Access to Carbon Markets in the new Green Economy:Public laws for small & medium private producers

Prof. Marie-Claire Cordonier Segger, MEM (Yale), BCL & LLB (McGill), BA HonsDirector, Centre for International Sustainable Development Law (CISDL);

Manager, IDLO Sustainable Development Law Programs; Visiting Professor, Faculty of Law University of Chile &

Affiliated Fellow, LCIL Cambridge Universitymcordonier@idlo.int / www.idlo.int

Opening Carbon Markets for a Global & Local Green Economy

• The rural poor depend the most on and are most vulnerable to ecosystem services for income, subsistence and future resilience

• Healthy ecosystems are critical to natural capital that generates economic activity for well-being (agriculture, aquaculture, forestry, climate system)

• The poor have few means to cope with and face disproportionate losses from the depletion of natural capital

• Many ecosystems are nearing critical thresholds beyond which their services to the poor are drastically reduced (coastal ‘dead zones,’ deserts, depleted soils)

(TEEB: The Economics of Ecosystems & Biodiversity, 2010)

Green Economy must support Rural Development

Direct benefits• More employment• New low-carbon products• Stimulated existing sectors• Local/national/international investment• Small business development• Sustainable energy, water and sanitation

Indirect benefits• Infrastructure development• Local/national capacity building• Resilience to natural disasters• Meeting international commitments (UNFCCC, T&I Treaties...)

2% GDP Green Investment Scenario v BAU (UNEP Green Economy Report, 2011)

Rural Development through Participation in the Green Economy

UN Framework Convention on Climate ChangeChanges financial flows towards low-carbon and climate resilient pathways, from: “public and private, bilateral and multilateral, including alternative sources”- Clean Development Mechanism (CDM)- Reducing Emissions from Deforestation and Forest Degradation (REDD+)- Technology Mechanism & Nationally appropriate mitigation actions (NAMAs)

Many Other Accords for Sustainable Development- UN CBD: Payment for Ecosystem Services (water services, biodiversity & habitat protection, etc) - ABS Nagoya Protocol: Access to Genetic Resources & Sharing of Benefits (ABS) - EU-Central America Association Agreement (SMEs, organic goods, carbon markets); CA-USA-Republica Dominicana FTA, CA-Panama FTA, Mexico-Nicaragua FTA, Mexico-Honduras-El Salvador-Guatemala FTA, Canada-Costa Rica FTA, CA-Chile FTA, Panama-Singapore FTA, El Salvador - Taiwan FTA (diverse commitments to support sustainable development & SMEs)

… Upcoming Rio + 20 UN Conference on Sustainable Development will focus on green economy in context of poverty reduction & sustainable development

Global Commitments to Open Carbon Markets& Green Economy

Overcoming Legal Barriers to Carbon Markets

Growing Regional and Voluntary Carbon Markets

(Carbon Finance at the World Bank, 2011)

• In the past 5 years, international, regional, domestic and voluntary carbon markets have grown from:USD 11 billion to 141.9 billion

Many Laws are Important – Not All are Clear

• Business registration and rules• Taxation laws• Subsidy policies• Anti-corruption laws• Financial planning, reporting

and auditing laws• Trade and investment laws• Intellectual property laws• Land use planning regulations• Protected areas laws• Payment for ecosystem

services, community-based natural resource management and participatory forest management regulations

• Environmental and natural resource management laws

• Energy and electricity laws• Agriculture laws• Transportation policies• Easement and acquisition

provisions• Building codes• Water management laws• Land tenure laws• Forestry laws• Biodiversity protection policies• Human, indigenous and gender

rights guarantees• Constitutional laws

Green investments can support poverty eradication & sustainable development, and laws can help with:• Equitable and secure land tenure• Clear guarantees for small & medium

scale carbon owners• Simple clear contracts for benefit

sharing• Reliable rules for insurance• Straight rules for small land owners to

associate & participate

Legal barriers to access carbon markets:Clear Property rights

Micro to medium sized enterprises may not gain access to open market opportunities, and laws can help with:• Clear and affordable business registration• Economic incentives for credit advances or

capital start-up costs• Elimination of perverse subsidies to

competing “brown” businesses• Guidelines for the transfer and sale of

assets• Corporate liability protection for owners

and investors

Legal barriers to access carbon markets:Small & medium laws for SMEs

Public – Private Dialogue & Participation for Green Economy

• New green economy markets are emerging, and important opportunities are opening for Central America.

• There is a need for meaningful participation of SMEs and rural producers in the opportunities of the global green economy, especially carbon markets (CDM, REDD+, NAMAs).

• Changes may be needed to public laws and policies. Successes can be shared, legal and governance barriers can be identified, reforms can be recommended, training and technical assistance can be provided, and solutions can be tailored for each sector / community.

• With new cooperation all along the value chain, producers & consumers can build the green economy together!

