Fishy politics that stink

It is time for European nations to finally show leadership and ban the trade in tuna

LATE tomorrow morning in Brussels an important meeting takes place for the bluefin tuna. It could well decide the fate of the species, and whether it is going to be fished to extinction or at last protected from the overexploitation that has caused its population to crash to unprecedented lows. The northern bluefin tuna (Thunnus thynnus) is classified as critically endangered for the Western Atlantic stock and endangered for the Eastern Atlantic stock 1,2.

It is an appalling story. Historically the bluefin has been tragically failed by a group of nations that collaboratively manage the fishery. The organisation known as ICCAT (The International Commission for the Conservation of Atlantic Tunas) is supposed to manage the fishery but in reality it is little more than set of paper pushers in Madrid for the nations that meet every December. Every year, behind closed doors, the member nations hand themselves quotas far in excess of scientific advice. These quotas are handed out in the knowledge that Europe’s fishermen will then go out and catch more than double this allowance through illegal landings in the poorly managed fishery.

Bluefin politics are ugly because all these deals to allow the hunting of a species to extinction are done behind closed doors and in order to eward a vocal but powerful political group—fishermen.They have allowed the economically irrational over extraction of a resource, and essentially stolen fish that belongs to all of us and given it to a handful of people.

For a long time, Europe’s tuna fishermen have had things nicely wrapped up. The tuna fishing interests of Italy, France and Spain would lobby the Commission’s directorate general of fisheries, which would say nice words publicly about bluefin conservation, monitoring and management and then go out to ICCAT every year, and then negotiate another deal that was disastrous for the fishery.

Matters came to a head last year when the chair of ICCAT warned its members that if they didn’t show some leadership then management of the species would be taken away. Such calls were in vain. So now the world looks towards a trade ban under a convention known as CITES in order to protect this fish. While the bluefin easily qualifies (such is its level of imperilment) if only that were enough to make sure that could be protected. Politics, as ever, intrude.

The first step for the bluefin is for two members of the CITES to propose a listing before a deadline in October. Monaco the Mediterranean principality, under the leadership of its bluefin-loving Prince Albert, was the first to step forward. Now the world is waiting to see what the Europeans will do. At first the news was good, France threw its weight behind the plan, to the surprise of conservationists President Nicolas Sarkozy supported an end to the overfishing. Britain, Germany and other northern European states have supported a ban. So after some political warfare in Brussels between the department involved in ‘managing’ fish and the department involved in environmental protection, and some heavy lobbying by the sushi-loving Japanese, the Commission decided that a proposal to CITES was appropriate 3.

It is with regret that I write that I now understand that the vote on Monday is far from a formality. Rumour now has it that the French are now backing away from a full CITES listing, and the Spanish are trying to organise outright opposition.

Meanwhile, fresh evidence has emerged of how completely out of control this fishery is with illegal fishing continuing unabated, a French vessel has recorded some astonishing abuses by the Turkish fleet. The management measures that were supposed to protect the bluefin are not working.

All this underscores the need for a trade ban. Trade bans are not always the solution for an imperilled species, as they create some crazy economic dynamics such as an illegal trade dominated by organised crime. And on land a ban eliminates the value for a species and can in turn encourage habitat conversion. But habitat conversion isn't a problem for the bluefin, and organised crime is already heavily involved in the bluefin trade. So CITES is the only serious tool left to allow the international community to address the needs of a species that lives outside of the control of national governments. It is no longer reasonable to argue that ICCAT can be trusted with a job that it has failed so long to perform.

Furthermore a ban would, finally, prevent the fashionable diners of America, Europe and Japan to keep consuming the species with a clean conscience or blissful ignorance. Nobu restaurants around the world would finally be forced to remove the bluefin from the menu. Others would follow.

If European nations fail show leadership over a CITES listing, it may be that the only hope is that the Americans will step in. The politics are not straightforward, as Jane Lubchenco, head of America's National Oceanic and Atmospheric Administration, said when I asked her about this a few weeks ago, there are concerns about how a CITES ban would affect the domestic bluefin industry in America, where the situation is not as disastrous as in the Meditteranean.

Nonetheless, it is clear that the Americans are watching the Europeans very closely indeed and waiting to see how its hand plays out. At the Bali conference on climate change in 2007, America was warned that it was either to "lead or get out of the way". That message should now be delivered to the Europeans over bluefin.

