Indonesian plantation giant signs forest CO2 deal

* Indonesian paper giant APP to preserve Sumatran forest
* Aims to sell carbon credits on voluntary market
* Sceptical greens point to APP plans to log elsewhere
Sunanda Creagh and David Fogarty Reuters AlertNet 4 Oct 10;

JAKARTA/SINGAPORE, Oct 4 (Reuters) - Indonesian pulp and paper firm Asia Pulp and Paper (APP), accused by green groups of large-scale deforestation, has signed a deal to protect a large area of forest in return for carbon offset revenue.

The deal is the first privately funded project turning a pulpwood plantation concession into a carbon reserve, said APP.

The deal with APP and Singapore-based Carbon Conservation, which helps governments protect areas of forest, is to set aside 15,640 hectares (38,650 acres) of peat forest in a 33-year pilot project aimed at encouraging plantation firms to become greener.

The land on the Kampar Peninsula on Indonesia's Sumatra island had been earmarked for clearing by concession holder PT Putra Riau Perkasa, a supplier to APP, but the two firms have agreed to work with authorities to preserve the forest instead.

APP said the deal was the first for the company as a way to save the forest and boost livelihoods from the sale of carbon credits.

Greens and analysts criticised the deal, saying the area protected is tiny compared with the amount of land APP and its pulp suppliers have cleared or is under threat of clearance.

APP and other plantation firms have become embroiled in a dispute with environmentalists over the destruction of Indonesia's rainforests. French retail giant Carrefour has stopped buying certain products from APP, citing environmental concerns. [ID:nSGE6660FS]

Forests play a key role in fighting climate change by soaking up huge amounts of planet-warming carbon dioxide emitted from burning fossil fuels such as oil and coal.

APP is part of the Sinar Mas empire founded by the Widjaja family, which also runs Golden Agri-Resources , the parent company of palm oil firm PT SMART Tbk .

The APP project covers an area about a fifth the size of Singapore, rich in plant and animal species and sitting on top of peat that, if cleared, would release large amounts of carbon.

SMALL START

"The Kampar Carbon Reserve is a gift from Indonesia to the world," said Aida Greenbury, sustainability director for APP.

Greenbury said the area would be audited to calculate the amount of carbon and how much could be locked away annually based on a plan that would include protection from fires and illegal logging and enlisting help from communities in the area.

Greenbury and Dorjee Sun, CEO of Carbon Conservation, said the goal was to design the project to meet rules laid out by the respected Voluntary Carbon Standard, which aims to make forest carbon projects transparent and credible for investors.

"We actually think this is a huge opportunity to create a working commercial pilot so that everyone can see that good behaviour need not be a loss-making endeavour," Sun told Reuters.

He said he recognised there were risks but felt it was better to engage APP and try to improve industry practices.

He estimated it would be at least two years before the project would produce CO2 credits for the voluntary market.

Conservationists said the deal, backed by the Ministry of Forestry, was a start but wouldn't improve APP's image overnight.

"While we support the conservation of the Kampar, this project in no way makes up for the tremendous amount of damage that APP and its affiliates are having on rainforests and peatlands across Indonesia," said Lafcadio Cortesi of U.S.-based Rainforest Action Network in emailed comments to Reuters.

Sinar Mas and APP have had a major role in generating carbon emissions through conversion of natural forests and peatlands, said Christopher Barr, a forest industry analyst with U.S. consultancy Woods & Wayside International.

He said Sinar Mas and APP had been expanding pulp and paper capacity in both Indonesia and China in recent years.

Greenbury said of the 2.5 million hectares in concessions managed by APP pulpwood suppliers, about 1 million had been set aside for a wide range of uses, including conservation areas, community use and indigenous species development. (Editing by Robert Birsel)

APP invests in carbon scheme using Kampar peatland forest
The Jakarta Post 5 Oct 10;

Under a new project launched Monday by an international paper company, more than 15,000 hectares of unique forest destined to become a pulpwood plantation, in Kampar, Riau, will be used as a carbon reserve.

The project involves Sinar Mas Group subsidiary Asia Pulp and Paper (APP) and Carbon Conservation carbon-footprint consultancy.

Multiple assessments have found that this peat dome area, previously allocated as concession for PT Putra Riau Perkasa (PRP), which supplies APP with pulpwood, is rich in biodiversity and needs to be protected.

The peat dome is expected to preserve significant amounts of carbon for the next 33 years, Carbon Conservation chief executive officer Dorjee Sun said.

“Carbon credits earned from the conservation area will then be sold to interested companies around the globe,” he said

Dorjee said the project was designed to use the sale of carbon credits to inject millions of dollars into job creation and community development programs for indigenous people around the conservation area.

“We must make sure this project brings long-lasting community benefits,” he said at the project launch at the Grand Hyatt Hotel in Jakarta.

However, the project will need US$2 million to get started.

Sun said the company had yet to formulate detailed strategies or programs to develop local communities. However, the company planned to spend the next six months discussing such issues with local community groups, regional administrations and other related stakeholders to figure out their real needs, he said.

APP sustainability managing director Aida Greenbury said the company and Carbon Conservation were working together with the Forestry Ministry, PRP and other stakeholders to run the project, which she said could act as a model in tackling climate change.

“We are creating real community investment programs directed at the true root of Indonesia’s environmental issues: poverty in the indigenous communities surrounding the rainforests,” Greenbury said.

Among the main greenhouse gas emissions problems Indonesia needed to tackle was the traditional slash-and-burn technique employed by forest farming communities, who relied on this forest-clearing method for survival.

APP has been widely accused by green groups and environmentalists of committing large-scale deforestation. Retail giant Carrefour has stopped buying paper from APP because of environmental issues.

Indonesian National Climate Change Council (DNPI) executive director Rachmat Witoelar said he appreciated the commitment made by Carbon Conservation and APP to preserving the environment and developing local communities.

“Now we have a concrete example of what Indonesia should and could do,” he said.

Forestry Ministry secretary-general Hadi Daryanto said public-private partnership schemes such as the one in Kampar were the best way to preserve Indonesian forests, since the ministry had “only” Rp 2 trillion per year for this purpose.

“The budget is insufficient, so private investment is needed,” Hadi said.