Indonesia forest-Borneo island

Four forest-preservation projects in Indonesia backed by Australia's Macquarie Group and conservation group Fauna and Flora International aim to yield about 13 million carbon credits a year, a senior FFI official said on Tuesday.

Combined, the potential stream of offsets represents what is believed to be the largest number of forest carbon credits of any project development team in Indonesia, which has about 20 forest-carbon projects under development.

The projects, three in West Kalimantan on Borneo island and one in Papua province, aim to preserve or rehabilitate about 400,000 hectares (1 million acres) of forest, with large areas under threat of conversion to palm oil plantations.

Negotiating with palm oil firms to prevent forest clearance is a key part of the complex cluster of projects, said Frank Momberg, FFI's Asia-Pacific director for program development.

In return, the palm oil firms would earn a share of the revenue from the sale of carbon offsets, with each offset representing a tonne of carbon dioxide.

Forests soak up vast amounts of planet-warming CO2 and can act as a brake on climate change.

Under an emerging U.N. scheme called reduced emissions from deforestation and degradation, or REDD, developing nations could potentially earn billions of dollars by setting aside and rehabilitating their forests.

The valuable carbon offsets they earn could be sold to rich nations to help them meet their emissions goals under the scheme that is likely to be part of a broader climate pact from 2013.

Momberg said two of the projects focused on preserving about 90,000 ha of degraded carbon-rich peat swamp forest in Kupuas Hulu in West Kalimantan.

The first of these projects covered 46,000 ha. "There's been deforestation in the area but it's not owned by any oil palm concession. You have to get tenure to own the carbon. So at the moment this is conversion forest.

"We're taking it over by applying for an ecological restoration concession licence in order to have the area not converted to palm oil," Momberg said from Jakarta. Preserving this area would save 2.8 million tonnes of CO2 a year over a 10-year period.

The second site covered up to 44,000 ha but was owned by a number of palm oil firms and the final size of the area preserved was dependent upon negotiations with palm oil firms that own the forest concessions in the area.

Momberg said the project team was hoping to sign individual contracts with the oil palm companies to form a carbon pool to share the carbon credit revenue.

The companies involved Sinar Mas and First Borneo Group and annual emissions savings were estimated at 2.5 million tonnes.

The third site in West Kalimantan, in the Sungai Putri peat swamp, was also degraded forest and totalled 60,000 ha. Momberg said preserving this area would save about 3 million tonnes a year based on a 10-year scenario.

He said he expected the licences and project design documents to be completed by the end of the year with the first voluntary market carbon credits likely to be issued in 2010.

The largest project covered 250,000 ha in Papua province in remote eastern Indonesia, with about 100,000 ha under threat of oil palm conversion and the remainder subjected to unsustainable logging and illegal logging, he said.

This project could yield about 5 million carbon offsets a year if this area was preserved but negotiations on revenue sharing with local communities were expected to take time.

FFI was also developing a separate project in West Kalimantan to preserve a cluster of community forests.

These customary traditional forests are usually less than 10,000 ha and to meet the transaction costs the best way is to group the forests as a carbon pool. Momberg said the grouping could total between 30,000 and 50,000 ha and annual CO2 savings would range between 280,000 and 500,000 tonnes