More questions than answers on carbon trading in PNG

Papua New Guinea’s forest carbon trading fiasco is back in the news. The focus is on Kirk Roberts, pictured above, his company Nupan (PNG) Trading Limited and an Australian carbon trading firm, Carbon Planet. “It’s no secret that I am one of the most important foreigners in PNG,” Roberts says. But his opponents have called him “the kingpin of the ‘carbon cowboys'”.

Roberts claims to have power of attorney over 90 forest deals. He also claims to be unaware of any disputes with tribal groups, although one tribal representative says he was coerced into signing a Memorandum of Agreement with Nupan.

Two articles were published in the Sydney Morning Herald on Friday last week (4 September 2009): “I am a top foreigner in Papua New Guinea, says carbon kingpin” and “Australian firm linked to PNG’s $100m carbon trading scandal“. The next day, The Australian published an overview of the whole sorry tale so far: “The rush is on for sky money“. Meanwhile, Carbon Planet has produced a series of questions and answers on its website about its involvement in REDD projects. Two extraordinary videos of a “official hand over ceremony on behalf of the 45,000 people of the East Pangia FMA [forest management area]” have also been posted on Nupan’s website (see below).

None of this is straight forward. There are many people in the logging industry who would love to see REDD fail so they that could carry on logging. Wari Iamo, the acting head of the Office of Climate Change, has said that the government does not support the sort of Voluntary Carbon Agreements that Nupan is setting up in PNG. He has also noted that in forest areas covered by Forest Management Agreements the timber resources belong to the State. This could be read as an attempt to make sure that any revenue from REDD goes to the State rather than the landowners and companies such as Nupan and Carbon Planet. There’s also the problem that trading the carbon will allow emissions elsewhere to continue – a dangerous distraction, as Friends of the Earth points out.

But the fact that something is complex means we need more transparency, not less. This post looks at three aspects of carbon trading in PNG:

1. Free, prior and informed consent

2. The dodgy REDD “credits”

3. The money

In doing so it raises (or repeats) some of the unanswered questions.

Free, prior and informed consent

One of the most important aspects is whether landowners in Papua New Guinea are signing the agreements with free, prior and informed consent (FPIC). The principle is crucial to upholding the human rights of Indigenous peoples and local communities. Here’s how Oxfam Australia explains FPIC:

• Free refers to the general principle of law that consent is not valid if obtained through coercion or manipulation.

• Prior refers to meaningful, informed consent sought sufficiently in advance of any activities by a company.

• Informed means that the process must involve consultation and participation by Indigenous peoples with full disclosures of a development activity in accessible and understandable forms to affected peoples and communities.

Nupan has contracted Carbon Planet “to provide the certification and trading services for its carbon projects in Papua New Guinea,” according to Carbon Planet’s website. In its Corporate Ethics and Social Policy, Carbon Planet states that “Carbon Planet, in consultation and cooperation with Indigenous Peoples, undertake that we will endeavour to adhere with the principles outlined in the UN Declaration on the Rights of Indigenous Peoples” [emphasis added]. While Carbon Planet should be commended for referring to UN DRIPs, this wording is way too loose. To have any credibility, Carbon Planet must actually comply to the principles in the UN DRIPs, not simply say that it will try to do so. What’s worse is that in its Guiding Principles on Rights of Indigenous Peoples Carbon Planet appears to be looking only at Articles 31-37 of UNDRIPs.

Unfortunately, it seems that Roberts is being economical with the truth in at least some of his dealings with local people. For example, in a letter from Nupan to the Vice Chairman and Directors of Tumu Timbers Development Limited, regarding forest in Kamula Doso, Roberts states: “We confirm that the independent verification process to enable your Project to be formally recognized under the UNFCCC guidelines for REDD Carbon Credits is now well underway.” But there is as yet no agreement at UN level on REDD. There are no UNFCCC guidelines for REDD Carbon Credits. Roberts declined to reply when REDD-Monitor requested a copy of the UNFCCC guidelines. Here’s the letter from Nupan to Tumu Timbers (pdf file, 24.9KB)

NuPan (PNG) Trading Corporation Limited

July, 2009
Mr. Wisa Susupe,
KAMULA DOSO FMA Block 1;2;&3 FMA

Welcome Sir!

It is our great pleasure to welcome you and acknowledge your fellow Vice Chairman and Directors of Tumu Timbers Development Limited.

Mr. Billy Toroti – Vice Chairman
Mr. Walama Painama – Director / Secretary
Mr. Yamai Umtadie – Director
Mr. Nodie Imali – Director

We acknowledge receipt of your Board Minutes confirming our appointment, and assure you that we have, on your behalf, and with the help of the People of Kamula Doso, now completed all the Corporate, Legal, Government, and Social responsibilities required of us as your appointed Power of Attorney, and that we will at all times continue to act in your best interests.

We will continue the village consultation process started with your people some years ago, and will take our greatest care to represent the interests of your people at all times. We confirm that the independent verification process to enable your Project to be formally recognized under the UNFCCC guidelines for REDD Carbon Credits is now well underway.

The decision you have all made to preserve your beautiful forests from logging and other destructive activities is a brave one, and we salute your intention to maintain your Forests in the interests of providing Mother Earth with “A breath of fresh air”.

We salute you and thank you for your trust.

Yours sincerely,
“Roberts”
Kirk William Roberts
CEO / Chairman
Nupan (PNG) Trading Corporation Limited

Roberts refused to discuss how the deals were done when asked by the Sydney Morning Herald:

“The whole thing has been checked over by international verifiers,” he said.

