Australia eyes carbon credits from Indonesia’s forests

Efforts to prevent the deforestation and degradation of Indonesia’s forests could yield much-needed carbon credits that Australia will be looking to purchase to help meet its emissions targets, says Australian Climate Change and Energy Efficiency Minister Greg Combet at a talk at the Australian National University (ANU) on Friday. 

The Australian parliament recently passed a landmark legislation that puts a price on carbon and paves the way for Australia to enter global emissions trading markets to help the country cut its emissions by 5 percent below 2000 levels by 2020.

A carbon price is expected to promote a transition into energy efficient and low carbon energy production and industrial processes. Australia is currently the highest emitter per capita among developed nations as it heavily relies on the export and use of coal for electricity generation.

Indonesia’s efforts under the United Nations backed Reducing Emissions from Deforestation and Degradation scheme or REDD+ could emerge as a major carbon market for countries such as Australia looking to acquire internationally accredited carbon credits, Combet said. Deforestation, particularly in the tropics, makes up almost one fifth of the global emissions.

“The (Australian) government is keen to contribute in negotiations to see REDD+ progress under the UN framework,” Combet said, “But also engage in negotiations with countries that are interested, including Indonesia, to seek ways in which we can support, in particular, the development of (REDD+) projects.” 

The legislation allows carbon credits to be sourced from overseas, however fifty percent of credits would have to come from domestic sources.

 “Australia’s carbon price policy opens up significant opportunities for Indonesia to tap into financial resources to support the development of REDD+ and to demonstrate that REDD+ indeed results in real emissions reduction. It is timely for Indonesia to push forward the development of this scheme in a credible way,” said Fitrian Ardiansyah, a climate and sustainability specialist based in the ANU. “REDD+ could lend Indonesia a competitive edge in a low carbon future,” Ardiansyah added.

The 2008 Eliasch review estimated that halving emissions from forests by 2020 would require up to $26 billion a year, out of which $7 billion could be supplied by global carbon markets. 

A credible scheme under the UN could significantly boost private sector investment in emissions abatement from forests; already the demand for forest carbon credits has reached $424 million in the voluntary carbon market last year. In order for REDD+ to emerge as a trustworthy market mechanism, it needs to be transparent, adopt effective rules and ensure that genuine reduction takes place, Combet added.

Australia, along with other developed nations such as Norway, Germany, Britain and the United States have so far pledged more than $6 billion dollars to help countries like Indonesia roll out pilot projects and build the necessary infrastructure for REDD+. Indonesia has rolled out a number of pilot project, including the pioneering project funded by the Australian government in Central Kalimantan, and has issued pivotal legislations in support of this scheme.