Congratulations to Ilya Gridneff of the Associated Press in Port Moresby in Papua New Guinea who has diligently followed the trail of the Kamula Doso carbon credit story right back to its roots. A few hours ago he filed a story on the wires about the elusive Australian businessman, Kirk Roberts. Mr Roberts is the man behind the company Nupan Trading--which had a relationship with Theo Yasause, formerly at the Office of Climate Change. Nupan Trading is also behind this website.
As Gridneff reports, Mr Roberts is a colourful character. A disgraced former horse trainer, he is currently working in the cock fighting industry in the Philippines (and currently under investigation by the immigration department in this country). In 2007, he was fined $2,800 by the Australian Securities and Investments Commission for failing to assist liquidators and failure to provide reports to the liquidator. Mr Roberts told Gridneff, "I am the most beneficial foreigner to this country (PNG) right now."
Mr Roberts is undoubtedly referring to his work all around Papua New Guinea signing up landowners for big carbon trading deals in advance of negotiations to trade forest carbon as offsets between countries. Although Mr Roberts declined to offer more details about where his forest carbon deals are to be found in Papua, we know there could be a number of them. Carbon Planet previously revealed that it provided $1.2m Australian dollars of project finance to develop carbon trading projects around the country, with $100,000 in finance for each deal. Of course the one deal that we do know about is Kamula Doso.
The story so far sheds a spotlight on the impact that international discussions over avoided deforestation are having on forests around the world. Avoided deforestation markets will not just include the UN's REDD credits. The climate bill passing through Congress at the moment also allows for the trade in credits generated by avoided deforestation.
Some of those involved speak of an orderly arrival of this market. Nonetheless, the absence of a deal does not stop the private sector from speculating that a deal will be done, or even trading on the basis that they will do. In 2008, REDD projects made up 14% of the forest carbon credits traded on voluntary markets. So even though REDD credits do not formally exist, a way is being found to trade them as options. REDD “credits” trade at a lower price than other kinds of forest carbon credits, a signal that the market recognises their risk.
Economists would see nothing wrong with this, and might well argue that such advanced trading is stimulating investment in avoided deforestation projects. The problem is that the information vacuum over forest carbon deals puts landowners at a serious disadvantage.
Landowners who don't really understand what is going on, and who really cannot be expected to fully understand, feel pressured into signing confidential agreements. In the absence of an international consensus about how the profits of such deals should be shared between landowners, local and national governments and traders, how can landowners negotiate a fair deal?
Buying up forest carbon rights is popular at the moment. Even if forest fails to make the cut for REDD credits, there are Waxman Markey credits--which could quite possibly have more relaxed rules. And even if these newly purchased forests don't qualify for either of these mandatory carbon trading schemes then there is always the growing voluntary market to fall back on. The voluntary market in forest carbon is likely to get a boost from a deal in Copenhagen. Corporations and individuals will want to get in on avoided deforestation credits. Its going to be a bonanza.
But its all good, surely? It is all going to result in less deforestation? Not necessarily. The patchwork of discussions and deals under way currently offer little but uncertainty at the moment. Will the avoided deforestation projects really avoid deforestation or would they have been saved anyway? How will they avoid 'leakage' with loggers simply finding new areas of forest to cut down? If they cannot address the drivers of deforestation in Brazil and Indonesia such as demand for beef and palm oil, how will it actually work? Questions, questions, questions.
By Ilya Gridneff
PORT MORESBY, July 16 AAP - A former Australian horse trainer who ran a Philippines cock fighting business is involved in carbon deals central to an inquiry into Papua New Guinea's suspended climate change boss.
Kirk William Roberts denies any wrongdoing in his carbon dealings in PNG and claims former business associates are running a smear campaign against him.
"I am a loveable larrikin," Roberts said from his Port Moresby home.
"I've done nothing wrong, we're doing good things.
"I am the most beneficial foreigner to this country (PNG) right now."
But Roberts' role in a series of carbon deals is now at the crux of PNG's carbon trading woes that includes an investigation in Dr Theo Yasause's role as director of the country's Office of Climate Change (OCC).
Yasause gave Hong Kong based company Forest Top and Roberts, a director of another company called Nupan PNG, an official mandate to trade carbon after Roberts locked in local landowners for potential carbon deals.
But documents show Yasause issued the mandate when he was the PNG prime minister's chief of staff, signing documents as interim director of OCC on May 12, 2008, one month before he was officially appointed director.
The documents show Yasause allowed Roberts to go to the world market offering lucrative carbon credits in PNG.
On the same day Roberts and Yasause also signed a memorandum of understanding with Forest Top director David Leamey to facilitate international carbon credit deals.
Forest Top then gave Australian company Carbon Planet the exclusive rights to broker the credits and provide technical and scientific input to verify the credits.
Forest Top was to be the body that distributed carbon credit sale proceeds to the stakeholders like Nupan, Carbon Planet and landowners.
An Australian Securities and Investments Commission (ASIC) document shows Carbon Planet last year gave $1.2 million for projects in PNG which were associated with Nupan and Forest Top.
Carbon Planet literature predicts the global voluntary carbon market will be worth around $US9.9 billion-$US17.1 billion ($A12.5 billion-$A21.5 billion) per year by 2012, with the global compliance market worth up to $US2 trillion ($A2.5 trillion) by 2020.
Carbon Planet chairman Jim Johnson said they still stood by their PNG deals but declined to comment further.
The deal between Yasause and Roberts' company Nupan became public last month, and as PNG does not have any carbon policy nor legislation for such ventures, the PNG government sidelined Yasause and launched a full investigation into the OCC.
The prime minister's media secretary Betha Somare said any of the deals struck were not valid. The new acting director of the OCC, Wari Iamo, is expected to make a similar statement this month.
