Driven by relentless and ill advised palm oil expansion, Kalimantan’s carbon rich but relatively unproductive peatlands are being rapidly drained and burned. Across Indonesia, peatland destruction is releasing up to a billion tons of carbon dioxide a year – equivalent to emissions from 200 large coal power plants – in addition to fomenting wide social conflict and destroying critical habitat for orangutans, tigers and other species. Yet economic activities on peat contribute less than 1% to Indonesia’s GDP.  Emissions from sparsely populated rural Central Kalimantan alone now exceed those of Jakarta, a sprawling traffic-choked mega-city of more than 10 million people.

Smoke Over Indonesia Photo: Creative Commons

From September 20-22, Central Kalimantan played host to the annual meeting of the Governor’s Climate and Forest Task Force (GCF).  The GCF brings together California with 15 tropical forest states from the Brazilian Amazon, Peru, Mexico, Indonesia and Nigeria covering 20% of the worlds tropical forests to promote the development of REDD (Reducing Emissions from Deforestation and Degradation) mechanisms in carbon markets. Ironically, with heavy smoke from peat fires disrupting flights in and out of the province, the meeting almost had to be relocated to Jakarta.

REDD was initially promoted by industrialized countries as a quick, easy and cheap way to address climate change under the UN Framework Convention on Climate Change as part of a wider fossil fuel emissions reduction agreement, but prospects for such a new international agreement have declined precipitously since the debacle at the Copenhagen Conference of Parties two years ago. While the urgency and importance of protecting peatlands and tropical rainforests is undeniable, at the same time, the true challenges and complexities of trying to define and implement REDD payment mechanisms on the ground at the sub-national level were in full display at the GCF meeting.

Suwido Limin shows dam constructed to restore drained peatlands and slow GHG emissions

At the formal level, the outcomes of the GCF meeting were fairly straightforward.  Delegates agreed to accept the Brazilian state of Matto Grosso and Madre de Dios in Peru as new members. The next GCF annual meeting will be hosted by the state of Chiapas in Mexico. The GCF established a new fund, with $1.5 million in seed money from the U.S. State Department, to assist with state capacity building. Efforts to expand GCF membership in Europe were endorsed.

Discussions among stakeholders and rights holders in the GCF side events and corridors profiled some of the greater challenges and controversies. Perhaps foremost among these is the need for rights based approaches to promote durable and just forest stewardship and green development, which was put forward forcibly by Indigenous and forest community organization participants.

A strong statement was delivered to the GCF meeting by forest dependent community representatives from Aceh, Papua, Central Sulawesi and Kalimantan calling for, “guarantee on people’ full involvement and representation in every process and stage, especially in the project’s decision-making processes…rights and access to complete and comprehensive information…the right to manage and to utilize the forest and resources within it, which we have inherited from our ancestors…every decision concerning the benefits for the people should be defined by the people themselves.” Underlying and supporting this perspective, including from many GCF delegates, is a growing recognition that durable forest stewardship can only be achieved with full involvement, understanding and support of the forest dependent communities themselves.

As Odigha Odigha (a Goldman Environmental Prize winner who RAN worked closely with in the 1990s), representing Nigeria’s Cross River State put it, “The people in the forest are the ones that must fully understand what REDD is because they have the final responsibility, not people in London, not people in Washington.” Similarly, the former Governor of Papua strongly emphasized community rights and empowerment in his proposals for promoting low-carbon green development pathways in Indonesia’s most heavily forested province.

The GCF delegates have largely returned home, but here in Borneo the peat smoke remains.  Yet, reasons for optimism in Central Kalimantan can still be found in some locally led initiatives. Native Dayak, Sudwido Limin, is not waiting for REDD to take action.  At the tropical peatland research center that he established, Sudwido showed us how they are damming up drainage canals in abandoned peatland areas, restoring forest cover and fighting peatland fires in a community based approach.  The methods they are developing could be widely applied, and combined with a strict prohibition on further peatland conversion would go a long way to leashing in Indonesia’s soaring greenhouse gas emissions. Jakarta, are you listening?

This rightfully raises the question, “Will the Indonesian Forest Moratorium help save forests and reduce record greenhouse gas emissions being released by Indonesia, or will it fall short and allow logging as usual to continue?”

Businesses hoping that Indonesia would move forward with a robust moratorium on issuing new rainforest clearance permits are sorely disappointed by the large number of loopholes and exemptions in the final document, issued five months late after intense palm oil and pulp and paper sector lobbying to weaken it.

A government moratorium on issuing new forest clearance permits was one of four main forest-related climate commitments made by the President of Indonesia as part of a $1 billion agreement with the government of Norway signed last year. Various economic studies have indicated that curbing deforestation, improving forest governance and promoting a shift to low carbon rural development would be positive for Indonesia’s GDP growth and international competitiveness.

Unfortunately, the moratorium’s final specifics fall far short of the proposals put forward by reformist leaders in Indonesia and international expectations. The moratorium is loaded with exemptions and exceptions. Secondary natural rainforests, including critical tiger and orangutan habitat, huge areas of virgin rainforest slated to become sugarcane plantations, large new mines, and all existing permits, including a large number issued by the Ministry of Forests hours before the moratorium was originally scheduled to start, mean that widespread deforestation will continue.  At least two-thirds of the primary forest and peatland area included in the moratorium are estimated to be forest areas that were already illegal to clear under pre-existing laws and regulations.

But with palm oil and other commodity prices soaring, Indonesia’s plantation conglomerates have seemingly let greed for more land blind them to the wider national interest. Working with mining sector and pulp and paper interests, the conglomerates successfully lobbied to gut the moratorium and ensure that it remained under the control of the corruption-ridden Ministry of Forests, which proved the winner in a struggle with honest reformist elements over the design of the moratorium’s scope and its implementation.

