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Carbon Conservation gets into bed with Asia Pulp and Paper, one of Indonesia’s biggest forest destroyers

Yesterday, Asia Pulp and Paper and Carbon Conservation launched a REDD-type project on 15,640 hectares of peat forest on the Kampar peninsular, in Sumatra. “The Kampar Carbon Reserve is a gift from Indonesia to the world,” said Aida Greenbury, sustainability director for APP, in a press release. But the project raises serious questions about the credibility of REDD.

The Kampar Carbon Reserve, as the project is called, is a pulpwood plantation concession held by PT Putra Riau Perkasa (PRP), which in turn supplies APP. The project is intended to last for 30 years, in three phases.

The press release explains that

Kampar Carbon Reserve will develop in three phases. Phase one will take three to six months to do a complete assessment of the land, soil analysis and community needs, issues and challenges. Phase two, which could take approximately one year to complete, will involve independent auditors validating the carbon preservation model and securing third-party investment. Phase three will extend through the life of the project and will include activities to both protect and improve the land as well as annual third-party verification and certification.

APP and Carbon Conservation launched the project at the Hyatt Hotel in Jakarta. REDD-Monitor would have attended, but Aniela Maria, from APP’s ironically named “Sustanability and Stakeholder Engagement” department, wrote in an email to REDD-Monitor:

“Thank you for your email, unfortunately we cannot accommodate your request to attend because this is a private invitation-only event.”

Here are some of the questions that this project raises (which REDD-Monitor would have asked at the launch yesterday…):

  1. The land is a “deep peat carbon sink” according to the press release, although it doesn’t say how deep. Converting forest on peat deeper than three metres is illegal in Indonesia. Not that that seems to have stopped much forest destruction so far, but it could do. Given that Indonesia’s Ministry of Forestry was involved in the negotiations for the deal, why did they not simply enforce the forest law? Recently, an article on the Norwegian Embassy in Jakarta’s website noted that

    “The LOI [Letter of Intent] has correctly recognized that unless the legal regime and law enforcement is strengthened to fight illegal logging, efforts at reducing deforestation is bound to fail. In fact the LOI also proposes a special unit to tackle this problem in its second phase after the preparation phase.”

    Of course, this might be too little, too late. Meanwhile, will APP, Carbon Conservation and PT PRP be paid for agreeing in effect to obey Indonesia’s forest laws?

  2. It is not clear whether the project developers carried out a process of obtaining the free, prior and informed consent from the indigenous communities living in the area. The press release states that APP and Carbon Conservation “worked with” local stakeholders on the project. But a report in the Jakarta Post suggests that free, prior and informed consent has not been obtained:

    [T]he company had yet to formulate detailed strategies or programs to develop local economic potential, Sun said, adding that the company expected to spend the next six months conducting dialogue with local community groups, regional governments and other related stakeholders to determine their priorities.

    Did the project developers obtain free, prior and informed consent from local communities, before launching the project?

  3. It is not at all clear, from the information supplied in the press release, what the project actually involves. Dorjee Sun, head of Carbon Conservation says, “Working with APP we are giving new life to a carbon-rich piece of land that is roughly a quarter the size of Singapore that we are now conserving as a protected carbon plantation.” The email from APP inviting journalists to the launch in Jakarta is titled, “Launch of Indonesia’s First-Ever Pulpwood Plantation to Carbon Plantation.” In a video interview in which he talks about the project, Sun says, “The Kampar Carbon Reserve is also the Kampar Carbon Plantation because it’s both what could have been a plantation but it is now a plantation for carbon.”

    So, will the project involve protecting forest, or converting it to a plantation?

  4. Lafcadio Cortesi of Rainforest Action Network commented to Reuters that, “While we support the conservation of the Kampar, this project in no way makes up for the tremendous amount of damage that APP and its affiliates are having on rainforests and peatlands across Indonesia.”

    The project may protect a small area of the Kampar Peninsular, but if APP continues to expand its destructive operations elsewhere, this will have no impact on reducing deforestation. How does the project address leakage?

REDD-Monitor looks forward to posting responses from APP and Carbon Conservation to these questions.

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  1. Aida Greenbury’s statement that this REDD project “is a gift from Indonesia to the world” is indeed true. In fact, Indonesia has created the very need for this carbon deal. How?

