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 About two years ago, I worked for several weeks in Palangka Raya, a small provincial capital in Indonesia. My job was to help the provincial government prepare a master plan for the rehabilitation of the world’s largest peat-forest area. On the day of my arrival, the local newspaper ran an article about the “Green Gold of Central Kalimantan.” I soon discovered that the newspaper was talking about an intangible form of gold. By rehabilitating its peat swamp forests, the provincial government of Central Kalimantan hoped to reduce CO2 emissions from these forests, and sell these reductions to overseas buyers through REDD (Reduced Emissions from Deforestation and Degradation). REDD is a new carbon finance mechanism that is under development by the international community. What follows is a short lesson in modern alchemy: how to turn improved peat-forest management into gold.
Going Green with REDD
Since 2007, there has been a market for certified greenhouse-gas emission reductions (CERs, for short). Governments buy CERs—or require private companies in their jurisdictions to buy them on their behalf—to meet their emission-reduction commitments under the Kyoto Protocol. At present, there is no generally accepted methodology for measuring greenhouse-gas emission reductions from the improved management of forests, including peat swamp forests. For the provincial government of Central Kalimantan, this means that there is presently no market for CERs from its peat lands. This may change, however, in 2012. If the international community would approve REDD and (just as important) expand it to include peat restoration, expect a green gold rush toward Palangka Raya.
Peat, the Unknown Carbon Sink
The potential for selling CERs from improved peat-forest management in Central Kalimantan is huge. Perhaps surprisingly, oxidation of peat in drained peat lands accounts for no less than 8% of global CO2 emissions, which is more than the combined CO2 emissions of Germany, France, Italy and the United Kingdom. According to detailed calculations of Wetlands International, degraded peat in Indonesia accounts for about 58% of global CO2 emissions from this source, mostly because of the peat swamp forests near Palangka Raya. These are not the largest but certainly the most degraded peat forests in Indonesia. The cause: human error.
The Ex-Mega Rice Project
In 1995, President Suharto—the former military dictator of Indonesia, who was ousted in a coup three years later—announced the Mega Rice Project against the advice of an army of experts. The plan: Drain one million hectares of swampland in Central Kalimantan and convert these lands into rice-growing areas to make Indonesia self-sufficient in rice production. Only the first part of this plan (“drain one million hectares”) was implemented successfully. The conversion into rice-growing areas never materialized, which was no surprise to anybody (except Suharto) because the soil was and remains unsuitable for intensive agriculture. Worse yet, the dried peat resulting from the failed project is susceptible to fires that have caused the release of massive amounts of greenhouse gases.
‘Additionality’ Is Crucial…
Peat that lies in properly watered swamps barely emits greenhouse gases. This implies that proper management of water levels in the Ex-Mega Rice Project area could potentially reduce about 4% of the world’s greenhouse-gas emissions. The international community is currently considering the inclusion of emission reduction from improved forest management (possibly including peat forests) into the regular market for CERs. A major difficulty is the design of a generally accepted methodology for measuring greenhouse gas emission reductions from such activities. It is especially difficult to verify if emission reductions were caused by improved forest management or would have happened anyway. In the latter case, an activity would not be eligible for CERs. This problem is known in the Kyoto Protocol jargon as “additionality.”
…But So Is ‘Environmental Feasibility at Time of Preparation’
I believe that a project such as draining the peat swamp forests of Central Kalimantan should not be eligible for CERs, even if it meets all criteria currently under consideration by the international community (including “additionality”). This is because the project was not environmentally feasible at the time it was started. Allowing such projects to become eligible for CERs would encourage irresponsible investments in projects with potentially significant environmental costs. I am in favor of rehabilitating the Ex-Mega Rice Project area, but do not believe that REDD is an appropriate mechanism for financing (part of) the costs. To me, that is the same as rewarding a bank robber for not robbing banks anymore. Come to think of it, it’s actually even worse. It’s giving the largest reward to the bank robber who used to steal the most.
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