Forestry and Poverty Project Newsletter – Issue 38, August 2012

Green EU Priorities in Indonesia Neglect Economic Development

The European Union (EU) has proudly announced that it spends more than half of its aid budget in Indonesia on environment-related programs – more than three times its expenditure on education, more than five times its expenditure on health, nutrition water and sanitation combined, and almost seven times the spending on economic development and trade.

A total of €500 million went from EU member states to Indonesia in 2010. Of that, €291 million went towards environmental initiatives. The EU announced the figures at the launch of the “Blue Book 2012 EU-Indonesia Development Cooperation 2010/2011” – an annual overview of development cooperation between the EU and Indonesia. The European Union further reiterated its stance to prioritize low-carbon economic development in its cooperation programs with Indonesia at the launch.

The bulk of the funds – around €200 million – were in the form of ‘Climate Change Development Policy Loans’ from L’Agence Française de Développement (AFD – France’s development agency). These loans were disbursed by the World Bank and administered by the Indonesian Finance Ministry to develop ‘climate friendly’ policies.

Priorities for the loans included emissions reductions from “forest loss and peat land conversion and burning … reducing the over-use fossil fuels, developing renewable energy alternatives (e.g., geothermal and biomass) and promoting energy efficiency.”

The European Union’s spending follows broader shifts in aid spending over the past decade away from economic development and towards ‘soft’ development areas.

The World Bank loan documents note that drivers of deforestation include ”governance failings, illegal logging, land use conflicts, and deliberate conversion for agricultural uses, including cash crops and tree crops” – all of which can be considered symptomatic of poor tenure regimes in Indonesia.

A major initiative that is highlighted in the document is the negotiation of the EU VPA (Voluntary Partnership Agreement), which imposes an elaborate licensing system on exporters of forest products. The EU’s modeling on VPAs demonstrated that implementation would result in welfare losses in Indonesia and hinder Indonesian trade and exports.

Similarly, one of the key initiatives for the EU on trade was the creation of ACTIVE – ‘Advancing Indonesia’s Civil Society in Trade and Investment’. The first priority of the ACTIVE program is “harnessing international environmental regulation to boost and strengthen Indonesia’s trade and investment flows”, which would appear to hinder, rather than spur trade.


USDA says China forest output to increase, exports tempered by EUTR

The United States Department of Agriculture’s (USDA) new Chinese forest sector outlook says that Chinese exports will be tempered by the new EU timber regulations.

The report states that it is expecting the Chinese forest sector to increase its output value by 20 per cent over the next 12 months, which includes an increase in the domestic logging quota, which will jump by 23 million m3.

Prolonged afforestation projects in China have increased domestic production of logs for manufactured goods to supply the domestic market.

The report also states that domestic lumber demand will increase by around 10 per cent and that log demand will remain flat or decline mostly due to a cooling construction market.

The report notes that the EU’s Timber Regulation (EUTR) will have an impact on exports of Chinese timber products into Europe. As referred to in the previous story, the EU’s modeling of restrictions on timber imports into the EU stated that welfare losses would occur across the Asian region as a result.

In addition, regulations in the US that limit formaldehyde emissions from composite wood products have required a number of Chinese producers to upgrade facilities.


Australia Considers EU-ETS Links: Are REDD Credits Over?

Australian news outlets reported in August that Australia is considering linking its carbon tax to the European Union’s Emissions Trading System (EU ETS) and limiting carbon credits from developing countries. The move would appear to kill-off plans to bring credits from avoided deforestation into the broader carbon market.

According to news reports, the Gillard Government will link the Australian carbon tax to the EU-ETS from 2015, allowing Australian polluters to offset any emissions with emissions permits from Europe.  According to Australian Treasury modeling, Australia needs to source around 40 per cent of its emissions reductions from overseas to meet its targets.

The Australian government had originally intended to source carbon credits sourced from Reduced Emissions from Deforestation and forest Degradation (REDD) programs in Indonesia and Papua New Guinea.  The first announcements on these programs – such as emissions reduction programs in Kalimantan – were made in 2008 and 2009; the initial timelines projected that countries such as Indonesia would be fully integrated into functioning international carbon markets by July 2012.

