Macquarie Capital Group Limited, a financial services firm based in Australia, currently owns 100% of the Company. At financial closing, it is expected that 4-5 investors including IFC will each own between 15-40% of the Company. The final composition of investors will be known in the next 2-3 months. BioCarbon has partnered with Fauna & Flora International (FFI), a well respected, operationally focused NGO to be the on-the ground project manager for its initial projects.

The total project cost is estimated to be approximately $25 million. The proposed IFC investment is a $5 million equity investment in BioCarbon.

5.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	5.0

* These investment figures are indicative

The proposed project sites in the first phase of investments will all be located in Indonesia in the provinces of Kalimantan and Papua. BioCarbon is currently in discussions with state and private parties to acquire long term concession rights for these sites.

Climate change mitigation and adaptation is one of the World Bank Group’s strategic priorities. IFC has identified the forest sector as one of the key pillars of its climate change mitigation strategy. The following outlines the key development impacts of the proposed transaction. The Project will directly help in climate change mitigation through avoided deforestation of mainly tropical rainforests in several countries where these forests are seriously threatened. The Project will result in intervention in sites where there is a significant threat of biodiversity loss. The Project will provide for direct benefit sharing with local communities and local governments as well as development of alternative livelihood strategies for the local communities. The Project would support one of the early private sector initiatives for conservation of forests and is likely to have a demonstration impact that could catalyze large amounts of private capital in this sector. Finally, the Project is expected to demonstrate the viability of AD projects and serve as a test case for advancing the discussions on the adoption of an international Reduced Emissions from Deforestation and Degradation (REDD) framework.

IFC’s expected additionality includes: IFC financing will help BioCarbon to raise adequate financing to implement the projects. IFC’s equity investment would provide the necessary long term financing needed by the Project. IFC will provide forest sector and carbon market expertise to BioCarbon, which is critical for the success of this pioneering transaction. IFC will also provide specific advice and guidance to BioCarbon in developing a robust and adequate framework to address the possible impacts of the Project on the local communities affected by the Project.

The key environmental and social issues have been identified as:

the development and resourcing of a corporate level environmental and social (E&S) management system to provide quality assurance across the project portfolio;
the effective implementation of E&S management programs at project level which address labor, land acquisition and involuntary resettlement, indigenous peoples and cultural heritage as well as carbon and biodiversity values.
In both cases, the performance benchmarks are BioCarbon’s selected certification standards (the Voluntary Carbon Standard (VCS) and the Climate, Community and Biodiversity Alliance (CCBA) Standard); the IFC Performance Standards and relevant IFC guidelines. In addition a number of specific actions for the two projects currently under development have been identified.

The proposed project’s primary objective (i.e., management and sale of carbon stocks) is strongly correlated with conservation of forest resources, biodiversity and natural resources and relies upon the development of community-based forest management systems with communities with claims to traditional ownership and/or use of resources. The potential adverse environmental and social impacts associated with the development of project sites are not irreversible, relatively few in number, site-specific and can be readily addressed through mitigation measures. It is therefore concluded that this is a Social and Environmental Category B project, but with a need to review and categorize each project entering the BioCarbon portfolio. Review of the two most developed project sites (in West Kalimantan) indicate that both would be considered Category B. For further details please refer to the Environmental and Social Review Summary.