"As Nupan (PNG) Trading Corporation is the power-of-attorney for numerous incorporate land groups, it is inappropriate for us to comment on any media speculation at this time," Roberts said.
Nupan and Forest Top are now in dispute and Leamey and Roberts are locked in various legal battles over wide ranging allegations centred in the Philippines, where Roberts is under investigation by the Philippine immigration department.
"I want nothing to do with carbon credits and nothing to do with Kirk William Roberts," Leamey said.
Roberts, equally as frosty in his opinions of Leamey, was involved in what is considered the Philippines' national sport of cock fighting, running an operation in Olongapo, 130km northwest of the capital Manila.
"Cock fighting in the Philippines is the equivalent to pokies in Australia," he said.
Roberts said jealous cock fighting rivals, former business partners and competitors were running a smear campaign against his efforts to help PNG.
That smear campaign includes details of his time as a thoroughbred trainer in NSW, when his horse Yobro won the 1997 Auckland Cup and came second in the Brisbane Cup the following year.
But in March 2002 NSW Thoroughbred Racing Board stewards charged Roberts for verbally threatening his vet, Dr Darren Gibbins, during a December 2001 telephone call.
Roberts was given a six months disqualification after being found guilty of asking his vet to withhold records from an inquiry.
Previously Roberts had a six-month ban for administering a prohibited substance to a racehorse.
An ASIC prosecution report for July to September 2007 shows Roberts also was fined $2,800 under the Corporations Act for failing to assist liquidators and failure to provide reports to the liquidator.
AAP ig/mo/bwl
Thursday, July 16, 2009
Monday, July 06, 2009
Knights in shining armour
Who will save Papua New Guinea's forests? A year ago, Prince Charles launched his project to help save the rainforests. In doing so he described an "an astonishing level of public consensus in the developed world that tropical rainforest destruction must be stopped if we are serious about reducing the levels of carbon dioxide in the atmosphere". Shame, then, that on July 1st, to dismay among environmentalists, mummy (the Queen), gave a knighthood to megawealthy Tiong Hiew King, founder of giant Asian logging conglomerate Rimbunan Hijau, for services to deforestation, I mean, commerce.
Rimbunan Hijau is the Malaysian conglomerate which is the biggest extractor of tropical timber from Papua New Guinea. It is also the parent company of the subsidiary Wawoi Guavi Timber, which is engaged in a legal battle over the logging rights to the forest of Kamula Doso in Papua. Kamula Doso is one of the largest blocks of unlogged rainforest in the country, containing hundreds of millions of dollars worth of timber and strategically placed for access to all the other remaining forests in Western province.
Rimbunan Hijau would very much like to cut the forest of Kamula Doso, and the rest of the region, down to stumps. So that it can be turned into something useful like Australian barbeque trolleys, while locals scratch around wondering where future went. Indeed, the only reason Kamula Doso is still standing today is because of a lengthy court battle being fought by local NGO Ecoforestry Forum over the way the concession was awarded and the teensy weensy issue of whether logging rights had actually been acquired from local landowners before the concession was granted.
But others now realise there is money to be made by avoiding deforestation. So while the loggers and the NGOs tussle over who has the legal right to cut it down, others are tussling over who has the legal right to not cut it down. In other words, who has the rights to any carbon credits for avoided deforestation, should they exist.
The Kamula Doso forest has been an ongoing issue in the country. These days it is linked with the creation of irregular carbon credits, which have appeared in the hands of Australian carbon brokerage, Carbon Planet. On the same day that the Chainsaw King got his gong from the Queen, Papua New Guinea finally suspended Theo Yasause, director of the Office of Climate Change in relation to the printing off symbolic carbon certificates (some of which relate to the carbon in Kamula Doso). His suspension was reported by Ilya Gridneff of Associated Press and came after weeks of feverish rumour and speculation. An internal investigation of the office appears to be underway (although this has been said before), and in the meantime, Dr Wari Iamo has become acting director.
Significantly Gridneff reports that AusAID has announced a corporate planning adviser will be placed in the OCC office for three months as part of the $3 million pledged under the Australia-PNG carbon initiative. Great move Australia. Now the question is whether other parts of the international aid community (World Bank Forest Carbon Partnership Fund, the Norwegians and UK's DFID) will apply safeguards to REDD projects here and in other parts of the world or lumber on regardless?
Last but not least, Kevin Conrad was passing through London today, and spoke at a meeting on the politics of climate change at Chatham House in London. Although much of what takes place at Chatham House is usually on a non-attributable basis, Dr Conrad was one of those who spoke publicly at the meeting--so I am able to report what was said here. He reflected on some of the governance issues in relation to avoided deforestation, particularly in relation to countries that have struggled to control both logging and illegal logging. And also on some of the governance issues as faced by Papua New Guinea. On the latter issue he said:
"We found that because Papua New Guinea was advocating a regime shift in forests, we had every carbon cowboy in the world descend upon Papua New Guinea and try to get a deal with some landowners to they could go back and say they were working in Papua New Guinea and that somehow gave them some credibility.
We then, at the same time, had a group of governors who understood our law very well and understood that if the government got all of the money in a consolidated budget that they under our law would then receive 100% of it because it was an export oriented activity.
We have what is called a derivation grant, so money comes in as consolidated revenues and if it is an export it goes to the state. So what they did was rattle the cages, try to destablise the regime as it were, try to bait the government into signing saying that all the REDD money goes to the government first. Surprisingly it then ends up in the governor’s pockets.
But it was a serious issue we had some irregularities, so cabinet had to suspend our executive director, we have to launch an independent review, and we want it to be transparent. But we want to learn from this.
