Ecosystem Restoration

THE government’s climate mitigation policy is increasingly at odds with its initial aims. Instead of being serious about supporting conservation initiatives, the government has increasingly taken a hard line against those trying to protect the forest, while it is still allowing destruction of forests.

One example is the cancellation by the Environment and Forestry Ministry of the ecosystem restoration permits held by Rimba Raya Conservation and Global Alam Lestari. The Ministry says that it revoked the permits held by the two companies because of violations of the rules on carbon trading and because they had not paid taxes.

These accusations from the government are baseless because the buying and selling of carbon by the two companies took place long before the carbon trading regulation was issued in 2021. The carbon transactions by both companies were made on the voluntary market before the obligatory carbon trading market had been established.

The Ministry’s tough stance towards holders of restoration permits has triggered suspicions that there are business interests behind it. An investigation by this magazine confirmed indications that these permits were revoked at the request of a tycoon close to the government. The motive was to take control of the booming carbon business. Ecosystem restoration companies that have been trading carbon since 2010 are a soft and lucrative target for takeovers.

President Joko Widodo has said that the potential market for carbon trading from our forests is worth Rp4,000 trillion. The price of carbon in Indonesian forests is now around US$5 per ton of equivalent carbon dioxide emissions. When demand increases, the price of Indonesian carbon will also rise.

The restoration policy for production forests in 2004 was at the discretion of the government. When the price of timber collapsed as a result of global demands to stop deforestation, companies holding forestry exploitation permits (HPH) collapsed. Of the 600 companies in existence before 2000, only half remain.

The problem is that permits have already been handed out for 64 million hectares of forest. If the companies holding HPHs cease operations, the forests will be vulnerable to clearing and illegal logging, damaging them further. The government subsequently granted restoration management permits on the condition they were only used to exploit non-timber forest products.

When the climate mitigation became a global movement from 2015, the restoration business boomed because of the carbon trading scheme. But instead of supporting it through good corporate governance, the government has tended to be antipathetic towards environmentally friendly businesses with significant potential. The cancellation of the Rimba Raya and Global Alam permits, for example, was accompanied by ‘audits’ of all restoration companies involved in carbon trading.

There are now 16 restoration companies that have invested in forest protection and selling ecosystem restoration services through the emissions trading mechanism. But the Environment and Forestry Ministry has not approved their carbon trading business plans, and given no clear reasons. Conversely, for extractive companies such as oil palm plantations and nickel and coal mining, the government has sold off permits without any complicated conditions.

If the government stance and policy continue to be at odds with common sense, Indonesia will lose the trust of the international community in preventing global warming through beneficial economic mechanisms. And the world will know that government policy is being taken advantage of by cronies and oligarchs.