Introducting Graham Corby

In April this year, when I first began working on carbon credits, I had copies of two lots of irregular carbon credits from Papua New Guinea. One was the Kamula Doso series which had been recently issued to Nupan Trading, owned by Kirk Roberts. The other set, the 'A' series dated back to 2005 and had been issued by a company called ClimateAssist, seemingly with the backing of the government.

Support for the apparent backing of the government in these credits came from a signature on the credits that appeared to be by a government minister, and an associated letter that gave the company ClimateAssist the right to monetise these carbon credits on behalf of the government.

The company ClimateAssist is in fact an Australian gentleman called Graham Corby. I spoke with him several months ago. The first thing to say is that if anything in what follows remains unclear this is not for lack of trying on my part. Mr Corby has failed to follow up on his promise to send me more information about his carbon credit generating scheme, and since I published his carbon credits, doesn't want to talk further about his business. But he told me plenty in April, so lets begin with that, because I sense I am not the only person interested in his activities at present.

Mr Corby claimed he was assisting Papua New Guinea in the sale of these carbon credits. The idea he said was to "use some of the credits to do projects up in Papua New Guinea". He told me, "The Papua New Guinea government gave us the credits and made us the brokers to monetize the credits." So I asked Mr Corby, what does it mean, exactly, to monetize the credits? Does it mean to sell them? He said, "Yes and no. There's companies that want to loan money against the credits and they want money back after the projects are finished". He continued, "Some companies want to buy them, but they're not in a position to buy them until the REDD thing comes in with Copenhagen at the end of the year. But other companies are looking at lending money to us to do the projects and then we pay them back over a four year period." In other words, the credits being offered were printed prior to any actual project to produce carbon emissions reductions.

Mr Corby agreed that the credits I had were his, and had been used to start his business, but that they had changed dramatically over the years. "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 serial numbers are the same, he added. "Because we couldn't do anything with the first two lots".

What was wrong with the original lots I asked? "Companies I was working with were not in a position to put funds there. Once Australia signed and ratified the protocol last year, we got new ones issued and the power companies actually took them as voluntary credits against the Australian government fining polluters". He added, "well they haven't bought them. They're in the process of lending money to us. They won't buy them until Copenhagen".

Have you paid the government of Papua New Guinea for these credits, I asked? "...We haven't paid them because we haven't sold them. And we, until Copenhagen comes into force we can't get any of the loan funds. But once it does come in then we'll have the loan funds to do projects there. What we've been doing has been on our own initiative and our own funds"

I'm confused, I say, how is it that the government can issue credits before they're actually generated?

Mr Corby: "They're not issuing them. ClimateAssist is issuing them on a voluntary basis from company to company"

Me: Right.

Mr Corby: "It's a company to company deal."

Me: "Are you allowed to do that?"

Mr Corby: "Oh yes. It's voluntary participation."

Me: "Right, so because the company, the power companies are voluntarily saying that they'll voluntarily buy them from you, then it's OK for them to be credits that haven't actually been generated?"

Mr Corby: "Haven't been generated until Copenhagen. Once that's been. Once Copenhagen is in then we can go back to the government and say right, you've got them there, here's the money, and generate the true credits that aren't voluntary."

So there you have it, once Copenhagen has come in, Mr Corby will be able to go and generate the "true credits that aren't voluntary".

So what about money? How much does he think these deals would be worth? Mr Corby said, "at the moment we've signed a joint venture agreement with one company and we're, we have sold them for $12 USD a tonne." You'll have to do the maths for me, I've no idea what that is, I said. He replied, "Eh – It's huge. I haven't got that in the brain, It is huge. " As for the project deals he says, "There's one that's 50 million USD, another that's 32 million, and another that's 27 million". (If you look at the notes on these "credits" one set claims to represent 87,460 million metric tonnes of carbon, the other 33,333,333 million metric tonnes.)

Mr Corby said that no money had passed hands between his company and government officials, adding that there was "a financial arrangement that if REDD comes in we would provide money for that office to operate". (This claim was first published by Reuters just prior to my first article on the subject, but as yet it remains unverified as to whether any such arrangement was ever actually officially agreed to by the government of Papua New Guinea.)

So what are all these carbon avoiding projects that Mr Corby is working on? There are projects all over the country he claimed but would not say where. He said some involve coffee projects where coffee is planted in the forest, instead of outright deforestation, another involves planting trees for the paper industry so that government doesn't have to cut down trees in the forest, and there is even a palm oil project. Are they REDD projects I asked? "They will be REDD projects if the Copenhagen summit is ratified. If it is not, then these projects are projects that can produce funds to pay back the companies that are investing with us".

