Will PNG Cash in on ‘Carbon Credits’?

By Paul Oates

A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or carbon dioxide equivalent (CO2). (Wikipedia definition)

The concept of Carbon Credits came out of the 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC). Under the Kyoto Protocol, those who are currently producing greenhouse gases and primarily Carbon Dioxide (CO2) a gas that is reportedly causing global warming, are allowed to offset that production of CO2 with Carbon Credits. Carbon Credits can also be traded between those who have them and those who need them in order to continue their CO2 producing activities as usual without suffering any yet to be determined penalties.

In order to understand how the Carbon Credit Trade is progressing, an organization called Probe International has compiled an ‘on line’ data base of those Credits that reveals who is cashing in on Carbon Credits.

Significantly, PNG currently only figures in 2 out of many hundreds of transactions so far. One of the major producers of greenhouse gases (China) and therefore CO2, is apparently also one of the biggest recipients of Carbon Credits.

PNG PM sees RED(D)

PM Somare has been very critical of agencies such as the UN and the World Bank who are trying to specify how Carbon Credits can actually be monitored. PNG is co-chair of the REDD (Reducing Emissions from Deforestation and Degradation) negotiations. Apparently PNG is arguing that a reduction in monitoring of the eventual process will speed up negotiations. It doesn’t take the proverbial ‘Blind Freddy’ to work out what Somare actually wants?

Sam Moko, a PNG forests campaigner, is quoted as saying. “With a reputation of corruption, complete disregard for land owner rights, free and prior informed consent and accurate estimations of likely benefits, PNG is in no fit state to be receiving REDD funding without strict conditions in place. The PNG delegation is using its position to keep green groups and indigenous people’s groups away from meetings in an attempt to keep rules on social and biodiversity safeguards out of the REDD framework.”

Carbon Sinks

Previous guarantees have been made by European countries that they would provide billions of dollars to countries who currently still have rainforests to keep their forests in the ground and thus provide a ‘Carbon Sink’. A Carbon Sink is a term that refers to a method of sustainably capturing free Carbon Dioxide and thus removing the Carbon from the Earth’s atmosphere. Forests are one method of achieving this requirement. In essence, this is what happened millions of years ago during the Carboniferous Period when the deposits of coal were formed that are now being burnt to produce electricity.

So the position of the PNG government concerning Carbon Trading may seem to be rather ambiguous. On one hand, the government has clearly sanctioned the large scale felling and extraction of PNG native forests. Yet on the hand, it is now claiming to be frustrated at delays in receiving payments from those counties that have previously agreed to provide funds to leave PNG forests alone to act as a ‘Carbon Sink’.

The Full Cost of Alternative Energy

Those who are currently proposing the use of alternative energy production should logically also be proposing a negative period from the date of the installation of the wind generator or solar panel in order to compensate for the amount of greenhouse gases produced during the manufacture of the device.

Introducing large wind and solar powered electricity generators to PNG may therefore be very disadvantagious to the future user in the short term. The long term benefits may also be questioned if these devices breakdown and have to be replaced.

PNG’s Potential Power Sources

PNG’s abundant potential for hydroelectric generation has been eyed off by the Queensland government who have recently announced a potential scheme to bring electricity from the Purari to Queensland via an under sea cable link. Yet what happens when PNG needs this power and the potential Carbon Credits that go with it, herself?

The media has recently reported that the residents of the potential hydro scheme apparently know nothing about it. The concept therefore of a vulnerable power cable being disrupted by disgruntled PNG landowners is not impossible to imagine.

A Carbon Tax and PNG

It seems an apparent travesty that a ‘Carbon Tax’ is being touted by some countries as a way of reducing CO2 emissions. Yet those who may be least able to afford this tax may have to pay this additional cost on top of the current cost of a product. Everyday items imported and used by PNG consumers may soon become more expensive if this tax is imposed by countries that produce exports to PNG.

