The “ultimate goal is to jump-start a forest carbon market”, the World Bank announced in 2007, at the launch of the Forest Carbon Partnership Facitily. A “jump-start” is a way of starting a car with a flat battery. After four years of trying, perhaps it’s time to accept the fact that there’s no point jump-starting the forest carbon car when the wheels have fallen off.
This post is in response to the comments on REDD-Monitor following last week’s post “Carbon Fund risks undermining REDD readiness”. That post highlighted a letter from NGOs to the World Bank, explaining their concern that the Bank is in danger of rushing through its REDD readiness process.
In the discussion following that post, one comment referred to a response from the World Bank’s Benoit Bosquet to questions about the FCPF at the recent Eleventh Rights and Resources Intitiative Dialogue on Forests, Governance and Climate Change, that took place in London in October 2011. Having listened to a recording of the Dialogue (available here), I thought it was worth transcribing Benoit Bosquet’s presentation.
It’s interesting to hear what Bosquet says about carbon markets. Bosquet is not new to the carbon game. He’s been working on promoting carbon markets at the World Bank for several years. He is now the lead carbon finance specialist and co-ordinator of the Forest Carbon Partnership Facility at the World Bank. He previously worked on the Prototype Carbon Fund and managed the Bio-Carbon Fund. In his presentation, Bosquet admitted that, “The carbon market is certainly going through a major crisis right now.” He asked what this might mean for REDD. “Er, you know, quite frankly I’m not sure,” he said, in answer to his own question.
Bosquet also explains that the World Bank is not rushing with REDD – in contrast to the concerns raised by the NGOs in their letter to the Bank – but is taking its time in order to “get things right”.
Incidentally, this is not intended as a personal attack on Benoit Bosquet. The World Bank’s Forest Carbon Partnership Facility demonstrates how difficult it is to implement REDD on the ground. Hopefully this will be last we will hear of REDD as “low-hanging fruit”.
Frances Seymour, head of the Centre for International Forestry Research (CIFOR) was chairing the session at which Bosquet spoke in London. (The speech by the Bank’s Andrew Steer that she refers to is available here and an overview of the Dialogue by IISD is available here.) The following is a transcript of Frances Seymour’s introduction and Bosquet’s presentation:
Frances Seymour: Tell us, what is the World Bank’s assessment of the future of the compliance markets in particular? Two weeks ago we had Andrew Steer, the World Bank’s special envoy for climate change out in Jakarta and he had a pretty up-beat message about what was going to be happening there, so I’m wondering the degree to which you share his optimism. How is that different than what you thought it was going to be three or four years ago? How confident are you of your current analysis? And then as a second set of questions, if you can fit it in, there’s been a lot of discussion about the slow disbursement of the funds that have already been pledged and the fact that very little of that finance has been performance based, so there’s kind of a fundamental question here, is finance really the constraint in getting REDD off the ground? Benoit.”
Benoit Bosquet: Very good. Good morning, everybody and thank you very much to RRI for the opportunity to come here. It was actually supposed to be Andrew Steer who would be here, so Andrew was not able to travel at the last minute and he asked me to replace him. So, you’re getting me instead of him, but nevertheless I will try to offer some thoughts.
I did not hear Andrew speak in Jakarta, but I have a sense of what he might have said. You know, I also sympathise with a lot of sentiment that were voiced by Jeff [Hatcher, Rights and Resources Initiative] in particular in his remarks. The carbon market is certainly going through a major crisis right now. What you see is a very active EU emissions trading scheme that is trading allowances within Europe, but you, the concerning part is that the clean development mechanism what you call the primary market where you see new projects being originated has effectively evaporated. The good news, as Jeff said, and I’m sure Michael [Jenkins, Forest Trends] will recall, the voluntary market is growing, but it is indeed still very small.
