Palm oil giant to forgo development of New Guinea rainforest

/ Rhett A. Butler

Palm oil giant Golden-Agri Resources (GAR) will forgo development of an oil palm plantation in an area of rainforest in Indonesian New Guinea in order to comply with its forest conservation policy. The decision by GAR — which is the parent company for PT SMART, one of Indonesia's largest private palm oil companies — was disclosed in a report on its high carbon stock pilot project, which is a key component of the company's forest conservation policy (FCP).

Palm oil giant Golden-Agri Resources (GAR) will forgo development of an oil palm plantation in an area of rainforest in Indonesian New Guinea in order to comply with its forest conservation policy.

The decision by GAR — which is the parent company for PT SMART, one of Indonesia’s largest private palm oil companies — was disclosed in a report on its high carbon stock pilot project, which is a key component of the company’s forest conservation policy (FCP). GAR made the commitment in 2011 after a damaging campaign by Greenpeace cost it dozens of corporate customers who were concerned about allegations of forest and peatland destruction for new oil palm plantations.

The high carbon stock assessment is being conducted by The Forest Trust, the NGO that is charged with helping GAR develop and implement the FCP. The report notes that while GAR has the legal right to develop the concession — roughly three-quarters of which is forested — it will implement the FCP and not convert high carbon stock (HCS) or high conservation value (HCV) forest.

GAR's existing plantation as well as its forest concession in Papua Province

GAR’s existing plantation as well as its forest concession in Papua Province. Papua is seen as the next frontier for oil palm expansion in Indonesia.

The decision is significant because it represents one of the rare cases where an Indonesian company has voluntarily forgone development of a concession due to environmental concerns. At present it is unclear what would be the fate of that forested area that isn’t converted. There is some risk that officials could claw back those areas and grant it to another company. Or that GAR could simply sell the concession.

However there is another possibility that could pay dividends for both GAR and Indonesia’s forests: a land swap. According to the Indonesian government, there are some 40 million hectares of degraded land within the forest estate that could be suitable for plantation development. Companies like GAR have been pushing for a mechanism to exchange existing concessions located in forests and on peatlands for concessions in already-deforested areas. So in theory, GAR could propose trading the Papua forest concession for a concession on deforested land elsewhere. The Papua concession could then be made off-limits for conversion.

But the devil is in the details. Despite a lot of enthusiasm for the concept, to date there has been little progress on land swaps for oil palm plantations in Indonesia. The challenge is primarily bureaucratic — land swaps would require coordination between two highly territorial ministries — the Ministry of Agriculture and the Ministry of Forestry — as well as untold levels of local government. But land swaps are also held up by lack of good data on land tenure and use.

Nonetheless the potential for land swaps seems great. GAR alone has set aside some 19,000 hectares of potential HCS forest areas, while the Ministry of Forestry estimates there is some 8.5 million hectares of “good forest” in areas that could be potentially zoned for agricultural conversion (termed “APL” in Indonesia). Those 8.5 million hectares could store upwards of eight billion tons of carbon dioxide, or more than the combined annual emissions of the United States, India, and Germany.

Indonesian New Guinea is home to a wealth of wildlife, like the Sulphur-crested Cockatoo and Schoenherr’s blue weevil.

CITATION: GAR and SMART. Update: The First Six Months of the High Carbon Stock Forest Conservation Pilot Project. Oct 30, 2013.

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