Redd & Ongs_2008

On-the ground role of NGOs with emerging carbon market issues: Is the REDD emperor actually wearing any clothes? David Melick – Terrestrial Programme Manager WWF, PNG. This talk is based upon my experiences in PNG, but I suspect that much of this is applicable to other countries, which are trying to get up to speed on REDD and the emerging carbon markets… Based on what I have been hearing this morning, I have been toying with what REDD stands for, maybe: Revenue Extracted for Deception and Disinformation? or how about: Reality Eliminated from Decisions on Deforestation? I very much hope REDD will work – it offers tremendous possibilities for saving forest and bringing income to landowners – but we must be pragmatic and see whether there is any foundation to PNG’s international promotion of its REDD capabilities. Right now REDD is threatening to become a muddled mess replete with the usual shady operators who haunt the PNG forestry scene. First, I’ll outline some of the major concerns and then I’ll go on to talk about the possible roles of NGOs with REDD.

LACK OF KNOWLEDGE Generally, there is a lack of knowledge on REDD and on the realities of the carbon markets; particularly in developing countries. But there also seems to be a lack of specific information and expertise in the developed countries. In addition, things are moving very fast, so this paucity of knowledge is further stretched as the goals posts are shifting almost by the day. To illustrate this, I would point out that I am being approached very regularly by people from government asking what expertise we (i.e. WWF) have and how it can be obtained. Of ten these approaches are being made unofficially because government agencies want to maintain the perception that they are in control. The fact that I am considered an authority is a sad indictment – I know very little… We are entering a weird alternative universe here of advisors, consultants and so-called experts…. For example, we have been hearing about the Australia-PNG Carbon Partnership, but I have yet to meet anyone in PNG, who can tell me exactly what this is in practical terms…

GOVERNANCE ISSUES: CONFUSION & COMPETITION There is competition for governance control of the newly emerging carbon issues within the PNG government. There is also competition from numerous individuals who are attempting to control the market. In PNG, the Forest Authority, Department of Planning, Agriculture Department and Dept. of Environment & Conservation are all jockeying for responsibility. Right now it appears that DEC will have responsibility for the newly formed Office of Climate Change and Environmental Sustainability; however, this also appears to be sit directly under the Prime Minister’s Dept., so who knows where the executive power will lie? Moreover, what about the role of Provincial Governments? What about sovereignty issues – there is suspicion within PNG as to Australia’s motives to push REDD; they are perceived to be positioning themselves to get cheap carbon credits from PNG and to be pressing their own governance regulations, which they will feel entitled to do if they put money into REDD in PNG. There is a parallel here with the situation I experienced in China. Following the commercial logging ban in 1996, the State Forestry Administration struggled with a sense of identity and found itself vying with other agencies for control of forests under a new agenda of conservation. That uncomfortable power struggle was continuing up till the time I left a few years ago. However, something similar is likely to occur in PNG (and many other countries). These internal power shifts raise questions as to whom is best suited to deal with these issues – can forestry departments change into conservation agencies, climate change experts or carbon brokers?

INADEQUATE EXPERTISE, SCIENCE AND POLICY DEVELOPMENT Another major problem is that vague/nebulous information is being presented as the basis for policy development and strategic frameworks. This garbage is being produced by a range of so-called experts who have placed themselves in positions of authority. These are academics and advisors, who must take responsibility for producing the range of superficial documents, which are adding to the confusion, rather then clarifying the government position on REDD. Moreover, many of these experts are the same people who have been writing what passes for environmental guidelines for the corrupt logging industry. Is it appropriate to use these dubious experts are the basis for a new credible REDD system? Consider, for example, the PNGFA Forestry and Climate Change Framework for Action 2008 - 2015. This document purports to set up a framework, by which PNGFA can start to develop policy for climate change issues. However, rather than setting out an achievable and measured policy development, this document is full of motherhood statements and constantly speaks of the need to build capacity; but it fails to articulate specific needs let alone produces a framework for moving forward. Simple clear guidelines are needed: Why does something need to be done? How will it be done?