Increasing World Energy Requirements

The problem of energy production is further complicated by an ever increasing world population that requires more and more electricity. The more energy required currently equates to more CO2 than can be captured and stored by the ever decreasing world forests. The problem for PNG is that many of the local forests have already been felled and removed in a non sustainable manner by reportedly foreign owned timber companies.

The overall dilemma is that while countries currently producing excess CO2 are allowed to trade Carbon Credits with those who have them, there will be no real change in the overall amount of CO2 being produced and therefore, no benefit in reducing global warming. Those claiming global warming is adversely affecting them already seem ponderously slow in grasping this axiomatic ‘nettle’.

What’s in it for PNG?

Can PNG effectively benefit from any effective Carbon Trading? It seems ‘the jury is still out’ on this question.

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See Also: McKinsey’s REDD plans in Papua New Guinea: Nice work if you can get it

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15 thoughts on “Will PNG Cash in on ‘Carbon Credits’?

  1. I wouldn’t hold my breath of the Hydro Electrical Scheme put forward by the QLD state Government. It’s announcement (with a big focus on the apparent 15,000 jobs it will create in QLD) was timed to counter mass public assets sell offs and an all but failed cross town tunnel. News programs have reported that the Hydro Electrical Scheme between PNG & QLD is nothing more than a publicity stunt by the QLD Labor Party.

    This post is a great explanation of Carbon Trading, with a PNG perspective.

  2. Did anyone else notice the following headlines in PNG online news yesterday:

    The National
    Voluntary carbon schemes risky, says prime minister
    “PRIME Minister Sir Michael Somare says the trading of forest carbon through voluntary carbon schemes in PNG is risky, premature and undermines an equitable REDD+ approach that is being promoted by the government.”

    Post Courier
    Govt backs carbon bid
    “The Government of Papua New Guinea has thrown its weight behind carbon trading on the voluntary market. In a letter to Nupan (PNG) Trading Corporation Ltd, Deputy Prime Minister Don Polye said the Government was fully behind Nupan in its endevours to create and verify the Kamulo Doso, East Pangia, Aitape-Lumi Consolidated and Extension and Passismanua Inland Forest concession areas.”

    Meanwhile the SMH is reporting of recent UN discussions:
    “The PNG delegation is using its position to keep stakeholders, such as green groups and indigenous people’s groups, away from the meetings in an attempt to keep rules on social and biodiversity safeguards out of the REDD framework.”

    WTF is going on in PNG. With the current standard of politicians and governance (or lack of) PNG does not deserve to prosper from carbon trade. This is a big reason there has a only been two transactions to date as opposed to the tens of thousands in China, India, Indonesia etc.

  3. There seems to be a dispute going on between the PM and Don Poyle. One endorses voluntary carbon credit schemes, while the other discourages them. A conflict of vested interests perhaps?

    Also note the rise of Federica Bietta as the spokesperson for PNG on carbon initiatives. She is the Deputy Director of the Coalition for Rainforest Nations (CfRN) and a Director of Finance and Administration at the Columbia University Business School. As far as I know she has never been to PNG.

    The Director of the Coalition for Rainforest Nations is Kevin Conrad, and he is also from Columbia University.

    Think there might be a connection here?

    “Lucy, yu got some splaining to do!”

  4. I thought it was only a few weeks ago that the PM advocated voluntary carbon trading because of the April Salome project in his electorate while the then Deputy PM along with Warri Iamo opposed voluntary carbon trading. It appears, with the exception of Iamo that the situation has reversed.

    My guess is April Salome has copped a hard time getting approval to enter the voluntary market (hiccup with the CCBA after the public consultation. Note Nupan has exactly the same problem) because of landowner disputes and now wants to bypass any scrutiny thus changing tact.

    Who bloody knows what the real situation is. It’s all smoke and mirrors….

  5. April salume is not a carbon trading project.
    It is a 150,000 hectre logging project read its PDD.
    Carbon Credits can not be generated by the CCBA standard.

