Norway-Indonesia forest deal: US$1 billion dollars worth of continued deforestation?

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Norway-Indonesia forest deal: US$1 billion dollars worth of continued deforestation?

Here’s a copy of the Letter of Intent (pdf file 341 KB*) signed yesterday by Norway’s Minister of the Environment and International Development Erik Solheim and Indonesia’s Foreign Minister RM Marty M. Natalegawa. One billion dollars sounds like a lot of money, but it’s worth putting in perspective.

In 2010 alone, Norway will invest US$21.7 billion in its petroleum industry, including oil exploration. Every day, Norway produces 2.2 million barrels of oil. Oil production is declining, according to the Ministry of Petroleum and Energy, but gas production is increasing. This then is where Norway’s money comes from. Similar to its dual role in Amazon conservation and destruction, Norway is simultaneously ensuring that climate change gets worse, while claiming to address climate change through financing REDD.

Will the Norway-Indonesia forest deal at least reduce deforestation in Indonesia? Not very likely, at least judging from the Letter of Intent.

The first step is to produce a document “tentatively by October 2010, detailing the deliverables in the LoI . . . This Partnership will not be effective until the document has been agreed.” The Letter of Intent outlines three phases. Phase 1 is called “Preparation”, and runs until the end of this year. Phase 2, which runs from January 2011 until the end of 2013, is called “Transformation”. Phase 3 starts in 2014 and presumably runs until the planet burns. It’s called “Contribution-for-verified emission reduction”.

Two serious problems with the Letter of Intent are outlined below:

  1. Rights of Indigenous Peoples: There is nothing whatsoever in the Letter of Intent about the rights of indigenous peoples. The Letter of Intend simply states that Indonesia and Norway intend to:

    “Give all relevant stakeholders, including indigenous peoples, local communities and civil society, subject to national legislation, and, where applicable, international instruments, the opportunity of full and effective participation in REDD+ planning and implementation.”

    There is no mention of the principle of Free Prior Informed Consent or of the UN Declaration on the Rights of Indigenous Peoples. One of the few considerations of social issues in the Letter of Intent is the following, which is intended to happen during the phase 2: “Take appropriate measures to address land tenure conflicts and compensation claims.”

    Marcus Colchester of the Forest Peoples Programme outlines in a 2008 article, “Indonesia: putting rights into forest conservation”, just how complicated land tenure issues are in Indonesia:

    “Custom (adat) is respected in the Indonesian constitution and orders much of people’s social life, especially in rural areas. However, the formal legal framework and current land tenure regime offer people very little security. Less than 40 percent of rural land holdings in Indonesia is titled, a proportion which is declining year on year as new holdings are created faster than the national land office can survey and register them. This means that most lands are held under informal or customary tenures, yet the unclear procedures for recognizing customary tenures are barely applied.”

    There are an estimated 500 different ethnic groups in Indonesia – a country which consists of 12,000 islands dotted over an area of sea as wide as the USA. Nevertheless, the Norway-Indonesia forest deal, quite unrealistically, plans to deal with the land tenure problem by the end of 2013.

  2. Two-year suspension of conversion of native forests and peatlands is grossly inadequate: According to the Letter of Intent, Indonesia will implement “A two year suspension on all new concessions for conversion of peat and natural forest.” This is not a “ban”, it is a temporary suspension, which applies only to “new concessions”. It gets worse. The value of the suspension is undermined by the fact that it falls under phase 2, meaning that it will not start until January 2011 at the earliest. The Letter of Intent states that

    “The second phase will be initiated in January 2011, with a shared aspiration to complete it by the end of 2013 … The aim of this phase is to make Indonesia ready … whilst also initiating large scale mitigation measures as follows … A two year suspension on all new concessions for conversion of peat and natural forest.”

    No start date is given for the two-year suspension. It could start at any time during Phase 2 – which ends in December 2013. This allows a loophole anywhere between seven months and 43 months to hand over peatswamps and forests as concessions to plantation companies. As one observer points out:

    “It is possible that, far from being ‘an important step towards preservation of Indonesia’s rainforests’, the agreement could actually result in a short/medium-term acceleration of the rate of deforestation; presumably enough new concession allocations will be made to compensate for the 2-year ‘suspension’.”

    Norway’s funding is planned for six years. Yet there is no commitment to continue (or even review) the suspension beyond the two year period. It’s a two year suspension probably preceded by an oil palm plantation bonanza and followed by business as usual.

    Late last year, the NGOs EIA and Telapak produced a report titled “Up for Grabs: Deforestation and Exploitation in Papua’s Plantations Boom”, which documents the scale of the threat to Papua and West Papua’s people and forests. A total 5 million hectares of land, mostly forested is threatened.

    The billion dollar Norway-Indonesia forest deal will make no difference whatsoever to any of this, because these are all “existing concessions”. The Letter of Intent has nothing to say, and will not affect, concessions for clearance that have already been awarded, but not yet cleared. This is potentially a vast area (particularly given the delay in starting the two-year suspension). Apparently, Indonesia and Norway could not agree to stop this because this would require “compensation” payments to be made to the companies that already have the contracts – which raises two obvious questions:

    • What is REDD supposed to be about if it is not paying people and/or companies not to cut forests down?
    • If one billion dollars is not enough to cover this, how much would it take?

