New Greenpeace report exposes VW’s REDD carbon offset sham. The Katingan REDD project faces problems of additionality, permanence, leakage, land conflicts

And (of course) an unverifiable, counterfactual baseline.

A new report by Greenpeace investigates VW’s “climate neutral” production claims for its new ID series of electric cars. Greenpeace concludes that VW has done too little to reduce its CO₂ emissions, and that the carbon credits bought from the Katingan REDD project in Indonesia are neither additional nor permanent. VW’s claims of climate neutrality are “a huge sham”.

On the project website, the company behind the Katingan REDD project, PT Rimba Makmur Utama, states that,

In the absence of our work, the project area would have been cleared of forest, and the peat drained, gradually releasing the vast carbon stocks into the atmosphere. Each tonne of carbon dioxide that we prevent from release becomes a carbon credit. This process is based on robust scientific evidence, and overseen by independent auditors under the Verified Carbon Standard. Purchasing and retiring such credits permanently removes them from the market, mitigating against climate change, and protecting this unique and biodiverse habitat.

The website even features a carbon counter that claims to show exactly how many tonnes of CO₂ have not been released to the atmosphere as a result of the Katingan REDD project:

Greenpeace’s new report takes apart these claims. The carbon credits do not mitigate against climate change, and the assumptions about what would have happened to the forest in the absence of the project are questionable and in any case unverifiable.

Greenpeace writes that,

Many factors indicate that the project operators’ assumptions regarding additionality are clearly exaggerated. It is highly probable that the forest would have stored comparable amounts of CO₂ even without the project. The project has merely shifted deforestation to other places in the region. Destruction of forest cover that may have been prevented in the project area is taking place elsewhere. Moreover, the permanence of CO₂ storage is not guaranteed. While buyers of the carbon credits continue to release CO₂ into the atmosphere, where it will impact our climate for about 100 years, it is far from certain whether the forest will still be standing in 20 or 50 years.

VW’s climate action: Too little, too late

Greenpeace looks into VW’s attempts to reduce emissions in the manufacturing process, and points out that “phasing out the internal combustion engine is not enough to mitigate climate change.” VW should stop developing internal combustion engines way before its deadline of 2040, and should replace all sports utility vehicles with climate-friendly cars.

Greenpeace demands that,

VW must minimise its own CO₂ emissions instead of compensating them: Compensation payments to REDD+ projects do not make any car climate neutral. The destruction of our climate cannot be “compensated”. Offsets mislead customers into believing they can continue business as usual without needing to modify their behaviour. Instead of trying to buy itself out with carbon offsets, VW must restructure its business model to make it more climate compatible.

Greenpeace also looks in detail at the questionable assumptions behind the Katingan REDD project.

Greenpeace questions the baseline scenario, which it finds “is implausible in many instances, and highly unlikely”. Several of the reference regions are 1,000 kilometres away from the project, “rendering them nearly useless for purposes of comparison”, Greenpeace writes. The project developers exaggerated the danger to the forest in the project area of conversion to industrial tree plantations. In any case the project area was legally protected under the May 2011 national moratorium on new forest concessions.

Greenpeace also reports on land conflicts with local populations and that villagers affected by the REDD project have a negative view of the project, in contrast with VW’s claims about such projects being beneficial to local communities.

Forest cover in the project has decreased since the project started. Deforestation in villages near to the project has increased, and villagers are moving away from the project area.

Additionality: The problem of counterfactual baselines

The project design document (PDD) for the Katingan REDD project lists seven potential options for what might have happened to the forest in the absence of the project. The PDD concludes that only one of these options is “credible”: “significant barriers prevent the reali­zation of all but a single credible land use scenario: industrial acacia plantation.”

The project’s baseline scenario anticipated that between 2011 and 2020, in the absence of the project, 51,2929 hectares of the project’s 150,000 hectares would be converted to acacia plantations. That’s an average of 5,129 hectares per year.