    The comments on the Nupan “Kamula Doso project’ have been met to the satisifaction of the process. The project is waiting to complete its last project validation in the project area.
    The process understand s now that the first and last level of consent is within the project.
    Kamula Doso has no land owner disputes other than previous logging companies properganda and the media then trying to create doom and gloom to sell newspapers from that information.

    Don Polye is sticking up for the people of PNG and doing what is right.
    Somare does not own any PNG forests , he has no legal right to try and trade PNG forests through this REDD+ land aquire stratergies.(land grabs)
    Each project area is owned by those forest ILG’s who register their forests as a Incorporation.
    Somare is trying to control the forests of PNG, although his legal advisers , 1st Legislative Council and Deupty PM have been advising him he is treating PNG illegally.
    The process of VCS will always bring the truth out into the open, which is what is needed in PNG.

  6. I just read the PDD. I am not sure why the criticism as April Salome are taking exactly the same approach as Nupan re CCBA and VCS to in order to generate carbon credits. Call it what you want I suppose.

    Yes you are right carbon credits can not be generated by CCBA. This however is the route chosen by Nupan and one that has been rehashed time and time again by Nupan in the media…”dual verified to the Climate, Community, and Biodiversity Alliance (CCBA) and Voluntary Carbon Standards protocols”.

    You say there are no landowner disputes. The public consultation documents on the CCBA website which are freely available to download show page after page of ILG Chairmen stating:

    1. Documents relating to landowner consent are fraudulent
    2. Landowners have not been consulted
    3. Landowners strongly object to the project
    4. The project delivers no benefits to the landowners

    You state “The project is waiting to complete its last project validation in the project area”. Now you have raised the important point that the CCBA does not issue credits can you also be honest about the fact that the VCS, who does issue credits, currently does not have any methodology with which to validate the Nupan projects against. This means any talk of imminent approval and validation of credits etc is just wrong because the project is not and it is currently impossible for the project to be undergoing VCS validation.

    I want to make it clear I believe it is the right approach re CCBA and VCS. However I think there has been too much bullshit sprouted about progress, landowner consent and how the project is progressing and your last post is just typical of this misinformation.

  7. John, the documents you refer as comments on CCBA website are cleverly arranged by logging company employees.
    All comments have been refeuted months ago to the approval of the DOE.
    The boss has had the 52LG’s sign in person to carbon trade, 2 years ago.
    The signatures on theose comments are very different to the 52 ILG’s.
    Importantly to add some of the complaints have been dead for over 15 years etc etc etc.
    If you care to look at the VCS website you will see the Nupan ‘ methodology’ under the name of a Nupan contractor Green Collar .

    No BS about Nupan progress John , but to put you on the right track, so far the CCBA standard is extra baggage , commercially no one gives a hoot in regard to its ‘social’ and bio-diversity rules.

    So far with International negotiations there has not been any proposed buyers , that give care for Rain Forests or the social issues in those rainforests. Sure they all talk about and lecture it , but when comes to putting their money were their mouths are forget it, theirs the Bullshit.

    Thank you for your interest in Nupan.

    1. Thanks for the measured response Greenie Cap. I have no way of telling if the comments on the CCBA website are from real ILG chairman or not. I would like to think the DOE auditing the project through the CCBA would meet them in person to verify. If you say the DOE is satisfied I will take you at your word.

      I am also aware that Nupan had submitted a methodology to the VCS. I believe this is the second one submited by a Nupan contractor. I congratulate Nupan for persistence and initiative. We still need to be clear about the process. A methodology submitted to the VCS needs to undergo a double approval process i.e. approved by 2 DOEs before it can be used to validate a project. I understand that the methodology is currently undergoing this approval process. I stand by my comment above that it is impossible for the project itself to be undergoing validation because the methodology you refer to has not been approved. First a methodology is approved and then a project can be validated against that methodology.

      The VCS approval process of methodologies is long and tedious. The World Bank submitted a methodology for REDD in December 2008 that is yet to be approved.

