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Early warning signs in forest carbon market
Early warning signs are beginning to appear in the market-based scheme for trading forest carbon credits. As reported by Gerard Wynn and Sunanda Creagh for Reuters, the establishment of a global carbon market is already showing signs of disorganization and a potential for fraudulent activity. With the estimated billions of dollars that will flow through the Reducing Emissions from Deforestation and Degradation (REDD) mechanism, there is a growing concern for the possibility of fraudulent trading and the involvement of organized crime.
A developing case in Papua New Guinea illustrates the risks involved in the lucrative trading of carbon offset credits. The country is losing its rainforest at an alarming rate and in response the government has championed the forest carbon market and in 2008 established its Office of Climate Change (OCC). However, the agency has suspended all carbon trading plans after land ownership disputes came to light. "All projects are suspended while we get some experience," said Theo Yasause, executive director of OCC. A project under question focuses on the Department's own proposal to give exclusive carbon rights to a large area of rainforest to two brokers which would in return donate $8 million to fund the agency's development.
In documents obtained by the Economist, on November 3rd 2008, the country’s OCC, issued REDD credits for 1m tonnes of carbon, supposedly under the proposed REDD mechanism. Betha Somare, press secretary for the prime minister, issued 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 investigating how REDD credits came to be issued.
In a recent interview by Sunanda Creagh, Interpol environmental crime official Peter Younger cautioned: "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 continued, "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, organised crime will be involved."
More coverage
The Economist - REDDy and waiting: Some odd documents from Papua New Guinea show how hard it is to save trees
Posted By Lopaka Purdy at 5:35pm on June 10, 2009
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