PNG update: Yasause suspended, dodgy carbon credits and carbon ripoffs

Last week, Theo Yasause, the director of Papua New Guinea’s Office of Climate Change, was suspended while an internal investigation of the office is carried out, reports Australian Associated Press. For several weeks, the government of Papua New Guinea has been embroiled in a scandal over the issuance of a series of REDD credits, in the absence of any policy or legislation. Yasause denies having done anything wrong.

Two journalists have been covering these REDD developments in Papua New Guinea: Natasha Loder, who is based in the UK and works for The Economist; and Ilya Gridneff, who works for the Australian Associated Press in Port Moresby, PNG. This post is an attempt to summarise their stories so far. Please visit their blogs for more information. Loder blogs on Overmatter: Leftovers from the science desk at The Economist and Gridneff on Papua News Guinea.

The story broke on 4 June 2009, when Reuters reported “evidence of a multi-million-dollar offer of assistance from carbon brokers to a government agency, and confusion over whether offset sales were from valid projects.” The carbon brokers were Earth Sky and Climate Assist PNG and the government agency was the Office of Climate Change.

On 6 June 2009, The Economist reported that it had seen documents which suggest that the Office of Climate Change had issued REDD “credits”, apparently for one million tonnes of carbon each in 40 projects across the country. The article points out that “no government is able to issue any legal REDD credit, as no framework exists for doing so.” The Economist writes:

Betha Somare, press secretary for the prime minister, said in a formal statement “the OCC has no legal mandate to issue any forest carbon credits, other than afforestation and reforestation through the Clean Development Mechanism, nor is there currently any REDD asset in existence due to a lack of a regulatory framework for forest carbon in Papua New Guinea”. Officials are now looking in to how REDD credits came to be issued.

Kamula Doso, Nupan PNG Limited and Carbon Planet

Also on 6 June 2009, Natasha Loder wrote on her blog about the Kamula Doso REDD credit. In 1990, logging company Rimbunan Hijau sought an extension to one of its logging concenssions in Western Province. The government granted the extension for Kamula Doso’s 800,000 hectares of primary forest. In October 2008, PNG’s Supreme Court ruled that the order sought by Rimbunan Hijau for the logging extension was improper.

A few days after this ruling, on 3 November 2008, the Office of Climate Change wrote to a company called Nupan PNG Limited (above), stating “As Designated National Authority (DNA), I can issue a certificate of credit should you complete the following steps for the Project Documentation to be registered under the Voluntary Carbon Standards.” Attached to the letter is a copy of a certificate, titled “Series Number B1 Voluntary carbon credits issued under the UNFCC Reduced Emissions from Deforestation and Degredation (sic) initiative for clean development mechanisms.” The certificate is signed by Theo Yasause and Leo Tale, Director-Carbon Trade. Loder wrote to Yasause and received the following response:

Kirk Roberts of NUPAN PNG have been working with the landowners of Kumula Doso and made representation to my Office.

We issued an Interim copy of the Certifcate dated 3 Nov 08 on the basis that they will undertake wide stakeholder consultation covering all landowners, provincial and local government before such project can be entertained. The Original Certificate was kept in my Office but someone took that out and leaked it out on circulation. No documentation were submitted with proof that consultation were undertaken and the people are happy with possible carbon trade.

We have since ceased dealing with NUPAN as all landowners are not involved nor does the provincial and local governments in that area. We have stop any direct links with NUPAN since 3rd February. Forestry and ourselves were stopped by Court no to log or undertake carbon trade.

The credits in question were not sold or given to anyone as yet. This is because no Project Documentation were submitted to my satisfaction which would than be submitted to VCS for verifying.

Furthermore, there is a Court Injunction, in place and any dealing will be in contempt of court. Therefore, we have ceased dealing at this stage. from my side no credits were sold nor bought by anyone. Nor have the Office benefited in anyway.