Greenpeace compared that figure to the actual rates of deforestation for industrial tree plantations in Central Kalimantan province from 2001 to 2010, documented in a report by CIFOR, titled, “Atlas of Deforestation and Industrial Plantations in Borneo”. CIFOR found that a total of 71,599 hectares of industrial tree plantations were established in Central Kalimantan in this period. Of this, 33,713 hectares of forest was cleared to make way for plantations. The average rate of deforestation is 3,371 hectares per year.

In other words, the yearly average for the entire province of Central Kalimantan was significantly lower than the PDD anticipated for just the Katingan project area. All of the plantations established in Central Kalimantan between 2001 and 2010 were on mineral soils. The project area has predominently peat swamp soils, which would need to be drained before they can be planted with acacia trees – at considerable extra costs.

Greenpeace notes the incentive for project developers to draft a baseline that is as destructive as possible: “The less favourable the assumed development of the forest cover in the absence of a project, the greater the number of tradeable CO₂ offsets.”

In addition, Greenpeace notes that certification bodies have a conflict of interest in that they are commissioned and paid by project developers.

Greenpeace argues that the project developers and auditors only agreed on the baseline scenario when the certification process was underway in 2015 and 2016. Dharsono Hartono director of PT Rimba Makmur Utama, the company running the Katingan REDD project, didn’t mention acacia plantations as a threat to the project area in presentations he gave and blog posts he wrote between 2012 to 2014.

Of course, as Larry Lohmann has pointed out, “The problem is not ‘bad baselines’ but the concept of counterfactual baselines itself.”

Reference regions: Thousands of kilometres away

To calculate the rate of deforestation in the absence of the REDD project, the project developers identify reference regions. These are supposed to as similar as possible to the project, and in the immediate area of the project.

But the only large industrial tree plantation in Central Kalimantan is Korintiga Hutani. It covers 80,000 hectares, about half of which was previously forest. But the soil is mineral, not peat swamp soil, as found in the project area.

Five of the seven reference regions are in Riau province on the island of Sumatra. That’s more than 1,000 kilometres from the project area. In the late 1980s, Riau was 80% covered in forest. The area of forest fell dramatically following the arrival of two of the world’s biggest and most destructive pulp and paper corporations: Asia Pacific Resources International (APRIL) and Asia Pulp and Paper (APP). The pulp and paper infrastructure built by APP and APRIL is (fortunately) still lacking in Central Kalimantan.

The other two reference regions are in West Kalimantan, 400 kilometres from the project area. But these reference areas cover only about 13,000 and 25,000 hectares – a small fraction of the project area’s 150,000 hectares.

The PDD states that, “Acacia plantations have already been established in peat forest areas of Central Kalimantan to the east of the project site in Pulang Pisau and Gunung Mas districts.”

Greenpeace compared this statement with the data in CIFOR’s “Atlas of Deforestation and Industrial Plantations in Borneo”, and found the statement not to true. In Gunung Mas, since 2000, 2,907 hectares have been cleared for acacia plantations, but on mineral soil. There are no industrial tree plantations in Pulang Pisau.

Moratorium, what moratorium?

In May 2011, Indonesia’s then-President, Susilo Bambang Yudhoyono, signed a decree to bring into force a two-year moratorium on new forest concessions. The moratorium has been renewed several times since then, and in 2019 President Joko Widodo issued a permanent moratorium on new forest concessions. The moratorium covers about 66 million hectares of primary forest and peatland, including the project area.

Greenpeace writes that,

The baseline scenario stipulates that applications for two of the three licenses for pulpwood plantations would have been submitted in 2010. The companies involved would have received letters with confirmation of provisional reservation in 2011, and of full license in 2012. The adoption of the now permanent moratorium in 2011 has rendered these assumptions obsolete.

