Papua New Guinea Environmental Alliance letter about the country’s proposed Carbon Market Regulation

In recent months, the Papua New Guinea Environmental Alliance has sent a series of letters to the Climate Change and Development Authority about the development of REDD and carbon market regulation in the country.

The most recent letter was published today (11 April 2023) as a full-page advert in the Post Courier.

In the letter, the Papua New Guinea Environmental Alliance writes that,

“It is our view that a strong regulatory framework will enable us to adequately mitigate the risks that are associated with carbon market project implementation, and in particular guarantee the protection of the rights and interests of customary landholding communities.”

REDD-Monitor has a somewhat different position on regulation, carbon markets, and risks. Rather than attempting to regulate carbon markets, it would be far better to scrap them entirely.

Back in 2009, Larry Lohmann of The Cornerhouse wrote a chapter titled, “Regulation as Corruption in the Carbon Offset Markets: Cowboys and Choirboys United”. It was published in the the book Upsetting the Offset: The Political Economy of Carbon Markets, edited by Steffen Böhm & Siddhartha Dabhi.

Lohmann’s chapter starts as follows:

“When a particular commodity market cannot be regulated, the attempt to regulate it can do no more than create an illusion of regulatability. Deflected into a cul de sac, official action to correct abuses sustains the underlying problems, or makes them worse. Regulatory acts become a danger to society. Governance becomes a part of corruption. All this happens regardless of the good intentions of regulators or anticorruption fighters.”

Lohmann argues that, “the carbon offset market is an example of such an unregulatable market, and that attempts to regulate it will only entrench its status as a locus of international corruption and exploitation”.

Lohmann’s chapter remains extremely topical, 14 years after he wrote it:

“Hundreds of projects and millions of credits are accused of being fraudulent, scams for shoring up business as usual – or worse. Scandal after scandal regarding the offset market is splashed across the front pages of newspapers.”

Some of the members of the PNG Environmental Alliance (including FORCERT and Wildlife Conservation Society) are actively involved in developing REDD projects.

In their letter, the PNG Environmental Alliance is pointing out that developing a regulatory framework for carbon markets “should not bypass thorough consultations with stakeholders and logical, deliberate, and transparent planning and execution of the process”.

Mr. William Lakain
Acting Managing Director
Climate Change and Development Authority
Level 1, Section 72 and 73,
Wards Road, Hohola
P.O. Box 4017,
Boroko 111, NCD

Date: 31 March 2023

Dear Mr. Lakain,

RE: OPEN LETTER ON THE DEVELOPMENT AND IMPLEMENTATION OF A REGULATORY FRAMEWORK FOR CARBON MARKETS IN PAPUA NEW GUINEA

In our letter to your office on 27 February 2023, the members of the PNG Environmental Alliance (PNGEA) outlined the areas that we believe need to be considered and completed for the development of an appropriate regulatory framework for carbon markets in PNG. We received a response from your office on 14 March 2023, however, we now write this open letter to you to ensure our still outstanding concerns related to the development process of the regulatory framework for carbon markets in PNG are made known to the wider public.

In his press statement dated 17 February 2023, the Minister for Environment, Conservation and Climate Change, the Honourable Simo Kilepa, expressed concerns that the absence of a full regulatory framework poses significant risks for governance and transparency for the carbon markets space. We agree with his sentiments to the extent that a full regulatory framework is necessary at this time. It is our view that a strong regulatory framework will enable us to adequately mitigate the risks that are associated with carbon market project implementation, and in particular guarantee the protection of the rights and interests of customary landholding communities. The development of this regulatory framework, however, should not bypass thorough consultations with stakeholders and logical, deliberate, and transparent planning and execution of the process.

The members of the PNGEA have vast combined experiences working directly with rural PNG communities on a range of issues related to sustainable management and conservation of land and natural resources. We believe it is our duty to use this practical experience and expertise at the national level to assist our government in the development of policies, laws and regulations that will serve our people and safeguard their interests.