On 2 February 2009, Yasause sent a “Notice of Nullyfication (sic) of all corresspondences (sic) and certifications issued on Kumalo (sic) Doso Pilot Project on REDD” to the Managing Director of Nupan PNG Limited (see page 5 of the letters about Kamula Doso). The letter states that “This decision has come about due to the continuous dispute between various landowner groups within the Kamula Doso project area and also with your company ownership.”

On 15 June 2009, at a news conference in Port Moresby, Yasause explained that “It’s not a false document but a sample.” Asked why he would make sample documents, he said, “We want to see what it looked like.”

Carbon Planet, an Australian “carbon management” company, is developing the Kamula Doso forest into a REDD carbon trade project for Nupan. “There are in existence a group of certificates issued by OCC to Nupan for Kamula Doso. They are not real certificates. They are symbolic to the fact that Nupan is recognised by OCC as rightful developer to the landowners of Kamula Doso,” Jim Johnson, Executive Chairman and CEO of Carbon Planet, told Loder.

“There has been no purchasing of carbon credits under any agreement, they have not been put forward for sale or traded,” Johnson added. “Carbon Planet is putting forward carbon credits for sale from its contracted portfolio, but only subject to certification by one or more of the recognised standards bodies.”

Carbon Planet has invested A$1.2 million in projects in PNG, according to an Australian Securities and Investment Commission (ASIC) document obtained by AAP. Johnson seemed distinctly edgy when Ilya Gridneff rang him to ask him about this:

“I’ve got nothing to talk about,” he said.

“I am really sick of you people casting aspersions on my company.

“No payment has been made to PNG, your information is incorrect.”

AAP read out ASIC’s Carbon Planet statement which says: “Payments include $1.2 million of advanced funding on origination projects in PNG which the company expects to recoup in the 2009 financial year.”

Johnson responded: “I am not explaining at all. I am not having this conversation,” before hanging up.

Meanwhile, Colin Filer from the Australian National University got in touch with Loder and said he knew something about Kamula Doso. Loder asked him what he knew and asked, “may I check whether you have any personal or financial ties with this story please?” Dr Filer replied “Of course I’m connected to some of the players, but like any good journalist, I don’t reveal my sources.”

As Loder commented on her blog, this is astonishing:

Dr Filer has contacted me as an academic who knows about a huge story of international significance and it turns out that he has some other non-academic connection that he is now refusing to disclose.

Dr Filer, it turns out, has worked for Carbon Planet. His job was “to write reports about the institutions that might be used to distribute landowner benefits from REDD projects”, Loder writes. Once she’d found this out (by writing to the vice-chancellor’s office at the University), Loder asked Filer again what he knew about Kamula Doso. “[S]adly Dr Filer didn’t want to talk to me any more,” Loder writes.

Loder points out that while much of the focus of governance issues is on poor countries, the same standards have to apply everywhere: “transparency is necessary everywhere if this market is ever going to work”.

She also has a recommendation for forestry consultants:

it really does matter when someone comes to buy $20m of carbon credits who has verified that they exist. In medicine, disclosure of consultancies is the norm. I think forestry consultants everywhere are going to have to start paying more attention to disclosure and transparency, particularly in relation to work done for carbon brokers and traders.

Climate Assist PNG

On 15 June 2009, the Office of Climate Change released a press statement, which Loder wrote about on her blog three days later. The Office of Climate Change’s 1,500 word press statement includes the following:

2. Climate Assist PNG Pty Ltd: –
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.

Loder spoke to Gregory Corby, of Climate Assist. “[H]e says he has made a complaint to the Attorney General in Papua New Guinea, and his lawyers have told him not to say anything,” Loder writes.

Loder notes that this refers to an “A series” of carbon credits dating back to 2005 – before the Office of Climate Change existed. “So it could well be technically accurate to say that the office of climate change had ‘no dealings with this company in respect of credits issued’,” Loder writes. “But if these carbon credits do exist, as the statement acknowledges, who, exactly, in government authorised their production?”