Papua New Guinea is the first of many upcoming instances, whether it is in... Peru. Whether...whenever there is prospective of oncoming wealth there is a tendency for the small to become overrun by the strong. That is something we as a global society have to guard against and that is why we have to hold back market forces, until made the necessary infrastructural and capacity investments in each country."
On the broader issues, Dr Conrad said: "That is the question of transforming a development pathway in developing countries and the understanding that that means significant capital needs to be invested. What we are already seeing globally is that when stakeholders see a gravy train on its way, many of them try and restructure the local system using information and misinformation to try and position themselves at the front of the line. Now that is normal human behaviour. But it is important.
What we have to understand we need to first invest in absorptive capability. You can’t just drop money into a third world country and expect that to solve a problem, can’t build a road and provide a car and expect that will solve a villagers challenge of getting product to market. Because it rains and guess what the road disappears the car runs out of fuel, spare parts don’t make it and after half a year they are back at square one and the money has been lost.
The question is how do we invest first, before we introduce market forces? How do we first invest in the analysis, the institution building the capacity building, the strengthening of governance? All of these things in developing countries to varying levels, there are some like Costa Rica that have a head start on that. There are some countries in Africa that have a further way to go and there are many are in between, and Papua New Guinea is one of those."
It would be nice to think that the suspension, the investigation and the new acting director for the Office of Climate Change will draw a neat clean line under this episode and allow everyone to move on. But Dr Wari Iamo is very unlikely to be able to do this. For one thing he is a very curious choice for the Office of Climate Change as he was involved in the original allocation of the disputed Kamula Doso forestry concession to Rimbunan Hijau, in 1999. In 2002, Dr Iamo was criticised by a subsequent investigation by Papua's Ombudsman Commission, which said among many things that he did not “give proper consideration to environmental matters” and his “conduct was baffling and negligent”.
Is it really not possible to do better than this in the search for champions for the world's third largest rainforest?
Rimbunan Hijau is the Malaysian conglomerate which is the biggest extractor of tropical timber from Papua New Guinea. It is also the parent company of the subsidiary Wawoi Guavi Timber, which is engaged in a legal battle over the logging rights to the forest of Kamula Doso in Papua. Kamula Doso is one of the largest blocks of unlogged rainforest in the country, containing hundreds of millions of dollars worth of timber and strategically placed for access to all the other remaining forests in Western province.
Rimbunan Hijau would very much like to cut the forest of Kamula Doso, and the rest of the region, down to stumps. So that it can be turned into something useful like Australian barbeque trolleys, while locals scratch around wondering where future went. Indeed, the only reason Kamula Doso is still standing today is because of a lengthy court battle being fought by local NGO Ecoforestry Forum over the way the concession was awarded and the teensy weensy issue of whether logging rights had actually been acquired from local landowners before the concession was granted.
But others now realise there is money to be made by avoiding deforestation. So while the loggers and the NGOs tussle over who has the legal right to cut it down, others are tussling over who has the legal right to not cut it down. In other words, who has the rights to any carbon credits for avoided deforestation, should they exist.
The Kamula Doso forest has been an ongoing issue in the country. These days it is linked with the creation of irregular carbon credits, which have appeared in the hands of Australian carbon brokerage, Carbon Planet. On the same day that the Chainsaw King got his gong from the Queen, Papua New Guinea finally suspended Theo Yasause, director of the Office of Climate Change in relation to the printing off symbolic carbon certificates (some of which relate to the carbon in Kamula Doso). His suspension was reported by Ilya Gridneff of Associated Press and came after weeks of feverish rumour and speculation. An internal investigation of the office appears to be underway (although this has been said before), and in the meantime, Dr Wari Iamo has become acting director.
Significantly Gridneff reports that AusAID has announced a corporate planning adviser will be placed in the OCC office for three months as part of the $3 million pledged under the Australia-PNG carbon initiative. Great move Australia. Now the question is whether other parts of the international aid community (World Bank Forest Carbon Partnership Fund, the Norwegians and UK's DFID) will apply safeguards to REDD projects here and in other parts of the world or lumber on regardless?
Last but not least, Kevin Conrad was passing through London today, and spoke at a meeting on the politics of climate change at Chatham House in London. Although much of what takes place at Chatham House is usually on a non-attributable basis, Dr Conrad was one of those who spoke publicly at the meeting--so I am able to report what was said here. He reflected on some of the governance issues in relation to avoided deforestation, particularly in relation to countries that have struggled to control both logging and illegal logging. And also on some of the governance issues as faced by Papua New Guinea. On the latter issue he said:
"We found that because Papua New Guinea was advocating a regime shift in forests, we had every carbon cowboy in the world descend upon Papua New Guinea and try to get a deal with some landowners to they could go back and say they were working in Papua New Guinea and that somehow gave them some credibility.
We then, at the same time, had a group of governors who understood our law very well and understood that if the government got all of the money in a consolidated budget that they under our law would then receive 100% of it because it was an export oriented activity.
We have what is called a derivation grant, so money comes in as consolidated revenues and if it is an export it goes to the state. So what they did was rattle the cages, try to destablise the regime as it were, try to bait the government into signing saying that all the REDD money goes to the government first. Surprisingly it then ends up in the governor’s pockets.
But it was a serious issue we had some irregularities, so cabinet had to suspend our executive director, we have to launch an independent review, and we want it to be transparent. But we want to learn from this.
Papua New Guinea is the first of many upcoming instances, whether it is in... Peru. Whether...whenever there is prospective of oncoming wealth there is a tendency for the small to become overrun by the strong. That is something we as a global society have to guard against and that is why we have to hold back market forces, until made the necessary infrastructural and capacity investments in each country."