We are aware that at present, the CCDA is coordinating the drafting of a Climate Change (Management) (Carbon Market) Regulation 2023 (Carbon Market Regulation) and that an amendment of the Climate Change Management Act 2015 (as amended) (CCMA) has been forecasted. We stand ready to provide our assistance where necessary, however, it is our view that to arrive at a full regulatory framework that mitigates risks and protects the rights and interests of our people and our country in relation to the various types of carbon markets, the following still needs to be undertaken:

1. The circulation/publication of the four REDD+ Safeguard documents (on Free, Prior & Informed Consent, Benefit Sharing & Distribution, the Grievance Redress Mechanism, and REDD+ Development), to allow these documents to be used as the basis for development of safeguards for other types of carbon projects, and to inform the CCMA revision process, as well as the development of the Carbon Markets Regulation and other necessary regulation(s).

2. Further stakeholder consultation on the final draft Carbon Market Regulation, after the final versions of the four REDD+ Safeguard documents have been circulated to stakeholders, and the input of the stakeholder consultation on the CCMA revision has been processed into a draft revised CCMA and made public.

3. A revision of the CCMA through a transparent process, including thorough stakeholder consultation, with key points for the revision being the following:

   1. definition of “carbon rights” (and any reference to primary and secondary carbon rights),

   2. clear and specific references to safeguards and regulations for all types of carbon credit projects,

   3. alignment of existing forestry, environmental and energy legislation, and a clear outline of how carbon projects will be nested within a multi-sector national approach, and how this will be governed.

4. The development of safeguards for all other types of carbon credit projects; the draft Carbon Market Regulation proposes to cover all types of carbon projects generating carbon credits or other types of financing. While we understand that for the energy sector sufficient legal guidance may already exist, we otherwise only have developed Safeguards for REDD+ projects, whose scope is limited to management and conservation of existing forests, including mangroves. However, there need to be safeguards for the other types of carbon credit projects under the Carbon Market Regulation, e.g., sea grass, marsh or swamp lands, reforestation/afforestation, woodstoves, etc.

5. Establishment of a functional National Climate Change Board as per the CCMA to provide general control and guidance over the exercise of the functions and powers of the Authority under the CCMA, including oversight of the development of the missing elements of the full regulatory framework.

It is our view, that to ensure governance and transparency, a carbon market regulation should only come into effect once all other related elements of the framework mentioned above have been completed and operationalised. And only once this process has been completed, will it be appropriate to lift the Moratorium which is currently in place on new voluntary carbon market projects.

We therefore ask the CCDA to do the following:

a) Publish an outlined plan for the development and implementation of a full regulatory framework for carbon markets in PNG, including all issues listed above;

b) Provide sufficient time and opportunities for stakeholder consultation on all elements of the regulatory framework currently under development or that still need to be developed;

c) Publish and circulate the four REDD+ Safeguard documents (on Free, Prior & Informed Consent, Benefit Sharing & Distribution, the Grievance Redress Mechanism, and REDD+ Development) that have been approved by NEC; and

d) Extend the deadline for comments on the final draft of the Carbon Markets Regulation from 14 April 2023 to a later date, allowing time for the development of the other regulatory framework elements that need to inform it.

We are grateful to the CCDA for your continued communication and discussions with the PNGEA membership on the development of a regulatory framework for REDD+ and the carbon market and we look forward to hearing from you and working in collaboration with you.

Thank you very much for your consideration.

Yours sincerely,

Pamela Avusi
Acting Coordinator
PNG Environmental Alliance
Correspondence email address: pavusi@forcertpng.org

Bismarck Ramu Group (BRG)
Centre for Environmental Law & Community Rights (CELCOR)
Consultative Implementation & Monitoring Council (CIMC)
FORCERT – Forests for Certain: Forests for Life!
Institute of National Affairs (INA)
Partners with Melanesians (PwM)
PNG Council of Churches (PNGCC)
Research & Conservation Foundation (RCF)
Tenkile Conservation Alliance (TCA)
Tree Kangaroo Conservation Program (TKCP)
Wide Bay Conservation Association (WBCA)
Wildlife Conservation Society (WCS-PNG)

Cc: Hon. Simo Kilepa, Minister for Environment, Conservation and Climate Change
Cc: Hon. James Marape, Prime Minister
Cc: Hon. Salio Waipo, Minister for Forest
Cc: Ambassador Mr. Ivan Pomaleu, OBE, CACC Chairman

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