in Australia, Papua New Guinea

Carbon Planet’s Dave Sag on carbon trading in PNG

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dave_sag_al_goreA fascinating discussion is going on at “the Masalai blog” about carbon trading in Papua New Guinea. It is particularly interesting because Dave Sag, co-founder and Executive Director of Carbon Planet has answered some of the accusations against his company.

Sag is a software programmer, who has found himself “at the forefront of Internet software development since 1993,” he writes on his website. In 1998, he won an Australia Day Council Award for services to Australian Business. He was nominated as one of Australia’s top 40 achievers under 40 years of age. Sag describes himself as “a serial entrepreneur. Right now my main focus is saving the world via Carbon Planet”. He’s even had his photograph taken with Al Gore.

I’ve extracted a series of questions and Sag’s answers from the blog discussion, below. Please visit the Masalai blog for the full discussion.

It has been stated that you have 25 carbon contracts from PNG. Where are these from and what economic vehicle are the landowners using to engage with Carbon Planet? (e.g. have they formed companies to help invest that money)

Dave Sag: Unfortunately I can’t answer most of this question immediately as there are issues of commercial confidentiality but rest-assured all of the projects we are working on will be highly public, with full details of the areas, the stake-holder consultation that has taken place, and the financial distribution models all being a core part of the project. Under the VCS rules however most of the money must go to the asset owners, ie the people who’s forests are being preserved.

If there is to be a carbon offset scheme, shouldn’t it be directly with the people that OWN the forests concerned? Why should ‘brokers’ or Governments get the money? Plus it needs a proper regulatory and governance structure to make sure it is all above board – which isn’t in place yet ANYWHERE in the world, let alone PNG.

Dave Sag: It’s a very difficult thing building a successful REDD project and very few people in the world, let alone in PNG, have the skills, the science, the money and the motivation to put such a project together properly and to get it registered with the VCS, and to then sell those credits in a time of financial uncertainty. We’ve been working on this and other projects for two years, spending our own money to make sure these projects are done properly.

Carbon Planet is committed to the idea that the people of PNG should be paid properly for the environmental services their forests provide, and that the income from those services should be greater than the income otherwise obtained by tearing those forests up. Don’t believe the ignorant nonsense you read in the popular press. Who is behind those stories ask yourself?

What is Carbon Planet’s strategic position while the policies and legislation for carbon trading is yet to be approved?

Dave Sag: No country in the world has formal REDD rules approved yet and the world is counting on negotiations at Copenhagen this coming December to formalise much of the REDD project rules such that REDD credits will, with some luck and political will, be able to be used in part to meet countries’ national emissions targets. In the meantime there are however organisations like the Voluntary Carbon Standard and others who have pushed ahead to define comprehensive mechanisms by which project developers can begin developing REDD style projects that produce credits that can be traded in the voluntary carbon markets, ie to parties that want to reduce emissions but that do not have formal emissions targets imposed upon them.

With reports that Carbon Planet will be making estimated annual sales of $1 billion, what percentage of this income is being retained by landowners?

Dave Sag: Just to keep some perspective here, the vast majority of the money from the REDD projects we are working on in PNG will flow to the landowners themselves. Carbon Planet has not lied, bribed anyone, paid any money to the PNG Government and so on as alleged and implied by a couple of journalists who, themselves, admit they don’t really know what they are talking about. Those allegations are sheer nonsense and, if true would undermine the very credits we are working hard to generate. No-one would buy the credits if they were dodgy.

While there will be billions of dollars in REDD credit sales from these projects, as I said before, most of that money will go to the landowners, not to Carbon Planet. The exact % that goes to land-owners will be outlined in the project documentation which will be a public document. CP is not “making billions” from these deals.

PNG has a long history of landowners receiving money through mining dividends and squandering it. Will Carbon Planet be also educating landowners on how to use their money?

Dave Sag: This point is fair and is certainly something that concerns us very much. How the money is disbursed is a large part of the complexity of the project and we are working very hard to make sure it’s right. But until the details are made public it is not appropriate for me to give my opinion on how that should happen.

Is there an education component to your carbon trading in PNG and if so how is that conducted?

