Indonesia may let palm oil growers collect CO2 credits

JAKARTA Mon Aug 9, 2010 8:15am EDT

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JAKARTA Aug 9 (Reuters) - Indonesia may propose palm oil plantations be eligible to earn carbon credits under a U.N.-backed scheme aimed at preserving forests, a forestry ministry official said on Monday.

Such a move could potentially create a new line of revenue for the palm oil industry and listed firms like Wilmar (WLIL.SI) and PT Astra Agro Lestari (AALI.JK), but is likely to anger green groups who accuse planters of deforestation.

Indonesia was the first country to develop a national framework for a U.N-backed forest preservation scheme called reducing emissions from deforestation and degradation (REDD).

The scheme would allow forested developing countries like Indonesia to be paid potentially billions of dollars from rich nations not to chop down their trees. [ID:nJAK495718]

Countries began developing domestic legal frameworks for REDD in anticipation of a global agreement on the scheme at climate talks held in Copenhagen last year, which will be continued in Mexico in December.

"If there is agreement on REDD, we could put palm oil plantations to be eligible for that," said Wandojo Siswanto, a special adviser to the forestry minister and one of Indonesia's lead negotiators at global climate talks.

Siswanto said the forestry ministry was working with the national planning agency, Bappenas, on the feasibility of including palm oil in Indonesia's national strategy on REDD.

"I think it would be good if we just say that palm oil plantations could also mitigate climate change through carbon sequestration through the nature of the trees," he said, adding that both existing plantations and future plantations developed on degraded land could be eligible.

Monoculture forests trap climate warming greenhouse gases but not nearly as much as natural heterogeneous forests.

Moray McLeish, of the Washington-based environment think tank World Resources Institute, said clear definitions of what constituted a forest were needed.

"If a plantation is regarded as a forest, then you can cut down a virgin forest and replace it with a plantation and on paper you have no change," he said.

"On the ground you have massive carbon emissions, massive loss of biodiversity, loss of ecosystem system services and loss of livelihoods for local people.

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The UN has yet to formulate its definition of forest for the purposes of REDD but has already developed a set of safeguards to prevent planters from clearing natural forest and then being rewarded with carbon credits.

Tim Boyle, the Bangkok-based regional coordinator for the U.N. REDD programme, warned that the global climate talks on a successor to the Kyoto Protocol may end up adopting a definition of forest that specifically excluded palm oil from REDD.

"It would be strange if it was assumed that palm oil was going to be counted as forest. That would seem risky to me," he said.

(Editing by Neil Chatterjee and Jonathan Thatcher)

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