Mr Corby seems to be arguing that various projects that would be financially viable in their own right, might also qualify for REDD credits if the deal is done in a particular way at Copenhagen. For example, I asked him why he would get carbon credits for planting trees for the paper industry, he said that two would be planted and only one would be used to make money. "The other tree stays there for eternity".

The international community is very keen on 'learning by doing' as a way of figuring out REDD, but I can't imagine that these are the kinds of deals that everyone had in mind. And is this part of a broader concern about creating the perverse incentives for cutting down forests and putting in plantations?

Finally, before everyone rushes in to blame the government, I think it is worth reminding ourselves that in June, The Office of Climate Change in Papua New Guinea added to the story by issuing a statement about 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." I've also received information which backs up this notice in the form of a cease and desist notice issued late last year by the Office of Climate Change to Mr Corby.

N.B. These credits were first issued prior to the creation of the Office of Climate Change, so the statement doesn't actually answer the question of whether someone in government did become involved in promoting the brokerage of credits through Mr Corby as early as 2005.

I think the final word in this very curious, and opaque story, must go with Mr Corby himself:

"We are issuing voluntary credits between my company and other companies. That's why we have to give the money back to the other company. But these companies then go to their government and say we're supporting these projects, and they then are given a breaks from their government because they're supporting something that's green." Mr Corby went on to explain that these were power generating companies, two in Germany, one in Canada, and two in Japan. He wouldn't be specific about which companies these were and said that they would only discuss these deals after Copenhagen."

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

MARIAN WILKINSON AND BEN CUBBY, Sydney Morning Herald

September 4, 2009

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

BEN CUBBY AND MARIAN WILKINSON

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.

Call in the consultants

The story so far: Papua New Guinea has been leading the way in international negotiations over avoided deforestation in the hope of curbing greenhouse gas emissions, an objective known as REDD (Reducing Emissions from Deforestation and Degradation). But during 2009, a scandal erupted over the appearance of carbon credits that appeared to have been endorsed by senior figures in the government. Following complaints by the state governors, legal moves in the court in Port Moresby, and media reports, the head of the Office of Climate Change (OCC; sometimes also referred to as OCC&ES), Theo Yasause, was suspended pending investigation.

The scandal in Papua New Guinea has happened at a difficult time for the country. While it should be working on national legislation for REDD, and preparing for Copenhagen, it has to waste time and resources on investigating its own office of climate change. But it is all much needed work. It would have been far worse to let the situation in the OCC fester.

The government is also having to handle an increasingly enraged opposition. In late July, angry scenes erupted in the parliament after the government narrowly avoided a motion of no confidence by adjourning the session until November for "much needed refurbishments" to parliament house. Yes, you did read correctly. The government survived the motion by closing parliament and calling in the decorators. Chaos ensued. Ilya Gridneff from AP writes, "MPs hurled abuse at each other across the chamber and security officers had to restrain members of the public who voiced their frustration when the government won the adjournment vote on Wednesday." See Canberra Times.

Improvements in governance and transparency, in any country, are often hard to win. The challenge for Somare's government is to complete this investigation, figure out what went wrong, and when the paint is dry on Parliament House, to publish its findings. If necessary, further legal action should be taken. It seems difficult to see how the report could fail to find fault in some places. For example, the evaporation of the office's budget is highly worrisome.

However, before government critics get too over-excited, it should be pointed out that not all of the things that have happened in the name of the government, were necessarily officially endorsed. Indeed, legal proceeding are under way in Australia in relation to the A series of carbon credits.

The acting executive director of OCC, Wari Iamo, wants the investigation and review to be completed by late October, so that everything is in place for the climate change meeting in Copenhagen this December. The investigation wants to find out whether any policies or laws were beached over carbon trading arrangements made by any public officer. It is also going to look into OCC's finances and how they have come to be so poorly managed that it has run out of money for 2009. Basic errors in financial management have resulted in substantial and unrecognised liabilities being incurred.

At the same time, the OCC needs to get on with developing its Interim Low Carbon Development Strategy, which emphasises the REDD policy agenda. Part of this involves looking at securing land for REDD and for benefit sharing. Another part of this strategy involves looking at the drivers of deforestation and degradation in the country. Again, much needed work. You can't just buy up a few blocks of forest in a country, slap a REDD sticker on them and hope that deforestation will go away. Finally, an economic analysis of REDD costs is also needed in the country, and will use the methodology developed for Guyana's low carbon development strategy.

