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Policy Paper: Assessing prerequisites for market-based REDD+ activities 8 At the national level, however, developing countries willing to participate in a future market-based REDD+ mechanism will need to establish robust reference levels that ensure additionality of emission reductions and minimise leakage. The process of setting reference levels includes several steps and requires data and analysis to determine the historic emissions and removals which may lie outside the current capacity of many developing countries (Meridian Institute 2011a). We will first present the current status of the negotiations at UNFCCC level and their requirements for the establishing of reference levels before discussing further prerequisites REDD+ countries should meet and what these requirements mean for the country’s capacities. Requirements at UNFCCC level At the UN-level, the debate on REDD+ has for a long time centred around the question whether reference levels should be set at national or subnational scale. Since subnational reference levels are restricted to a smaller geographical area or to the boundaries of a project they do only require a limited set of data allowing for near-time and cost-effective implementation. In terms of effectiveness, however, subnational reference levels are highly problematic since they are especially vulnerable to the spatial displacement of carbon emissions (leakage). The problem of intra-national leakage can be effectively controlled for when national reference levels are established, allowing governments to pursue a broader set of policies and giving them a stronger sense of ownership (Wertz-Kanounnikoff / Angelsen 2009). These and further arguments led the UN negotiations on REDD+ to tend towards a national approach while not totally excluding the application of subnational reference levels. Hence, the Cancun Agreements request future REDD+ countries to develop national reference levels which can be combined from subnational reference levels. Subnational reference levels however will only be accepted as an interim measure (UNFCCC 2011, Decision 1/CP.16 para 71 (b)). At the Durban climate summit, these requirement were again confirmed (UNFCCC 2012, Decision 12/CP.17 para 11). When setting reference levels, different reference periods can be used allowing for historical, historical adjusted or projected reference levels. The country’s historical emissions represent a useful foundation for establishing scientifically robust reference levels, as historic data is expected to be reliable in predicting what will happen in the short term future. Another advantage in terms of reproducibility is that they are based on a simple and transparent calculation. Such an approach would further allow countries to better understand the drivers of deforestation and forest degradation and their extend and location which is crucial for the development of national REDD+ strategies (Meridian Institute 2011b). However, especially for countries with high forest cover but small rates of deforestation, an adjustment of the historical reference level to specific national circumstances could further improve accuracy and predictability of future deforestation and forest degradation activities. These and other arguments have also been recognized at UNFCCC-level where COP 15 established that reference levels should take into account historical data and be adjusted for national circumstances (UNFCCC 2010, Decision 4/CP15 para 7). At the 17 th Conference of the Parties in Durban, Parties repeated this decision and further emphasized the need to include details on how the national circumstances were used to adjust the reference level (UNFCCC 2012, Decision 12/ CP.17 para 9). COP16 decided to integrate the whole range of REDD+ activities in a future mechanism – possibly rewarding countries for reducing emissions from deforestation and forest degradation, conservation of forest carbon stocks, sustainable management of forests as well as enhancement of carbon stocks. Since then, countries have to set the scope of their reference level accordingly. Following the guidelines for submission of information on reference levels included in the “Guidelines for submission of information on reference levels”, “significant pools and/or activities should not be excluded” (UNFCCC 2012, Annex of Decision 12/CP.17) Nicolas Kreibich, Christof Arens and Wolfgang Sterk Wuppertal Institute
Policy Paper: Assessing prerequisites for market-based REDD+ activities 9 and if a pool or activity is omitted, REDD+ countries have to include the reasons for its omission (UNFCCC 2012, Annex of Decision 12/CP.17). With regard to data accuracy, the guidelines agreed on at SBSTA 35 in Durban requests Parties to submit transparent, complete, consistent and accurate information that allows to technically assess the data, methodologies and procedures used for the construction of the reference level. Furthermore, the information provided should be guided by the most recent IPCC Guidance and Guidelines. Further requirements for participating in a market-based REDD+ mechanism Since the requirements agreed on at UNFCCC-level are not directly linked to a specific financing option, further preconditions might be needed if REDD+ is to be financed via the carbon market. The possibility to adjust reference levels to national circumstances as contained in the UNFCCC Decision 12/CP.17 (UNFCCC 2012, Decision 12/CP.17 para 9) -comes with the risk of generating emission reductions that are not additional (“tropical hot air”). This could undermine the effectiveness of the mechanism and the credibility of national systems (Angelsen et al. 2008). Therefore, upward adjustments of the reference level should only be possible when the country justifies the adjustment on an empirical basis. Adjustments could further be proved in form of a third party assessment (Meridian Institute 2011b). Furthermore, the possibility to use subnational reference levels as an interim measure may be problematic. In a market-based REDD+ mechanism which rewards parties for results-based action monitored at national level, a benchmark established at national level would be the only level fully consistent with this approach (Greenpeace 2011). Implications for the market readiness of REDD+ countries The requirements established at UN-level as well as those stemming from the fact that a market-based mechanism imposes additional access criteria have important implications for countries willing to participate in REDD+. First, countries will have to make key decisions on the scope and on the definitions of their reference levels. A common forest definition has to be found and the scope of the activities to be included in the reference level as well as the reference time period have to be determined. After having made the fundamental decisions on the design, the data for the construction of the reference level has to be compiled and analysed. Two different types of data exist: first, rates of deforestation and tree planting as well as rates of forest degradation and enhancement of forests by activity type have to be collected. Second, this activity data will then be combined with emission factors of deforestation and degradation as well as removal factors for carbon stock enhancement. The combination of the data leads to a historic emissions estimate which can than be adjusted to national circumstances (Meridian Institute 2011b). 3.1.2 Technical readiness for Measurement, Reporting and Verification (MRV) of carbon Commonly, measurement, reporting and verification (MRV) is being related to two things: to the actions on the ground and to the financial support for these actions. While both types of MRV will be of central relevance for the implementation of REDD+ activities (Herold / Skutsch 2009), in this section only MRV of carbon will be looked at. Nicolas Kreibich, Christof Arens and Wolfgang Sterk Wuppertal Institute
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