Two days later, Loder posted on her blog a document (above) dated 26 July 2005, that may answer this question. It is signed on behalf of the PNG government by the Minister for Trade and Industry, Paul Tiensten, and by Gregory Corby of Climate Assist. The document is titled “Carbon Credits, Carbon Reduction Credits, Clean Development Mechanisms” and states at the bottom, “This certificate represents ownership in carbon sinks.”

The document refers to the “Kyoto Protocol (1990)”, although the Kyoto Protocol is dated 11 December 1997.

A few weeks before posting the document, Loder asked Corby about the certificate. Here’s what she writes on her blog:

He said, the credits had changed dramatically over the years, and these early credits were used to start his business. “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.” . . . Mr Corby went on, “the Papua New Guinea government gave us the credits and made us the brokers to monetarise the credits.” In addition, Mr Corby said he had a long-standing relationship with the Prime Minister. However the PM’s press secretary denied this when I asked her a few weeks ago.

A letter dated 24 October 2005, also signed by the Minister for Trade and Industry (above), states that “The Prime Minister and I have accepted that Climate Assist (PNG) Ltd acts as Brokers on behalf of the Independent State of PNG to buy and sell carbon credits.” The letter also states that “The carbon credits have been assigned to Climate Assist (PNG) Ltd through our certificate and monetization that will finance designated projects within PNG.” This document, Loder writes “appears to back up Mr Corby’s statement that he was empowered to ‘make and sell’ carbon credits on behalf of the government.” The letter ends with the statement, “Therefore, this letter sets to acknowledge the role of Climate Assist (PNG) Ltd and advise that the Government of the Independent State of PNG unconditionally guarantee all actions undertaken for the monetization of these credits.”

Loder finishes her post about the “A series” of PNG credits by writing, “Are all these documents what they purport to be? I think at this stage the arguments are best left to lawyers, and I’d like to edge carefully out of this blog, trying not to knock over any words as I leave.”

Aitape Lumi, Carbon (PNG) Dev. Corporation and South Pole

On 24 March 2009, Theo Yasause wrote to the Managing Director of Carbon (PNG) Dev. Corporation. The letter states that “the Office of Climate Change has no objections to the company developing a pilot REDD project in the area.” As Loder points out, “This is somewhat unexpected,” given that Reuters reported on 4 June 2009 that the Office of Climate Change “suspended in January all plans to sell rights to the carbon stored in its rainforests after deals sparked land ownership disputes”. Yasause told Reuters that “All projects are suspended while we get some experience.”

Perhaps even odder, in his letter to Carbon (PNG) Dev. Corporation, Yasause writes, “If you agree, I will request South Pole Ltd Carbon Trading Company based in Zurich Switzerland to assist you develop the project to have the credits ready for sale.” When Loder showed the letter to Christian Dannecker, at South Pole, he told her this his firm had never seen the letter, had never heard of Carbon (PNG) Dev. Corporation, and knew nothing about these projects.

Loder writes:

Mr Dannecker has some observations and questions of his own. Why does does the letter refer to CER credits? This is a good question, voluntary credits go under the term Verified Emissions Reduction or VER. Where does the value of 50m voluntary credits come from? Another good question, the value of the carbon in any forest is not down to the government to decide. Finally, Mr Dannecker observes that merely a letter of support or approval is satisfactory in such circumstances.

South Pole Carbon is already formulating a complaint to the Office of Climate Change about the use of his company’s name in this context. He adds, “we appreciate that he thinks of us but would like to be informed beforehand”.

Carbon ripoffs

Meanwhile, both Loder and Gridneff have written about conmen who are travelling from village to village offering fake carbon trading deals and promising huge returns. Villagers hand over about US$500, for “registration as a shareholder” in a carbon trading company. They receive a receipt and the conman leaves, never to be seen in the village again. “People in the bush are calling it ‘money bilong sky’ [sky money] or ‘selling the air’ or ‘selling the gas above’,” WWF’s Dave Melick told Gridneff.