      It sounds like you might be backtracking from trying to get CCBA approval with your comments re extra baggage. The Ecosystem Market Place Voluntary Carbon Market Survey 2009 noted a clear preference for projects approved by the CCBA and VCS. From a personal perspective if I had a choice of purchasing credits from only a VCS project or a CCBA and VCS approved project I would choice the latter. I may not necessarily pay a premium but all things considered equal another layer of security and scrutiny is desirable from a buyers perspective.

      Having said that the CCBA process may become too time consuming and costly from a commercial perspective and Nupan may decide to ditch it. That is Nupan’s perogative.

      Cheers.

  8. Hi there John,
    the meth is at its ‘second review’ and final assessment.
    Of course Nupan is more imformed of its validation stauts than anyone else out side the process, and REDD has been trying for a long time after their 16th version and the pending International issues will be another 16 versions.

    Dont get me wrong , Nupan wheres many (caps) at the moment it is Enviromental, Social and Commercial . The ILG’s of many projects have mandated Nupan to bring them the best returns possible without harming their enviroment.
    its just in the real world of $ nobody really considers the forests or the social elements.
    I could be wrong but Nupan Economists and International brockers have been negotiating for many years with 100’s of companies around the world,and I am simply stating and observation of negotiations over this period.
    So far, commercially the CCBA has no ‘ finacial assistance to promote the price of a VCS VCU, but I advise that when the VCU are registered and REDD+ goes on and on around in circles and buyer’s on the planet may ‘change’ their views.

    the Boss beleives that the CCBA could come in to affect with the PNG forests biggest threat the PNG Government.

  9. Seems PNG wants to pioneer something which it has yet to sort out within country first before going to the world media. We havbe nothing tangible in place yet we want to preach about carbon trading and redd. Lets clean our back yard first, lets set the policies the legislation, the operating perimeters first. The small island nations are well into their second national communication, yet PNG wants to pioneer the REDD+ and Carbon Trading, the small island nations have alot more to lose because of climate change yet PNG has nothin in place except for a few greedy politicians and beureaucrats with their carbon cowboys!!!

    1. Right On Dawg! I mean we can”t even keep our city clean for starters. If you’re talking about the environment then imagine if all those millions spent on the Office of Climate Change had been spent on a waste management system for Port Moresby.

      For example different rubbish bins provided by NCDC for glass, paper, biodegradeables, plastic etc. then promoting recyclying companies to expand their recyclying beyond just metal. Then turning our waste dumps into methane gas production facilities for clean energy to power our city buses.

      Wouldn’t that provide a more immediate impact on our environment? Carbon Trading has to be watched no doubt, but the government should not necessarily be a player in the industry or actively be looking at making deals at this stage.

  10. Dont be confused Dawg REDD+ has nothing to do with carbon trading.

    Png back yard is a mess because the REDD and REDD+ UNFCCC has ‘ mention ‘ through Conrad to the PM that there could be handouts or ‘ pledged European Money in excess of 100’s of millions, if the PM can provide results to be paid.
    As you know this type of communication to a PNG politician is like a child in a lollie shop.
    Any way 3 years goes past and the PM handouts or pledged monies is nowhere, and going nowhere.
    The PNG PM has nothing to offer he does not own PNG rainforests, and more importantly if there was , Conrad has talked the PM into using the Columbian Business School as the PNG facilitaor to distrubute funds!!!!!!!!!!! Cleverly enough the PM is being instructed to take it away from the backyard of PNG.