Asked for detail, he said: “That information will all come out when the projects are complete. I’m not going to talk about verification now.

“Why would I do that? It’s not for people to write stories about at the moment.”
[ . . . ]
“They come to me looking to get into carbon trading, not the other way round,” he said. “I can’t go into any details of how it’s done – this is commercial-in-confidence.”

When REDD-Monitor asked Dave Sag, co-founder and executive director of Carbon Planet, about the UNFCCC REDD guidelines mentioned in Roberts’ letter, Sag replied: “I can’t speak for Mr Roberts but what I assume he means there is the development of the specific REDD methodology and the PDD [Project Development Document] that documents the KD [Kamula Doso] project is well underway.” Sag neatly avoided answering the question about the UNFCCC REDD guidelines.

Here are the two videos of the “official hand over ceremony on behalf of the 45,000 people of the East Pangia FMA [forest management area]”:

During the second video Roberts is asked “So what do you think the people will gain out of carbon trading, long term?” Here’s his response:

“Most importantly the people will be able to preserve their customs. They’ll be able to be the same that they’ve always been, but still be able to maintain themselves in a better way by utilising the finances that carbon trading will be able to provide, with infrastructure in the villages, hospitals, roads, etc. etc. Managed properly it will definitely be a better place.”

According to the Sydney Morning Herald, one tribal representative was coerced into signing an agreement with Nupan:

a tribal representative the Herald spoke to, who cannot be named, said he had been coerced into signing a memorandum of understanding that gave Nupan power of attorney over his land. Initially he refused. ”I didn’t know anything about the certificates, that was my first time in hearing about the certificates,” the tribesman said.

The tribal representative claimed he eventually signed the memorandum in the face of Nupan’s persistence. ”I couldn’t do anything . . . So I just went ahead and signed it. Then later I complained to my lawyer.”

The dodgy REDD “credits”

Another part of this story is a series of dodgy carbon credits, printed on Office of Climate Change letterheads and signed by the then-head of the OCC, Theo Yasause (who is currently suspended pending an investigation). When asked by the Sydney Morning Herald about these letters, Dave Sag “denied media reports in PNG the certificates were stolen or were intended to mislead.”

“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.”

REDD-Monitor has posted some of these REDD “credits” here and here. Questions remain. Why would a “prop” need to be written on OCC letterheaded paper, stamped and signed? If it was only a “prop”, why was it not marked, for example, “sample”? And if it really was a “prop”, why did Yasause feel the need to write again to Nupan in February 2009, stating, “As Designated National Authority, I hereby write to advise you that all correspondences and certificates issued for the development of REDD pilot project in Kamula Doso is hereby withdrawn as of the date of this letter.”?

Interestingly, on its website, Carbon Planet says something different to what Sag told the Sydney Morning Herald:

In mid 2008 the Office of Climate Change (who is the Designated National Authority (DNA) who authorises carbon market activities) created a “symbolic REDD credit certificate” as a sample certificate with no commercial value.

Carbon Planet has had no involvement with them; we understand the certificates were an internal sample produced by the Office of Climate Change not for any commercial use or purpose. The “REDD credit certificates” were not intended as anything but a symbolic reference of a REDD credit certificate.

So, when is a “symbolic REDD credit certificate” a “prop” and when is it an “internal sample”? And did the villagers who have signed agreements with Roberts also understand that these REDD “credits” were only “symbolic”, a “prop” or an “internal sample”?

The money

Another hardly trivial issue is the matter of money. Last year, Carbon Planet invested A$1.2 million in PNG. Here’s how Dave Sag explained this to Tan Copsey, a journalist with China Dialogue, recently:

“We have invested $1.2 million [Australian dollars, or nearly US$1 million] in Papua New Guinea,” Sag said, “but we haven’t given it to the government. We’ve spent money on everything from plane fares to taxis to local translators to consultants to illustrators. Right now, we also employ a lot of very hard-core scientists who go out into the jungle. These are not armchair scientists; these are real people doing real work, and it is expensive and it is complicated.”

On its website, Carbon Planet states that the money went to Nupan:

As at September 7, 2009, Carbon Planet has never paid any monies to the PNG Government. Carbon Planet paid AU$1.2m in project finance to project developer Nupan Trading Corporation (PNG) Limited.

So where did the money go? A$1.2 million would buy an awful lot of plane tickets and taxi rides. Consultants and scientists tend to be more expensive. But are they employed by Nupan or by Carbon Planet? Who are they? What were they hired to do, exactly? And are any of their reports in the public domain?

Another question is how much money Carbon Planet might get from all this. According to the Sydney Morning Herald:

Carbon Planet, which has acquired a publicly listed company, told investors recently it had $100 million in potential REDD projects in PNG. Mr Sag said this figure was “estimates based on contracts we have in place”.

But elsewhere, Carbon Planet gives different figures. Natasha Loder, a journalist with The Economist, writes on her blog that she has a business model document produced by Carbon Planet which claims that, “25 REDD Projects have been contracted at $1 billion per annum to date”. The same document also claims that Carbon Planet has contracted eight REDD memoranda of understanding in Indonesia, at $600m per annum. So how much are these various contracts actually worth to Carbon Planet?

While we’re looking at money, and unanswered questions, the Australian government needs to answer some questions about its Papua New Guinea Australia Forest Carbon Partnership, under which Australia has committed A$3 million to PNG. In addition, Australia has a A$200 million International Forest Carbon Initiative. Penny Wong, Australia’s Minister for Climate Change and Water has so far declined to answer questions about her government’s involvement in carbon trading in PNG.