Conclusions: Time to move forward

Gracias / Thank you / Merci

Contact:International Development Law Organization (IDLO)

Viale Vaticano, 106 00165Rome, Italy

idlo@idlo.int+39 06 40403200

Annexes

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Historical Trend

Project startProject start

Carbon credits (CERs) represent the difference

between the baseline and actual emissions

Carbon credits (CERs) represent the difference

between the baseline and actual emissions

TimeSource: UNDP 2010

Generating carbon credits through REDD+ activities

Aid targeted at biodiversity, USD million

(OECD, Rio Markers 2011)

Trends in public and private green instruments

• REDD+ activities will be eligible for support under new international finance mechanisms

• Renewable energy feed-in tariffs and other power purchasing agreements are being implemented across North America, Europe and Africa

• Carbon markets have gained traction in developing economies such as Brazil, China, India and Mexico with worldwide growth from USD 11 to 141.9 billion in 5 years

• Technology development and transfer to developing countries is supported by Japanese and Chinese initiatives

• Global market for eco-labeled fish products grew by over 50% in 2008-2009

• Ecotourism is the fastest growing area of the industry with an estimated increase in global spending of 20% annually

New public & private investment & trade • International trade and investment agreements

(renewable energy, transport, tourism)• Voluntary and regional carbon markets

(agriculture and land-use)• Domestic tax policies and subsidies can encourage

green investments• Value-added production and certification schemes

Official Development Assistance• significant portion is designated to green growth in:

energy efficiency projects, low-carbon industries,natural resource management, disaster risk reduction

OECD: bilateral ODA for climate mitigation

Green economy is more than global commitments

Practical example: Rising organic production and processing

• Organically managed lands reached 35 million hectares in 2010 with the highest number of producers in Latin America, Africa and Asia and revenues of USD 50.9 billion

Inaccessible institutions can lead to corruption, exploitation and administrative barriers without:

• Free, prior and informed consent (FPIC)• Stakeholder decision-making procedures• Rules for participatory project implementation• Clear and affordable rights of recourse• Culturally sensitive and customary justice

systems• Targeted legal training of officials, the judiciary

and administrative tribunals

Legal barriers to accessing green instruments:Access to justice

Increased employment from new economic activity may not create fair and equitable labour, clear laws can help with:• Fair negotiation of contracts• Guarantees for decent wages• Guidelines for safe working conditions• Freedom of association & cooperatives• Compensation for workplace injuries

Legal barriers to access carbon markets:Fair employment rules for the poor

LPPCI Methodology

Legal Preparedness Assessments Reports identifying legal and institutional barriers to fostering adaptation, mitigation by participation in international mitigation schemes and access to international climate funding

produced.

- Conduct a needs assessment mission;- Conduct a risk analysis of obstacles;- Identify legal and institutional barriers to adaptation and to access international climate finance; - Organize series of working groups and videoconferences; - Draft recommendations/plan of actions;- Organize final roundtable; and- Publish and disseminate the LPARs.

- Provide training andtechnical assistance;- Conduct training of trainers;- Convene expert for a; and- Organize information dissemination and seminars.

Climate change actors applylegal and institutional responses fostering adaptation, mitigation by participation in

international mitigation schemes and access to international climate funding

Action plans for legal and institutional reforms fostering

adaptation, access to international climate

finance, and participation in carbon markets

proposed

Capacity of local climate change actors

to implement approved action plans

enhanced

- Consult policy-makers and implementing agencies;- Convene expert fora;- Identify with counterparts actions/changes that legal and institutional reforms need to support; - Design action plans; and- Organize a validation conference.

Stakeholders consensus building events convened to develop action plans

- Sectoral and cross-sectoral consultations with stakeholders and key opinion makers;- Organizeinternational andlocal policydialogues; and- Publish and disseminate results of consensus building.

• In-Country Programs: over 175 Countries • Project Offices: Bishkek, Juba, Kabul, Nairobi• Rome Headquarters, Regional Centers in Cairo and Sydney• Alumni Legal Network in 44 Countries

WhoWho

WhereWhere

TargetTarget

How How

• Inter-governmental Organization specialized in Legal and Institutional Aspects of Development

• Legal Professionals; Governments; Policy Makers; Regulators; and Civil Society in Developing Countries, Transition Economies and Countries Emerging from Conflicts

• Legal Capacity Building and Technical Assistance Programs on Sustainable Development (Climate, Natural Resources, Green Economy) and other issues.

International Development Law Organization

IDLO Strategic Plan 2009-2012

WhatWhat• The LPGE aims to ensure the meaningful participation of

developing countries in the opportunities presented by the global green economy, while supporting the development of a legal environment that promotes sustainable use of biodiversity and equitable access to its benefits.

• The LPGE is a unique methodology that systematically identifies legal and governance barriers, makes recommendations, provides legal and regulatory training and technical assistance, and implements consensus-based solutions tailored uniquely for each recipient country in order to access international green economy markets.

Overcoming legal barriers to the green economy

• Research on common barriers and legal best practices

• Context specific impact assessments to identify legal and institutional barriers between green economy benefits and poverty alleviation

• Consultation with stakeholders to build consensus on desired benefits

• Revision of finance instruments to ensure: access to justice, and property, labour and business rights

• Country-driven legal and institutional reforms to national, subnational and local regulatory frameworks

• Capacity building for ongoing domestic reforms

Overcoming legal barriers to the green economy

HowHow

• National Legal Preparedness for Climate Change and REDD+ programs in countries such as Zambia, Vietnam, Mexico, Colombia, Ecuador with partners such as IFAD, CDKN, FAO and UN-REDD

• Training workshops to the Zambian Development Agency on green growth through legal incentives for international carbon investments

• Land titling legislation, REDD+ and customary law research and legal training workshops

on reform processes for communities in Uganda, Benin, Burkina Faso, Senegal, Liberia, Mozambique, Rwanda, Madagascar and Indonesia

• Legal training in selected communities in Kenya on rights to protect traditional knowledge through community-based mechanisms that enable them to set legal conditions to share knowledge with non-traditional users on questions of biological diversity and REDD+

• Rural microfinance legal capacity analysis and training programs for low-emission sustainable food production and labeling in communities in Ecuador and Uganda with partners such as the Government of Italy

But a few IDLO programs...