So, what does that mean for REDD? Er, you know, quite frankly I’m not sure. What I can tell you is that our experience with the BioCarbon Fund has been quite frustrating. We tried, together with you know, the governments and the private sector companies that decided to put their money into that fund, US$90 million mind you, it wasn’t billions, it was US$90 million back in 2004. We’ve really tried to develop the clean development mechanism for forests and it’s been a long arduous road. The rules are just very cumbersome and there’s now generally, you know the recognition that if REDD is going to happen and if there should be rules for REDD in the future they should be really streamlined.
I believe though, that you know, there is a need for private finance. We see ODA flows not growing or potentially decreasing in the future. I’m sure Matthew [Wyatt, UK Department for International Development] will have good news for us and the UK will have good news for us later today, but nevertheless, you know, let’s recognise that outside of Norway’s money there isn’t a whole lot of very serious money on the table right now in the range of what we are told by economists is needed.
So, I think private sector finance is needed, and unfortunately too often one identifies private finance with carbon markets, but that is clearly not the case. In fact carbon markets are a very small part of what the private sector does. And, you know, the private sector will invest and will continue to invest in infrastructure, in agriculture, in energy. So how do you then create the enabling environment that is needed, that Francesco [Martone, Forest Peoples Programme] referred to, so that this private sector investment comes and does not result in these massive land grabs but instead you know helps secure the tenure and the traditional knowledge of you know local communities and indigenous peoples?
And so, I believe that REDD-plus finance, including from the private sector, is an opportunity to do that. I continue to be optimistic. Indeed, we need to revisit all the basics. And some of us are more or less aware of the need to revisit the basics, because the issues are still the same ones.
Inside the World Bank I see my colleague Peter Lewis [spelling?] there in the group, we had this debate ourselves several years ago, you know what really was the priority at the beginning of these REDD-plus initiatives a few years ago.
So I believe that REDD-plus finance does give us an opportunity to go back to the basics and do the right thing. We are not talking about reinventing the wheel, we are not talking about new solutions. I mean we do know that rights are important, governance is important and all of that is true. The new opportunity though is performance based payments and I do believe that that empowers people and empowers countries once they can show that indeed they have accomplished the objective and reduced emissions. It’s true that it’s not all about carbon, no doubt about it, but if you cannot measure carbon emissions and verify that emissions have been reduced, you know, you’re nowhere near the objective and resolving the problem.
So that’s what I would generally say, there’s obviously a whole lot more to say about specific lessons from our initiatives, or the initiatives in which the World Bank is associated but we can probably talk about this a little later.
Now, regarding the second question very quickly, it’s true that the FCPF in particular has been quite slow to disburse money but again, you know, these things are not so simple. It was just in the UK’s Sunday Times ten days ago, an article saying the World Bank sits on millions of dollars pledged to beat climate change. Well guess what? It’s not so simple, right? And especially if you want to do this with the objectives and the concerns that we all have in mind. I mean just before the UNFCCC negotiations session we were in Panama, in fact Francesco was there too, and we had a global dialogue on the FCPF with indigenous peoples. Trying to get these indigenous peoples leaders to Panama was incredibly challenging so I realise, I put myself in the shoes of a government that tries to organise consultations, this takes time. There’s a huge information gap about what REDD-plus is all about and how communities can or be affected, will be affected, what they can do, you know, how their livelihoods and rights are to be factored into this.
So, you know, it’s not just about moving the money, it’s about moving the money to the right goals. Also we talk about billions of dollars, that’s all very nice, but you know a lot of these countries have actually limited capacity to absorb and disburse this money. So that needs to be built and this is not a surprise. Again, REDD-plus gives us an opportunity to build this capacity.
So, what we refer to as readiness, you know, we’ve realised is really quite comprehensive and goes back to some of the fundamental issues that explain why countries are not developing as fast as some others. And we run into the same issues with REDD-plus. And so unless readiness takes these on board and takes the time to address them correctly, you know, it’s not going to make a very, a big difference in the future. So it’s probably good to take the time to get things right.
PHOTO Credit: Rust in Peace.