The REDD+ Challenge: turning
promise into progress
Niall Marriott
Carbon-Plus Capital LLP
Expert Symposium to the REDD-plus Start Up Year 2020 International Seminar

20th January, 2020
ITO Hall, Tokyo University
Organised by the REDD Research and Development Centre, Forestry and Forest Products Research Institute of Japan195 countries have joined the international agreement.
Negotiations focus on four key areas:• signed 1992, Rio de Janeiro, Brazil• effective 1994
• mitigating (reducing) greenhouse gas emissions• adapting to climate change• reporting of national emissions• financing of climate action in developing countriesThe Kyoto Protocol

192 countries have signed the Kyoto Protocol extension
period:• Signed 11 December 1997, Kyoto, Japan• Effective 2005
• first commitment period 2008-2012• second commitment period, 2012-2020• principle of common but differentiatedresponsibilities• reduce and where necessary offset - three"flexibility mechanisms"

192 countries have signed the Kyoto Protocol extension
period:• first discussed, 2005, Montreal, Canada• agreed methodological guidance, 2009, Bali, Indonesia• agreed safeguards, 2010, Cancun, Mexico• agreed results-based finance work programme, 2013,
Warsaw• policy approaches and positive incentives for thereduction of emissions of greenhouse gases

REDD+ describes
countries' efforts
to reduce emissions
from deforestation andforest degradation, andfoster conservation,
sustainable
management of forests,
and enhancement offorest carbon stocks indeveloping countries• a market-based mechanism:
 Compliance Market: access toETSs in foreseeable future unclear
 Voluntary Market: many projects
under different standards• Public Sector off-takers include ForestCarbon Partnership Facility – TheCarbon Fund, UN-REDD, Norwegian
Climate and Forests Initiative, Japan
Joint Crediting Mechanism, but not
yet Green Climate Fund• Private Sector off-takers include banks,supermarkets, hotel groups, etc

Current compliance markets for carbon offsets

Current voluntary markets for carbon offsets• Governance, rules and standards:
determined and regulated by governments
under the auspices of the UNFCCC, e.g. EU
ETS, Tokyo ETS, California ETS• Eligible participants: multilateral andbilateral agencies and firms operating insectors governed by legal GHG emissions
reduction targets• Tradeable types of offset: Clean
Development Mechanism; JointImplementation• Target sectors: power production,manufacturing, etc.

• Governance, rules and standards:
determined by voluntary carbon
programmes, e.g. Verra/Verified Carbon
Standard, Gold Standard, etc.
• Eligible participants: multilateral andbilateral agencies, and firms operating insectors not governed by legal GHG
emissions reduction targets but
responding to stakeholderpressure/demands• Tradeable types of offset: Voluntary
Emissions Reduction offsets, e.g. fromcookstoves projects, from REDD+

Baseline

ResultIntervention• Additionality• Permanence• Leakage

Emissions
Reductions

Carbon Markets

Internal Rate of Return

25%
20%

15%15%
10%

20%

Additionality

5%5%5%

Low-carbon model

REDD+ model0%
Business-as-usual model

Eco Power Grid

The Niger Delta• Niger River, Niger Delta,Nigeria• June, July and August, 2016
• highest river level recorded inover 50 years ofmeasurement• 38 lives lost
• 9,000 homes destroyed• 26,000 livestock lost• cross-sector, multi-stakeholder partnership
launched 2015
• 9 states, 2 pilot states – Bayelsa and Rivers• regional population ~30m
• world’s 3rd-largest mangrove ecosystem(10,000km2)• Africa’s largest upstream oil and gasdevelopment• Project Idea Note for registration of REDD-plus
Scheme 2016
• US$ 500m+ project pipeline• Project Design Document completion due 2020

The REDD-plus carbon offset market – supply-side potential, opportunity and issues“Politicians around the world have pointed to Ethiopia
as an example of what can be done to reforest theirown countries ...”
“During the recent UK election campaign, major
political parties made expansive promises to plantmillions more trees, and referred to Ethiopia'sinitiative.”“The Labour Party pledged to plant two billion trees by
2040, the Conservative Party at least 30 million moretrees every year, and the Green Party 700 million by
2030.”BBC Reality Check
20th December, 2019

Kyoto Protocol, 2008-2020• goal to control emissions of the main
anthropogenic (human-emitted) greenhousegases (GHGs) in ways that reflect underlying
national differences in GHG emissions, wealth,and capacity to make the reductions• top-down structure• standards and targets set internationally forstates to implement• requirement to incentivise, measure and report
GHG emissions reductions against baselines andtargets responsibility of Annex I country parties
to UNFCCC only

The Paris Agreement, 2021• goal to keep increase in global averagetemperature well below 2 °C above preindustrial levels; and to pursue efforts to limit
the increase to 1.5 °C• bottom-up structure• each country determines, plans, and reports on
the contribution that it undertakes tomitigate global warming - no enforcement
mechanism• requirement to incentivise, measure and report
GHG emissions reductions against baselines andtargets the responsibility of all country parties toUNFCCC

Key issues – supply-side:•

Exposure of communities to market risk

•Institutional capacity including measurement•

Potential competition for emissions reductions
between unconditional and conditional NDCs