How can this sort of document add anything to already confused and overstretched government agencies? Clearly there is a need to get professional input into these important issues given the quality of these efforts. The focus must be on specific carbon policy not generalistic climate change gumph… Another policy development document is the 2021 Future of the Forests Report from PNGFA. Again, this document is full of contradictions and lacks understanding of fundamental issues. At its most benign, this report advocates a “steady as she goes” approach, but at other times is seems to advocate a 200-300% increase in forestry (raising timber harvest from the current 3 to 8 million m3). In addition, the report identifies that agricultural expansion will impact on forestry. But, even given all these extra demands on the forest resource, this report then goes on to suggest that REDD and carbon sequestration could also become a major revenue stream for the forest industry. My question would be, how? Where is the additionality? Worryingly, this report also suggests that the PNG Government should create “enabling conditions” such as tax breaks etc., to help support the forestry industry. According to official figures, commercial logging operations are all running at a loss in PNG today – the thought of the government propping up these unsustainable and corrupt industries is something that most environmental NGOs in PNG would strongly oppose. In fact, I have been approached by UN in PNG, who are also confused. They have asked me how we see baselines and whether the government have dealt with this. They too are unimpressed and somewhat concerned by the state of carbon policy efforts in PNG and they fear that there is failure to understand the baseline concept – this must of course underpin any compliance markets.

What is the role of NGOs? PNG’s leaders have chest-thumped about leading the world to have REDD implemented post-Kyoto, but we must examine the reality behind the rhetoric. One role of NGOs is to be non-partisan and to ask the hard questions if needs be. These are some of the key issues as I see them in PNG with regards to REDD today: 1. Standards: Right now, the most important role NGOs can play is to help set standards and try to ensure that these form an integral part of compliance markets. WWF has established the Gold Standard for CDM projects, now we need to work towards the best standards for forestry projects – the markets have clearly shown a desire for NGOs to take a lead on this. Currently, WWF regards a combination of VCS and CCBA as the best forest projects standard, however, we should consider modifying these or developing/endorsing a single standard. This issue is complicated by the fact that environmental NGOs want to conserve the forests through REDD; however, they don’t want this to be used as an excuse not to reduce industrial emissions at the source. Good standards can help meet these aims and keep the markets honest.

2. Sustainable Forest Management (SFM): Will SFM be rewarded under REDD? This is a key issue that hasn’t been adequately addressed. WWF are very concerned about rewarding past poor practice. In PNG the forestry industry now advocates increasing rotations to 50 years and minimum cuts to 65cm dbh, (in what seems to be an effort to get on board the REDD bandwagon). There is no evidence these sorts of rotations are sustainable, let alone likely to be carbon additional. Last week, when I asked Bob Tate of the PNG Forest Industry Association whether 40-50 year rotations are sustainable, I was told, “the jury is still out!” This is hardly the sort of firm evidence needed to ensure compliance under SFM in REDD schemes…. Specifically, we need clarification on a range of issues: - How is SFM defined? - How is it monitored? - What about harvesting rotations? - Where is the supportive science? - What about harvested wood products (HWP)? – the treatment and accounting of HWP could completely transform REDD schemes. These SFM issues are thrown about (i.e. in the PNGFA Forestry Vision and Policy outlines), but at the same time there are numerous admissions of lack of capacity and compliance. Why, when forestry has been anything but sustainable for years, should we expect a transformation to SFM under REDD? Last week the PNG Forest Minister announced several changes to forests’ policy: the cessation of roundwood exports by after 2010, and a government guarantee to buy 25% of timber to combat transfer pricing. However, notably, there was no mention of any attempt to improve forest industry compliance to sustainable management regulations. 3. Eligibility: The issue of eligibility is critical – in terms of baselines and land status. Specifically; - Where are the baseline measures? - How will the increasing export of oil and gas impact upon baselines? - What is the baseline measure of timber extraction? There are dozens of unanswered questions here. Moreover, people in PNG government are asking whether we should use a 1972 or a 1990 forest baseline measure – why not 2008? How will the Government designate and define land-uses? In PNG villagers seem to think all forest will be eligible – but it will not; only forest under threat will be eligible under additionality rules. Given this, we must also be wary of cynical government. In Papua, 9 million ha have been designated for oil palm, but a quick analysis shows most of this land is not suitable for oil palm. This would appear to be a case of the Indonesian government placing land