So much work, so little time. So how is Papua going to do it? It is probably going to call in the consultants. Guyana did it. Brazil and Indonesia did it. So did Mexico. And the climate consultants du jour are McKinsey. If Papua can find a mere $2m, McKinsey will load up its crack team of climate consultants into the Batplane, fill it up with biofuel, and send it swooping down on Port Moresby to help the country prepare itself for Copenhagen by developing the national REDD and climate change plan, deploying cost-abatement curves from their utility belts... and all just in time for Papua's cabinet meeting in November.

Now I can guess what some of you are probably wondering, shouldn't Papua be doing this all for itself rather than calling in the western consultants? Well in an ideal world, which this isn't, perhaps--and only if it had all the expertise it needed. Remember that there are stacks of people fretting about whether Papua (and many other countries) are going to manage to get this all right.

How will leakage be avoided? How can REDD truly address the drivers of deforestation? How can Papua manage forest conservation at the same time as promoting a sustainable low-carbon development path? How can Papua increase agricultural productivity as a way of reducing pressure on forestry? Well, guess what? This is exactly the sort of thing that McKinsey consultants know all about.

Of course they don't come cheap, and they are not without their problems. Guyana's response to its McKinsey REDD report backfired a bit in some quarters. But Papua is a different country with a different set of problems, and a low baseline of deforestation is not one of them. So it will certainly be interesting to see what McKinsey comes up with. Where to find the money? Well UN-REDD is likely to be asked, and all the usual government donors. The Australians, in particular, might be a good source to tap. The country's entire carbon strategy seems to be to buy carbon offsets abroad, whether or not these are produced by the rules and regulations of a mandatory market.

Consenting adults

In recent weeks, a number of fascinating discussions have been held across several websites that have helped to further unravel the story of forest carbon deals in Papua New Guinea. This has helped to throw some light onto a process that had formerly been going on behind the scenes, and at least allow some level of public scrutiny. See "Carbon trading under more scrutiny", and check out the comments. What is so informative about this discussion is that involves a discussion between some of the main players in private forest carbon projects in Papua New Guinea: Carbon Planet, local journalist Ilya Gridneff and at least one of the representatives of the landowners involved in a carbon deal in Kamula Doso. This conversation is also picked up by Chris Lang of REDD Monitor.

Most of those involved in negotiating over the scheme known as Reducing Emissions from Deforestation and Degradation (REDD) say that rules and regulations should be properly set before a market for these forest carbon credits is introduced and traded. But holding back the private sector from doing deals in advance of Copenhagen is impossible.

While REDD policy wonks debate about whether it should work at a project level or a national level, the private sector is busy answering this question buying up projects all over the place. Instead of a national baseline for deforestation that the government tries to minimise, bits of forest here-and-there are being tied up in deals. And you can't simply blame 'carbon cowboys'... charities and environmental NGOs are all doing project level deals as well. How will these project level forests avoid 'leakage' and the movement of forest destruction to other areas of the country? They probably won't, which makes them a concern and which is why people argue about whether REDD should work at a project or national level.

One question that crops up again and again in forums discussing carbon trading in Papua is the question of how such trading is possible and what laws allow it? The answer appears to be quite deceptively simple. The laws that allow forest carbon trading are as simple as those that allow me to sell you any piece of property that I own. Indeed, I could sell you the spirits in the trees, if you were convinced I had the ownership rights to them and could transfer this ownership to you. And this is in essence what is going on in Papua right now, as well as in a number of countries around the world. For all the talk of REDD and carbon markets in the future between nations, the deals done right now and carbon being traded, seems to involve just a voluntary market between individuals and corporations. The market that offers you ways of offsetting your aeroplane flights, or car journeys.



Where does REDD come in? Well the idea is that when Copenhagen arrives, a deal over REDD would create a large and valuable mandatory market. A highly regulated market where governments would be obliged to buy forest carbon credits in order to offset their pollution--mostly from power generation. It seems there is an expectation that these voluntary agreements being done right now could somehow be turned into some kind of REDD credits and traded on that market. (The term of art is that they would be 'fungible'.) And even if official trading doesn't begin for years, just the creation of REDD at Copenhagen would stimulate the market to produce options to deliver REDD credits. (There is also Waxman-Markey bill in the US, which will allow forest carbon to be traded a lot sooner.)

