Indonesia eyes 100 Mt of avoided deforestation VERs
20 February, 2008
US investment bank Merrill Lynch has joined an Indonesian-based avoided deforestation project, which is expected to generate 100 million tonnes of voluntary emission reductions (VERs) over 30 years.
The bank is working with Australian project developer Carbon Conservation to commercialise the credits, and is offering VERs to its investment banking and wealth management clients, said the bank’s global head of carbon emissions Abyd Karmali.
The project is based in the 750,000 hectare Ulu Masen forest, the last remaining unprotected rainforest region on the island of Sumatra. It is being implemented by the government of Aceh province, UK-based conservation NGO Fauna and Flora International (FFI) and Carbon Conservation. The group will look to the validation and sale of avoided deforestation credits as well as official development aid funds to provide financial incentives to Aceh’s residents to deliver forest protection.
FFI Australia representative Joe Heffernan said the sale of VERs would be seen in the next phase of the project and represent “going forward from aid to trade”.
Under the plan, legal logging will be curtailed and sustainably managed, while illegal logging will be prevented by government law enforcement in cooperation with FFI, which has existing operations in the area. Aceh’s governor Irwandi Yusuf was an FFI employee prior to taking office and intends to increase manpower and improve equipment to patrol the rainforest, which is home to tigers, elephants, orangutans and clouded leopards.
Project funding will also go toward sustainable development projects, including production of ‘green certified’ soft commodities, to provide alternatives to illegal logging activity.
These activities are budgeted at $48 million over five years, with $26 million earmarked for direct payments to communities. Current funding from the World Bank Multi-Donor Fund’s Aceh Environment and Forest project is to be joined in future by carbon credit sales under the reducing emissions from deforestation and degradation (REDD) model, as well as from the recently established World Bank Forest Carbon Partnership Facility (see World Bank launches deforestation fund with $165m pledges).
The project was recently certified under the Rainforest Alliance Climate, Community and Biodiversity Alliance (CCBA). Carbon Conservation chief science and policy officer, John Niles, said: “The CCBA certification gives the project and generated VERs a level of credibility, and reflects the fact that we used conservative estimates of carbon savings in our calculations.”
Niles said that at the end of 2008 a process of post facto verification and monitoring would generate a 2008 vintage of VERs available on the market in 2009. The planned 85% reduction in logging is expected to generate 3.3 million tonnes of carbon credits annually. He said it is hoped that REDD credits will become fungible and certified post-2012, but that initially VERs would be sold on the voluntary market.
