Carbon Credit Rush Hits Papua New Guinea

As Sabah wrestles to rid itself of an outrageous corrupt carbon credit deal spearheaded by deputy chief minister, Jeffrey Kitingan, more examples of this form of eco-opportunism are being confronted in Papua New Guinea (PNG), a country already ravaged by Malaysian logging.

The latest scheme proposed in PNG is from an Indian company named Kanaka Management Services and represents a major ‘voluntary agreement’ binding local people in Oro Province to a similar 100 year deal as with Sabah.

Worryingly, the contract stipulates that an appointed representative can make deals with the company on behalf of the community. Chris Cook, a senior fellow at University College London explains that thanks to the troubling clause: “The lessee can, essentially, in cahoots with the rep, supposedly acting on behalf of the community, ensure all sorts of trumped up charges, concealment of income etc. [It] reminds me of the profit sharing deals by film financiers who always ensure there is no profit to share.”

The question to the supposed eco-capitalists from Kanaka Management Services is therefore why such a clause should exist which at the stroke of a pen in the small print of the deal removes the native rights of the community for a hundred years.

The Governor of Oro Province, Gary Juffa, has meanwhile slammed the deal as “a scam” and has called for all such land management enterprises to be banned from PNG:

“The company’s landowner representatives have circumvented the provincial government. I do not blame them, they were perhaps looking for the best possible options for their people but in the absence of thorough, informed knowledge about carbon projects and the particular sector, without proper advice from appropriate government organisations, agencies, private sector experts, they have entered into an agreement which is detrimental to their interests, the interests of the province, the interests of the country, indeed the interests of the world. Such organisations like Kanaka Management Services, should be completely banned from countries like PNG to ever get themselves involved in this kind of arrangements or agreements…  without the benefit of a regulatory framework in place, it appears that the agreement is flawed and in my opinion null and void.

I have informed the developer and his agents that they are more than welcome to take us to court if they wish, but we are satisfied that we are in a position to basically inform them that their project—or this scam that they are purporting to be a project—is null and void and will not be recognised or tolerated by the provincial government.

The vast area comprising 397,000 hectares of forest in the deal were expected to generate 8.1 million credits annually, therefore sequestering over 800 million tonnes of carbon dioxide over 100 years. The contract states that Kanaka Management Services would take home 65% of the income for the first five years, only sharing the profits equally with native landowners after the 16th year.

With very little details on who would be affected and how this money would be redistributed amongst the community, the deal was slammed by carbon credit watchdog, Carbon Market Watch, as raising “significant red flags”. Despite this, the proposal was signed off as a Verra Verified Carbon Standard project (VCS). Verra is currently the world’s leading carbon credit organisation, boasting 1781 “certified VCS projects” around the world.  Governor Juffa has added his concern:

“It’s strange that VERA, supposedly a reputable organisation, has endorsed this or has even publicised this on their website when the fact of the matter is that this arrangement is so deplorable and disgusting that it should be thrown out by any organisation involved in the reputable processes of carbon trade projects.

“For instance, they’re offering for the first 5 years, 35% to landowners for carbon pricing at $6–$8 for atmospheric carbon. This is ridiculous already to start with. Nothing improves for the next 95 years according to this agreement.

PNG has since issued a moratorium on these “voluntary” carbon credit deals in a bid to protect its forests and peoples from such deals. Any future carbon credit schemes will have to be done through the government.

Kanaka Management Services was established in 2007 as a greenhouse gas project consultancy and project development. Their executive team is led by environmental scientists and engineers, and the company has received acclaim from the UN, scooping up many of UN-granted Kyoto awards over the years.

Their website claims: “Our UNFCCC CDM, VERRA VCS, VERRA CCB, SD Vista, Gold Standard, REDD+, Plan Vivo, Sustainability and other GHG projects due diligence, consultancy and process integrity is one of the best in the industry.” The company claimsthat critics of their project may have ulterior motives to discredit the scheme:

“There is no scam or confrontation with anyone. Maybe due to political reasons some elements are propagating some news for their own benefits which is against the land owners and communities interests. Both local communities and land owners are happy about this REDD+ project. We do not want to discuss the local politics here.”

Carbon Credits – A Credible Climate Solution?

Meanwhile, KMS is just one of the companies rushing to get their hands on the newest resource stored in Papua New Guinea’s lush rainforests, the third-largest in the world, namely the unregulated carbon credits that represent a new, fashionable and speculative money-maker for “green” financiers.

Touted as the solution to both climate change at COP26 last year, carbon credits allow companies and nations to protect vulnerable forests by “buying” the carbon the trees sequester, and then offsetting those credits against their own emissions.

But while markets and middle-men rush to profiteer from climate change, experts around the world warn against both the flawed economics and the land management. One concerned Australian economist, Prof Steve Keen, told ForestSEA:

 “Carbon credits are an attempt to financialize climate change. This is inherently a fallacy, because what we need is far less carbon production, which can only count from cutting output, and you can’t profit out of cutting output. The schemes to date have been more scams than genuine attempts to reduce our carbon footprint.”

He said the system is putting forest nations at risk of speculative profiteering, once again at the expense of native land rights, forest management, and indigenous people’s access to their own resources.

Currently, there is no international regulatory framework for the carbon credit market, but the UN has provided validation for the concept and offers guidelines as part of its REDD+ programme. These guidelines include respecting and protecting indigenous rights to land, and the compulsory development of indigenous communities from the profits of trading the carbon from their forests.

However, deals like the one in Papua New Guinea and the notorious Sabah carbon deal—which saw the state bound to pay 100 years worth of carbon credit profits to an organisation with no history of carbon trading should any future government cancel the deal—raise serious questions about whether or not the UN is doing enough to enforce those guidelines and protect the world’s most vulnerable groups. 

When asked if the UN will condemn or acknowledge these “scams” done in the name of REDD+, or redevelop these guidelines in response to mounting evidence of exploitation and profiteering, the UN-REDD Programme Secretariat Mario Boccucci responded:

“Since 2008 the Programme has supported partner countries in strengthening   the technical capacities needed to design and implement REDD+ strategies, safeguards, monitoring and reporting elements meeting UNFCCC requirements for REDD+ results-based payments. It does so through a country-based approach that provides advisory and technical support services tailored to national circumstances and needs for countries to achieve REDD+ readiness, which refers to the efforts a country undertakes to develop the capacities needed to demonstrate and implement REDD+.

“In its technical assistance, including the support to countries to unlock climate finance, the UN-REDD Programme follows the highest standards for environmental and social safeguards, including the so called Cancun safeguards, and promotes inclusion and engagement of indigenous peoples and local communities. In accordance with its mandate the UN-REDD Programme works at global, national and subnational level, focusinges on jurisdictional REDD+ in line with the country REDD+ strategy. The Programme does not work on the topics your questions cover. Other examples of REDD+ multilaterals include the Forest Carbon Partnership Facility and Forest Investment Program, hosted by The World Bank.”

The problem appears to be that the claimed support and regulation are doing little to prevent carbon scams conducted in the name of the UN programme, which has provided a veneer of respectability for profiteering.  It is time to put proper controls in place or dump REDD as a misguided and counter-productive programme that has distracted from more effective measures to combat climate catastrophe.

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