On the broader issues, Dr Conrad said: "That is the question of transforming a development pathway in developing countries and the understanding that that means significant capital needs to be invested. What we are already seeing globally is that when stakeholders see a gravy train on its way, many of them try and restructure the local system using information and misinformation to try and position themselves at the front of the line. Now that is normal human behaviour. But it is important.
What we have to understand we need to first invest in absorptive capability. You can’t just drop money into a third world country and expect that to solve a problem, can’t build a road and provide a car and expect that will solve a villagers challenge of getting product to market. Because it rains and guess what the road disappears the car runs out of fuel, spare parts don’t make it and after half a year they are back at square one and the money has been lost.
The question is how do we invest first, before we introduce market forces? How do we first invest in the analysis, the institution building the capacity building, the strengthening of governance? All of these things in developing countries to varying levels, there are some like Costa Rica that have a head start on that. There are some countries in Africa that have a further way to go and there are many are in between, and Papua New Guinea is one of those."
It would be nice to think that the suspension, the investigation and the new acting director for the Office of Climate Change will draw a neat clean line under this episode and allow everyone to move on. But Dr Wari Iamo is very unlikely to be able to do this. For one thing he is a very curious choice for the Office of Climate Change as he was involved in the original allocation of the disputed Kamula Doso forestry concession to Rimbunan Hijau, in 1999. In 2002, Dr Iamo was criticised by a subsequent investigation by Papua's Ombudsman Commission, which said among many things that he did not “give proper consideration to environmental matters” and his “conduct was baffling and negligent”.
Is it really not possible to do better than this in the search for champions for the world's third largest rainforest?
Sunday, June 28, 2009
Barking up the right tree
One of the curious aspects of the story about irregular carbon credits is how many people have emerged offering more "information" about the story. One of the first was someone who went only by the name of Treble Cleff, but otherwise remained anonymous. Treble Cleff was certain that I should stop writing about Kamula Doso, which he said was doing a lot of damage to the landowners. He wanted me to pay more attention to another aspect of the story. He also wanted to know what I knew. This sort of anonymous dialog is tough to handle, who are they and what is their agenda? Impossible to say.
In this context, on June 8th, shortly after I wrote about irregular carbon credits in Papua New Guinea, I was approached by an academic called Colin Filer at The Australian National University. He offered a copy of a soon-to-be published scientific paper on the PNG "carbon cargo cult", written by Dr Filer and some colleagues. It should, he wrote, explain part of what was going on. When it arrived, (titled “Deforestation and Forest Degradation in Papua New Guinea”), the manuscript argued that official deforestation rates in Papua are too high, and that countries have an incentive overestimate deforestation. This was interesting but when I asked how this was relevant to the story I was mysteriously told it was "just background" and that Dr Filer was hanging onto some “juicy stuff” on this until he could get more verification.
But Dr Filer had also told me that he knew something about Kamula Doso. So I asked him what he knew. At the same time I asked, "please forgive me for asking but given your long professional experience in this region, may I check whether you have any personal or financial ties with this story please?” He wrote back: “Of course I'm connected to some of the players, but
like any good journalist, I don't reveal my sources.”
Lets just stop for a moment and recap. Dr Filer has contacted me as an academic who knows about a huge story of international significance and it turns out that he has some other non-academic connection that he is now refusing to disclose. Astonishing. So I wrote to tell him why this was wrong.
Essentially, I pointed out that academic employees are generally expected to either be independent or openly disclose any financial ties they may have that may be relevant to their work. I ended, “If there is any uncertainty about the request I am making, or you wish to decline this second opportunity to disclose your involvements, the only route open to me is to contact the vice-chancellor's office, explain the situation and make a formal request that these questions are answered immediately through the press office.” He replied, “I don't respond to threats.”
Well as it turns out, his boss the VC took a different view, and after a little email abuse from Dr Filer, “you're out to lunch with the wrong end of the stick”, I finally got my declaration—albeit prefaced with “let’s get this straight”. So who does Dr Filer work for? He has worked for Carbon Planet, one of the companies that is integral to the story. Dr Filer's job was to write reports about the institutions that might be used to distribute landowner benefits from REDD projects.
Being contacted this way, seemed sufficiently unusual to ask the university for a statement. I suppose I had been expecting something a bit more robust than “the University encourages its academic staff to take part in constructive public debates in areas of their expertise. Dr Filer is a long-standing academic expert on PNG's forestry sector, and as such has a right to comment. The University does require staff to disclose sources of funding for research, and Dr Filer has now done that, albeit somewhat belatedly.”
Of course the existence of a consultancy isn't evidence of any wrongdoing. But not being open about one's consultancies is unusual, particularly in such a sensitive case such as this, and when asked directly about them.
Having received my disclosure, I returned to the university and Dr Filer and asked for more information about Kamula Doso, but sadly Dr Filer didn't want to talk to me any more. When I questioned this, the university replied that while it "encouraged academic staff to engage in constructive public debate, we don't require that they do so.... ”
I'm not sure that telling journalists that they are "out to lunch" when they request a disclosure of commercial interests, and then going off into a sulk, really qualifies as constructive public debate, but there you have it. In the meantime, I've also heard that a friend of Dr Filer has been telling another journalist that I'm "barking up the wrong tree".
I'm not so sure. The tree for me is merely that there are certain standards of transparent behaviour that are expected from academics, and they need to stick to them because they are employed by the public.
The broader issue here is about the disclosure of commercial consultancies in forestry. Forestry workers may be beavering away on dry academic information about biomass, growth rates, satellite imagery, regrowth rates or even tenure in traditional communities. But increasingly these studies are becoming fundamental to arguments about huge amounts of real money in the forest carbon market. Academic studies are what underpin estimates of value. On the basis of a report from a consultant, a forest can be deemed to sequestering a particular amount of carbon, and then this can be sold as a valuable offset worth millions of dollars.