Dave Sag: Yes absolutely and in fact we have been doing quite a bit of that sort of thing, not just in PNG but all over the work we work hard to educate people about the science behind climate change, the mechanisms by which the world is responding and the changes that must happen to the economy to transition the planet to a fairer, cleaner more universally prosperous world.

For us it’s a real concern if people think we are just like some evil mining or logging company coming in to exploit the locals; our real intentions are totally opposite to that. I’m not going to just say “trust me” though because I know trust has to be earned, but please at least give us the chance to earn that trust before you write us off as a bunch of corporate carbon colonialists.

How can you demonstrate, to a cynical world press, that you have the commercial rights to trade Carbon Credits on behalf of PNG? And that you have Land Owner support for any such venture?

Dave Sag: When we started working on PNG REDD projects we knew they would attract all sorts of attention from people both supportive and hostile to the projects. Obviously there are vested interested that seek to stop REDD projects because they like, and profit from, the status quo. We also knew that the media, by and large, don’t understand the finer points of either carbon trading, forestry laws, or, quite frankly, working in PNG.

These points are essential parts of the VCS process and the detailed evidence of commercial rights, powers of attorney and stake-holder consent will be a public part of the final project documentation.

How can you demonstrate that your projects can be “realised” given that PNG has no policy (yet), and the OCC&CT is embroiled in controversity?

Dave Sag: This is the topic of much confusion. The OCC is what’s called the Designated National Authority in terms of carbon deals, and, by and large it appears that the controversy you refer to has been a result of ignorant reporting rather than any actual misconduct.

How do you respond to the reports of legal issues with your first “trial” Project in Kamula Doso?

Dave Sag: We have checked and rechecked and, to our knowledge, there are no legal impediments to any of the projects we are involved in. There’s a lot of gossip, allegations and so forth, with people claiming to have seen documents that claim to show some sort of injunction over the KD area, but those documents are, according to our best advice, meaningless. We, and our project partners would not have invested this much time and money on projects with huge legal questions hanging over them. That makes no sense.

The press seem to have new issue every day, obviously becasue PNG is at many levels not behind carbon Trading.

Dave Sag: Of course a vigourous and well informed media is a vital watchdog on political and corporate activities and I would not wish it to be any other way. Indeed I wish the press had more teeth at times. And I wish they’d learn a bit, or a lot, more about the topic before charging in, rich with ‘good intentions’ for the people of PNG, but spouting off all sorts of nonsense.

Alas CP has no control over what gets reported. Even if you compare stories about our recent merger announcement you’ll see some writers say one thing, some say a different thing and most of them get the number confused. It’s amazing since, in that case the whole story was on a press release written down for them.

It’s been a long time since I believed what I read in the papers or what I see on TV.

Carbon Trading will benefit the people of PNG immensely. It represents a massive economic shift. People are genuinely sceptical of carbon trading right now because the money is not real for them. When people start to bank real money earned from managing and preserving their traditional forests do you imagine they’ll want to keep hacking them down?

How do you know that the overaching legislation that will finally be agreed on will actually support the structures you are currently putting in place? If it doesn’t and you have to start from scratch again, how do you justify the commercial merits of your actions to your shareholders?

What’s the rush Sir? We in PNG are not desperate for your services.

Dave Sag: Every minute of every day an area of rainforest the size of a standard soccer field is destroyed. Deforestation accounts for nearly 20% of all greenhouse gas emissions. Many people who work in logging camps are kept in virtual slavery and sexual predation and systemic violence are routine in such camps. Delays to these project cost lives, money and the health of the planet. Every month of delay means more lives lost, more forests removed, species wiped out, and more environmental harm to clean up later. It takes a new forest 100 years to capture back the CO2 from an existing forest.

You may not be desperate for our services but plenty of people are.

I don’t think Carbon Planet could really be any more transparent about its dealings, especially in light of the fact that, once the projects are formally registered, all of the project details, in the form of formal PDDs (Project Description Documents) will be available for public comment and scrutiny via the VCS. Those documents go into a huge amount of detail about the project areas, legal basis for the projects, the evidence of landowner consent, approval from government, the lot. If you are interested, go check out the PDDs of some of the other projects on the VCS website and see for yourself the sort of detail they require.

What piece of legislation, either in PNG or internationally, gives rise to all this nonsense?

