NUSA DUA, Indonesia (Reuters) - Organized crime syndicates are eyeing the nascent forest carbon credit industry as a potentially lucrative new opportunity for fraud, an Interpol environmental crime official said on Friday.
Peter Younger, an environmental crimes specialist at the world’s largest international police agency, was referring to a U.N.-backed scheme called reducing emissions from deforestation and degradation.
REDD aims to unlock potentially billions of dollars for developing countries that conserve and restore their forests. In return, they would earn carbon credits that can be sold for profit to developed nations that need to meet greenhouse gas emission reduction targets.
“If you are going to trade any commodity on the open market, you are creating a profit and loss situation. There will be fraudulent trading of carbon credits,” he told Reuters in an interview at a forestry conference in Nusa Dua on the Indonesian island of Bali.
“In future, if you are running a factory and you desperately need credits to offset your emissions, there will be someone who can make that happen for you. Absolutely, organized crime will be involved.”
Younger called on governments, multi-lateral bodies and NGOs to involve law enforcement agencies more in the development of REDD policies and in the fight against illegal logging and deforestation, which are responsible for about 20 percent of mankind’s greenhouse gas emissions.
“It struck me, as I sit here at this conference, as ironic that I am the only policeman here. You say you want to strike up partnerships to address illegal logging -- who with?” he said. “Consider resourcing law enforcement efforts and not just relying on NGOs and other nice people to do it for you.”
Forests soak up vast amount of carbon dioxide and REDD aims to reward governments and local communities for every ton of CO2 locked up by a forest over decades, equating to a potentially very large flow of cash globally for forest credits.
Local communities are supposed to earn a share of REDD credit sales to pay for better health, education and alternative livelihoods that entice them to protect rather than cut down surrounding forests.
But revenue-sharing measures have yet to be fully worked out and will differ for each country. Some NGOs fear central and provincial governments might demand control of the money, with very little filtering down to local communities.
Fraud could include claiming credits for forests that do not exist or were not protected or by land grabs, Younger said.
“It starts with bribery or intimidation of officials that can impede your business. Then if there is indigenous people involved, there’s threats and violence against those people. There’s forged documents,” he added. Younger said illegal logging was a significant and growing problem and that the same networks that are used to smuggle wood could also be used to traffic women and children, drugs, firearms and wildlife. There was evidence to suggest revenue from wood smuggling was funding armed conflict, he said.
Younger, who also specializes in wildlife smuggling, said the illegal trade of caviar, orchids, tropical fish and ivory was also flourishing.
“In illegal logging for instance, there are companies that may have a lawful side of the business and this is the dirty laundry on the side,” he said.
Better transnational sharing of flora and fauna crime data and better resourcing of policing was needed to address the problem, he said.
Editing by David Fogarty