1. Financing BFCP REDDeX Discussion 14 July 2010 All numbers are draft and US$

2. 2 Recap One of four officially recognized REDD demonstration programs in Indonesia BFCP is an innovative forest carbon demonstration program located in the District of Berau, East Kalimantan, Indonesia; Multi-sectoral approach to addressing land use and deforestation Spans a political jurisdiction –Berau, East Kalimantan, Indonesia Berau is 2.2m ha – the size of Belize Objectives Develop the capacity of the Berau district government to manage a REDD program. Achieve emissions reductions of 10-12.5 million tons of CO2e by 2015 Improve natural resource governance and biodiversity conservation while creating economic opportunities for forest communities and the private sector. Key model for: REDD & low-carbon development at provincial level Pathway to a national program - Working with GOI/GON LOI Implementation

3. 3 Where Are We? Development II [Jan 2010 – Dec 2010] Development I [Jan 2009 – Dec 2009] Demonstration [Jan 2011 – Dec 2015] Scoping [Apr-Dec 08] Pilot-based strategies Improved forest management Protection forests Oil palm Land-use planning, policies & enforcement Monitoring & verification Adaptive management Business Plan Master Budget ($50m) Initial budget ($12m) Funding Plan – Public/Other Senior TNC buy-in GOI Engagement (Draft MOU) Donor Dialogue & Negotiation Legal Structure Comprehensive Agreements Baseline scenario and modeling approach Refined strategies for reducing deforestation and degradation Stakeholder support Political Support Situation analysis/drivers Rough program design hypothesis Identification of partners/ contractors

4. 4 Core Funding Requirement Our original thinking on funding needs… Total Core Funding Requirement (Jan 2011 - Dec 2015)* i.e. funding required upfront (committed to by y/e 2010) to support results and outcomes as articulated within business plan BFCP $50m (this number originally closer to $65m) TNC Global $10m TOTAL $60m Total Additional Funding Requirement (Jan 2010 - Dec 2015) i.e. committed to over time (2011-2015) to support additional outcomes, and further support TNC programs $ tbd Let’s focus on the core * All numbers draft and US$

5. 5 Proposed BFCP Governance and Mgnt. Structure

6. 6 $50m Budget

7. 7 Core – Suggested Financing Sources Funding committed to by y/e 2010 to support core outcomes as articulated in the business plan It’s largely about public funding

8. 8 Fundraising Plan – Approach TNC and GOI will work together to launch a joint fundraising campaign for BFCP with the goal of $2m in private funds through TNC (TNC’s capital contribution or ‘skin in the game’) and $48m in public funding. Initially, unlikely to be appetite for corporate financing (via emission reduction purchase agreement) – risks are many and several TNC makes GOI aware that it will be soliciting $5m in public funding sources for its own direct costs to support BFCP [TNC makes GOI aware that it will be soliciting additional private funding to support additional TNC program costs]

9. 9 Fundraising Plan – Key Objectives Fully fund all program costs Tap into the strong interest among range of funders to support a majority of the overall costs. Include a TNC contribution to the BFCP trust to demonstrate our commitment to the program, but limit the TNC commitment to what is needed to accomplish this goal so our philanthropic fundraising can also support TNC operational costs Coordinate closely and ensure complete transparency with GOI partners regarding the overall funding plan and TNC’s commitments and approach.

11. Australian Govt.

12. Japan Govt.

13. Forest Carbon Partnership Facility (World Bank)

14. Forest Investment Program (World Bank)

15. UN REDD

17. Commitments for Indonesia Global Commitments Indonesia Commitments Australia Automatic bullets $120 million from 2010-2013 France $350 million from 2010-2013 Automatic bullets Norway $1 billion from 2010-2013 (total of $2.7 bn over five years) Automatic bullets Japan $550 million from 2010-2013 Automatic bullets UK $480 million from 2010-2013 Automatic bullets US $1 billion from 2010-2013 $35 million USAID program 12

18. Commitments for Indonesia Global Commitments Indonesia Commitments Germany TBD $30 million FCPF Readiness Fund $180 million Carbon Fund $55 million $3.5 million Readiness FIP $558 million Indonesia selected as one of five recipient countries UNREDD $74 million Automatic bullets REDD funding for Indonesia has not yet begun to flow at the level of its potential. 13

20. Competing Funds: ICCTF, MOF

21. Getting GOI to provide fundraising support (road-show, roundtable)Lack of a cohesive plan for scaling up REDD at the National, Province and District levels Donors with different interests (programs and geographies) Donor mentality to spend the money ‘thinly’ across a number of different initiatives. 14

22. 15 Additional Issues Transparency, accountability, safeguards, and pay-for-performance mechanisms Internal organizational management Donor relationship managers Forest carbon staff within HQ Field staff Fundraisers Single-point accountability