The shambles of the World Bank’s REDD negotiations in the Democratic Republic of Congo

The World Bank and the government of the Democratic Republic of Congo are coming to the end of negotiations about the country’s Emission Reductions Payment Agreement. While no official announcement has yet been made, REDD-Monitor understands that the Agreement was signed last week.

The Emission Reductions Payment Agreement is not publicly available.

The World Bank is negotiating a contract that will affect the natural resources of an area of more than 12 million hectares behind closed doors. There is no semblance of consultation, let alone free, prior and informed consent. Yet the contract could have serious impacts on the livelihoods of about two million people living in Mai Ndombe province.

This post looks at two serious problems with the ERPA negotiations. First, there is little evidence that DRC is even remotely serious about reducing deforestation. Second, a recent UK government report exposes how chaotic the Carbon Fund’s negotiating process actually is.

The DRC government is not serious about reducing deforestation

The World Bank is negotiating this contract with Amy Ambatobe, DRC’s Environment Minister, and Henri Yav Mulang, DRC, Finance Minister. In 2016, the World Bank “provisionally” approved DRC’s Emission Reductions Program Document, which states that,

Within the DRC government, the Ministry for the Environment, Nature Conservation and Tourism is the competent authority for REDD+ implementation, project authorization, and main entity for REDD+ valorization.

The Ministry will sign the ERPA and assumes direct liability towards the contracting partner – here the FCPF Carbon Fund – for REDD+ implementation, ERC [Emission Reduction Credits] generation, and exclusive transfer of good and valid title.

It is noted that for its financial implications, the Ministry of Finance must approve the ERPA.

Illegal logging concessions

Ambatobe’s recent record on forest protection is woeful. In February 2018, he awarded three logging concessions to Chinese companies, in breach of the country’s 2002 moratorium on new logging concessions. The concessions cover a total area of 6,500 square kilometres.

Civil society in DRC accuses Ambatobe of misappropriating US$12 million received as payment for the concessions. Ambatobe denies the charge.

In March 2018, Ambatobe wrote to the Prime Minister setting out plans to allocate 14 logging concessions, covering a total of more than 31,600 square kilometres.

In May 2018, Ambatobe passed a Ministerial Decree governing the registration of REDD investments in DRC. The decree is an update of a 2012 decree that lays down the procedure for the approval of REDD+ projects.

The Ministry of Environment held two consultations on the decree, but the text of the approved decree was different to that discussed during the consultations. The new decree gives the state exclusive ownership of forest carbon, allows only large investment organisations to register REDD projects, addresses benefit sharing in terms of how benefits will be distributed within the governments, weakens the definitions of a REDD project and of emission reductions, and weakens the requirement for external evaluation.

Ambatobe is currently working on revising the country’s Forest Code. A draft of the revised Code includes lifting the moratorium on new forest concessions.

In June 2018, Global Witness put out a report titled “Total System Failure”. It documents how a European company, Norsudtimber, is logging illegally in DRC on a huge scale. Global Witness found that the company is logging illegally on 90% of its sites, “with government complicity”:

Government ministers do not heed the law, the government is cracking down on civil society organisations and companies operate as they please with little consequence, placing the country’s resources at a growing risk of corporate and state looting. Companies like Norsudtimber are exploiting this environment and wreaking havoc on our planet.

Oil exploration concessions

It get worse, believe it or not. DRC’s president, Joseph Kabila, who remains president only because he refused to acknowledge the end of his term in December 2016, is accused of corruption, incompetence and human rights abuses. He has repeatedly delayed elections and has cracked down on protesters against his regime. Elections will be held in December 2018.

In February 2018, Kabila signed off on three oil exploration concessions covering a large area of Mai Ndombe province, including part of the Salonga National Park.

The Carbon Fund’s chaotic negotiations

A 2017 UK government report on the Bank’s Forest Carbon Partnership Facility and Carbon Fund provides a glimpse into the problems inside the Carbon Fund.