    In December 2008, all of the threatened forest conversion that Carbon Conservation and APP are now cashing in on through REDD would have been illegal. By January 2009, the then Minister of Forestry, M S Kaban, had legalized it, setting the scene for deals just like this.

    Minister of Forestry Decree No. 101, 2004 (SK. 101/Menhut-II/2004 – stipulated that pulp and paper companies would not be permitted to harvest raw materials from natural forests after December 2009. The decree was designed to ensure pulp companies invested in industrial timber estates – something the sector had been accused of failing to do for years. Under this, any natural forests within the concessions of PT. Putra Riau Perkasa, would have to be left untouched. By law, any REDD deal in their concession would have been both unnecessary, and illegal.

    However, in January 2009, the then Minister, Kaban, revoked this decree, effectively giving pulp and paper companies rights to harvest natural forests until 2015 – an extension of 5 years of systematic and structurally sanctioned deforestation.

    As such, in one stroke, Indonesian’s government “gifted” the world the increased threat of deforestation in Indonesia – threats the government, APP and Carbon Conservation are now marketing as REDD opportunities. Negative incentives, anyone?

    Interestingly, based on Kaban’s revocation of the 2004 decree, APP’s harvesting of its natural forest should not be legally permitted beyond 2015. How this fits with Carbon Conservation’s time frames is an interesting issue, and may be a real concern for this project. Presumably, the deforestation they are “avoiding” would be illegal by 2015 – when the extension on legal deforestation in natural forests connected to pulp and paper companies expires. Surely they will not be selling credits beyond then – because where is the additionality? Phase three of Carbon Conservation’s project could be a bit messy – because it should not exist.

    But this is Indonesia. Perhaps the revocation can be re-revoked to effect a de-facto extension to deforestation for pulp and paper – again. That way, Carbon Conservation can carry on selling credits that would have been illegal without Indonesia’s global gift of woeful forest governance.

  2. Towards the end of September 2010, Indonesia’s Forestry Minister, Zulkifli Hasan, was in China. Guess what he did while he was there? He signed an MoU with PT Putra Riau Perkasa for a REDD project on the Kampar Peninsular. Here’s the report in the Jakarta Post:

    Sinar Mas hopes to show public it “cares” about environment

    By Dicky Christanto, Jakarta Post, 25 September 2010

    The Forestry Ministry is joining forces with private companies to support the government’s forest preservation program as it strives to achieve Indonesia’s pledge to reduce its emissions by 26 percent by 2020.

    Forestry Minister Zulkifli Hasan recently signed a memorandum of understanding with PT Putra Riau Perkasa, a subsidiary of Sinar Mas Forestry, which agreed to spare its 15,640-hectare concession in Semenanjung Kampar, Riau, for a giant carbon storage facility.

    “Twelve large companies have promised to set aside forest concessions as carbon storage areas.

    “This should prove that large companies are concerned about preserving forests,” Zulkifli said at the signing of the MoU at the Indonesian Embassy in Beijing.

    “However, I must warn that none of this will reduce the office’s critical stance toward these companies in running businesses,” he said.

    The agreement was signed regardless of gray areas in the REDD+ benefit-sharing scheme, which regulates carbon trade.

    Sinar Mas Forestry environment director Canecio P Munoz, who also attended the signing, said besides the Semenanjung Kampar forest area, the company had also dedicated another 700 hectares of land under the Bukit Batu biosphere reserve program.

    “The forest preservation program will enable us to respond to several third parties’ doubts about our commitments to preserving nature while running our business,” he said.

    Sinar Mas Forestry has come under public scrutiny after several environmental NGOs including Greenpeace suggested it had accommodated illegal practices in its business, including clearing peatlands and secondary forests dedicated for wildlife preservation to make way for oil palm plantations.

    As a result, several multinational companies including Dunkin’ Donuts, Pizza Hut and Burger King, recently cancelled their business contracts with Sinar Mas.

    Minister Zulkifli added that his office was in the middle of organizing a joint committee comprising the office, private entities, academicians and NGOs.

    This joint committee would be tasked primarily to monitor work carried out in forests, he said.

    “Whenever we face problems and difficulties regarding forest management, there will be no need to attract the attention of the international community any more. We will resolve these issues through this committee,” he said.

    Besides signing the MoU, Minister Zulkifli also met with the Sino-Forest company officials in Shanghai to discuss the company’s investment plans.

    “Sino-Forest plans to develop jatropha bio fuel because it has already mastered the technology to produce three times more jatropha oil than we could produce in the past,” Zulkifli said.