If none, then all you foreigners have colluded with CORRUPT PNG officials to undermine PNG’s governance systems by second guessing legislation and pre-empting the process by coming up with stupid business plans and schemes that have no legal basis. In the absence of legislation, the whole thing is a SCAM and must stop. NOW!

Dave Sag: PNG is a ratifying nation of the Kyoto Protocol and is not required to establish its own emissions trading scheme or anything like that in order that its citizens convert forestry projects into REDD projects.

It is a requirement of the VCS that we demonstrate national approval of the project through through PNG’s Office of Climate Change and Environmental Services (OCCES) which is the Designated National Authority (DNA) for carbon projects in PNG. We must also demonstrate that the 50+ Incorporated Landowner Groups (ILGs) genuinely desire that the project go ahead.

In terms of our legal authority to operate, the laws we cite specifically in the Kamula Dosa PDD are:

  • The Fairness of Transaction Act 1993
  • The Companies Act 1997
  • The Investment Promotions Act 1992
  • The Land Act (Customary Land Ownership) 1974

As the person (who calls himself Ananda Dave) who asked this question points out, none of this legislation relates specifically to REDD:

I note you alluding to PNG as a signatory to the Kyoto Protocol, but I thought Kyoto just established a broad understanding on how climate change issues should be handled. The specifics should hopefully materialise in Copenhagen or some other forum. Without knowing what those specifics are, I do not take any comfort in that response at all.

Sag did not answer the following questions, which were posed by Australian Associated Press journalist Ilya Gridneff:

1. Regarding the controversy surrounding the Office of Climate Change, you state, “The OCC is what’s called the Designated National Authority in terms of carbon deals, and, by and large it appears that the controversy you refer to has been a result of ignorant reporting rather than any actual misconduct.” You appear to know what happens inside the OCC – how did you get such an insight into the mechanics of a government body? Are you saying the investigation will provide no evidence of misconduct? Can you expand on this point and/or get in contact with the investigators to protect the innocent from this witch hunt.

2. Kirk Roberts, who runs Nupan Trading, continues to claim he has the Kamula Doso landowner all signed up and ready to go forward with carbon trading through Carbon Planet. Can you explain why or which PNG law gives the power to the now suspended Dr Theo [Yasause] to one month before officially becoming the OCC director (when he was still the Prime Minister’s chief of staff) to issue a mandate to Nupan to trade in carbon?

3. Can you explain why Roberts this month writes a letter to Mr. Wisa Susupe, from Kamula Doso: “We confirm that the independent verification process to enable your Project to be formally recognized under the UNFCCC guidelines for REDD Carbon Credits is now well underway.”

Can you provide us all with UNFCCC guidelines for REDD Carbon Credits along with details of the independent verification process?

REDD-Monitor has sent these three questions to Dave Sag and looks forward to his repsonse.
 

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  1. Okay here’s some answers, where I can. Sorry for the delay, I had a day off yesterday.

    1. We’ve been working in PNG for a while and naturally no-one does anything related to carbon and REDD in PNG without involvement with the OCCES. That’s a far cry from saying I know what happens inside their office however. Much of the reporting about our work has been, to my mind, ignorant, irresponsible and malicious. A couple of ill-mannered journalists / bloggers have made desperate attempts to smear Carbon Planet by association, juxtaposing stories about CP with stories of co-men who I have no doubt are taking advantage of the hype around REDD and carbon trading. I don’t know what their motives are for this but, of course, there are plenty of very powerful, extremely well funded parties that will stop at nothing to see REDD projects fall at the first hurdle.

    You may have heard of the ‘clever cow syndrome’, expressing the concept that it only takes one clever cow to open a gate. The rest can simply follow through it. The Kamula Doso REDD project will be one of the first large scale VCS registered REDD projects. Once sustainable incomes start to flow to the people of KD, other forest areas will soon follow suit. This terrifies those who rely on the status quo and so stopping KD is obviously a priority for them. I’m not describing some sort of conspiracy theory here, just plain old common sense and strategic thinking on the part of those parties. REDD, once it gets going, and proves itself, will be impossible to stop.

    2. I am not a lawyer and don’t for a second claim to be able to speak on Mr Roberts’ behalf. I am certainly not an expert in PNG law. I’m sorry if that response seems weak, and it is weak, but it really is the best I can come up with without digging through the PDD and seeking clearance from an expensive army of lawyers.