Equally concerning for the Australian government, the EU ETS has been under scrutiny given the collapse in credit prices, leading the CEO of Eon – one of Europe’s largest energy companies – to state that “the ETS is bust, it’s dead … I don’t know a single person in the world that would invest a dime based on ETS signals.”


WWF Still Vilifying Vietnam, Indonesia

International campaign group WWF has launched broadsides against the Government of Vietnam and the forest industry in Indonesia, accusing both of failing to live up to commitments on conservation and sustainability.

WWF recently launched its ‘Wildlife Crime Scorecard’, which assessed various developing countries on compliance and enforcement of laws relating to wildlife trafficking. The scorecard rated Vietnam as having the highest levels of non-compliance and lack of enforcement.

However, the Vietnamese government hit out at the report, stating that the country has recently made great efforts to crack down on the smuggling in of wild animals from other countries.

An official criticized the WWF report stating that it “only mentions rhino, tiger, and elephant. It was done by collecting unofficial information from non-governmental organisations, the media, and individuals, and without any consultation with legal compliance agencies.”

The report follows an incident in 2010, when Vietnamese authorities criticized WWF’s inclusion of tra, one of its main fish exports, on a ‘red list’ of unsustainable fish species.

In Indonesia, WWF launched a similar broadside against forest operator Asia Pulp and Paper (APP), which recently issued a ‘Sustainability Roadmap’. In the document, APP made commitments to cease forest clearing for planation establishment and 100 per cent reliance on plantation materials by 2015. APP also made a commitment to implement High Conservation Value Forest (HCVF) assessments in forest areas.

Despite this, WWF broadly attacked the new set of commitments, underlining its position on forestry that aims to close down forest industries in developing countries rather than support them.


Greenpeace Under Fire in Indonesia

Greenpeace activities in Indonesia have once again come under fire from officials and local groups.  Indonesian Justice Minister Amir Syamsudin has said that Indonesia is mulling over putting a freeze on Greenpeace Indonesia’s license to operate in the country.

Syamsudin told state news agency Antara that “foreign organizations must submit to [and follow] laws effective in our country,” and that the Greenpeace campaign in Indonesia had often hurt Indonesian businesses.

“Their campaign activities have often hurt businesses in our country. We can say they have overdosed. Now we are studying whether their activities have been conducted due to business competition [interests]” he told reporters.

According to an official from Indonesia’s Ministry of Foreign Affairs, Arko Hananto, Greenpeace has violated Indonesian regulations because it received foreign funds without reporting it to the government.

The criticism comes as the organisation faces a number of legal obstacles across the globe. In Canada, a government intelligence report noted that Greenpeace actions posed health and safety risks to the public. Greenpeace responded by stating that “There is a difference between breaking the law and criminal activities.”

In Australia Greenpeace activists have been found guilty over the destruction of a government experimental wheat crop. Surprisingly, Greenpeace has publicly conceded the failure of the wheat protest, particularly the negative public response to its direct attack on a scientific organization.


Land Disputes Ongoing in South Sumatra

Land disputes over a sugar plantation have resulted in nearly a month of conflict between communities and law enforcement officials according to Indonesian news reports.

The conflicts have concerned a state-owned sugar plantation, Cinta Manis, based near Ogan Ilir in South Sumatra. Clashes between police and local residents have resulted in a number of injuries and at least one fatality.

There has been widespread criticism by human rights and environmental NGOs over the handling of the disputes, questioning whether appropriate procedures have been followed by police.

The Indonesian Human Rights Commission has made public the finding that  Indonesian police forces were responsible for the death of a 12-year-old boy during one of the clashes..

Many Western environmental NGOs such as the Rainforest Action Network have been eager to blame land conflicts on specific export commodities such as oil palm or forest plantations – and then directly blame purchasers of those commodities for fuelling the original conflicts.

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