Climate Deals Turn Up Heat in Indonesia's Dark Peatlands

It used to be malaria that gave people fevers in Indonesia's remote, mosquito-infested peatlands.

Now it is carbon.

Investors around the world are dreaming of the billions the festering carbon-rich bogs could bring in as the world battles global warming. Peat bogs are the new black gold, some say.

Science has long known that Indonesia's 20 million hectares (50 million acres) of dense, black tropical peat swamps, formed when trees, roots and leaves rot, are natural carbon stores, explained University of Nottingham peat expert Professor Jack Rieley.

"They are 50 to 60 percent carbon. Peat stores more carbon than all of the planet's vegetation combined," he said.

Now the dots have been joined between peatlands and the massive amounts of climate change-related carbon emissions they release when burnt or drained to plant crops such as palm oil.

Peat is a potential gold-mine, said Marcel Silvius, Senior Programme Manager of Wetlands International NGO.

"This science was not available before," said Silvius, the co-author of a November 2006 report that found Indonesia's peatlands emit two billion tonnes of carbon dioxide each year -- more than the annual greenhouse gas emissions of Japan or Germany.

Years of lucrative deforestation for timber and palm oil plantations has entrenched the practice of burning vast areas of Indonesian land, smothering neighbouring Malaysia, Singapore and Brunei in annual choking smoke clouds, known as haze.

Now, in a sudden reversal, keeping Indonesia's forest cover intact is a hot investment ticket in a warming world, said Silvius.

"(The world's peatlands) emit eight percent of global carbon dioxide emissions, equal to what all the Annex One (industrialised) countries need to decrease (under the Kyoto Protocol). Tens of billions could be invested to achieve this," said Silvius.

Around $30.4 billion of carbon credits -- representing 1.6 billion tonnes of CO2 -- were bought and sold last year in Europe by companies seeking to trade off business-related carbon emissions for emissions reductions achieved elsewhere.

Already, investors are knocking on doors in towns close to peat swamps, such as Palangkaraya, in Central Kalimantan.

Within the million hectares of the nearby ex-Mega Rice Project peatlands, Rieley's scientists have been offered funding from Climate Care for tree planting and fire-fighting. Shell Canada is bank-rolling NGO-led peat rehydration and the Dutch government has invested 5 million euros ($6.7 million) in dam-building.

"They are all coming to visit the same people in Palangkaraya," said Daniel Murdiyarso of the Bogor-based Centre for International Forestry Research.

"There's so much interest - we are in the eye of the hurricane."

DEFORESTATION FEVER

Emissions cuts from forest areas such as peatlands are not yet eligible for trade, because they were excluded from the Kyoto Protocol's first, 2008-2012, round. But many predict they will be in six months' time, after the UN climate meeting in Bali hears a report on Reduced Emissions from Deforestation (RED).

"It has to enter the agenda so that developing nations such as Indonesia can benefit," Environment Minister Rachmat Witoelar told Reuters.

"We are ready. We have a grand plan to identify and restore or conserve our forest areas. We have also prepared the financial side of the deal," he said.

Meanwhile, the voluntary market is "developing rapidly", as investors hope carbon futures will evolve into tradable credits said Jorund Buen, the director of Point Carbon analysis group.

"Discussions on including avoided deforestation are among the most advanced with regards to post-Kyoto commitments," he said.

As home to 60 percent of the world's threatened tropical peatlands, and among the world's top three carbon emitters when peat emissions are added in, Indonesia is in the spotlight.

"While the details are still in the works, the 'big story' is becoming more clear," said Meine van Noordwijk, principal scientist for the World Agroforestry Centre.

"If this stays outside of the international discussions a huge opportunity will be missed... If accepted in principle, this will become part of the 2012-2017 international regime," van Noordwijk, who is based in Indonesia, said.

However, speculators descending on Indonesia's peat-towns are finding locals less up to speed on the intricacies of carbon trading and peatlands protection, said Murdiyarso.

"It's not easily understood by people -- the confusion is overwhelming... The papers here say, 'Central Kalimantan is clearing up the air of Canada'," he laughed. "The publicity from the local media is appalling."

PEOPLE VS. PEATLANDS?

While RED's exact stakeholders are murky, its plan to help save the planet by making conservation profitable is likely to be nationally based, rather than project-based, and to involve governments, the private sector and NGOs, analysts say.

But stitching up peat swamp carbon deals without involving local communities risks raising real tensions, said Jutta Kill of FERN, the Forests and the European Union Resource Network.

"Because the focus is narrowly on keeping the carbon stored, the incentive to police is increased," she said from Britain. "In Uganda, people have been shot at by forest rangers to defend carbon forestry projects."

This kind of market-led carbon trading is not the only way to safeguard forest carbon, she said.

"Northern countries could do a lot by not pushing deforestation through (expanding) palm oil and biodiesel (developments)".

"It certainly is a big policy incoherence if one part of the climate discussion is to reduce emissions from deforestation, and the other leads to an incentive to deforestation," she said.

Whatever eventuates, if perennial peat land problems such as poverty and fires aren't tackled, Indonesia's forests could go up in smoke, taking carbon traders dreams with them, Rieley said.

"A lot of things are supposed to happen at a high level. The problem is the low level -- how are you going to stop fires on the ground?"

"None of these schemes will work if the fires aren't stopped," he said. "You'll not only lose your forest, you'll lose your peat and its ability to function as a carbon store."