    3. Once again I can’t speak for Mr Roberts but what I assume he means there is the development of the specific REDD methodology and the PDD that documents the KD project is well underway.

    Honestly (and yes that’s a rather exasperated ‘honestly’,) if Mr Gridneff knew anything much at all about how REDD projects are developed and registered this would be obvious. I suggest you, and your readers, pop over to http://www.v-c-s.org and take a look at their guidelines, methodologies that have already been approved, and PDDs of projects that have already been approved. We don’t develop the guidelines, we just follow them.

    Here’s a few facts to set the record straight on a few points.

    Despite claims made in REDD Monitor and other blogs, Carbon Planet has NOT paid money to the PNG Office of Climate Change.

    Carbon Planet is not a motley group of so-called ‘carbon cowboys’. It employs scientists (botanists, anthropologists, forestry experts, chemical engineers, and even a forensic archaeologist) as well as top-grade engineers, economists, software developers and other experts. We’ve been involved with carbon management projects for a very long time and have hundreds of happy clients. We win work because of our professionalism, adherence to international standards, our expertise and our excellent reputation in the industry. Carbon Planet is the only full-spectrum carbon management company to have had its services accredited by the Australian Department of Climate Change as ‘Greenhouse Friendly™’.

    Carbon Planet operates under a strict ethical code of conduct. It is a public company and thus exposed to the highest degree of transparency and due-diligence. Carbon Planet has defined specific principles guiding our activity with regard to the rights of indigenous peoples.

    The vast majority of the funds from the REDD projects we are involved with flow to the people of PNG. Despite some claims in blogs Carbon Planet is not pocketing billions of dollars in REDD credits. CP is a service provider, not a project developer or primary asset owner.

    REDD projects are expensive and complex and require large amounts of up-front funding. Despite what other stories in REDD-Monitor may say, REDD projects are not designed to exploit the locals, but reward them for the environmental services their forests provide (currently for free in the absence of REDD mechanisms).

    All of the REDD projects Carbon Planet is working on will be independently verified, submitted to the VCSA for approval and registered with the TZ1 registry in New Zealand. The details of the projects will be publicly documented and the documentation, when lodged, will be open for public scrutiny and feedback.

    I hope this clears up a few misconceptions. I am happy to take follow-up questions to this comment, or, if REDD-Monitor is genuinely interested, write a more detailed article on Carbon Planet and the work it does.

    Cheers

    Dave Sag
    Founder and Executive Director
    Carbon Planet Limited
    http://redd.carbonplanet.com

  2. Dave

    Thanks for the clarification, and the invitation for follow-up questions, which I would immediately like to take you up on:

    1. Whilst you say above that “The Kamula Doso REDD project will be one of the first large scale VCS registered REDD projects”, what do you understand to be the legal situation of the KD project, especially in relation to the extant court order stating that “pursuant to Order 14 Rule 10 of the National Court Rules and Section 155(4) of the Constitution, Dr Theo Yasause and all other officers and employees of the Office of Climate Change and Carbon Trade (as set up under the auspices of the Dept of Prime Minister and NEC) are restrained from dealing with the Timber Rights and/or Carbon Credits of Kamula Doso pending the determination of this Judicial Review”?

    As you say above, “no-one does anything related to carbon and REDD in PNG without involvement with the OCCES”, so how is the KD project going to advance when the OCCES has specifically been forbidden by the court from dealing with it as a carbon credit?

    2.What is your comment on the view of a study carried out at the University of Canterbury, NZ, that the Voluntary Carbon Standard (VCS) under which your operations will be ‘certified’ is actually the weakest of all the voluntary carbon certification schemes. According to the study, (which is available here – http://www.globalcarbonproject.org/global/pdf/ComparisonClimateForestationProject%20Standards.2008.pdf), the VCS seems to suffer from some substantial defects, which in my view would fail to address some of the concerns about forest carbon trading schemes in PNG. Specifically (and to quote the UoC report):

    “Public consultation is not explicitly required for the verification process of a project.” (p12)

    “The VCS does not specifically focus on co-benefits [E.g, livelihoods, biodiversity protection, etc]. It regards co-benefits as a positive secondary effect that may lower the risk profile of a project.” (p17)

