Pembentangan kepada l

PERSIDANGAN PENGARAH- PENGARAH

PERHUTANAN SEMENANJUNG MALAYSIA

DATE: 5 September 2022

©2022 Malaysia Forest Fund. All rights reserved. Contains MFF’s Confidential and Proprietary
information and may not be disclosed or reproduced without the prior written consent of MFF.
 Presentation Outline

INTRODUCTION:
1 Malaysia Forest Fund, its Roles and Governing Structure

BACKGROUND:
2 The Dynamics of Climate Change Actions in the International & National Landscape

INSTRUMENT UNDER THE RFF:

3 Forest Conservation Certificate and Forest Carbon Offset

4 DISCUSSION:
Carbon Offset – consideration for the State Government

5 NEXT COURSE OF ACTIONS

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 Introduction l
Malaysia Forest Fund

q Approved by the Cabinet of Malaysia on 28 August 2020 - the REDD PLUS

FINANCE FRAMEWORK (RFF) and the establishment of MALAYSIA FOREST FUND
(MFF).

q Incorporated on 30 June 2021 under Company’s Act as CLBG, under the

purview of MINISTRY OF ENERGY & NATURAL RESOURCES

OBJECT OF THE COMPANY:

To create of innovative To develop strategies, standard, To facilitate& provide transparent

finance strategies in guidelines and procedures for and reliable communication,
generating positive fundraising, administration and education, awareness & capacity
incentives for the protection, disbursement of funds) building as well as verification
conservation and sustainable implementation and periodic and reporting to all relevant
management of forests. updating. stakeholders on the developed
forest initiatives.

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 Introduction l
MFF Governing Structure

Malaysia Forest Fund (MFF) is governed by a Board of Trustees, whose members consist of well-known
policy makers, businesses and a non-governmental organization.

Y.Bhg Datuk Dr Kamilia Binti YBhg Dato’ Hj Rosli Bin Isa

Dato’ Ibrahim Y.Bhg Dato’ Seri Ir. Zaini Ujang En. Desmond Anggang Anak
Ministry of Energy & Natural Resources
Chairman, Board of Trustees Board of Trustee (KASA) Tading
Board of Trustee
Board of Trustee (MOF)

Y.Bhg Datuk Muhamad Umar Swift Y.Bhg Datuk TPr Suki Mee
Board of Trustee (Industry) Board of Trustee (NGO)

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 Background l
Malaysia’s Commitment to curb the Climate Change under the Paris Agreement

q Nationally determined contributions (NDCs) s a climate action plan to cut emissions and adapt to climate
impacts under the United Nation Framework of Convention on Climate Change (UNFCCC).
q Malaysia’s updated NDC– unconditionally reduce economy wide carbon intensity against GDP of 45% by
2030 compared to 2005 levels.

How is
The need to
Malaysia doing
reduce emission
now? by industries

29.4% 45%
GHG emission Net Emission
intensity per unit 75,489 MtCO2
GDP improved 29.4% The need to
by 2016, compared to increase / maintain
2005 levels CO2 removals
(carbon sink)

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 Background l
Role of Forest to reduce GHG emission and Carbon Removal

Carbon Offset
259 Mg C ha-
a reduction or removal of emissions made
1
in order to compensate for emissions made
elsewhere

-CO2 eq

3 -10 Mg C ha-1
259 Mg C ha-1

CARBON CREDIT : A CREDIT IS VERIFIED GREENHOUSE

(GHG) EMISSIONS REDUCED OR ENHANCED REMOVAL OF
GHG FROM THE ATMOSPHERE

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 Background l
The establishment of Domestic Emission Trading Scheme (ETS) as one of key enabler for
carbon market
Value Chain of ETS*:

Verification Emission Trading Buyer / traders

Supply
& Validation Scheme /market maker
Sectors: Buyer/End user:
Emission Trading Platform:
Forestry
(including REDD+)

Domestic
Aviation
Brokers/ Traders:

Industry

Custodian Bank:

Energy Market makers:

Transport

Note*: Illustrative purpose only, based on ETS available internationally, the actual framework are still under development by BURSA MALAYSIA and KASA

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 Background l
REDD Plus is a proven framework under UNFCCC to generate sustainable funding internationally

REDD+ framework guide activities in the forest sector that reduces emissions from
deforestation and forest degradation, as well as the sustainable management of forests
and the conservation and enhancement of forest carbon stocks in developing countries.