The UK government report reviews progress made during 2017 by the Carbon Fund and finds that while the Fund has made progress in some areas, it ran into serious difficulties on the key matter of negotiating ERPAs:

[L]ess progress has been made towards the signature of an Emissions Reduction Payment Agreement (ERPA) – the contract which would allow the operationalisation of an emissions reduction programme, and the key milestone for 2017. This slow progress is a result of:

• Delays completing due diligence on individual country programmes accepted (conditionally or unconditionally) into the pipeline has slowed these countries’ progress towards beginning ERPA negotiations. In the case of these countries, there has been limited communication between host countries, FMT [Facility Management Team], and CFPs [Carbon Fund Participants] on progress. This has particularly been the case for Costa Rica and Mexico.

• There have also been several issues around the process for ERPA negotiations, which came to light in the context of the first ERPA negotiation, with the Democratic Republic of Congo (DRC). These include:

  • Lack of a clear process for agreeing commercial ERPA terms;

  • Lack of clarity over who between the FMT and CFPs should lead the negotiations, as a result of difficulties within the Bank between the FMT and DRC country office;

  • Issues around the level of oversight CFPs should have over secondary documentation which is a condition of ERPA effectiveness, such as reversal management mechanisms or benefits sharing plans.

The FCPF was launched in 2007 at COP 13 in Bali. At the launch of the FCPF the Bank announced that “ultimate goal is to jump-start a forest carbon market”.

The Carbon Fund exists mainly to buy emissions reductions. It can only do so after Emission Reductions Payment Agreements have been negotiated and signed.

But in the 11 years since the launch of the FCPF, it appears no one in the World Bank managed to establish exactly who would be negotiating the ERPAs and on whose behalf they would be negotiating. The terms of the negotiations are unclear, as is the process, as are the possible outcomes of the negotiations.

A little later in the UK government report is this description of the “lack of clarity” in the negotiations with the DRC:

The first country selected into the pipeline, DRC, became the “test case” for the Carbon Fund’s ERPA negotiation process. While the progress of the DRC programme through the Carbon Fund pipeline is to be commended, a number of aspects of the DRC programme meant that this was a more complicated negotiation than would normally be expected.

In our view, the lack of clarity over the role of the FMT [Facility Management Team] in ERPA negotiations was a major factor contributing to the delay of this milestone. The original understanding between the FMT and CFPs [Carbon Fund Participants], as discussed (at the 15th Carbon Fund meeting), was for the FMT, as Trustee, to lead negotiations with CFPs observing. However, in in reality the FMT has played more of an ‘honest broker’ role, mediating between donors and the forest country. This has slowed negotiations and put additional resource burden on donors to the FCPF.

The recommendations from the 2016 FCPF Annual Review, and the request of CFPs at the December 2016 Carbon Fund meeting, was that the FMT and CFPs agree respective responsibilities and processes for the ERPA negotiations, with an agreed framework setting out CFP expectations on specific terms. However, this was not concluded before the ERPA negotiations with DRC commenced. As of November 2017 the FMT have not produced a note setting out respective roles, or a default set of CFP expectations on terms.

The UK government report also highlights a serious problem with the ERPA:

As currently drafted, the DRC ERPA provides a one year window to the DRC to finalise a benefits sharing plan and reversal management mechanism, and to hire a programme management unit. These are substantive parts of the programme and will have a material impact on whether the programme will be successful. There is general agreement among Tranche B CFPs (including the UK) that much of this documentation should be in at least near-final state before an ERPA can be signed, due to its potential impact on the operation of a programme. It should also be noted that leaving a large window after ERPA signature to finalise secondary documentation delays the operationalisation of programmes.

The benefits sharing plan, reversal management mechanism, and hiring a programme management unit are important parts of any REDD agreement. Yet the UK government and other Carbon Fund Participants consider it acceptable that these need only be in a “near-final state” when the ERPA is signed. No explanation is given for this.

In early October 2018, the Bank released an “advanced draft” benefit sharing plan on the FCPF website. The document is dated 15 June 2018, raising the question of why it was not released 14 weeks earlier.

In August 2017, Rainforest Foundation UK raised a series of concerns with a previous draft of the benefit sharing plan. The “advanced draft” fails to address many of these concerns.

The “advanced draft” benefit sharing plan sheds more light on the Bank’s shambolic negotiation “process”.

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