    “Field verification has to be executed only once.” (p24)

    “it is hard to understand why credits [generated under the VCS system] would only be cancelled 15 years after a projects fails to submit a self-validation report.” (p26)

    3. In relation to point 1 above specifically, but also in relation to the current absence of a legal framework for REDD in PNG, how do you envisage that the Kamula Doso (and other Carbon Planet) projects in PNG will comply with the VCS Standards (version 2007.1, available here: http://www.v-c-s.org/docs/Voluntary%20Carbon%20Standard%202007_1.pdf) requirements that:

    – “The VCS [Project Description] shall include notification of relevant local laws and regulations related to the project and demonstrate compliance with them” and;
    – “The VCS PD shall be accompanied by Proof of Title, which shall contain one of the following:
    • a legislative right;
    • a right under local common law;” (both on p15 of the standard)

    Thanks very much, and we all look forward to hearing from you.

  3. Being on the ground here in Papua New Guinea, I do think this forum has some bias. Why shouldn’t landowners be excited about being payed to maintain their rainforests? This is what we have wanted here for decades. Just realize that many of the objections you are raising are precisely those of the existing industrial log exporters that would want REDD to fail no matter what. I understand your concern over carbon market offsets, but maybe keeping 60 million year old ecosystems intact is more important. People are excited here and there is an opportunity to end primary forest logging with REDD funding. Just be careful to analyze the political motivations better, and not just reproduce every rumor you come across, me thinks would better serve PNG and its rainforests and its lovely peoples.

  4. REDD will definitely fail unless we get rid of corruption first in PNG. Right now, the main players involved smell badly of backroom deals and under the table payments, and lets start with the PM and work sideways & downwards.

    REDD is the pathway to make big money as a middleman. We all know that. So why are you foreigners still pushing it on us instead of starting 1st with demanding that our PM and his cronies open up on their vested personal profit interests?

    With regard to Dave Sag’s comment: “vast majority of the funds from the REDD projects we are involved with flow to the people of PNG. ” That’s the point, Dave. You people don’t think that it’s unfair for there to be several middlemen, each taking their 10% ‘commission’ for these carbon trades. In PNG, we’re sick of middlemen because they’ve been ripping us off for donkeys years. Our politicians have seen your role model examples and they each want their 10% too. We’re sick of it.

  5. Given that Dave Sag sees himself as an expert, how come his company has been fired today by Nupan – the only Government approved carbon trader in PNG.
    Anything to do about his insane comments to the SBS film team?
    Duplicated documents, shaky science, or just plain BS spun so badly that the whole ball of wax came unpicked?
    Sorry Dave, you’re not a player, and obviously not a stayer, you have driven your company into the ground, and at the end of the day, lost your only real client!!!!!
    Well done Canberra boy, your shareholders will love you (to bits, with any sort of luck).
    Guess you need to give Natasha and Ilya a call, eh Dave?
    Lots of luck with that one!!!

  6. @roger – As far as I can tell, there’s no mention of this on Carbon Planet’s website, but here’s an announcement on CarbonoWontok:

    Carbon Planet dropped
    Date: 18 Feb 2010 Comments: 0

    Nupan (HK) Trading Corporation Limited, and Nupan (PNG) Trading Corporation Limited, today announced that they had severed all relationships with Carbon Planet Limited. Kirk Roberts, in a statement released to the media at 1200 hrs ESST, said the following, “Carbon Planet Limited and all and any companies and staff related to Carbon Planet Limited have no right to represent themselves as our Agents, Initiators, Marketers, or Sellers, effective immediately. Any agreement previously entered into by them in their name as it relates to our business or the business of our Clients, is not considered valid by us, and while we are happy to renegotiate any agreement on proper commercial terms directly with any Client company, we are not bound and will not support any commercial activity Carbon Planet Limited may or may not have entered into or concluded in its name while alluding to represent us.

  7. This is in reference to Puk’s Comment. Middlemen make the system work. There are middlemen in every industry (brokers, lawyers, bankers) whatever you call them they are part of the system and are specialists in their area. You say “we are sick of it” try to conduct inventory work, verification, monitoring and sales on your own. NOTHING WOULD GET DONE!!! PNG needs outside capacity and it doesn’t come free.