About the BioCarbon Fund (BIOCF)
Since its creation in 2004, the BioCarbon Fund has allocated resources to projects that transform landscapes and directly benefit poor farmers. It was the first carbon fund established in the world to focus on land use.
Housed within the Carbon Finance Unit of the World Bank, the BioCarbon Fund is a public-private sector initiative mobilizing financing to help develop projects that sequester or conserve carbon in forest and agro-ecosystems. It has been a pioneer in this sector, developing the infrastructure needed to pilot transactions and paving the way for the growing land-use carbon market established to date.
The Fund is composed of three Tranches and the BioCFplus support program:
Tranche 1 and 2:
Over the past decade, the BioCarbon Fund Tranches 1 and 2 have committed about $90 million to 25 projects that have restored 150,000 hectares of degraded lands and reduced deforestation in over 350,000 hectares of land. Projects have invested in environmental restoration, afforestation, reforestation, sustainable agriculture, and project-level REDD. Through the successful completion of these projects, the BioCarbon Fund has contributed to the establishment of the carbon market for land-use offsets.
Tranche One started operations in May 2004, has a total capital of $53.8 million; Tranche Two was operationalized in March 2007 and has a total capital of $29.5 million. Both Tranches are closed to new fund participation.
The BioCFplus program (about $6 million) supports project development and implementation with capacity building and training. The program further supports the pioneering role of the BioCarbon Fund by developing methodologies and tools for carbon accounting, promoting policy dialogue and by disseminating lessons learned.
Tranche 3 - next generation BioCarbon Fund activities:
Building on its successful track record, the BioCarbon Fund is currently developing a new, third tranche, which aims to scale up climate-smart land use and deliver landscape level transformations. For Tranche 3, the BioCarbon Fund will treat reforestation, REDD+, agriculture, and biomass energy in an integrated approach to mitigate climate change, enhance food security, and increase the resilience of local communities and environments to climate change.
More specifically, next generation BioCarbon Fund activities under Tranche 3 will be:
Because of the implementation scale, the facility that is proposed for the BioCarbon Fund Tranche 3 will apply new financial and implementation structures that encourage appropriate entities to become involved in implementation, be they private sector, public sector, communities, NGOs, or other entities. It will provide a platform for cooperation between the public and private sectors, as well as technical assistance for implementers and communities involved. Innovative project financing will be explored, including options such as direct financing by companies or capital markets.
- Implemented at the scale of the landscape level to transform large rural areas by restoring degraded lands, enhancing agricultural productivity, improving livelihoods and local environments.
- Based on an integrated approach that is breaking down the current narrow sectoral silos, to include various land management practices and energy activities that have an impact on the land. New sustainable land management practices will be pioneered, including on agricultural land, grasslands, pastures, rice paddies, and in wetlands. An integrated landscape approach will also be explored for the purpose of carbon accounting.
- Building on opportunities for innovative public-private partnerships and incentivizing sustainable investments on land; for example, by encouraging upstream investments in land productivity and supply chains by private companies and by providing results-based public financing for carbon benefits that will be achieved.
- Designed based on lessons learned from the existing carbon markets; for example drawing on positive lessons from monitoring and evaluation frameworks, but abandoning limitations experienced by small project-scale approaches.
Our impact: Generating benefits for rural communities and for landscapes:
BioCarbon Fund projects generate multiple revenue streams, combining financial returns from the sale of emission reductions (a.k.a., carbon credits) with increased local incomes and other indirect benefits from sustainable land management practices. The payments made by the BioCarbon Fund are results-based, thus providing strong incentives for good project management, performance, and impact.
BioCarbon Fund projects also have important economic, social, and institutional co-benefits that are key incentives for local communities to participate in project implementation. Social benefits have included opportunities for greater land tenure security, new employment opportunities for communities with limited sources of income, and improved income from higher yields in agricultural, timber or wood fuel products.
BioCarbon Fund projects have further helped to restore and protect ecosystems: Erosion on degraded land has been halted and reversed, fragile ecosystems and biodiversity have been protected, and productivity of agricultural systems has been revived or increased. In all cases, tons of CO2 have been sequestered from the atmosphere or avoided being released into the atmosphere, thereby mitigating climate change.
Our track record: Pioneering land-based carbon schemes with results:
Over its nearly 10 years of operation, the BioCarbon Fund has built a strong track record of pioneering land-based carbon schemes. Key achievements include:
- First issuance of carbon credits for a forestry project under the Clean Development Mechanism (CDM), globally and also in Africa;
- First registered Afforestation/Reforestation (A/R) CDM project;
- First registered CDM project in a number of countries (such as Albania, DRC, Ethiopia);
- First A/R methodology approved under the CDM;
- First methodology for carbon benefits from sustainable land management approved under the Verified Carbon Standard (VCS);
- Nine carbon accounting methodologies developed and approved;
- Tools for carbon modeling and monitoring developed; and
- Capacity built for various stakeholders including project entities, governmental agencies, policy-makers and project auditors.
The global context:
Most of the BioCF resources under Tranche 1 and 2 (80 percent) have been earmarked to Afforestation and Reforestation (A/R) projects under the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCCC). The CDM is one of the flexible mechanisms of the Kyoto Protocol intended to reduce the concentration of greenhouse gas (GHG) emissions in the atmosphere in a cost-effective manner. The CDM allows developed countries to use Certified Emission Reductions (CERs) generated from sustainable development projects in developing countries to meet part of their emission reductions targets under the Kyoto Protocol. Developing countries in return receive investments in clean technology and revenues from the sale of these emission reductions once they are generated. Emission reductions are quantified and certified as Certified Emission Reductions (CERs) by the Executive Board of the CDM (CDM EB). One CER is equivalent to one tonne of carbon dioxide equivalent (tCO2e), and forest projects account for CERs with a limited validity due to potential reversibility of achieved carbon stock changes.
The land use, land-use change and forestry (LULUCF) sector is responsible for about 17 percent of global anthropogenic GHG emissions. The UNFCCC has recognized the importance of this sector for stabilizing concentrations of GHG in the atmosphere, and has included A/R as one of the 15 sectors that are eligible to generate emission reductions and offset credits under the CDM. A/R projects remove carbon from the atmosphere through the planting of trees and by assisting in the natural regeneration of degraded lands. Quantification of emission reductions is done by applying baseline and monitoring methodologies approved by the CDM EB.