Carbon Credits, Climate Change, Conservation, Indonesia, Voluntary Carbon Market

Avoided deforestation credits head for the voluntary carbon markets

January 4, 2008 (ClimateChangeCorp.com) – Two Indonesian states determined to halt deforestation are getting ready to sell their forest carbon credits on the voluntary markets.

The Indonesian provinces are not prepared to wait for an international agreement on forestry, they want to start selling forestry credits on the voluntary markets now.  The governors of West Papua province and Aceh signed an agreement with the governor of the Amazon region in Brazil at the UN post-Kyoto talks in Bali. They agreed to work together to preserve their rainforests and to help establish international funding to avoid deforestation.

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A representative from Greenpeace pointed out at the signing that forested states were some of the most vulnerable to climate change: “The Amazon has seen droughts three years running,” he said. “Even the soya baron Blairo Maggi [a previous pioneer of deforestation for agriculture], who governs Matto Grosso state, has changed his tune.”

New line

The Forestry Eight, eight nations with 80 per cent of the world’s forest cover, successfully campaigned for the inclusion of forest preservation at the Bali conference last month. The result was an international agreement to pursue a programme called REDD, the Reduction of Emissions from Deforestation in Developing Countries, was included for the first time the UNFCCC post-Kyoto draft proposal.

Approximately 20 per cent of global carbon emissions derive from deforestation, according to scientific reports. “Previously, forests were never part of the Kyoto deal because climate change was seen as an issue to be dealt with by developed countries,” says Kevin Conrad, executive director for the Coalition for Rainforest Nations and environmental spokesperson for Papua New Guinea. Now that climate change has become more urgent, Conrad says, forested countries are seeing the potential to become part of the solution.

Although the details of how the REDD mechanism will work are still to be discussed by the UNFCCC, there are suggestions that forestry credits will be linked to the carbon markets to generate funds for forest preservation and alternative economic development in forested areas.

“The project basis of the CDM is unlikely to be adopted for REDD,” says Conrad, “because it doesn’t make sense to protect isolated parts of the forest from deforestation.” Conrad calls for allocations of carbon credits to be distributed to national governments by the UN in return for decreasing rates of deforestation.

Target the loggers

National deforestation plans are still not watertight, however. There have been concerns that although Brazil’s deforestation rates have decreased year-on-year, the illegal loggers have moved to targeting Peruvian forests instead. “We will have to build incentives into the scheme to encourage all forested nations to join and keep the loggers out,” says Conrad. Details of the plan will be firmed up at this year’s UNFCCC talks in Poland.

Meanwhile, Indonesia’s West Papua and Aceh have taken matters into their own hands, with governors promising to halt deforestation, only harvesting a few trees in a sustainable, and more profitable way. Governor of West Papua, Barnebus Suebu, complained that previous logging activities in West Papua province had generated only 10 dollars per log for the local people, while traders sold the logs on for thousands of dollars.

Money matters

Carbon market investor Carbon Conservation Pty Ltd, led by Dorjee Sun, a 30-year-old Australian who became a millionaire by developing internet software, intends to find the funding to help Suebu’s conservation plans become a reality. Sun hopes to sell carbon credits on from avoided deforestation in West Papua and Aceh on the voluntary markets once a national deforestation baseline has been set by the Indonesian government. Sun hopes to persuade mining company Rio Tinto Ltd, a previous buyer of Carbon Conservation’s avoided deforestation credits, to invest in his new venture for West Papua and Aceh.

The Indonesian states are testing the water in a new realm of voluntary carbon offsets that promise to become big business. First, however, forested nations need to convince investors that they have the power to stop illegal logging over the long term.

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