o Unclear revenue distribution and approvals through layers of
government
• The national government is now working to revise and
finalize legislation – June 2009
• Papua is exploring provincial licensing for REDD under
Special Autonomy Law and provincial forestry regulations
o As yet unclear how this interacts with national activities
o Remains a project risk
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20. 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 20
government officials in Mamberamo, June 2008

21. 4e. Distribution of Benefits
Investor Market
$
Investment Carbon
capital revenues Carbon
credits
Carbon
Carbon rights
Papua revenues Government
Project Entity (National, Provincial
Foundation Carbon Regency)
revenues
Local
distribution
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22. 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
Managing Directors of New Forests and Emerald
• Returns delivered through Planet meeting with Governor Suebu, May 2008
credit sales over time c
• Upfront costs shared among project partners
• Long-term commitment to sustainable resource use in
Indonesia 22

23. 5. Lessons Learned
• RISKS
o Projects in areas with low rates of deforestation have high
hurdle to establish evidence-based baselines
o Area, such as Papua, where this is limited data availability
make this even harder
o Legal uncertainty for REDD projects outside national-level
demonstration activities – right to transact credits?
o Also face technical uncertainty – project vs. national level
baselines?
o 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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24. 8. 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 Arial view of Mimika site, June 2008
remains important for information
gathering, data analysis and
FPIC/community engagement 24

25. www.newforests.com.au
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