Confusing and conflicting regulations are scaring away investors from Indonesia's fledgling forest carbon credit scheme aimed at curbing deforestation, lawyers said on Monday.
A U.N.-backed scheme called reduced emissions from deforestation and degradation (REDD) could potentially unlock billions of dollars in annual carbon credit sales for developing nations that protect their forests from illegal logging and other threats.
Indonesia in May became the first country to issue a legal framework for REDD, anticipating the scheme's inclusion in a broader U.N. climate pact during a major gathering in Copenhagen this year.
However, project developers will struggle for up to five years to attract necessary volumes of private investment to sustain REDD projects without public funding, said Martijn Wilder, a partner at Baker & McKenzie.
"We are probably three, four or five years away in terms of having a really significant liquid private sector market so the issue is how do we fund it at the moment," he told a forum of REDD project developers and policy-makers in Jakarta on Monday.
"There is direct funding from governments such as Norway or through the World Bank, but the key issue is how much do we rely on public sector financing or on private sector financing," said Wilder, head of Baker & McKenzie's global climate change and emissions trading practice.
Deforestation is responsible for nearly 20 percent of mankind's greenhouse gas emissions.
The United Nations, World Bank and numerous governments back REDD projects in developing nations that halt forest loss and pay local communities compensation as well as help them develop alternative livelihoods.
In return, rich nations and companies can buy REDD carbon offsets to meet their emissions obligations at home. A U.N.-backed market, though, will only come into force from 2013 if there's a global climate pact and the infant sector is presently supported by the voluntary carbon offset market and donor funding.
Source : REUTERS
Saturday, September 12, 2009
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