Policies & Action Plans
REDD PLUS FINANCE FRAMEWORK (RFF)
What is the RFF?
Malaysia’s National REDD Plus Strategy aims to ensure the forest resources and their eco system services are secured, and the benefits are shared fairly and equitably among all stakeholders. This is achieved by recognising the forests as natural capital. Implementing the National REDD Plus Strategy will facilitate transformational change in the forestry sector. The forest would not merely be regarded as a source of timber and non-forest products, but instead, their ecosystem services and rich biodiversity would be recognized, valued, accounted for and appreciated. It will also help increase carbon sequestration by up to 23 million tonnes CO2 annually.
Accordingly, there is an urgent need to connect forest complexes; the Central Forest Spine in Peninsular Malaysia and the Heart of Borneo in Sabah and Sarawak. These will enhance the country’s resilience to climate change, sustain its biodiversity and protect its ecosystem services. To achieve this and overcome the challenges identified, the REDD Plus Finance Framework (RFF) was developed as a finance mechanism to incentivize activities that help keep forests standing. It is designed to use funds for non-carbon benefits as well as for carbon credits. This will help deliver other environmental and socio-economic benefits in addition to the climate benefits. The RFF will in the long term contribute towards sustainable land use systems in the country.
The framework will promote consistency and synergies in the implementation of climate change, forest and biodiversity related policies between federal and state levels; while bringing together the many different actors involved (federal, states, private sector, NGOs etc). The RFF is a policy approach with positive incentive to forest owners and the private sector, and consists of two components
How Does the RFF Work?
Currently the two offerings under the RFF are:
Forest Carbon Offset (FCO)
The FCO is a market-based approach, meaning that participating corporations will receive forest emissions reductions units (carbon credits) that they can use to offset their own emissions or sell on the carbon credit market. The FCO is open to both domestic and international investors.
The FCO is a mechanism that allows the transfer of emissions reduction from forests to the buyers, in the form of carbon offsets. Robust accounting will be applied to generate the carbon offsets, taking into consideration robust methodologies for GHG estimation, calculation, environmental integrity as well as transparent, complete and accurate reporting. The FCO will only be issued for domestic use, creating a domestic carbon offset scheme
Forest Conservation Certificate (FCC)
The Forest Conservation Certificate (FCC) is a non market-based mechanism focusing on non-carbon benefits while ensuring the environmental integrity of the emissions reduction. It will act as an incentive for environmental and social contributions focusing on conservation of ecosystem services. The FCC is generated following the REDD Plus requirements agreed under the UNFCCC. The FCC is open only to domestic investors.
Registration of activities
A registry will be maintained to ensure no double counting or double financing occurs when issuing the FCC or the FCO. The activity participants shall pay a registration fee, to cover the administrative expenses when submitting a request for registration.
Benefit Distribution System
The RFF has been developed basing on the principles of benefit distribution system, as follows:
- Equity: fairness in terms of the distribution of costs and benefits amongst stakeholders.
- Transparency: availability of relevant information and the capacity for all stakeholders to comprehend how and why benefits are transferred.
- Performance relatedness: action taken to reduce emissions actually occurs and results achieved.
PROPOSED ELIGIBLE ACTIVITIES
The Ministry has proposed the following activities that would be eligible for corporations to apply for FCO and FCC under the RFF, as follows:
1. By 2025, at least 20% of terrestrial areas and inland waters, are conserved through a representative system of protected areas and other effective area-based conservation measures.
We must manage our protected areas more effectively. We need to expand the extent of the areas that are protected and ensure that the protected areas are representative of the various ecosystems present in the country. We also need to recognise and facilitate community conserved areas (CCAs) that would allow indigenous people and local communities to conserve and manage important sites.
Key actions:
a. Expand the extent and representativeness of terrestrial Protected Area network
b. Develop community conserved areas as an integral part of our Protected Area network
c. Improve the effectiveness of Protected Area management.
2. By 2025, important terrestrial ecological corridors have been identified, restored and protected.
We need to ensure that all our protected areas are well-connected and integrated into the wider landscape and seascapes and are not managed in isolation. Ecological connectivity is an essential element in the long-term viability of protected areas and biodiversity because of the needs for sufficiently large gene pools. It is also critical in accommodating range shifts as species react and adapt to climate change. Malaysia has already made significant progress in landscape conservation initiatives such as the Central Forest Spine (CFS) and the tri-lateral Heart of Borneo (HoB) initiative, aim to integrate biodiversity protection and management across broad landscape.
Key actions:
a. Strengthen the implementation of the CFS Master Plan in Peninsular Malaysia.
b. Strengthen the implementation of terrestrial connectivity under the HoB initiative.
3. By 2025, our production forests are managed and harvested sustainably.
Forestry and agriculture are essential to the wellbeing of Malaysia’s population, economy and environment. Forests and agriculture land cover more than 70% of our land area. While these sectors rely heavily on biodiversity, they also at the same time create multiple pressures towards it. We need to ensure that these sectors are planned and managed in a manner that will not impose undue pressures on our biological resources. Each sector has the responsibility to ensure that biodiversity conservation and sector-specific development go hand in hand. It is in their direct interest to do this to ensure that biodiversity continues to provide the resources that each sector needs.
Key actions:
a. Strengthen sustainable forest management
b. Rationalise incentives that are harmful to forest biodiversity
c. Strengthen agricultural planning and improve practices
4. By 2025, vulnerable ecosystems and habitats particularly wetlands are restored
It is important to ensure that vulnerable ecosystems are conserved and utilised in a sustainable manner. Vulnerable ecosystems and habitats must be comprehensively identified and mapped, with threats and management priorities clearly elaborated. We have to ensure that our ecosystems are better managed and their resilience strengthened. Furthermore, in light of climate change, ecosystems that are resilient will provide better adaptation/mitigation capacities as compared to ecosystems that are degraded.
Key actions:
a. Identify, map and protect all vulnerable ecosystems
b. Improve management and rehabilitation of vulnerable ecosystems
c. Support implementation of the National Action Plan on Peatland