While much money and attention is rightly being put into governance issues in poor countries that must handle REDD projects, it is worth noting that transparency is necessary everywhere if this market is ever going to work. It doesn't matter whether everyone is honest, it needs to be transparent to work because the market will not work well with lots of asymmetric information.
For example, it really does matter when someone comes to buy $20m of carbon credits who has verified that they exist. In medicine, disclosure of consultancies is the norm. I think forestry consultants everywhere are going to have to start paying more attention to disclosure and transparency, particularly in relation to work done for carbon brokers and traders.
In this context, on June 8th, shortly after I wrote about irregular carbon credits in Papua New Guinea, I was approached by an academic called Colin Filer at The Australian National University. He offered a copy of a soon-to-be published scientific paper on the PNG "carbon cargo cult", written by Dr Filer and some colleagues. It should, he wrote, explain part of what was going on. When it arrived, (titled “Deforestation and Forest Degradation in Papua New Guinea”), the manuscript argued that official deforestation rates in Papua are too high, and that countries have an incentive overestimate deforestation. This was interesting but when I asked how this was relevant to the story I was mysteriously told it was "just background" and that Dr Filer was hanging onto some “juicy stuff” on this until he could get more verification.
But Dr Filer had also told me that he knew something about Kamula Doso. So I asked him what he knew. At the same time I asked, "please forgive me for asking but given your long professional experience in this region, may I check whether you have any personal or financial ties with this story please?” He wrote back: “Of course I'm connected to some of the players, but
like any good journalist, I don't reveal my sources.”
Lets just stop for a moment and recap. Dr Filer has contacted me as an academic who knows about a huge story of international significance and it turns out that he has some other non-academic connection that he is now refusing to disclose. Astonishing. So I wrote to tell him why this was wrong.
Essentially, I pointed out that academic employees are generally expected to either be independent or openly disclose any financial ties they may have that may be relevant to their work. I ended, “If there is any uncertainty about the request I am making, or you wish to decline this second opportunity to disclose your involvements, the only route open to me is to contact the vice-chancellor's office, explain the situation and make a formal request that these questions are answered immediately through the press office.” He replied, “I don't respond to threats.”
Well as it turns out, his boss the VC took a different view, and after a little email abuse from Dr Filer, “you're out to lunch with the wrong end of the stick”, I finally got my declaration—albeit prefaced with “let’s get this straight”. So who does Dr Filer work for? He has worked for Carbon Planet, one of the companies that is integral to the story. Dr Filer's job was to write reports about the institutions that might be used to distribute landowner benefits from REDD projects.
Being contacted this way, seemed sufficiently unusual to ask the university for a statement. I suppose I had been expecting something a bit more robust than “the University encourages its academic staff to take part in constructive public debates in areas of their expertise. Dr Filer is a long-standing academic expert on PNG's forestry sector, and as such has a right to comment. The University does require staff to disclose sources of funding for research, and Dr Filer has now done that, albeit somewhat belatedly.”
Of course the existence of a consultancy isn't evidence of any wrongdoing. But not being open about one's consultancies is unusual, particularly in such a sensitive case such as this, and when asked directly about them.
Having received my disclosure, I returned to the university and Dr Filer and asked for more information about Kamula Doso, but sadly Dr Filer didn't want to talk to me any more. When I questioned this, the university replied that while it "encouraged academic staff to engage in constructive public debate, we don't require that they do so.... ”
I'm not sure that telling journalists that they are "out to lunch" when they request a disclosure of commercial interests, and then going off into a sulk, really qualifies as constructive public debate, but there you have it. In the meantime, I've also heard that a friend of Dr Filer has been telling another journalist that I'm "barking up the wrong tree".
I'm not so sure. The tree for me is merely that there are certain standards of transparent behaviour that are expected from academics, and they need to stick to them because they are employed by the public.
The broader issue here is about the disclosure of commercial consultancies in forestry. Forestry workers may be beavering away on dry academic information about biomass, growth rates, satellite imagery, regrowth rates or even tenure in traditional communities. But increasingly these studies are becoming fundamental to arguments about huge amounts of real money in the forest carbon market. Academic studies are what underpin estimates of value. On the basis of a report from a consultant, a forest can be deemed to sequestering a particular amount of carbon, and then this can be sold as a valuable offset worth millions of dollars.
While much money and attention is rightly being put into governance issues in poor countries that must handle REDD projects, it is worth noting that transparency is necessary everywhere if this market is ever going to work. It doesn't matter whether everyone is honest, it needs to be transparent to work because the market will not work well with lots of asymmetric information.
For example, it really does matter when someone comes to buy $20m of carbon credits who has verified that they exist. In medicine, disclosure of consultancies is the norm. I think forestry consultants everywhere are going to have to start paying more attention to disclosure and transparency, particularly in relation to work done for carbon brokers and traders.
Thursday, June 25, 2009
Letters from the field
Papua New Guinea is not the only country in the world with a problem with its forest carbon. In other parts of the world such as Liberia and Guyana, there are deals that are causing deep local unease and concern. One carbon trader wrote to me recently about Colombia:
On my last trip to Colombia I was contacted by various "brokers" or "in-betweens" that offered me "500'000 ha of virgin Amazonas forest" or similar areas to "buy oxygen". Prior to these meetings, they had "secured" the "oxygen sales rights" from native people's forests. I tried hard to explain them how things work but the carbon bonanza there seems strong. Other carbon companies in Latin America seem to face the same problems. I understand there was even an MP of the Colombian parliament that referred to oxygen credits (instead of CO2 credits) when proposing draft legislation on climate change."
