SINGAPORE, March 4 (Reuters) - Indonesia has applied to join a World Bank programme that supports developing nations' efforts to fight deforestation and help them earn cash through the sale of tradeable carbon credits.

The Bank's $350 million Forest Carbon Partnership Facility aims to support developing states design and create projects under a U.N.-backed scheme that could eventually earn poorer nations billions of dollars a year by protecting their forests.

A Bank official in Jakarta said on Wednesday the Indonesian government this week submitted a lengthy submission to apply to join the Bank's partnership.

The Bank backs the United Nations' forest carbon scheme called Reduced Emissions from Deforestation and Degradation, or REDD, which the U.N. hopes to formally bring into a broader climate pact to replace the Kyoto Protocol from 2013.

Guyana and Panama have already applied to join the Bank's programme but Indonesia is by far the largest to date and among the most crucial nations given the size of the country's remaining forests as well as the rapid rate at which they have been lost.

Indonesia is developing separate REDD regulations and is expected to issue them by mid-year, a top government official has said. About 20 REDD schemes are at various stages of development in Indonesia, the Bank has said, and has become a leader in developing rules governing the scheme.

SLASH AND BURN

Slash-and-burn farming and clearing for oil palm and other plantations have triggered vast fires in Indonesia, particularly on peat land, accelerating the amount of carbon dioxide in the atmosphere, scientists say.

Scientists say deforestation is responsible for 20 percent of mankind's greenhouse gas emissions.

The submission says between 1997 and 2000, Indonesia's deforestation rate was 2.8 million hectares per year, falling to 1.2 million hectares in 2000 to 2005.

It says the main drivers are extensive forest harvesting by pulp, paper and palm oil firms, expansion into rainforests and peat land by agriculture and forest plantations as well as encroachment by low-income communities into forest lands.

It also says REDD could be a major driver for investment.

"REDD-related incomes could also support a substantial investment in peat land restoration and broadly-based, rural and village level forest enterprises.

"Such an investment could result in alternative and sustainable livelihoods for many of Indonesia's 10 million lowest income families who currently survive on uncontrolled harvesting of forest and expansion of slash and burn agriculture."

The submission also explores the cost competitiveness of REDD versus palm oil and timber plantations.

It says the opportunity cost for deforestation for palm oil on degraded forest land on mineral soil was $3,963 a hectare, while clearing that land would release 184 tonnes of carbon-dioxide equivalent per hectare.

Carbon credits would have to be priced at $21.54 (27 euros) a tonne to be competitive to deter such plantations.

By comparison, the costs for planting on carbon-rich peatland were $4,265 per ha, while credits would only be $4.19 (5.25 euros) a tonne because emissions from peatland would release 1,018 tonnes of CO2-equivalent per hectare if cleared. (By David Fogarty; Editing by Sue Thomas)

Source: Reuters

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WASHINGTON (Reuters) - President Barack Obama's estimate of $646 billion in revenue for the first years of a carbon-capping program to curb climate change is realistic or possibly a little low, policy analysts said on Thursday.

Obama's budget for 2010 projects this revenue, from 2012 through 2019, will fund $150 billion in clean energy technology investments over 10 years and a tax credit to help Americans make the transition to a less carbon-intensive economy.

"I don't think it's overly optimistic at all," said Brian Murray, director for economic analysis at the Nicholas Institute for Environmental Policy Solutions at Duke University.

"It's on the conservative side," said Tim Profeta, the institute's director. Both spoke in a telephone interview.

"From a substantive standpoint, the numbers are based on a good analysis," said David Gardiner, senior adviser to the Ceres coalition of investors, environmental groups and others aiming to curb climate change.

The $646 billion figure, spread over eight years, presumes that a U.S. law to limit carbon emissions will be in place by 2012, and Obama has said he will work with Congress to make this happen.

Obama has said he wants a so-called cap and trade system that would put a price on emissions of climate-warming carbon. Companies that emit more than the limit would have to buy emission permits; companies that emit less could sell emission credits.

It would mean about $80 billion in revenue annually, the Nicholas institute's Murray said, with each ton of carbon emissions priced at $15 at the start of the eight-year period. Because the goal is to reduce carbon emissions, the carbon price would rise over the eight years.

Cap-and-trade legislation that narrowly failed in the Senate last year foresaw higher revenues based on a carbon price starting at $18 a ton and rising from there.

CAP-AND-DIVIDEND

The Obama budget envisions that some revenue from the emissions permits would be returned to individuals in an idea known as cap-and-dividend. Democratic U.S. Representative Chris Van Hollen of Maryland announced on Tuesday he plans to introduce a cap-and-dividend bill.

Meanwhile, Senator Barbara Boxer, a California Democrat who shepherded a cap-and-trade bill to the Senate floor last year, has vowed to introduce carbon-curbing legislation this year.

Environmental groups were jubilant at Obama's proposals on climate change.

"It's a hugely important policy direction and another sign that Obama gets it when it comes to building a clean energy economy," said Gene Karpinski, president of the League of Conservation Voters.

