Green Climate Fund makes first payment to Brazil for efforts to reduce deforestation

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It’s now been over 10 years since countries around the world started to work on the international policy framework known by reference as the acronym REDD+, which stands for ‘reducing emissions from deforestation and forest degradation, conservation and sustainable management of forests and enhancement of forest carbon stocks.’

Basically, REDD+ refers to a policy framework under the international Climate Change Convention designed to provide payments to developing countries for keeping their forests rather than logging them and converting them to plantations.

In 2016, as a result of a mandate from the Climate Change Convention, the Green Climate Fund (GCF) – the world’s largest funding mechanism for climate action – commenced work to develop policies to channel finance to countries, to pay them for their emissions reductions from REDD+ activities, most of which currently concern decreasing deforestation. These payments are called results based payments (RBPs). The results being the emission reductions and other social and environmental outcomes.

A decision was made by the GCF in 2017 to implement a pilot programme, and a call was made for countries to submit proposals seeking payments for where they claim to have reduced deforestation, degradation or emissions through other REDD+ activities such as conservation, sustainable management of forests or enhancement of carbon stocks (e.g. ecosystem restoration). Payments can also be made by the GCF for what are called ‘non carbon benefits’ (NCBs), for example biodiversity conservation, watershed protection and other ecosystem services.

To summarize this detailed process, countries need to identify a GCF Accredited Entity and provide the GCF with a concept note, which shows they are in compliance with all the steps required under the international Climate Convention.

Once the concept note has been approved, the GCF invites the country to provide a full proposal, with additional information on technical issues associated with what’s known as the forest reference emission levels (FRELs), a baseline against which to measure emissions reductions; social and environmental safeguards; and a clear description on how the country will use any funds received from the GCF.

Now, two years later, the GCF Board has considered the first of these proposals, from Brazil during its 22nd board meeting in Songdo, Korea, in late February 2019. This is not unexpected, in fact, as Brazil has been ready to seek payments for their reductions in deforestation for several years now.

This proposal was always going to carry a degree of controversy for some and excitement for others, depending on which side of the REDD+ fence one sits. (Yes, there’s a fence, and disagreement over how we should save forests.)

The split between strong opponents and avid supporters of REDD+ usually concerns carbon markets and the allowance for developed countries to continue emitting greenhouse gases by paying developing countries to use their forests for offsetting purposes. Some argue that offsets do little to help solve the climate crisis, whereas others want to see them incorporated into the market to make money flow.

The GCF pilot programme does not allow for any offsetting or transferring of REDD+ carbon credits, so it’s somewhat neutral on this particular issue, for now.

Brazil’s proposal created a ‘flurry’ of activity in preparation for the meeting. Civil society organizations (CSOs) in Brazil and around the world were hard at work analyzing the proposal, and consultations between Brazil, the GCF Board members, the Accredited Entity representing Brazil – UN Development Programme (UNDP) – Indigenous groups and CSOs were underway well before the meeting began.

The proposal was coming in a political context of concerns that Brazil might withdraw from the Paris Agreement under the new Bolsonaro administration, as well as that power shifts in the country are likely to see deforestation increase for expansion of industrial agriculture and possible negative impacts on indigenous peoples.

A publication was released in Mongabay early in the week, which showed the emerging divergence of views concerning the technical aspects of the proposal. The article conveyed views that approval of the project will create a bad precedent. Concerns were expressed that Brazil’s baseline is inflated, and the emission reductions might not be permanent. In other words, people are worried that the forests Brazil is being paid to protect may no longer be there in years to come. Other REDD+ experts expressed their views that the payment is needed to send a positive signal to incentivize the protection and conservation of forests around the world.

Nevertheless, the project came before the Board for its first round of public discussions at 11 a.m. (KST) on 27 February under project number FP100.

It was introduced by GCF Board co-chair Nagmeldin El Hassan, who at that time confirmed he was one of the UNFCCC technical reviewers of the FRELs being used to determined these very emissions reductions.

The project was presented, informing that the proposal reflects the emissions reductions shown in Brazil’s Biennial Update Report, and that Brazil is offering the GCF 25 million tons of emissions reductions at USD 5 per ton. The final amount assessed by the GCF, for which it is prepared to pay, is just under 19 million tons, plus an additional 2.5% for NCBs, amounting to USD 96 million. UNDP also foreshadowed that the further proposal will be made in coming months to the GCF under the same pilot programme for a further 47 million tons for emissions reductions during 2016, 2017 and 2018.