  11. Carbon Price which is a supposed Carbon Tax for Australia…
    Its just another name for charging Australian individuals another tax , and a vehicle to haggle big business polluters to a political advantage, it has no possible way of addressing Climate Change or reducing any emissions.
    Another fraudulent revenue gathered chapter in Australia’s democracy.
    The next one coming to Australia is a Climate Change disaster tax as a assurance for insurance underwritten by each state on top of a mandatory annual disaster insurance premium.
    Paul congratulations on this article you have answered nearly every political question being debated in Canberra today.
    Mechanism——nobody wants to discuss the real issue ,

    how can Australia trade a Carbon anything, the Greens and the Labour party are absolutely hopeless….what legitimate tenable instrument from what mechanism.
    Fancy trying to put a fixed price before a solid unanimous mechanism and trading scheme , because as the UNFCCC and its Government agencies , who don’t really care of the Environment or its social elements or third world countries , especially those with large rain forest areas.
    Instead they have created REDD+ a formula to acquire land and diverse the natural environment to ‘ideoliges’ that are criminal and a World Bank Carbon Bank .
    Regarding PNG it is absolutely apparent that PNG makes realise of big polluters responsibility,s , to be audited and made to policy to offset with a PNG VCS verified carbon unit.
    now Australia is having a political ‘price’ argument , how ridiculous.

  12. Greenie Cap, I nearly fell off my chair when I got a bouquet from you. Perhaps the two ends of the debate have ended up coming the full circle?

  13. Is this PNG’s fate?

    Indigenous Indonesians slam forest scheme
    • From: AAP
    • June 22, 2011 10:37PM
    INDIGENOUS peoples of Indonesian Borneo have demanded a halt to an Australian-backed forest conservation scheme, saying they are trampling their rights and robbing their lands.
    The Central Kalimantan chapter of the Indigenous Peoples Alliance issued a statement condemning the projects, including those being implemented under a $947.91 million deal with Norway to cut carbon emissions from deforestation.
    The projects, which involve the Australian government, CARE International and WWF environmental group, fall under a UN-backed conservation drive known as Reducing Emissions from Deforestation and Degradation (REDD).
    Indigenous alliance secretary general Abdon Nababan said the rights of traditional landowners had been ignored, and forest-dependent communities faced being driven off their lands or denied their customary livelihoods.
    “REDD could be the cause of cultural genocide as most indigenous people live in primary forests and peatland areas” which fall under a forestry moratorium announced by the Indonesian government last month, he said.
    “Its implementation will surely drive them away, though they have lived there for hundreds or thousands of years,” he added.
    Several studies have found that indigenous peoples are good forest managers but Nababan said schemes like REDD – part of UN talks for post-2012 climate action – handed control to corporations and environmental groups.
    “There is no other choice but to appoint indigenous people as the REDD projects’ main actors. They have traditional knowledge in managing and safeguarding our forests over centuries,” he said.
    The alliance called for an “immediate moratorium” on all REDD projects in Central Kalimantan until various conditions are met, including recognition of the mainly Dayak peoples’ “political sovereignty” and “collective rights”.
    Indonesian President Susilo Bambang Yudhoyono’s top adviser on climate change and REDD issues, Agus Purnomo, said he was unable to immediately comment.
    Indonesia is often cited as the world’s third biggest emitter of greenhouse gases, due mainly to rampant deforestation by the palm oil, mining and paper industries.
    Central Kalimantan is a heavily forested and resource-rich province with a total area of about 153,000 square kilometres, or more than the land mass of Greece.
    It has been designated as a test ground for REDD pilot projects, which are key to Indonesia’s commitments to slash its greenhouse gas emissions by at least 26 per cent by 2020.
    Deforestation is estimated to account for almost 20 per cent of global greenhouse gas emissions.
    In Indonesia it is said to produce more carbon emissions than all the cars, buses, trains and planes in the United States.
    But a joint statement issued after a meeting of the indigenous alliance last week said REDD schemes under way in Central Kalimantan were creating “confusion and chaos among indigenous communities”.
    It said the government and the schemes’ backers had ignored their obligations to inform and consult with indigenous peoples whose lives could be dramatically altered by measures to prevent deforestation.
    The alliance also demanded the Indonesian government address allegations of massive corruption surrounding forestry concessions.
    The forestry ministry admitted in February that less than 20 per cent of plantation companies and less than 1.5 per cent of mining firms had official operating permits in Central Kalimantan.
    It said that out of 352 plantation companies operating in the province, only 67 had permits, while only nine out of 615 mine units were operating legally.

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