"Wall Street and Washington alike understand that the question is no longer if or when, but only how we will tackle global warming and build the clean energy economy that will rescue us from economic collapse," said Sierra Club's Carl Pope.

Shell Oil Company president Marvin Odum also favors cap-and-trade.

"The only really wrong thing to do, is not to do anything," Odum told a congressional hearing on Wednesday. "The reason I like a cap and trade system is it directly addresses the problem. So when money goes into buy these credits, then that money goes directly to reducing carbon emissions."

The budget also raises the budget for the Environmental Protection Agency to $10.5 billion, a $3 billion rise from the previous year, with a $19 million increase for "a greenhouse gas emissions inventory and related activities that will provide data critical for implementing a comprehensive climate change bill," the agency said in a statement.

(By Deborah Zabarenko and Ayesha Rascoe; Editing by Jackie Frank)

Source: UK Reuters

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As environmentalists and politicians rally around the inclusion of avoided deforestation projects in an international climate change agreement, some big questions about forest and land ownership loom unanswered.

A new report (pdf) released yesterday by the London-based International Institute for Environment and Development aims to address some of those questions by promoting debate among reduced deforestation stakeholders about current land rights and institutions in countries with tropical rainforests, like Brazil and Indonesia. The goal is to find the answers before delegates meet in Copenhagen, Denmark, in December to negotiate a new international climate change treaty.

Uncertainty over land ownership, rights and access to natural resources are familiar problems in developing countries where deforestation is an issue, according to James Mayers, head of the natural resources group at IIED and co-author of the report.

However, the possible inclusion of "reduced emissions from deforestation and degradation," or REDD, projects in a post-2012 global climate change framework could mean exploitation of local communities who live in and around rainforests by governments or powerful private-sector stakeholders if land tenure has not been formally established, he said.

"We're trying to point out who decides and owns forest resources is going to be at the heart of any new set of arrangements for climate change as it is and has been [at] the heart of pretty much all other questions of governance and forest resource use," Mayers said yesterday about the report.

Mayers said he wants to initiate debate on the topic before the Copenhagen conference since that meeting will decide whether to include REDD or a similar avoided deforestation finance mechanism into a climate change agreement.

20% of emissions is the problem. What is the solution?

The Intergovernmental Panel on Climate Change has estimated that cutting down forests now contributes almost 20 percent of the overall greenhouse gases entering the atmosphere.

REDD projects, which seek to reduce emissions from deforestation and forest degradation, try to do so in a sustainable manner that gives incentives to local communities who rely on forest resources for their livelihoods not to cut down trees.

However, Mayers and co-author Lorenzo Cotula point out in the report that local communities may not benefit from financing mechanisms such as REDD when they have little incentive to protect forests because of land ownership issues.

Tenure, which can influence the distribution of risks, costs and benefits of financial transfers linked to forest conservation, will give local people greater leverage in negotiations with the government and private-sector stakeholders if it is defined and secured, according to the report.

"REDD is simply an idea cooked up at an international level," Mayers said, adding that it is important to consider how such an international mechanism is applied and to include a wider range of stakeholders, such as locals, in the ongoing international climate change treaty discussions.

Implementing a system that ensures benefits from REDD projects will "trickle" down to local levels should be structured around local organizations that already exist, rather than trying to construct organizations around a REDD project, Mayers said.

Community land rights in Cameroon

The report drew on experiences from seven countries with tropical rainforests to develop a typology of tenure "regimes," explore land ownership issues in each country and identify challenges that must be addressed in order for REDD projects to work.

Steve Panfil, senior manager of the Climate, Community and Biodiversity Alliance, said the report is useful because it gives examples of the legal systems and that various stages of land tenure in those countries.

"Land tenure is critical to have worked out, and in some countries it is much more clear than in others," Panfil said, adding that much of the land in several countries is still listed as state-owned even though local inhabitants and indigenous groups claimed it long ago but never had it formally titled.

The government of Cameroon, for example, passed a law that allowed communities to gain control of their forest if they go through certain procedures.

In practice, however, those procedures are "extremely cumbersome and difficult for communities to go through," Mayers said, pointing to the need for communities to develop "complicated" management plans and register the land in certain ways.

This results in an "overlapping law situation" in which groups at the local level share various land ownership arrangements.

There are attempts, however, in some parts of Cameroon to codify the terms of some of these customary arrangements so they are recognized under modern legal systems.

"Any initiative trying to support more sustainability in tropical forest regions needs to think how it's going to deal with local institutional issues, very small organization arrangements and [the] local level because without dealing with them, experience suggests little progress will be made," Mayers said.

Carbon rights are also a consideration

Another important issue to consider in addition to land tenure is carbon rights, Panfil said.

"The concern is REDD could suddenly make lands that haven't been economically very important much more ... valuable and that means when land tenure is not clearly established, there's a potential threat for those people whose rights haven't been made clear," Panfil said.

Most developing countries are sorting out these issues, Panfil said, explaining that some countries have set up special government agencies to establish who has legal rights to land.