Relying on the moratorium to stop deforestation of any area of forest in Indonesia would be an extremely risky strategy. Deforestation has increased since the moratorium was announced in May 2011. Nevertheless, in its 291 pages, the PDD refers to the moratorium only once:

As the majority of the project area is forested and situated on peatland, the Katingan Project must also comply with various regulations on the management of forest and peatland, including:

• Presidential Instruction INPRES No. 10/2011 regarding Suspension on the Issuance of New Licenses and Improved Management of Primary Forest and Peatlands”, renewed by INPRES No. 6/2013 and No. 8/2015

Permanence: “Dark brown fire scars” in the project area

Greenpeace notes that in 2019, journalists Daphné Dupont-Nivet, Gabriel Wahyu Titiyoga, and Aqwam Fiazmi Hanifa reported on the Katingan REDD project. Dupont-Nivet wrote about “two dark brown fire scars in the protected area” on satellite images. The burned area covered a total of 1,900 hectares. In 2015, more than 9,000 hectares of the project area burned.

A 2019 masters thesis by Vivi Selviana at North Carolina State University also found evidence of forest cover loss in the project area. Selviana now works as a research consultant for CIFOR.

An oil palm plantation on the eastern boundary of the project area also threatens the project. In 2015, Dharsono Hartono told Mongabay that,

“The impact of their land clearing will be very detrimental to us, because it’s one ecosystem. If they open land in a massive way, it will interfere with what we’re doing. In the short term, the impact will not be severe. But in the long term, the peat dome in the region will be affected, and there is potential for wildfire.”

As Greenpeace points out, even if the forest is protected for the 60 years of the Ecosystem Restoration Concession, what happens when the license expires is anyone’s guess. If the forest is cleared,

The CO₂ from fossil fuels burned to manufacture “carbon-neutral” VW models, which had been neutralised thanks to the forest, would still be in the atmosphere – in addition to with the emissions generated by the destruction of the forest itself.

Leakage: Substantial migration away from the project area

Leakage is very difficult to monitor, Greenpeace notes, but adds that there are signs of leakage in the Katingan REDD project. In her masters thesis, Selviana found substantial migration away from the project area in the early stages of the project. She writes that people moved out of the villages “due to lack of livelihood opportunities, to look for jobs, and for family reasons (e.g., marriage, children).” In 2014, after the project had started, more people moved of project area villages than control villages. “This might happen due to worries in the restriction of forest access as one of the local sources of income,” Selviana writes.

Land conflicts and land claims inside the project area

Greenpeace points out that although local communities are not the real drivers of large-scale deforestation, they are still being pushed out of project areas. Investigative journalist Daphné Dupont-Nivet found that there were land conflicts in the Katingan REDD project area:

In 2014, the highest-ranking Dayak leaders reached an agreement with the governor of Central Kalimantan, which stipulated that each Dayak family in the province would be granted the right to cultivate five hectares of land. They still had to find out where this land would come from. And a local politician secured votes in the Dayak community during the 2017 elections in the province by promising them that he would reclaim land, according to Bahrudin [a Dayak leader]. He showed letters and documents that had been prepared by Dayak community leaders. The villagers used these to claim land within the project area where the CO₂ reserve had been in place since 2013.

Vivi Selviani’s masters thesis is titled, “Learning Lessons from a REDD+ Initiative: Assessing the Implementation Process, Forest and Community Outcomes, and Impacts on Local Households in Central Kalimantan”. In it she takes a close look at the effects of the Katingan REDD project on local communities, interviewing members of more than 250 households.

Selviani found that perceptions of the project have deteriorated over time. Three out of the four villages surveyed rated community development and well-being improvement as “very negative”.

Household income did not develop as well for villages affected by the Katingan REDD project, compared to villages outside the project area. Selviana writes that,

Findings show no differences on total income for households in REDD+ and control villages before the implementation of the REDD+ project. However short after the implementation of the REDD+ project in October 2013, the total income of households in control villages was higher compare to REDD+ villages. Furthermore, approximately after 5 years implementation for the REDD+ project, the household total income in the control villages was also higher than the total income of household in the REDD+ villages.