Pointing out what’s wrong with the Norway-Indonesia forest deal is not intended to suggest that business as usual is preferable. But the reality of this deal is that it will do little or nothing to address the pressures faced by Indonesia’s forests, indigenous people and local communities. For several years REDD proponents have claimed that REDD is the easiest and cheapest way of addressing climate change. The REDD debate is littered with statements like this: “By reducing deforestation, we can achieve the largest, the quickest and the cheapest cuts in global greenhouse gas emissions.” That was Jens Stoltenberg, Norway’s Prime Minister, speaking at a UN conference in 2008.

The Norway-Indonesia deal shows that REDD is neither easy nor cheap. When the REDD rubber hits the road, it pretty quickly runs into the massive vested interests of forest destroyers and their supporters and beneficiaries in governments. This deal shows that it is possible to spend a lot of money simply subsidising business as usual, or worse.

If Norway is going to pour large sums of money into Indonesia, which has an appalling record of forest destruction and spiralling corruption in the forest sector, then it should make sure that the money will improve the situation rather than make things worse. The Norway-Indonesia forest deal sets a terrible global precedent.


UPDATE, 14 June 2010: Replaced the previous version (which was a 1.5 MB scanned copy) with the version available on the Norwegian Embassy in Indonesia website (which is a more manageable 341 KB). There is no difference in the text of the Letter of Intent.

Back to text ^^


PHOTO Credit: Endre Karlsen of Young Friends of the Earth Norway

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9 Comments

  1. Chris,

    your post is very interesting. Could you or any colleague -perhaps from Norway- explain further what is the oil and gas industry in Norway up to.
    You made an scary statement: “Norway is simultaneously ensuring that climate change gets worse, while claiming to address climate change through financing REDD”.What do you mean by this assertion?
    who controls the oil industry in Norway?
    What is the big business you all think the oil industry from Norway will achieve through the implementation of this nasty LoI with Indonesia?
    will this agreement implementation facilitate carbon offset for companies in Norway?
    thanks so much
    Rupert.

  2. The amount of compensation attributable to those who have concessions to convert – or merely log – forest in Indonesia might, in some cases, be minimal (or even negative).

    A number of concessions appear to have been granted to enterprises which have no experience of the timber industry, let alone sustainable management of forest. An offshoot of CCT Telecom on Papua is an example.

    This is presumably not the intention of Indonesia’s forestry laws and/orpolicy, is certainly bad practice, and should not be accepted under a FLEGT VPA.

    Illegality might also have been involved in the allocation of other concessions.

    Such illegality would presumably make those concessions void – and this would lead to concessionaires forfeiting any deposits (performance bonds) and being subject to other penalties.

  3. According to Indonesian government officials the Norwegian government specifically ruled out using any of this grant money for participation in the development of offset credits.

  4. @david – Thanks. That’s fascinating, but can you say which Indonesian government official(s) said this and what the context was, please? Do you have a source for this statement? Otherwise, it just sounds like a rumour.

  5. @Rupert De Santos – “Norway is simultaneously ensuring that climate change gets worse, while claiming to address climate change through financing REDD.” What I meant by this is that, as George Monbiot pointed out two-and-a-half years ago, no country on the planet has a supply-side policy on fossil fuels. Norway, in common with every other country, has no plans to stop exploring for oil.

    “When you review the plans for fossil fuel extraction, the horrible truth dawns that every carbon-cutting programme is a con. Without supply-side policies, runaway climate change is inevitable, however hard we try to cut demand. The talks in Bali will be meaningless unless they produce a programme for leaving fossil fuels in the ground.”

  6. @david – I found a source for your statement, from the Norwegian Embassy in Jakarta’s frequently asked questions about the billion dollar deal:

    Will Norway get carbon quotas from Indonesia?

    No. All efforts under the Norwegian Climate and Forest Initiative to reduce greenhouse gas emissions are additional to Norway’s commitments under the Kyoto Protocol, and will not be counted towards Norway’s commitments under a new climate agreement.

  7. Next to the two year suspension there are other important points agreed upon in the LoI

    “ii. Establish a degraded lands database, starting in one or more appropriate provinces, to facilitate the establishment of economic activity on such lands rather than converted peatland or natural forests.

    iii. Enforce existing laws against illegal logging and trade in timber and related forest crimes and set up a special unit to tackle the problem.

    iv. Take appropriate measures to address land tenure conflicts and compensation claims.”

    Good start I think (once again) and if successful well spend money! It’s not a good start of course If one is against any economic activity related to forestry…

  8. Do we think that the forest exploitation or degradation in developing countries is blamed as the main source to climate change ? I would rader say that the use of fosil fuels is the most significant to that of climate change, in terms of carbon emission. Or perhap, climate change is beeng used as a divice for a global economy policy by super power countries to control developing countries. I belief that global climate change will not be able to be stoped by human efforts, that is the faith of nature.

  9. @Supriadi (#8) – No, I don’t think that forest destruction is the main source of climate change. I agree with you that reducing emissions from fossil fuels is crucial to addressing climate change. I think that rich countries are hoping to use REDD for two things: 1) as a green figleaf at the UN climate negotiations – to give the impression that some progress is being made (although REDD without meaningful targets for reducing emissions from fossil fuels makes little sense); and 2) to avoid making emissions cuts at home.

    Having said that, I think it’s important to massively reduce deforestation and to massively reduce emissions from greenhouse gases.

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