"That's at different stages of developing, depending on which country you're talking about," he said.

The Climate, Community and Biodiversity Alliance has established a standard that requires projects to demonstrate that the people who have legal rights to the land are the people who will participate in any commercial agreement about carbon credits coming from that land.

The standard also recognizes countries that do not yet have laws established to describe who is legally authorized to sell carbon credits.

"In those cases the organization has to describe how they will get those rights made clear before it enters into any commercial transaction with carbon credits," Panfil explained.

The Voluntary Carbon Standard, which ensures that the carbon offsets associated with a project have real environmental benefits, also require organizations to have legal rights to carbon credits.

This, Panfil said, is "crucial because anyone who wants to invest in projects wants to know if [the] seller had [the] right to sell it," he said. (By LEA RADICK)

Source: The New York Times

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Tags: carbon emissions , forest

SINGAPORE (Reuters) - The world's first rules for generating tradeable carbon credits from protecting forests were a good start but Indonesia needed to clear up doubts over the government's share of the revenues, analysts and industry said Friday.

Indonesia's forestry minister signed the rules last Friday, making Indonesia the first nation to formally enact regulations governing a U.N.-backed scheme called reducing emissions from deforestation and degradation (REDD).

The scheme aims to generate billions of dollars in carbon credit revenue for developing nations in return for long-term protection of forests or rehabilitation of forest land.

Forests soak up vast amounts of carbon dioxide and reversing the rate of deforestation is seen as crucial to braking the pace of climate change.

About 20 percent of mankind's greenhouse gas emissions come from clearing and burning forests and Indonesia has been a large contributor of that pollution through logging and clearing for palm oil plantations.

Under the Indonesian rules, a foreign party can join up with an local entity to develop a REDD project and the credits could be used to offset emissions in the developed world.

The rules also spell out what types of forests are eligible and the licensing requirements. A national REDD commission would vet projects, which could run 30 years and possibly be extended.

"What is clear is who can do a REDD project and where a REDD project can be carried out -- who the REDD proponents are, who can be the national and international entities," Jakarta-based lawyer Luke Devine told Reuters Friday.

"It's a bit like a CDM scheme framework of pairing a national project developer with an international carbon buyer," said Devine, head of the climate change practice at Baker & McKenzie member firm Hadiputranto, Hadinoto & Partners.

The U.N.'s Clean Development Mechanism allows rich nations to invest in clean-energy projects in the developing world in return for U.N. backed carbon credits.

The world body wants to extend the same idea to REDD and aims to have the scheme formally included in a broader climate pact to replace the Kyoto Protocol from 2013.

For the moment, early REDD projects fall under the voluntary carbon market and a U.N.-backed REDD credit trading scheme won't be operating until at least 2013 and probably later.

TAX OR LEVY?

Devine said the government had not announced how REDD revenue would be handled or what the government's share would be.

"The earlier draft talked about a 30 percent share of the REDD entitlements going to the central government. The signed regulation just says it will be separately regulated."

He said the finance ministry was studying how to treat REDD credits, whether they should be taxed, whether the government should impose a levy on the value of the credit as with, say, timber, or whether the government should take a physical share of the credits as with oil and gas.

The rules have been more than a year in the making and investors have been waiting for clarity. The World Bank said earlier this year there were about 20 REDD projects in Indonesia at various stages of development.

"From a private sector perspective, these new REDD regulations are really encouraging as they provide more certainty on process and procedure to implement a project," Dorjee Sun, CEO of Carbon Conservation, told Reuters.

"Investors are still missing one key piece of information which is the state revenue share requirement in Article 20 but this is a challenge that is being met by the Ministries of Finance and Forestry," said Sun.

Carbon Conservation is working with the Aceh government in Indonesia on Ulu Masen, the world's first independently validated REDD project covering 750,000 ha (1.87 million acres).

The United States and Australia see REDD schemes as a viable way of offsetting domestic emissions, although some green groups say REDD will help rich nations dodge carbon-cutting measures.

A draft climate bill by U.S. Congressmen Henry Waxman and Edward Markey proposed incentives that would help cut deforestation in developing countries between 2012 and 2025.

Earlier this week, Australia said it would raise its 2020 emissions reduction target to 25 percent from 2000 levels if other rich nations pledged equally ambitious cuts. It said a fifth of that target could be met through overseas offsets, including future U.N.-backed REDD credits.

For the moment, Indonesia needed to spell out how credits from early REDD projects could be traded, said Fitrian Ardiansyah, program director for climate and energy for WWF-Indonesia.

"Some of the groups at the international level are talking about whether they can bank the credits that are generated from today till 2012 and then try to sell after 2012," he said, adding investors wanted clarity on how to fund early REDD projects.

"The parts affecting economic viability of the project have yet to be laid out," said Devine.

"We may therefore be looking at donor money for the early REDD projects, with investor money to follow once the full picture is presented."

(By David Fogart; Editing by Michael Urquhart)

Source: UK Reuters

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Tags: CDM , forest , Indonesia , REDD