It is a depressing vision. While politicians at national and local levels wrestle each other for control of the carbon markets in their countries, and argue about how these schemes will work, on the ground, fraudsters are muscling in and buying up sketchy rights to forest which at best could tie up forest carbon deals in legal red tape for years. At the same time, many of the countries that would sell the industrialised world carbon from their forests are struggling to contain illegal forestry, despite the fact that the international community has poured money into this goal for years. If we have not been able to incentivise the prevention of illegal forestry--which costs developing countries tens of millions a year in lost revenue--what hope is there for avoiding deforestation through carbon credits? The World Bank et al. seem to think the answer is better governance. Good luck with that.
Does the international community's checklist for selling REDD credits go like this?:
1. Sort out corruption
2. Establish rule of law
3. Free and fair elections
4. Trade forest carbon
I met earlier today with a forestry analyst, based in the UK. She said something interesting and slightly depressing. The only reason the industrialised world is interested in reducing emissions through deforestation (REDD), she said, was as a cheap way of generating cuts in emissions. But this assumes that REDD can be made to work cheaply, which may not be the case. It may be so costly, with so many rules, that it is almost impossible to implement.
This may leave REDD as a fringe mechanism, only used by a small number of countries and schemes that are able to qualify. Equally, if the rules for REDD are set too weakly, in order to attract more participation, then there is a very real risk that the credits sold through these schemes are valueless.
What happens if REDD falls through? What happens to all these forests that have done deals for the carbon rights? Discussions about REDD have incentivised a green gold rush, with carbon traders investing large amounts of money in financing projects that they expect to make money come a deal on forest carbon trading in Copenhagen this December. If REDD fails, do they try and recoup some of their lost finance by logging? Wouldn't it be hugely and depressingly ironic if discussing a way of avoiding deforestation actually ended up kicking off a global wave of deforestation? The stakes seem very high.
On my last trip to Colombia I was contacted by various "brokers" or "in-betweens" that offered me "500'000 ha of virgin Amazonas forest" or similar areas to "buy oxygen". Prior to these meetings, they had "secured" the "oxygen sales rights" from native people's forests. I tried hard to explain them how things work but the carbon bonanza there seems strong. Other carbon companies in Latin America seem to face the same problems. I understand there was even an MP of the Colombian parliament that referred to oxygen credits (instead of CO2 credits) when proposing draft legislation on climate change."
It is a depressing vision. While politicians at national and local levels wrestle each other for control of the carbon markets in their countries, and argue about how these schemes will work, on the ground, fraudsters are muscling in and buying up sketchy rights to forest which at best could tie up forest carbon deals in legal red tape for years. At the same time, many of the countries that would sell the industrialised world carbon from their forests are struggling to contain illegal forestry, despite the fact that the international community has poured money into this goal for years. If we have not been able to incentivise the prevention of illegal forestry--which costs developing countries tens of millions a year in lost revenue--what hope is there for avoiding deforestation through carbon credits? The World Bank et al. seem to think the answer is better governance. Good luck with that.
Does the international community's checklist for selling REDD credits go like this?:
1. Sort out corruption
2. Establish rule of law
3. Free and fair elections
4. Trade forest carbon
I met earlier today with a forestry analyst, based in the UK. She said something interesting and slightly depressing. The only reason the industrialised world is interested in reducing emissions through deforestation (REDD), she said, was as a cheap way of generating cuts in emissions. But this assumes that REDD can be made to work cheaply, which may not be the case. It may be so costly, with so many rules, that it is almost impossible to implement.
This may leave REDD as a fringe mechanism, only used by a small number of countries and schemes that are able to qualify. Equally, if the rules for REDD are set too weakly, in order to attract more participation, then there is a very real risk that the credits sold through these schemes are valueless.
What happens if REDD falls through? What happens to all these forests that have done deals for the carbon rights? Discussions about REDD have incentivised a green gold rush, with carbon traders investing large amounts of money in financing projects that they expect to make money come a deal on forest carbon trading in Copenhagen this December. If REDD fails, do they try and recoup some of their lost finance by logging? Wouldn't it be hugely and depressingly ironic if discussing a way of avoiding deforestation actually ended up kicking off a global wave of deforestation? The stakes seem very high.
Saturday, June 20, 2009
The unusual 'A' series of Papua carbon credits
Over the past few weeks the government of Papua New Guinea has been embroiled in a scandal about the issuance of irregular carbon credits in a “B” series. So what is the A series?The Office of Climate Change in Papua New Guinea recently added to the story by issuing a statement about a company called Climate Assist saying:
"This company sought to negotiate Carbon Credits in the market places that were not issued by this Office. This Office has had no dealings with this company in respect of credits issued. We were aware of this some months ago. We have our lawyers pursuing this matter with foreign law enforcement agencies as a matter of fraud. As such we cannot comment further on it." Climate Assist, too, is keeping silent at this stage.
So what is this certificate shown here? Luckily, I managed to ask Gregory Corby of Climate Assist about the A series of credits a few weeks ago. I asked him about the certificate reproduced here and another (which specifies a monetary value of $20m). He said, the credits had changed dramatically over the years, and these early credits were used to start his business. “We couldn't get them into trade or anything like that. And I had to go back to Papua New Guinea, it was 2007 and get others issued, and then I went back in 2008 and we got the last original ones issued.”
The credit shown is signed by a government minister on behalf of the government. On the bottom of the certificate it says it represents “ownership in carbon sinks”. Mr Corby went on, “the Papua New Guinea government gave us the credits and made us the brokers to monetize the credits.” In addition, Mr Corby said he had a long-standing relationship with the Prime Minister. However the PM’s press secretary denied this when I asked her a few weeks ago.