International buyers of palm oil and paper products are growing increasingly wary of sourcing from Indonesia due to the high rates of deforestation, widespread social conflict, high climate emissions, negative impacts on tigers, orangutans and biodiversity and pandemic levels of corruption.

Indonesia is the third largest emitter of greenhouse gases after China and the U.S. Some 85% of Indonesia’s emissions come from clearing of natural rainforests and draining of carbon-rich peatlands, which are also important habitat for endangered orangutans, tigers, elephants and rhinos. Deforestation is driven by expansion of the palm oil and pulp and paper sectors producing goods for the global commodity markets. These controversial products are in turn entering into the supply chains of leading companies around the world, where they can pose reputational risks to many highly valued brands.

Rainforest Action Network encourages responsible corporations to continue to publicly support strengthened efforts by the Indonesian government and business sector to promote economically positive low carbon development pathways and permanent protection for peatland and forest areas.

The West Kalimantan province of Borneo, Indonesia. Photograph: Romeo Gacad/AFP/Getty Images

As we applaud the new forest conservation policy announced by Sinar Mas subsidiary Golden Agri Resources, it’s important to remember that the big challenge facing palm oil traders like Cargill, watchdog groups, and international customers is to make sure that GAR’s promises to protect Indonesian rainforests on paper are turned into real change on the ground.

The Tropical Forest Trust, which will be working as consultants with GAR on this, will certainly have their hands full.

Key to building confidence with stakeholders  will be high transparency and regular independently-verified and robust reporting throughout 2011 and beyond that demonstrates if GAR is in actual conformance with their policy goals or not. GAR is not known for following through on its commitments and it has failed to follow RSPO criteria where required in the past. An independent audit in 2010 found numerous problems and serious violations of many GAR commitments, leading to the first ever censure of a member by the RSPO.

GAR’s business plan, meanwhile, calls for continued expansion by 40-50,000 hectares a year of its current 435,000 ha palm oil plantation estate in Indonesia. GAR has stated that it does not believe the new conservation agreement will have any material impact on its business. Indonesian government figures calculate the area of degraded and deforested lands in Indonesia that could be planted to palm oil as up to twice the size of the total area in the country currently under palm oil production. Clearly implementing a no deforestation and peatland expansion policy is feasible, even by palm oil companies with ambitious expansion plans. Nonetheless, GAR’s ongoing palm oil expansion will need to be closely monitored both in terms of how degraded lands are selected for planting and the potential for social conflict in cases where these “degraded lands” in fact are being used to meet basic livelihood needs of local communities.

GAR also just announced it will invest $500 million to build two new crude palm oil refining plants in Indonesia with 740,000 tons capacity per year, which will be on top of the one million tons per year plus that it is processing in its three current plants. About 30% of the palm oil it crushes comes from third party growers. Like Cargill, therefore, the impacts of GAR’s palm oil business encompass two roles: as plantation grower and as purchaser, processor and trader of palm oil. In this latter role, it is important that GAR, like Cargill and other major palm oil traders, move to clean up its supply chains if it is to effect the system-wide change in palm oil production practices it claims it wants to promote.

GAR is considering investments in palm oil plantation expansion projects in other countries as well, including a $1.6 billion joint venture involving a 200,000 ha palm oil expansion project in Africa. GAR should apply its rainforest conservation policy across all its plantation operations and expansion plans wherever they occur, not just in Indonesia.

“Subprime carbon credits may ultimately fail to reduce greenhouse gases and, like subprime mortgages, could collapse in value, yet they are already being securitized and resold in secondary markets. The report recommends that lawmakers include carbon trading in current debates about financial reform, and warns against hastily creating carbon markets without proper oversight.”

See more at: http://www.foe.org/subprimecarbon

The report results are striking.  The half a million tonnes of CO2 operational emissions – the greenhouse gas emissions from running their buildings, employee travel and the like – are completely dwarfed by the 625 million tonnes CO2 of financed emissions resulting from their $155 billion in financing of fossil fuels, which are the principal driver of climate change.  A lot of this money is flowing into expansion of the tar sands, one of the largest and dirtiest fossil fuel projects on the planet.

But what does this mean for the typical Canadian bank customer.  Every dollar we deposit with banks, they can leverage into $10-15 in new loans and financing.  Are banks using your money to finance fossil fuels and global warming?  We created a special checking account carbon calculator where customers of any of the seven banks we studied can enter the average amount of their deposit accounts (or the amount they wished they had!) and measure its carbon footprint in kilos of CO2 per year.  It turns out where you bank can have a big impact on the climate.  Switching $10,000 in deposit accounts from the biggest carbon Bigfoot bank, Scotiabank, to the low-carbon climate friendly leader, Vancity (Canada’s largest credit union), would reduce your annual carbon footprint by 1.4 tonnes of CO2, a very meaningful reduction.

Learn more at www.climatefriendlybanking.org

Last weekend was a wake-up call for regional banking giant ANZ. Over 15,000 people took to the streets of Hobart, Tasmania to protest ANZ’s potential financing of a big new pulp mill that threatens remaining stands of Tasmanian old-growth.

In Tokyo, where RAN has been leading a campaign to get big Japanese buyers of woodchips to stop their sourcing from Tasmanian old-growth, we paid a visit to the local ANZ branch office.

Join in with thousands of people around the world who want to see Tasmania’s old-growth protected from reckless logging. Tell Mr. Smith, the new CEO of ANZ Bank, “Don’t fund the GUNNS pulp mill!”