The destruction of forests accounts for about 20 per cent of global greenhouse gas emissions. Governments, companies or forest owners should be rewarded for keeping their forests instead of cutting them down. It’s a simple idea. But putting it into practice is proving immensely complicated.
There is currently no international agreement to reduce carbon emissions from forests, but negotiators are working on one. It’s called ‘Reduced emissions from deforestation and degradation’, or REDD for short, and is being developed in the build up to December’s UN climate negotiations in Copenhagen. The problem is, in the words of Marc Stuart, head of UK-based carbon consultancy EcoSecurities, ‘REDD is the most mind-twistingly complex endeavour in the carbon game. It involves scientific uncertainties, technical challenges, heterogeneous non-contiguous asset classes… There’s brutal potential for gaming and getting it wrong means that scam artists will get unimaginably rich while emissions don’t change a bit.’ Nevertheless, Stuart is in favour of financing REDD through carbon trading. Since he made his fortune through, er, carbon trading, perhaps we shouldn’t be too surprised.
But an early warning of what can go wrong has been provided by Papua New Guinea (PNG). Its Government is embroiled in a scandal over the issuance of REDD ‘credits’, despite having no legislation covering trading in forest carbon. ‘We’ve had every carbon cowboy in the world descend,’ PNG’s Special Envoy for Environment and Climate Change, Kevin Conrad, complained recently.
But the PNG Government appears to have encouraged these ‘carbon cowboys’. In 2005, the Minister for Trade and Industry, Paul Tiensten, issued a certificate which ‘represents ownership in carbon sinks’ to an Australian company, Climate Assist. More recently, PNG’s Office for Climate Change (OCC) has issued REDD ‘credits’ for 40 forest projects, each denoting one million tonnes of carbon. This, despite the fact that, as The Economist points out, ‘no government is able to issue any legal REDD credit, as no framework exists for doing so’.
One of the projects, the ‘Kamula Doso REDD project’ is particularly controversial. In October 2008, PNG’s Supreme Court issued a ruling preventing the notoriously destructive logging company Rimbunan Hijau from logging the Kamula Doso forest. A few days later, the OCC issued a certificate granting the rights to one million tonnes of carbon from Kamula Doso to a company called Nupan Trading Ltd. Nupan Trading is run by an Australian former horse-trainer called Kirk Roberts. More recently he ran a cock-fighting business in the Philippines, where he is under investigation by the immigration department.
In June 2009, Bertha Somare, the Prime Minister’s press secretary, issued a formal statement saying: ‘The OCC has no legal mandate to issue any forest carbon credits… nor is there currently any REDD asset in existence due to a lack of a regulatory framework for forest carbon in Papua New Guinea.’ The director of the OCC, Theo Yasause, has now been suspended, while an internal investigation is carried out into the issuance of the ‘credits’. Yasause denies any wrong-doing, claiming that the certificates were ‘samples’. Asked why he would make sample documents, he said: ‘We wanted to see what it looked like.’
None of which inspires much confidence in the brave new world of REDD carbon trading. Subprime carbon, anyone?