Another document appears to back up Mr Corby's statement that he was empowered to "make and sell" carbon credits on behalf of the government. I've also been given a letter dated 24th October 2005, sent to Climate Assist and signed by the same government minister, says:
“the Prime Minister has accepted that Papua New Guinea (PNG) has carbon credits and they are tradable commodity.
The Prime Minister and I have accepted that Climate Assist (PNG) Ltd acts as Brokers on behalf of the Independent State of PNG to buy and sell carbon credits.
The carbon credits have been assigned to Climate Assist (PNG) Ltd through our certificate and monetization that will finance designated projects within PNG.
Therefore, this letter sets to acknowledge the role of Climate Assist (PNG) Ltd and advise that the Government of the Independent State of PNG unconditionally guarantee all actions undertaken for the monetization of these credits”.
Are all these documents what they purport to be? I think at this stage the arguments are best left to lawyers, and I'd like to edge carefully out of this blog, trying not to knock over any words as I leave.
Updated: 18.8.09 Spelling adjusted.
Thursday, June 18, 2009
Media round up
Other parts of the media are also picking up on this difficult story about the issue of irregular carbon credits in Papua New Guinea. All credit to the journalists who are digging.
Reproduced in full is the latest from AAP, published in Australian paper The Age. Ilya Gridneff seems to have had a run in with the silver-tounged Jim Johnson of Carbon Planet.
Eco firm pays out for PNG carbon trading
Ilya Gridneff
June 18, 2009 - 4:09PM
An Australian-based environmental company has paid $1.2 million to develop carbon trading projects in Papua New Guinea where no policy or legislation exists to facilitate such deals.
South Australian-based Carbon Planet, with offices across Australia and in London, promotes itself as a leading force in the global 'carbon economy'.
An Australian Securities and Investment Commission (ASIC) document obtained by AAP shows Carbon Planet's financial statement to the end of June 2008 reporting a $A1.2 million payment for development of carbon trading in PNG.
Carbon Planet chairman Jim Johnson refused to comment when asked by AAP about the funding in PNG.
"I've got nothing to talk about," he said.
"I am really sick of you people casting aspersions on my company.
"No payment has been made to PNG, your information is incorrect."
AAP read out ASIC's Carbon Planet statement which says: "Payments include $1.2 million of advanced funding on origination projects in PNG which the company expects to recoup in the 2009 financial year."
Johnson responded: "I am not explaining at all. I am not having this conversation," before hanging up.
PNG has the world's third-largest rainforest and the government has great interest in turning the asset into carbon trading revenue, but at present no such policy or legislation exists in PNG, nor under UN guidelines.
Earlier this week, PNG's Office of Climate Change (OCC) director Dr Theo Yasause denied that his office accepted money from foreign companies or made any deals despite, leaked documents suggesting otherwise.
AAP understands Carbon Planet is working on one scheme with Nupan PNG, run by Australian Kirk Roberts, who has developed potential projects in PNG's Kamula Doso regions, in Western Province.
In November 2008, the OCC issued a contract for one million tonnes of voluntary carbon credits to Nupan for the Kamula Dosa project.
Dr Yasause said the OCC document issued to Nupan was a "sample" and was now null and void.
Also, an ongoing court battle with Kamula Dosa landowners restricts any business dealings in the 80,000ha of pristine forest.
Carbon Planet's literature predicts the global voluntary carbon market will be worth around $US9.9 billion-$US17.1 billion ($A12.5 billion-$A21.5 billion) per year by 2012.
They expect the global compliance market to be worth $US2 trillion ($A2.5 trillion) by 2020.
But while carbon trading has the potential to be a lucrative business, Carbon Planet has other financial issues.
KPMG partner Gary Savage in a Carbon Planet audit flagged the company's $4.6 million after tax loss by the year ended June 30 2008, and by October net losses had reached $6 million.
"These circumstances indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern..." Savage wrote.
ASIC would not comment.
© 2009 AAP
And other stories...
PNG carbon racket dupes landowners Radio New Zealand International
PNG in hot seat: claims of false carbon credits The Canberra Times
PNG Climate Change Office says carbon credit report based on stolen documents Australia Network News
Reproduced in full is the latest from AAP, published in Australian paper The Age. Ilya Gridneff seems to have had a run in with the silver-tounged Jim Johnson of Carbon Planet.
Eco firm pays out for PNG carbon trading
Ilya Gridneff
June 18, 2009 - 4:09PM
An Australian-based environmental company has paid $1.2 million to develop carbon trading projects in Papua New Guinea where no policy or legislation exists to facilitate such deals.
South Australian-based Carbon Planet, with offices across Australia and in London, promotes itself as a leading force in the global 'carbon economy'.
An Australian Securities and Investment Commission (ASIC) document obtained by AAP shows Carbon Planet's financial statement to the end of June 2008 reporting a $A1.2 million payment for development of carbon trading in PNG.
Carbon Planet chairman Jim Johnson refused to comment when asked by AAP about the funding in PNG.
"I've got nothing to talk about," he said.
"I am really sick of you people casting aspersions on my company.
"No payment has been made to PNG, your information is incorrect."
AAP read out ASIC's Carbon Planet statement which says: "Payments include $1.2 million of advanced funding on origination projects in PNG which the company expects to recoup in the 2009 financial year."
Johnson responded: "I am not explaining at all. I am not having this conversation," before hanging up.
PNG has the world's third-largest rainforest and the government has great interest in turning the asset into carbon trading revenue, but at present no such policy or legislation exists in PNG, nor under UN guidelines.
