Carbon Credit Watch

Subsidizing monoculture plantations: Indonesia officials want palm oil farms to receive carbon credits

(August 20, 2010) Brady Yauch writes that Indonesian officials hope to use the country’s rich rainforests to cash in on the global carbon market.

Indonesian officials are looking to ensure palm oil plantations are eligible to earn lucrative subsidies under a U.N.-backed scheme to promote carbon sequestration through forest projects. But doing so, critics argue, will create an incentive to convert biologically rich tropical rainforests to these monoculture plantations in order to earn the credits.

The scheme, known as reducing emissions from deforestation and degradation, or REDD, allows parties in the developing world to earn carbon credits if they promise not to cut down their trees and, instead, use them as a carbon sink—with the credits then purchased by investors in the developed world looking to “green” their image.

Indonesia is the first country to develop a national framework for REDD and, together with Malaysia, produces around 80% of the world’s palm oil.

Officials in Indonesia are keen to ensure palm oil plantations are eligible as carbon sinks in the UN scheme. If they succeed, billions of dollars earned by selling carbon credits to CO2 polluters in industrialized countries could start flowing into Indonesian pockets.

Wandojo Siswanto, a special adviser to the forestry minister and one of Indonesia’s lead negotiators at global climate talks told Reuters [PDF] , “I think it would be good if we just say that palm oil plantations could also mitigate climate change through carbon sequestration through the nature of the trees,” he said, adding that both existing plantations and future plantations developed on degraded land could be eligible.

Environmentalists, meanwhile, say this will create a perverse incentive to replace rainforests and degraded lands with palm oil plantations.

In both cases, they say, this will lead to environmental degradation.

Oil palm plantations destroy a forest’s biodiversity. According to a group of researchers, “oil palm is a particularly poor substitute for either primary or degraded forests, and whereas any conversion of natural forest is inevitably damaging to biodiversity, oil palm plantations support even fewer forest species than do most other agricultural options.”

“They (oil palm plantations) support few species of conservation importance, and affect biodiversity in adjacent habitats through fragmentation, edge effects and pollution,” they added.

The problems with the growing number of palm oil plantations across the region has already been well-documented. According to one report from the New York Times [PDF] , a group of scientists say the recent global rise in demand for palm oil led to the clearing of huge tracts of Southeast Asian rainforest and the overuse of chemical fertilizer in Southeast Asia.

“Worse still, the scientists said, space for the expanding palm plantations was often created by draining and burning peatland, which sent huge amounts of carbon emissions into the atmosphere,” the report added.

And as a CO2 antidote, oil palm plantations fail miserably. According to researchers L. Reijnders and M.A.J. Huijbregts, from the University of Amsterdam and the University of Nijmegen respectively, oil palm plantations aren’t nearly as effective carbon sinks as tropical forests.

“From this study it is clear that claims that palm oil is environmentally friendly or dramatically reduces CO2 emissions may well be at variance with actual practice,” they wrote.

Environmentalists, like Probe International’s Patricia Adams, warn that the REDD program, like other carbon credit schemes, sets up perverse incentives that destroy the environment. In the case of HFC-23, a potent greenhouse gas by-product of refrigerant manufacturers, producers earn more from burning the HFC-23 than they do from making the refrigerant, a process that is itself polluting [PDF].

As the new profit centre, refrigerant manufacturers went into overdrive to produce and burn the HFC-23 and earn lucrative carbon credits, all the while visiting more pollution on unsuspecting nearby populations.

The same perverse outcome will happen under the REDD scheme, she predicts, as countries try to cash in on carbon credits by replacing tropical forests with palm oil plantations. “The world’s environment will suffer from this unintended, but unsurprising response to ill-considered climate change policies,” Ms. Adams says.

Brady Yauch, Probe International, August 20, 2010

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