Thursday, September 03, 2009

Kirk Roberts rides again

The story so far... dodgy carbon credits purporting to represent forest carbon and signed by a government minister appeared in Papua New Guinea a few months ago. The credits caused consternation around the world, as nations prepare to do an international deal over forest carbon at the climate talks in Copenhagen. But a number of things have never been entirely clear. How much carbon, and how much money, the companies involved in these deals think they are handling in the country and what, exactly were those dodgy carbon credits used for?

Dramatis Personae

Kirk Roberts -- Nupan Trading. Dubbed the Kingpin of the carbon cowboys. Buyer of carbon credits from Papua New Guinea landowners, self proclaimed “one of the most important foreigners in PNG”. Former professional show-jumper, licensed horse trainer who was fined for doping a racehorse and instructing a vet to withhold veterinary records.

Dave Sag -- chief executive of Carbon Planet. Carbon Planet is the Australian carbon brokerage that wishes to sell forest carbon offsets to individuals, corporations, banks and governments.

Wari Iamo -- acting head of the Office of Climate Change. Dr Iamo is conducting the investigation into what went wrong previously in this office, and to pull together the country’s strategy for Copenhagen by November.

In today’s Sydney Morning Herald are two extremely illuminating articles about our drama so far. In one, Kirk Roberts has claimed to have power of attorney over 90 forestry deals in Papua New Guinea, “giving him control over land potentially worth tens of millions of dollars”. He has declined to give any information about how these deals were done, and what landowners understood by them.

But in the second article, Dave Sag finally spills the beans about the dodgy carbon credits. What were they for he is asked? Mr Sag says that Mr Roberts had used mocked-up carbon certificates signed by Mr Yasause as "props'' when negotiating with landowners, but he denied they were intended to mislead.

Quote from the article:

He said the documents, which purport to represent a million tonnes of ''voluntary carbon credits'' issued by the UN under the Reduced Emissions from Deforestation and Degradation - or REDD [Reduced Emissions from Deforestation and Degradation] scheme - were created by PNG officials simply to explain the scheme. ''Those certificates are worthless. … No one who knows anything about carbon would take them in any way seriously,'' Mr Sag said. ''They ended up in Kirk's hands because they would have been produced as a prop to be taken out and waved in front of people in order to provide some physicality to what is essentially an ephemeral thing.''

Readers ought to judge for themselves whether or not these credits were intended to deceive. It is true that nobody who knows anything about carbon would take them seriously, but I guess the point is that the landowners certainly do not know very much about carbon at all. The story then goes on to report that one landowner claimed he was co-erced into signing a deal. And Wari Iamo calls plaintively to landowners not to sign any more agreements with private companies until after Copenhagen.

But what about money, the Sydney Morning Herald reports that “Carbon Planet, which has acquired a publicly listed company, told investors recently it had $100 million in potential REDD projects in PNG, which is an order of magnitude larger than what Mr Roberts was claiming.

However, more privately, in a document I’ve obtained that was created by Carbon Planet, their business model is illuminated. In it, it claims: 25 REDD Projects have been contracted at $1 billion per annum to date. (These are probably Australian dollars but it isn’t entirely clear).

I guess the disparity between these figures could depend on a number of factors (an over-active imagination being one of them). More seriously, some of them could refer to turnover, how much money would pass through the hands of these traders and brokers, the other could refer to their cut. Seeing as we don't know what percentage of any carbon deal that Mr Sag or Mr Robert's company is getting we don't really know what they hope to make on the deal.

But lets imagine for a second, that this figure of a billion turnover is in some way accurate. Even if the companies concerned were to return most of this money back over to the landwoners, even if they only took a 1% fee this would amount to over $10m a year. If they took 10% they would make $100m. All from an initial investment of $1.2m Australian dollars. Quite a punt.

The Carbon Planet business model also claims eight REDD memorandums of understanding have been contracted in Indonesia, at $600m per annum. In addition they have five CDM projects at $76 per annum expected in 2009 in Pakistan. The company is also working on securing carbon credit projects in Africa, Australia, Azerbaijan, Peru and South America.

The idea then seems to be to create “REDD” projects for carbon and biodiversity credits and sell these onto the voluntary market after certification through the various standards that are emerging. These certified credits will then sell these on to trading organisations, climate change consulting and accounting firms, PR, Advertising and Marketing firms doing Corporate Social Responsibility programs, and direct to banks, governments, corporations and traders.

I guess the real worry is that in the rush to do something about carbon emissions quickly and cheaply, when push comes to shove, how much is it really going to matter what a landowner who cannot even read or write understood about his land when he signed a cross on a piece of paper?

I am a top foreigner in Papua New Guinea, says carbon kingpin


September 4, 2009

Australian firm linked to PNG's $100m carbon trading scandal


September 4, 2009

p.s. a name check also to Ilya Gridneff the AAP wire reporter who did a lot of the legwork that ended up on the front pages of the Sydney Morning Herald this morning.

Updated September 11th, 2009. "Sidney" changed to "Sydney" throughout. Apologies.