    Sino Forest’ founder Allen Chen said Indonesia had been chosen as the company’s investment target because of its promising reforms in forestry regulation.

    “We have received business intelligence reports that Indonesia is quite ideal for conducting business,” Allen said.

    Sino Forest Corporation is among several giant Chinese companies operating in the forestry industry. It manages 650,000 hectares of the 750,000 hectares of forest concession provided by the Chinese administration.

  3. The fact that the MoU was signed in Beijing reflects the dominance of China (or Chinese interests)over much of Indonesia’s palm oil and pulp sectors.

    Sino-Forest, several of whose affiliates are registered in a British tax haven (the Virgin Islands), has for some time promoted its success in acquiring a logging business in Suriname, a country whose newly elected President is subject to an international arrest warrant for drug smuggling.

  4. If the former Minister, MS Kaban, was acting unconstitutionally when he revoked the 2004 Decree, then the permission he gave is void.

    Also, there should be no compensation for APP given that MS Kaban is unlikely to have acted unconstitutionally unless he had been subject to lobbying by or on behalf of APP to an extent which some might regard as improper(whether customary or not).

  5. @Greenheart – Norway’s Government Pension Fund Global holds $23,827,324 of shares in Sino Forest Corp, so perhaps you should contact them to see how that fits with their ethical guidelines and Norway’s wider climate goals. Norway is also invested in a defacto way in this voluntary carbon offset market APP/Carbon Conservation REDD deal. How? Norway owns $17,831,263 of shares in Golden Agri Resources (GAR), which in turn controls Asia Pulp and Paper (APP) and Sinar Mas Forestry (and PT SMART, the massive oil palm arm of the group). Norway also holds $200,000 of shares in Indah Kiat Pulp and Paper – a subsidiary of APP that eats up lots of the natural forests controlled by Sinar Mas Forestry in Riau.

  6. I completely agree with Jago Wadley and I really appreciate his facts given in the above statement.

  7. Lafcadio Cortesi has posted his statement about this REDD-type project, on Rainforest Action Network’s blog, The Understory. Here it is:

    The Kampar is among the deepest and most valuable peat forest ecosystems in the world. Not only does it provide carbon storage, it is customary land that supports the livelihoods of local communities and it serves as critical habitat for endangered Sumatran tigers and many other species. Although RAN hasn’t seen the details behind this announcement, it’s likely that the area in question should be illegal to clear in the first place. Any further development in this or other parts of the Kampar and neighboring peatlands and natural forests should certainly be subject to the moratorium on new licenses due to be adopted in January as part of the agreement on reducing deforestation and forest degradation between the Governments of Indonesia and Norway.

    While we support the conservation of the Kampar, this project in no way makes up for the tremendous amount of damage that APP and its affiliates are having on communities rainforests and peatlands across Indonesia. This area represents a small proportion of the remaining natural forests and peatlands in their land bank and without action to protect other threatened areas in the Kampar and elsewhere, the area’s values could be lost and any emissions reductions rendered meaningless due to leakage.

    APP’s conservation efforts are a drop in the bucket compared to the destruction that their standard business practices are causing across Indonesia. Under no circumstances should APP be praised or compensated for doing something that they should have been doing in the first place.

    A critical question that needs to be answered in this situation, is whether or not local communities and governments know that this is happening and have a meaningful role in decision-making. If we don’t know that, it’s unclear where benefits will flow from this deal and how durable it will be. RAN maintains that if these types of conservation projects are to be successful, they must have the free, prior and informed consent of local communities and these communities must participate and receive an equitable share of the benefits.

    What’s really good here is that the Ministry of Forests is stepping up to change the designation of this land use from “clear and convert” to “restore and protect.” If it’s done in the right way, involving communities and avoiding leakage, it could be an important precedent for Indonesia’s government.

    If Indonesia is going to live up to their agreement with Norway, the government must re-designate licenses somehow and APP holds a lot of concessions with peat and natural forests. We urge the government to involve local communities, settle land claims and, as they appear to be doing with this agreement, and to reallocate all remaining undeveloped peatlands and natural forests to restoration/conservation areas.

    Finally, this project is a great example of why, before they package carbon as a commodity, private carbon traders should adopt fundamental social and environmental safeguards and require their clients to verify that they’re not involved in the destruction of peatlands and natural forests across all their land holdings.