Forest Carbon Partnership Facility (FCPF) Carbon Fund and Bio Carbon Fund (BioCF)

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1 Forest Carbon Partnership Facility (FCPF) Carbon Fund and Bio Carbon Fund (BioCF) Terms of Reference (TOR) Definition of policies, processes and procedures for in the land use climate funds A. Background and objectives 23 October 2018 The World Bank s Forest and Landscapes Team within the Climate Funds unit (GCCFM) sits in the Climate Change Cross Cutting Solutions Area (CCSA); it manages carbon funds and facilities, worth over $1.3 billion. There are two main carbon funds/facilities in the land sector: o o The BioCarbon Fund (BioCF) is the World Bank administered fund dedicated to forestry and agriculture projects and programs. Tranche 3 of the fund, along with the BioCFplus-ISFL (collectively known as the Initiative for Sustainable Forest Landscapes or ISFL ) has been launched with a focus on large, scaled up integrated activities, using a combination of technical assistance, investment funding, and results-based payments. See more information at and The Forest Carbon Partnership Facility (FCPF), which became operational in June 2008, is a global partnership focused on reducing emissions from deforestation and forest degradation, forest carbon stock conservation, the sustainable management of forests and enhancement of forest carbon stocks (REDD+). The FCPF has two separate but complementary funding mechanisms to achieve its strategic objectives: The FCPF Readiness Fund supports tropical and sub-tropical developing countries in preparing themselves to participate in possible future systems of positive incentives for REDD+; and The FCPF Carbon Fund is designed to pilot a performance-based payment system for emission reductions ( ERs ) to be generated through REDD+ activities under a host country s ER Program ( ER Program ). The FCPF has so far selected over 47 REDD+ countries into the partnership. More information can be found at Both the FCPF Carbon Fund and the BioCarbon Fund ISFL are piloting performance-based payments for emission reductions from large scale, jurisdictional, programs. By August 2018, 15 countries have submitted REDD+ emission reduction programs for consideration by the Forest Carbon Partnership Facility s Carbon Fund, and it is expected that 4 additional countries will submit in the near future. In addition, 5 countries will submit AFOLU based emission programs to the BioCF ISFL. It is expected that the first monitoring of emission reductions occurs at the end of 2019 and will continue until the end of the lifetime of the two funds (2025 for the FCPF Carbon Fund and 2030 for the BioCF ISFL). Before the funds can make payments for the emission reductions, the reported results will be subjected to by an independent third-party. It is expected that at least events might occur in a given year. 1

2 So although is also expected to occur in 2019, there is little that has been defined so far in terms of the process and the requirements for. A short list of potential firms has been identified, but the process itself and the requirements for the verifiers will need to be defined in the coming months. Under the ISFL, a firm is going to be engaged to conduct the technical assessment (validation) of ERPDs, but also to define the validation process and support in the definition of certain processes, procedures and policies: a) User requirement analysis to define the basis of the assignment; b) An outline of the proposed approach, including the expected level of assurance for the independent assessment and the procedures to be applied; c) Checklists and other materials to be used for each assignment including the draft assessment checklist highlighting how the ISFL ER Program requirements will be assessed. Although the GCCFM has some experience in s, these have been project level transactions and they rely on processes that already exist. Verification of ER programs under the FCPF or the ISFL are yet to be defined. This definition is critical for ensuring an efficient process and to set the basis for a future automation of processes. B. Objectives The general objective of this work is: To support the Facility Management Team of the FCPF and the ISFL (FMT) at the World Bank in defining the policy, processes and procedures related to under both the FCPF Carbon Fund and the Biocarbon Fund ISFL, including the preparation of manuals for the of Emission Reductions. More specifically the objectives are the following: 1. Bibliography review: Conduct a bibliography review of the accreditation requirements and technical manuals of the main GHG programs that exist in the voluntary and compliance markets (Air Resource Board, Alberta s GHG program, Verifier Carbon Standard, ) and relate these to the governance documents and requirements of the two funds; 2. User s requirement analysis: Consult the FMT, Carbon Fund Participants and ISFL Contributors in defining the process and requirements of under both funds based on the bibliography review above; 3. TOR definition: Define TORs for the hiring of the entities for the of ERs, including the requirements in terms of accreditation, liability insurance, personnel, etc. 4. Technical manual: Define a technical manual to allow entities to conduct ERs in line with the defined requirements; C. Tasks The FCPF and ISFL Facility Management Team (FMT) is seeking a firm to provide technical support to the FMT in the definition of the process and requirements. The tasks will be the following Tasks Description 2

