Indonesia issues world's first rules on forestry credit revenue-sharing

Indonesia has become the first country to release rules governing revenue-sharing for forest carbon projects under the UN-led Reduced Emissions from Deforestation and Degradation (REDD) mechanism.

Under the new rules, between 10 and 50 per cent of all carbon credit earnings generated from forest protection projects would go to the government, with the allocation divided between national, municipal and provincial jurisdictions.

Meanwhile, between 20 and 70 per cent of the revenues would go to local forest communities, with the ratio split between the government and local communities dependent on the type of forest.

The rules expand on Indonesia's existing regulations governing REDD, which the government formally enacted in May, making it the first country to do so.

The regulations specify who can carry out a REDD project and spell out what types of forest are eligible. It allows for foreign entities to team up with a local partner to develop a REDD project, which could run for 30 years and possibly be extended. Meanwhile, a national REDD commission would work to vet projects, ensuring they deliver real quantifiable carbon emission reductions.

According to the World Bank, there are about 20 Indonesian forest carbon projects in various stages of development under REDD.

According to some studies, Indonesia ranks as the world's third-largest emitter of carbon dioxide, after China and the US, largely as a result of the large number of forest fires set each year on peat lands to clear the way for palm oil plantations.

While research by Australia's Applied Environmental Decision Analysis has surmised that issuing carbon credits to palm oil companies to protect rainforests could help prevent deforestation, Greenpeace has taken a different view, arguing that forests in tropical nations such as Indonesia would be better protected if industrialised countries contributed to a global fund that would pay for forest conservation projects.

Last month, the US signed a deal to cancel $30m in debt owed by Indonesia, in return for a commitment to protect tropical rainforests on Sumatra Island. It is the largest debt-for-nature swap to date under the US Tropical Forest Conservation Act.