A closer look at Sabah’s controversial carbon trade deal

 

Some 600,000 hectares of forest is to be initially used for a carbon trade deal, which could later entail up to 2 million hectares. (Bernama pic)

KOTA KINABALU: The controversy surrounding Sabah’s carbon trade deal is showing no signs of abating, with the issue also played up in the recent state assembly sitting.

Deputy chief minister Jeffrey Kitingan, one of the proponents of the provisional agreement, was grilled on the deal, also known as the Nature Conservation Agreement (NCA), by the state opposition, including its leader Shafie Apdal.

Questions raised ranged from the credibility of the Singapore firm, Hoch Standard Pte Ltd, which was engaged by the state government in the deal, to issues of transparency as well as land that will be lost to foreigners as a result of the deal.

FMT takes a look at what the provisional NCA is about and what the government and its detractors have to say about it.

What is the NCA?

Sabah’s chief conservator of forests, Frederick Kugan, said the NCA’s main objectives are the conservation and protection of tropical rainforests through the monetisation of carbon stored in standing trees, in addition to natural capital benefits in the forest environment.

He said in a statement that the focus of the NCA would be on forests classified previously as Totally Protected Areas (TPAs), which are areas already locked in for conservation and protection under various state laws and international treaties.

Kugan said the state government had agreed to a provisional framework with Hoch Standard.

It is believed this provisional deal was signed towards the end of October.

However, the NCA proper had yet to be finalised as there were a number of outstanding issues such as the designated area and the size and locality, he said.

Kugan explained that an initial area of 600,000ha was to be identified as a pilot scheme. Only upon the success of this would the state government consider approving more areas, up to a potential of two million hectares.

The state government is said to have agreed for the terms of the deal to last for 100 years.

What does the government say about the deal?

Apart from giving assurances that there will be no exploitation of protected forests, Kitingan has defended the decision to engage Hoch Standard, which he described as “a reliable company”.

He said the company had dealings with countries such as Indonesia, Australia as well as those in South America in the monetisation of natural capital, including carbon trading.

He said it was untrue that the company had a paid-up capital of only US$1,000. He said many companies did not need big offices and a large number of employees these days.

Hoch Standard had initially approached the previous state government some four years ago, he said.

As part of the provisional agreement, it will provide the trading platform that will connect various parties and the United Nations body involved in carbon trading.

Kitingan said if the company did not deliver, there were safeguards in the agreement to enable the state government to revoke the deal.

He said the 100-year term was to ensure proper planning as “trees don’t grow in one or two years’ time”.

“This is done over a longer period so we can harvest the benefits and ensure future generations also benefit,” he said.

What’s the problem with the NCA?

Civil society organisations maintain that they are not against carbon trading.

Sabah Environmental Protection Association president Alexander Yee said it was the deal itself and the manner in which it was done that they were unhappy about.

This includes the lack of public consultation, working with a third party in Singapore with no proven track record, the huge area set aside for a pilot project and the long duration of 100 years.

There are also questions surrounding the payment or profit-sharing terms between the government and Hoch Standard over the management of carbon credits as well as the necessity of engaging an outside firm when there is local expertise available.

The groups are also disappointed that the deal was not publicised, adding, they were “shocked” to learn of such an agreement from media reports.

“Part of the United Nations processes on carbon trading is to have public consultation with the local communities or what is known as the free, prior and informed consent practice, which they have not done,” Yee told FMT.

“Public consultation is an important component but it seems they are busy looking at the profits and losses.”

The lack of any official public document over the deal is also causing restlessness.

Other than the media reports, there are so-called documents on the NCA available online, which appear to detail the terms and conditions of the deal, but the author or authenticity of the documents cannot be immediately ascertained.

There is also a viral letter dated Dec 1 from Sabah Attorney-General Nor Asiah Mohd Yusof addressed to a person of interest in the Singaporean firm, questioning him on several issues and saying he was neither a director nor shareholder in Hoch Standard.

Nor Asiah was reported to have confirmed that the letter is genuine, and has since ordered an investigation into the leak.

Former senator Adrian Lasimbang has initiated legal proceedings against the NCA, naming the chief conservator of forest as the first defendant and the state government as the second defendant.

Lasimbang was reported by a local daily here as saying that while the NCA was not a bad idea, it lacked transparency and asked how the deal was formulated. - FMT