Indonesia aims to wrap up forest-carbon rules

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JAKARTA (Reuters) - Indonesia hopes to lay out a clear set of regulations before June on using carbon credits to protect rainforests so the rules can be discussed in upcoming international talks, a top climate official said.

The United Nations has backed a scheme called REDD, or reduced emissions from deforestation and degradation, in which developing nations could potentially earn billions of dollars from selling carbon credits in return for saving their forests.

Investors from banks to forestry firms and NGOs are lining up to set up REDD schemes in Indonesia and elsewhere in Asia, Africa and South America.

But the scheme is in its infancy and regulations are needed guide how REDD projects will work, will ensure the forests remain intact, how much carbon they will save and sequester and how money from selling the credits will flow to local communities.

Agus Purnomo, head of Indonesia’s National Council on Climate Change, told Reuters on Thursday it was crucial to manage expectations over plans to save huge swathes of forest.

“Money is not going to fall from the sky just because we have forests,” said Purnomo, who heads the council set up last July under President Susilo Bambang Yudhoyono. The council coordinates policy and developing priorities on climate change.

REDD won backing at U.N.-led climate talks in Bali in 2007 and trial schemes are now being developed. The World Bank in Jakarta says 20 trial schemes are at various stages of development in Indonesia. Banks, including Merrill Lynch and Macquarie Group of Australia, are among the investors.

Indonesia is also under pressure to curb deforestation, particularly illegal logging.

A report sponsored by the World Bank and Britain’s Department for International Development says up to 84 percent of Indonesia’s carbon emissions come from deforestation, forest fires and peatland degradation.

REDD REVENUE

“I am pushing to have REDD ongoing, (a) scheme (that) is clear before June, so that it will also contribute to the international negotiation process,” he said, referring to a round of U.N.-led climate talks in Bonn, Germany.

The talks are part of a series in the run up to main talks in the Danish capital at the end of the year aimed at trying to agree on a broader replacement for the U.N. Kyoto Protocol climate pact.

Purnomo said one of the key unresolved issues over REDD was on taxation and the split in revenue for investors.

“The potential investors have been kicking and screaming with the proposal from the ministry of forestry but none of them are actually producing a good alternative arrangement,” he said.

Some potential investors wanted to be taxed on their net profits, he said, adding this could be tricky since there would have to be an agreement on the level of costs.

He said that as well as dealing with some grumbles from potential investors the process also sometimes faced resistance from parts of Indonesia’s unwieldy bureaucracy.

“That’s why I need political blessing. I’m not supposed to say it that way but basically what I do is kick some butts,” added Purnomo, 50, who previously headed non-governmental organizations such as the World Wildlife Fund in Indonesia.

He said a climate trust fund, aiming to pool donor commitments to direct the cash at priority areas and improve transparency, was also due to be launched before June.

He said the election of U.S. President Barack Obama had brought “fresh air” to global climate change negotiations, although it was unclear how much Washington would be able to commit itself to given the financial crisis.

“I think that they will have to resolve to a ‘less now but more later’ type of commitment,” he said, adding that overall progress in December’s U.N. climate talks in Copenhagen could hinge on the depth of the crisis.

Purnomo said he was concerned about pressure on developing countries to shoulder more of the cost of climate change.

“It’s not a winning debate when you ask China, India or other countries…to make commitments to reductions when our emissions per-capita are very, very small.”