3 1. Bibliography review: 2. User s requirement analysis: Conduct a bibliography review of the accreditation requirements and technical manuals of the main GHG programs that exist in the voluntary and compliance markets (Air Resource Board, Alberta s GHG program, Verifier Carbon Standard, ), other guidance (ISO ) and the requirements/guidelines under the Carbon Fund and ISFL. This will include the review of the main policy decisions and requirements under these GHG programs including: accreditation requirements for firms verifying under the GHG program; means of ; how the liability of firms are addressed; what are the requirements in terms of level of assurance and materiality for ; what are the documents that are made available to aid the process; what are the requirements to entities in terms of training and internal processes, etc. Relate this to the existing governance documents and requirements of the two funds including the respective Charters, process guidelines and methodological requirements. Consult the FMT and Carbon Fund Participants on the r the basis of based on the bibliography review. Based on the consultation identify the main elements that need to be defined under the Carbon Fund in terms of requirements and policy. Subsequently consult FMT members to understand what are the options for the different policy decisions and elements (standards, guidelines, procedures), needed from the Carbon Fund and ISFL. The consulting team will present the different options and PROS and CONs of the policy decisions and processes. Once this is clear, the Carbon Fund and ISFL donors will be requested for guidance to clarify some of the policy decisions. It is expected that some of these requirements will include: liability requirements for firms and other accreditation requirements; basis of for firms (level of assurance and materiality level); technical documents needed for guiding the. The team will also assess, in collaboration with the legal department of the World Bank, the legal implications in terms of liability for the potential firm. For instance, if the verifier is found liable for generating ERs that are verified but are not paid by the CF or the ISFL, what would be the implications from this side. Under the ISFL a firm will be engaged to help the FMT to define part of the policies, standards, processes and even procedures for validation, i.e. a) User requirement analysis to define the basis of the assignment; b) An outline of the proposed approach, including the expected level of assurance for the independent assessment and the procedures to be applied; c) Checklists and other materials to be used for each assignment including the draft assessment checklist highlighting how the ISFL ER Program requirements will be assessed. The firm is expected to participate in that consultancy, provide support to the FMT to help define the most adequate policies, ensure coherence and linkages between both works, etc. 3

4 3. TOR definition: Define TORs for the hiring of the entities for the of ERs, including the requirements in terms of accreditation, liability insurance, personnel, etc. This will be based on the information received in the previous phase. This will be the basis for launching a procurement process following the WB procurement processes to select a firm who will be in charge of conducting the These TORs will be presented at the CF meeting 4-7 February 2019 for confirmation from Carbon Fund Participants. These TORs and a presentation should be posted two weeks in advance to the CF meeting. 4. Technical manual: Define a technical manual to allow entities to conduct of ERs in line with the defined requirements and specify the interaction process between auditee and auditor. Verification entities require some guidance in order to conducting the. This includes guidance for setting the basis for (objectives, scope and criteria, materiality, level of assurance), planning (including risk assessment, planning analytics, materiality assessment, contribution analysis and design), execution (sampling, procedures) and completion (reporting, peer reviewing, statement). The guidance should allow stakeholders and verifiers to conduct s in line with CF or ISFL policies and defined processes. D. Deliverables and timeline The deliverables and expected dates would be the following: Phase Deliverable Date 0. Planning The firm will provide a detailed inception report for conducting the activities described in this TOR and adjusting them to the dates set below. 1. Bibliography review 2. User s requirement analysis 3. TOR definition Report on bibliography review showing the main elements that are defined for under GHG programs around the world. URA report showing the main policy and process decisions after consultations with members of FMT and participation in URA from firm under ISFL. Draft of TORs Second draft TORs addressing comments from the FMT 1 week after contract signature 4 weeks after contract signature 15 December December 15 January Presentations and other material for CF19 meeting 11 January 2019 Incorporation of feedback from CF19 15 February 2019 Draft for commenting 10 March

5 4. Technical manual Final Report 29 March 2019 E. Modalities of implementation The firm will travel, at least, twice to Washington for the delivery, presentation and discussion of the inception report and the final report and will maintain weekly meetings via WebEx with the project supervisor, the project coordinator and the WB team: FCPF Secretariat, BioCF ISFL. The language of the consultancy will be in English. F. WB primary contacts To be defined at RFP stage. G. Qualifications To be defined at RFP stage. H. Other requirements Communications: All communications regarding the assignment with any CF and ISFL contributors or the general public, must be authorized. Materials: All materials shared with, collected by or produced as part of this service are the property of the World Bank, and should not be shared with any other party without specific authorization from the World Bank. Right of Review of Documents: The World Bank retains the right to review any and all documents, prior to them being shared with CF and ISFL contributors. Staffing and Change of Staffing: The firm must inform the World Bank of any change in the composition of team members for the assessment. In case of failure to inform about changes in the composition of team members, the World Bank retains the right to cancel or modify the original contract. I. Conflict of interest In order to ensure no conflict of interest, the firm in charge of preparing the standard will not be allowed to conduct s under the CF and the ISFL. 5