Carbon trading is tightly regulated

Focus, Normal


I HAVE been reading headlines about carbon trading cowboys and the hype generated with the customary landowners. These cowboys tying up landowners do not know anything about how carbon emissions credits are generated, verified and sold in the market place.
I taught carbon trading as part of the “international trade law” class at the University of PNG some time back so I think I know something about the process, from getting started to listing the credits in the market to be traded.
I am also a director of a company called Carbon Market Consultants Ltd, which is linked by MoUs to over 40 companies internationally dealing with carbon market and traders on the Chicago and New York Carbon Exchanges.
Some of the companies in our network are front-runners or instigating participants in the creation of the private sector voluntary market called Voluntary Carbon Standards (VCS) being set up in Geneva, Switzerland.
This is separate from the one controlled by the governments through the United Nations that is based in Bonn, Germany. The one based in Bonn was created by the signatories to the UN Framework Convention on Climate Change (UNFCCC) and is controlled by rules generated pursuant to the provisions of the Kyoto Protocol.
VCS, on the other hand, are rules generated by the key private sector players and experts who have come together to devise and verify how trading on the private exchange should be done.
If anything, the primary factor that must be understood by landowners and carbon cowboys is that the rules pertaining to Bonn Exchange do not differ very much from the VCS ones in Geneva.
In fact, it is possible to list carbon credits or emissions credits on both exchanges to be traded but it is not allowed to do duplicate sales. That would be fraud on the massive scale and is illegal.
The PNG Government and carbon cowboys are fooling around with landowners. They do not know where to start. They are establishing their kingdoms high in the sky without knowing how to link that to ground zero which is where the credits are to be generated.
The Government has wasted millions of kina in public funds over the last nine years or so and has not yet send down the aerial roots to the soil upon which is contained the carbon that could be traded.
They are doing things back to front. Is it not better to start at the bottom and grow upwards?
I will raise some questions to make my point clear.
How does one determine how much carbon is contained in a coconut tree? 
Is the carbon content of the coconut tree the same as that of a banana tree?
Is it the same in a kunai patch as in a sago palm?
Or in a Klinki pine tree as in a Kauri pine?
Much has been written in the press about the April Salumei project and land rights holders from that place.
How much does the carbon cowboys know about the carbon content in a copal gum tree which is abundant in the April Salumei project?
The tree produces copal gum which is used as an additive in the paint and varnish industry.
The landowners already have a source of income under their nose so why are they trying to look beyond their noses to find money?
The Government should get their priorities right and help these people to make money from what is growing naturally on their land.
What happens when the pine tree sheds its resin which hardens into a product called copal gum?
These trees could be tapped like rubber trees. When they shed their resin, they release emissions which become food for younger trees, and the cycle continues.
Each tree is made up largely of carbonous material – the building block of life.
A human body is about 70% water and the rest is carbon. So do you weigh the human body to determine the carbon that is contained in that body?
The carbon content of the body will be the total weight minus the weight of the water content.
So when we come to trees, do we not also weigh the whole tree individually (including its leaves, branches, trunk and roots) and then make allowance for the water content in the tree to determine its carbon content? 
Do we know how much is contained in the trunk and roots of the tree that is underground?
From the above, it should now be clear that not all trees and plants have the same carbon content.
A hard wood like the kwila has more carbon content than say a banana or jatropha trees which are softwoods.
So for the April Salumei project do we know all the species and other matter that growing in that forest?
How much emission is released annually from the tree in the production of copal gum?
How was the estimate reached?
Do we know how many kauri pines are growing there or their size?
If we can get an average tree, we could do some mathematics and multiply by the number of trees there.
Is it possible to use satellite imagery technology to determine the volume of carbon in a given area of land?
How good is that technology?
Can that technology verify what is below the ground as well?
Also, has any of these trees been cut to make way for village gardening?
If so how much carbon is being turned into emissions?
Neighbouring activities also need to be taken into account.
A neighbour that cuts and burns his trees will affect the volume of carbon in the project area so some adjustments have to be made.
These emissions have to be subtracted from the total carbon in that area during the relevant period for trading purposes. All these have to be verified scientifically using standards that have been international accepted both under the Bonn system as well as the VCS in Geneva.
So tying up agreements with landowners does not convert overnight to creating emissions credits that will be acceptable for trading in Bonn or Geneva.
That is wishful thinking at its best.
In PNG we have problems also with landownership. So the first problem as I have tried to explain is to determine and verify the volume of carbon that is contained in a given forest area.
The second problem is one of title and that is what the Government and the carbon cowboys have yet to address. I can say now that the companies in my network will not buy any credits from anyone in PNG or elsewhere unless the person can produce a land title as evidence of ownership.
We all know that in PNG, 97% of land is owned by customary land rights holders and much of it has not been registered. So what is the Lands Department doing about assisting in the process of land registration?
The reason why I had developed the “Donigi Plan” for registering customary land is because it provides a better basis for carbon trading activities to be conducted in this country. The Department of Environment and Conservation and the Office of Climate Change does not know what it is talking about and is barking up a wrong tree!
The Government cannot go lobbying internationally unless it has established the legislative framework within the country. Again it is putting the cart before the horse.
Has the US been trading emissions credits within the country and if so, for how long and by what method?
We are blaming the US for all things in this world. Yet trading in emissions credits has been part of life in the US economy for many years even before the UNFCCC and Kyoto Protocol came into being.
That is why they have carbon exchanges in Chicago, New York and San Francisco.
To facilitate trading in emissions credits, the US federal government passed the Clean Air Act which provides for heavy penalties against companies that use old technology to create emissions. The market responded by creating a mechanism for getting companies out of jail.
In simple terms, the market recognised that it will take time and money for companies to switch over to new technologies.
The starting point is not international negotiations but enabling legislation at home.
We are spending several millions of kina to send a delegation to Copenhagen for a joy ride with no tangible benefit at the end of the day as we still have not got our house in order.


* Peter Donigi is a lawyer and former senior diplomat with postings as Ambassador to Germany, Holy See and UN in New York.