NON-MARKET INSTRUMENT
Voluntary Contribution By Private
Sectors To Support Conservation
Activities
REDD Plus Activities
Quantified &
Reduce Emissions from Verified
Deforestation & Forest
REDD Reduction of
Degradation
emission /
Conservation & or
Enhancement of Carbon enhanced
Stocks removals MARKET INSTRUMENT
+
Pursuance of sustainable
management of
forests

Proceeds to fund
REDD+ activities

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 Case for Actions l
Growing interest from the private sector to invest in nature-based solutions projects

PRIVATE SECTORS: FOREST OWNERS/MANAGERS:

To reduce their 1 Forests and their biodiversity in

1
climate and Malaysia are under-protected
environmental and under-funded
footprints Mismatch:

$ received are Lack of a clear

2 Sustainability (ESG/ donor centric 2 framework/mechanism to
and does not
SDG) requirement & secure investments to
directly
strengthening business support support yearly $
reputation State’s requirement
requirement

Reduce cost, legal Lack of viable

3 3 business case that
and market risk &
captures the best
therefore maintain or
increase profitability interest of the State

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 REDD PLUS Finance Framework (RFF) I
Forest Conservation Certificate – a non-market mechanism which recognise contribution from
donors in conservation and sustainable management of forest
FCC Conceptual framework
Forestry Owner
(State Govt./ Agencies ) Business Owner
Businesses support Forest
Plan & Implement Activities Conservation Certificate
(FCC) voluntarily
REDD++ ACTIVITIES

$ $

Restore the ecological Finances long-term

Protection or Increase the
conservation of forest forest area integrity & function of conservation
degraded forests
Benefit to
businesses:

Aggregate and
✓ ✓ ✓
reconnect Community
Encourage Sustainable CSR
fragmented engagement and
Forest Management
ESG / SDGs Tax Exemption First Rights
participation
forests Reporting Programs Refusal for
Carbon

✓ Report of
tCO2*
*removals/reduction of emission of GHG not meant for offset, nominal, non-transferable and
Audit/Validate FOREST CONSERVATION do not generate rights or credit
CERTIFICATE (FCC)
Note: FCC is developed based on Framework & Modality of Amazon Fund Confidential I Page 10
 REDD PLUS Finance Framework (RFF) l
Forest Carbon Offset - a carbon market mechanism that allows the transfer of emissions
reduction from forests to the buyers, in the form of carbon offsets
FCO Conceptual framework

Demand Supply
Industry Project Developer
Sets climate target Plants trees, buries C02,
protects forests

Have they cut enough carbon? Project claims to

Yes remove avoid
No carbon emissions
Offset
Market /
Arrange Standard to verify
Purchase carbon credit

$$$ Project Fund conservation activities

Industry
Developer

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 Discussion l
Carbon Offset – consideration for the State Government

1 Know your Understand how Forest Carbon credits are issued and what data is required
Assets Misconception: credit are issued based Facts: Forest carbon credit will only be issued when -
on carbon stocks (a) additionality are demonstrated
(b) emission reduction/enhanced removal against historical
baseline

TREND IN CARBON STOCKS AFPF, 2014

Crediting Period

BAU
Scenario 1
(w/out carbon
fund)

FOREST
Additionally Enhancement of
Baseline* CREDIT CO2 removal =
(average of 5 years historical Scenario 2 50,337 tCO2
GHG prior the crediting (with carbon fund)
period)

Y1 Yn
Y2018 Y2022

Note: *based on recent COP26 decision- methodology is to be decided by Source: ASEAN Peatland Forests Project (APFP). The pilot site covers an area of about
Q4, 2022, based historical adjusted baseline 4,000 ha of which 2,000 ha inland forest.

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 Discussion l
Carbon Offset – consideration for State Government

2 Develop
The need to scale up action on-the-ground to protect nature requires thinking bigger, broader, and
more strategically than project-level approaches à nested REDD+ /Jurisdictional REDD+ /National
Scale & Strategy REDD +

NATIONAL &
REDD+ SUBNATIONAL REDD+
PROJECTS NESTED Programs

Standalone site -
site-scale REDD+ Jurisdictional-
scale REDD+
crediting crediting scale REDD+
New site-scale Once nested, crediting
interventions should considered part National-level
be designed with of the national or subnational-
and subnational level on an
the intention and
goal of nesting at REDD+ program. interim basis
the earliest REDD+
opportunity. programs.

Pros of Nested approach:

(1) allow aligning of baselines and accounting – ease of reporting
(2) provide some degree of autonomy in implementing practices and/or selling
credits
(3) targeted approaches in complex deforestation areas

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 Next Course of Action I

CAPACITY DEVELOPMENT PROGRAM ON REDD PLUS & FINANCE IN COLLABORATION WITH THE
FOREST RESEARCH INSTITUTE OF MALAYSIA (FRIM) AND THE STATE FORESTRY DEPARTMENTS

1 2 SIRI 2/2022 - PROGRAM

3
SIRI 1/2022: KOLOKIUM SIRI 3/2022 – HALATUJU
KERANGKA KEWANGAN REDD PEMBANGUNAN KAPASITI BAGI
PEMBANGUNAN PROJEK REDD PLUS
PLUS BERSAMA PENGARAH- PENILAIAN KARBON HUTAN DI
DI PERINGKAT NEGERI
PENGARAH PERHUTANAN NEGERI BAWAH MEKANISMA KEWANGAN
(mengikut Wilayah)
REDD+
21 – 23 Sept 2022 3 - 7 Okt 2022 Okt – Disember 2022

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Thank You