Markets working to support sustainable development

Forest Carbon Partnership Facility (FCPF)

The Forest Carbon Partnership Facility is an initiative hosted by the World Bank and designed to assist ‘tropical and subtropical forest countries develop the systems and policies for REDD+’. REDD is an innovative market-based instrument designed to place value on standing forests and so reduce emissions from forest destruction and deforestation.

The FCPF has two main components:

  • The Readiness Fund. This channels money to low income countries to help them develop and prepare REDD+ readiness policies and strategies. To date this has been the main focus of the FCPF and is set to continue.
  • The Carbon Fund. This fund is set to start financing REDD+ activities in 2011 and will continue to do so until 2015. This fund is contributed to by donor countries [further details are given below] and private sector companies – taking the form of a public-private partnership. This will test payment systems for REDD+ activities in selected pilot countries.
Market coverage: 

The FCPF works alongside other initiatives to pilot REDD projects and payment delivery models. To date donors have pledged approximately US$648 million to the FCPF.

There are currently 37 tropical and sub-tropical countries that have been selected to receive assistance in their REDD efforts. To date 36 of these have signed up to the FCPF, although only 32 have followed up on the next stage of the process. Up to date details on the progress of individual countries for the readiness fund can be found here. Democratic Republic of Congo has recieved by far the most money, more than $2million dollars, followed by Indonesia.

Background information: 

Launched at the Bali UNFCCC negotiations in December 2007, the FCPF has been operational since June 2008.The World Bank assumes the functions of trustee and secretariat. The World Bank, the Inter-American Development Bank and United Nations Development Programme are Delivery Partners under the Readiness Fund and responsible for providing REDD+ readiness support services to distinct countries.

Governance of the FCPF is undertaken by a ‘participants committee’ made up of 10 representative participant countries (i.e. recipients of assistance) and 10 representatives of donors or carbon fund sponsors. Interestingly donor members receive a vote per $million contributed.

The FCPF cooperates closely with the UN-REDD programme and the Forest Investment Programme (FIP). A paper was released in 2010 entitled ‘Enhancing Cooperation and Coherence Among REDD+ Institutions to support REDD+ Activities’ outlining the relationship and how these organisations and initiatives plan to interact [a link to the working paper is given below] 

Funding source: 

Donor countries: Australia, Canada, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Switzerland, United Kingdom, USA.

Funding has also been provided by BP, CDC Climat (a subsidiary of Caisse des Dépôts that ‘serves the economics of climate change’) and The Nature Conservancy.

In total donors have pledged around US$648 million to the FCPF (US$258 million to the Readiness Fund and US$390 to the Carbon Fund).