As for detailing how the payment will be used, Brazil put forward a pilot programme entitled Floresta-plus, which concerns ecosystem restoration and incentives for environmental services in the Amazon. Brazil also proposed that they will use the payment to strengthen their national REDD+ strategy focused on forest monitoring, the measurement, reporting and verification (MRV) of carbon, improvement of their Safeguards Information System (SIS), capacity building and putting in place a South-South cooperation program.

The first reaction from the Board was generally positive, with some Board members hailing the proposal and approvement of payments for REDD+ as a ‘turning point,’ ‘historical’ and a ‘milestone’ for the GCF.

Several Board members asked that the information on the project is made available to other countries to assist them with their own REDD+ results-based payment applications to the GCF, a point supported by Board members from Africa in particular. Others identified that these proposals need to give consideration to the GCF Indigenous Peoples policy.

Some Board members requested additional information on the following issues:

• Details on the use of proceeds and quantifications of outcomes;
• Plans for stakeholder engagement; and
• How to ensure the sustainability of the Florest-plus Programme.

Active CSOs intervened, making the point that they are not ready to see the project approved and wish for a decision be postponed. The CSO observers expressed that the FREL is inflated due to a selection of base years with historically high emissions, resulting in Brazil being allowed to claim an unfair financial advantage.

They further made the point that the proposal provides nothing specific on actions to avoid leakage and expressed concern about the possibility of non-permanence of the emissions reduction being paid for, where deforestation in Brazil has been increasing in recent years. They pointed out that there is a lack of analyses on how the implementation of the Floresta-plus Project – which was developed under Brazil’s previous administration – could be affected by the recent change in government.

Concerns were expressed by others that there is nothing to provide any certainty that the use of proceeds would occur in a manner consistent with the Cancun Safeguards and the GCF Indigenous Peoples Policy. Brazilian CSOs had also raised their concerns related to alleged violations of rights of IPs that have not been addressed.

UNDP responded to the issues raised, stating that the Floresta-plus project builds on extensive stakeholder engagement, but more is needed. The UNDP representative confirmed there is a need to conduct extensive consultations for the preparation of the management plan and to have good operational safeguards. He asserted that the project will deliver on clear outcomes concerning hectares conserved and livelihoods improved. No comments were made by UNDP concerning the controversial FREL.

Following this exchange, the co-chairs of the GCF Board sent Board members and their advisors working on the project back to their respective corners to keep talking, in hopes that the project will come back later in the day or week.

The proposal came back to the Board at around 5 p.m. on the same day.

Three proposed conditions were circulated among Board members, and the project was approved without objection. The three conditions concerned:

1. Provision of detailed documentation concerning criteria and processes for determining beneficiaries of Floresta-plus, areas for implementation, and distribution of benefits to beneficiary stakeholders groups;
2. Publication of the Floresta-plus social and environmental safeguards and other information both online and in locations available to affected peoples, 30 days prior to delivery of the project; and
3. Ensured consistency of project implementation with the funding proposal and the underlying national policy framework.

It is widely recognized that Brazil has reduced emissions over the past decade through policies and interventions, and many are consistently putting forward the change in Brazil as transformational, especially given the continual growth of the Brazilian economy, despite the reduction in emissions from deforestation of the Amazon. This process was never going to be perfect, nor was it going to be smooth for whichever country went first, but it is clear that revisions are needed to the GCF’s approach for paying for emissions reductions through the REDD+ Framework.

So, what’s next at the GCF concerning REDD+?

There are now three major developments coming up at the GCF, so watch this space.

The first: More results-based payments proposals are expected. Other countries’ proposals are in the pipeline and will be presented at future Board meetings. The GCF has allocated a total of USD 500 million for these proposals.

Second: The GCF Board will make a decision concerning the REDD+ RBP pilot programme, including provision for a review to occur during 2019. Board members want to see improvements to the system, including putting in place a different approach to FRELs to prevent inflated baselines and to reconsider whether to use the scorecard approach that is currently used. There was support on the Board for this review to be further discussed at the 24th Board meeting in October 2019.

Third: The next Board meeting in July, will likely see a proposal concerning REDD+ and the private sector. There have been a number of consultations between the secretariat, observers, civil society and indigenous peoples, and a number of focus areas are emerging. These range from increased emphasis at the GCF on carbon markets to supporting smallholder farmers’ access sustainable supply chains.