Jurisdictional and Nested REDD+ partnershipmodelLevel ofrisk

OffsetMarketOffset
MarketMarket price

Level ofrisk
Market price
Localcommunity

Project

Market priceFixed price

Project

Localcommunity

Protected area
management,
restoration andconservation

Local community
REDD-plus Scheme

Investor

National-scale
activitiesSubnational-scaleactivities

Project-level –scale activity

Nested-jurisdictional
approach includingcommon protocols andapproaches to:• Incentivising action• Measuring results
including baselines
and reference levels• Reporting outcomes
and impacts

Agriculture

Forestry

Other land uses

National Land-use
Carbon Accounting
Model andEnvironmental Data
Analytics Service

The REDD-plus carbon offset market – demand-side potential, opportunity and issues“If you look at today…85% of our energy is made fromhydro carbons and 15% from an important and growing
list of other things including renewable energy, solar andwind and biofuels...but as <the latter> grows so does theworld <economy> grow and we need more energy…in 25years’ time there really is a very strong chance that theamount of oil and gas that we’re using today will roughly
be the same then.”Lord Browne
Ex-Chief Executive Officer, BP
The World Turned Upside Down
BBC Radio 4

Key issues – demand-side:•

Quality management – going beyond compliance•

Access to markets – costs of registration and “over-thecounter” trading•

Indecision on Article 6 rulebook

Business Synergy ModelDeveloping public sector offtake markets

Developing private sector offtake market• Multilateral agencies, e.g. Forest Carbon
Partnership Facility’s The Carbon Fund,
potentially The Green Climate Fund
• Bilateral agencies, Japan’s Joint Crediting
Mechanism, Norway’s International
Climate and Forest initiative – NOK 3B /USD XB per year
• National and Regional Emissions Trading
Schemes continued and developed asvoluntary measures under The Paris
Agreement, either individually or undera unified Sustainable Development
Mechanism based on ITMOs• Industry associations, e.g. CORSIA• Corporates, e.g. banks, supermarkets,etc. including consumer offsetting
programmes, e.go Shell Drivers’ Offset Schemeo Alibaba/Ant Financial Services, “AntForest – “UN Champions of the Earth,2019”• Individual consumers, e.g. throughsupport for NGO project developers,
community-forestry schemes, etc

UK Drivers’ Carbon
Offset Scheme•

71% of people in the UK would like to reduce their CO2 footprints•

part of planned global nature-based solutions investment of $300
million•drivers automatically take part in the offsetting programme every
time they scan their Shell Go+ app or card with fuel purchase•

Available to join free of charge - similar service available to businesscustomers•

Supports UK government’s target of net-zero emissions by 2050.

•Works with Forestry and Land Scotland –carbon credits generation
through regeneration of 1 million trees - approximately £5 million
investment•

Launched in Netherlands April 2019 - one in five Shell customers now
driving carbon neutral•

Also supporting nature-based solutions in Spain, Netherlands,
Malaysia

https://youtu.be/Y_dnell4Xjc

Capture andprocessing offlare gas

The REDD+ Market – investment potential, opportunities and issues“Business Roundtableredefines the Purpose of a
Corporation to Promote ‘An
Economy That Serves AllAmericans”
Press Release
Business Roundtable
An association of chief executive officers of America’s
leading companies
19th August, 2019

Key issues - investment:•

Pre-seed financing – “Valley of Death”•Pricing investment risk•

Alignment with existing private investment
principles and protocols

Blended Finance Model

100

95

“Valley of Death”

9585

90

Pre-financing Post-financing

858065

Risk

70

65

6045504045303020100Phase 1:
ScopingPhase 2:
DesignPhase 3:
Feasibility

軸ラベル

Time

Phase 4:
Preparation

Phase 5:
Execution30

Swamp rice
piloting growing
and processing

Spreadof risk
Low-carbon
goods / services
off-taker

Market priceMarket price
ProjectInvestor

Market priceLow-carbon
Low-carbon
Pool
goods
andof lowLow-carbon
goods
andcarbon
goods /
services
marketgoods
andservices market
services
offservices
markettakers

Market price
Project

Investor

Spreadof risk
OffsetMarketOffsetMarketMarket priceMarket price
ProjectInvestor

Market priceMarket price
ProjectFund /pool ofProjects

Investor

REDD+ emissionsreduction
production andtrading“Rewilding habitats and reforesting may be easierin the future as the world is already becoming awilder place in many areas…the global population
will grow from 7.7 billion to 10 billion by 2050, butby then nearly 70% of us will live in cities andhave abandoned rural areas, making them ripe
for restoration.”
Mark Maslin
Professor of Earth System Science, University College London
Simon Lewis
Professor Global Change Science, University of Leeds and University CollegeLondon

The last 100 years?
• shrinkage of forests• adoption of coal as an energy
source and later oil and gas• geopolitics based centralised
energy distribution• the age of dead forest carbon
economics?

The next 100 years?
• expansion of forests for biodiversity
and ecosystems services• widespread adoption of renewableenergy and net zero emissions• geopolitics based on decentralised
energy distribution• the age of living-forest carbon
economics

Thank you / Arigato