So the point about these deals is that entrepreneurs are betting that the voluntary credits they are developing today will be transferable to forest carbon credits that can be upgraded and traded on the grown-up markets for more money later down the line. And while that speculation might be unhelpful at this stage, far bigger risks have been taken in business for far less potential reward. So it isn't unexpected. Furthermore there is the attraction of potentially huge profits. In some countries, in some parts of the world, the cost of conserving an acre of rainforest is ludicrously low compared with even low estimates of the vale of the carbon per acre. That is sort of the point of a market, is that the private sector finds the cheapest ways to conserve carbon. The trouble is that this is never going to be a normal market, its a highly regulated market created by national and international legislation in order to achieve a public good. The public will simply not be comfortable with massive windfall profits for a few entrepreneurs, or even the landowners themselves. There is already an idea floating around that such profits need to be taxed, and put into other carbon avoiding projects.

Although it is hard to know exactly what is going on, I think it might be valuable to conduct a thought experiment. Lets imagine that I've got a couple of thousand dollars I want to invest in Papua New Guinea forestry in a credit project. How might I go about doing this? Well for a start, I don't actually want to buy anything physical like a forest. I want to buy the rights to trade. And I want to part with as little money as possible initially, because I want to buy as many rights as possible.

I start a whirlwind tour of the provinces, the further the better. I make friends with the landowners and sweeten them up with cash and gifts. I explain that the world needs to conserve forests because of something that has been put in the atmosphere, and that I'll act as a broker for them to make sure they get the best deal. I'll take a percentage, and maybe a fee.

I sign deals with the landowners that gives me the sole rights to negotiate and sell carbon on their behalf. All I have to do now is hire a few consultants to boff out a few reports about how big the trees are and how happy all the locals are, and I'd be very nicely set up to do a massive post-Copenhagen deal. What is more, if the consultant's reports look particularly convincing, I might even be able to recoup my initial investment at a very early stage by getting further infusions of investment by selling off a portion of my rights to someone else, perhaps in the form of some kind of option for REDD credits. With more cash in hand, I go off again in search of more rights to buy.

What makes all this even more fabulous a proposal is that if anyone complains about what I am doing, or questions its transparency or processes, I can cite commercial confidentiality and then complain to all and sundry about how all I am trying to do is save the world and give local people some kind of way of surviving without cutting down their trees. I'm a good person and all these horrid people just want to make me out to look like I'm doing something wrong.

Some of these deals may be absolutely fine, we just don't know. What we need in Papua, and elsewhere, is some way of publicly notifying these deals. A simple way of doing this would be government-backed project deal webpages, lots of them. Proposed forest carbon deals should be published on them, so that if any landowners feel there is something awry, or there are competing claims, this should be immediately apparent, and these claims should be published. Kamula Doso is a legal nightmare. We don't want more of these cases. This is not simply private business. All these companies want to sell credits on the mandatory markets. Its going to be our money that is buying these credits. We have a right to more information. If companies want privacy over their deals, they have to guarantee that these credits will not be traded on mandatory markets. Its a small price to pay for access to a billion dollar public market that is ultimately paid for by higher taxes and fuel prices in developed nations.

Finally, given that there is a legitimate public interest, we really do need to know what the landowners understand by these deals and what they've been told. In medical research a concept that has developed is "informed consent", it isn't just enough for a subject to say yes to an experiment or procedure, you have to be able to provide proof that the people who have agreed have sufficient understanding of what they have agreed to.

I wonder if this might be a useful concept for these environmental deals with local landowners. Here is a standard web definition:

"Informed consent is a legal procedure to ensure that a patient or client knows all of the risks and costs involved in a treatment. The elements of informed consents include informing the client of the nature of the treatment, possible alternative treatments, and the potential risks and benefits of the treatment. In order for informed consent to be considered valid, the client must be competent and the consent should be given voluntarily"

In conclusion: More transparency over deals. Where they are being done, what financial arrangements and promises have been made, and what the landowners really understand and have been told.

I'm all in favour of markets for environmental services. But lets recall that this is a special market, created entirely by legislation, for a policy outcome--which is less carbon in the atmosphere for the least cost. While the private sector must be given the incentives the world needs to invest money, this market will never sit comfortably with massive windfall profits, whomever they fall to. That is just one of the current unresolved debates underway over REDD.

Nupan unveiled

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

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?