under potential threat, so they can then build a case for REDD later – NGOs must jump all over these sorts of disingenuous definitions… Another eligibility issue concerns those communities who have already adopted best practice, for example by forming protected areas. These communities may not be eligible for carbon payments, while we are in effect rewarding landowners who want to log or deforest. Globally, this situation is demonstrated by the position of countries such as Costa Rica, in PNG it is illustrated by communities who have formed Wildlife Management Areas. Can we develop biodiversity credits that will be realistic revenue earners? 4. Social equity and centralized systems: This comes back to standards. Key elements within standards must include social equity and transparency of money flows to communities. The PNG Government draft policy has floated management figures of between 40-60% of carbon payments – how is this justified? In PNG there are worrying signs that individuals are trying to corner the market, notably government ministers, senior public servants and/or their friends and wantoks. The politicization of the REDD markets in PNG cannot be overstated and all potential investors should be aware of this. 5. Encourage best practice: Eventually, meaningful REDD schemes must work through a centralized compliance system, but this is years away. Till recently, I favored working with Government to help construct this centralized system, but in the last few weeks I’ve swung 180 degrees. Because of political interference, self-interest, and the lack of expertise, it’s clear a national carbon accounting and compliance system is not realistic in the short-term. Now, I think we need to work through voluntary markets. REDD will be market-driven if it is to survive, let alone prosper – we must support best market practice. If well-run and sustainable voluntary markets are established, this will drive national systems to match these and hopefully these voluntary schemes will become part of compliance markets. There was a clear message coming through from recent climate meeting in Bonn: the markets aren’t waiting – carbon investors want to move forward with or without NGOs and, presumably, without unorganized governments. 6. Education and awareness raising: People must be aware of their legal rights and obligations. In PNG it is clear that people need to be informed about carbon cowboy schemes. Local people refer to REDD as “selling the air”; this refers both to the fact it’s seen as money for nothing and maybe also that it’s about gas…. Carbon cowboys are making deals as we speak; but in some cases in Papua, landowners already owe money to carbon traders. This is because landowners didn’t understand the costs involved in verification, monitoring and maintaining permanence…

Unscrupulous carbon traders (linked to highly placed political figures) are reportedly strong-arming and threatening landowners already in PNG – this seems to echo the existing bad situation within many logging concessions, where corruption is rife… Tim Flannery pointed out that landowners have far more power trading carbon as opposed to timber, because with REDD, the crop (i.e. carbon) doesn’t leave the land. But who owns carbon? Landowners own the trees but after a forest agreement, the timber is owned and exported by the government – this is a mechanism by which vested interests in government may well attempt to corner and control all markets – it must be clarified. SOME GENERAL COMMENTS ON NGOS ROLE ON REDD GLOBALLY Roles of NGOs will vary in differing places. For example, in Peru WWF want to review land registration. Currently, people will lose rights to their land if they are deemed not to be developing it; we would like to see REDD considered as a development activity so the land registration is maintained for forest conservation. Also, while we are looking to work on pilot projects, we cannot forget big picture issues. We must look at leakage – for example, the situation with China is laughable. There are only two CDM forestry projects, both in China – yet China has had a commercial logging ban for over 10 years and have exported their deforestation to Russia, Burma, Congo, etc. How can we support this? THE POWER OF WWF IN THE GLOBAL MARKET WWF has a key role in setting standards in REDD because the REDD is being driven through Europe and this is where the WWF brand and influence is greatest. Furthermore, governments who want to implement REDD will have to listen to NGOs because the markets will be driven by international buyers who will demand credible standards – right now the government and logging companies are non-transparent and cannot be pressured. Shareholder sensitive multinationals are looking for carbon credits and corporate social responsibility; they will be very susceptible to external scrutiny and won’t accept a continuation of the current poor practices of the logging and land-use in PNG.

Concluding comment I think REDD is, potentially, a huge opportunity for PNG. I also think there are a lot of decent people, who want this to work. What we must safeguard against – and NGOs have a key role in this is – is to ensure that the science is solid, baselines are rigorous, landowner rights and obligations are understood, and, centralized payment systems are equitable. We must also ensure that vested interests, be they Governments or their unelected selfappointed special representatives, don’t hijack the whole process …