Earlier this week, PNG's Office of Climate Change (OCC) director Dr Theo Yasause denied that his office accepted money from foreign companies or made any deals despite, leaked documents suggesting otherwise.
AAP understands Carbon Planet is working on one scheme with Nupan PNG, run by Australian Kirk Roberts, who has developed potential projects in PNG's Kamula Doso regions, in Western Province.
In November 2008, the OCC issued a contract for one million tonnes of voluntary carbon credits to Nupan for the Kamula Dosa project.
Dr Yasause said the OCC document issued to Nupan was a "sample" and was now null and void.
Also, an ongoing court battle with Kamula Dosa landowners restricts any business dealings in the 80,000ha of pristine forest.
Carbon Planet's literature predicts the global voluntary carbon market will be worth around $US9.9 billion-$US17.1 billion ($A12.5 billion-$A21.5 billion) per year by 2012.
They expect the global compliance market to be worth $US2 trillion ($A2.5 trillion) by 2020.
But while carbon trading has the potential to be a lucrative business, Carbon Planet has other financial issues.
KPMG partner Gary Savage in a Carbon Planet audit flagged the company's $4.6 million after tax loss by the year ended June 30 2008, and by October net losses had reached $6 million.
"These circumstances indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern..." Savage wrote.
ASIC would not comment.
© 2009 AAP
And other stories...
PNG carbon racket dupes landowners Radio New Zealand International
PNG in hot seat: claims of false carbon credits The Canberra Times
PNG Climate Change Office says carbon credit report based on stolen documents Australia Network News
Carbon credit fraud inquiry
There is a lot of mudslinging going on inside Papua New Guinea. Some of it involves sideswipes at the media. Seeing as there are only a small number of journalists are actively working this beat at the moment, I have to feel that complaints about media coverage must be partly directed towards me. The Office of Climate Change has referred to "misinformation in the media done deliberately to create sensationalism and drama with a view to destroy the Office of Climate Change and what it has achieved so far and what it stands to achieve for this country".So before I write more about the irregular carbon credits from the government of Papua New Guinea, it might be useful for me to state my opinion about carbon markets, reducing carbon emissions through avoided deforestation (known as REDD) and Papua New Guinea.
I have been a long advocate for payments for ecosystem services and wrote a long piece about this very subject for the Economist many years back, which was the basis of a memorable cover we ran (shown above). It still graphically sums up what everyone is talking about right now. (The original piece is now behind our subscriber wall, so I've linked to a copy posted on the web.) And I've written many times in support of property rights in the solution of environmental problems.
Given the current threat of climate change, the idea of reducing deforestation as a way of reducing carbon emissions is a good one. I'm uncomfortable with the idea that the main aim of reducing this deforestation seems to largely be as a way for developed countries to avoid making meaningful cuts in emissions. We should be making those cuts in emissions and paying to reduce deforestation.
That said, everyone knows that we need to find a way of stopping people cutting down so many trees, and that some kind of incentive is necessary. Further, that this incentive is going to involve money. The devil, though, is in the details. Whether it will be possible to set up a system that is not open to massive abuse, is the big question. As for Papua New Guinea, I've no agenda towards anyone or any institution other than to discover the truth. Such an agenda will not suit everyone, which is just tough.
But I digress. The main point of my post is to pick up on a press statement published by the Office of Climate Change in a number of newspapers on Tuesday. I have a copy of one of these which was published on page 7, of The National. There must be about 1,500 words in this vast statement, which contains some bizarre and and a few ill-advised statements.
The press statement is signed by Leo Tale, acting executive director, of the Office of Climate Change on June 15th, but must have been submitted to the newspaper at least the day before on the 15th. This is very curious because on that day, Theo Yasause was also giving a press conference as the director of the Office of Climate Change. Who is running Papua's Office of Climate Change right now? I'll let you know when I have an answer on that.
Until then, if you happen to be part of the international community of donors (Norwegians, Australians, UN, World Bank) currently rushing to thrust money on Papua New Guinea in order to improve "governance" so that REDD will work... you might just want to make sure you know who is running the Office of Climate Change before you write the cheque. Indeed, if you can get a good answer to that question I'd be delighted to know. Until then, you have been warned.
Finally, I'll turn to the most interesting part of this recent press statement. It reads:
"2. Climate Assist PNG Pty Ltd: -
This company sought to negotiate Carbon Credits in the market places that were not issued by this Office. This Office has had no dealings with this company in respect of credits issued. We were aware of this some months ago. We have our laywers pursuing this matter with foreign law enforcement agencies as a matter of fraud. As such we cannot comment further on it."
I'm no lawyer but I would imagine that such a statement would be pretty damaging to Mr Corby's business interests and he might be somewhat miffed to be accused of fraud by someone who may, or may not, be the head of the office of climate change. Indeed, I just spoke with Gregory Corby, of Climate Assist, a few hours ago and he says he has made a complaint to the Attorney General in Papua New Guinea, and his lawyers have told him not to say anything.
There is a lot more to say, but it is late in the UK, and it will have to wait another day. Suffice to say that what everyone is referring to is an "A series" of carbon credits that were mentioned in passing in my piece for The Economist. (As opposed to a "B" series which were discussed more extensively.)
The A series date back to 2005, prior to the creation of the Office of Climate Change. So it could well be technically accurate to say that the office of climate change had "no dealings with this company in respect of credits issued". But if these carbon credits do exist, as the statement acknowledges, who, exactly, in government authorised their production?
It is hardly credible that Mr Corby would simply decide to print off a whole bunch of carbon credits from Papua New Guinea and try to sell them without any government knowledge.
So who in government knew about, and who approved, the "A" series of Papua carbon credits?
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