Australian miner threatens lawsuit against PNG for scrapping carbon scheme

An Australian company is threatening to sue the government of Papua New Guinea after its proposed carbon credit deal was canceled. Mayur Resources, a mining and energy company that works exclusively in Papua New Guinea, said in a statement that “the current intention is to vigorously challenge the notices through applicable legal processes, with a view to continuing its carbon offset projects.”

This comes after the country’s Forest Clearance Authority canceled the proposed offset project that involved approximately 800,000 hectares (2 million acres) in PNG’s Western province. As reported by REDD Monitor, the carbon credit scheme was a revival of the failed Kamula Doso Improved Forest Management Carbon Project, which was run by Mayur Renewables, a subsidiary of the mining and energy company, until 2020.

The threat marks the latest twist in a convoluted story that began with a coal power station proposal. Mayur Resources acquired leases to mine coal in PNG’s Gulf province, and in 2017 told Mongabay it had received approval from the country’s environmental authorities to develop a coal- and biomass-fired power plant in the city of Lae. The project, which would have been the country’s first coal-fired power station, was widely criticized by civil society groups. Both environmental and human rights NGOs were quick to point out the dangers of opening a coal power station in a nation on the front line of climate change.

The plan for the power plant was scrapped in July this year, with the company announcing it would pivot to focusing on renewables, establishing “PNG Nature-Based REDD+ Forestry Carbon Credit” projects around the country. The REDD project saw Mayur partner with Australian oil and gas exploration company Santos Limited, which is involved in the Exxon Mobil-led PNG LNG project in the country.

A statement released at the time by Mayur managing director Paul Mulder suggested the carbon credit program would be used to offset the mining company’s own emissions: “The response to this amendment in strategy has been positive with our future customers welcoming our ability to use renewables to penetrate the energy requirements of our projects, thus reducing our carbon footprint. We have then additionally proposed to generate high quality PNG Nature Based REDD+ Forestry Carbon credits to further offset remaining carbon emissions that are currently unavoidable.”

Paul Barker, executive director of the Institute of National Affairs, a PNG think tank, told Mongabay that “there’s still a lot of uncertainty over the various carbon approvals that have been granted and their status.” He said the country’s Climate Change and Development Office (CCDA) was “probably swept off-guard” by a resolution at last year’s COP26 climate summit in Glasgow, Scotland, that opens a torrent of new carbon credit proposals. These could come both from businesses for domestic offsetting and from overseas firms, notably in neighboring Australia, seeking to offset emissions from major new resource projects there, Barker said.

“CCDA is still finalizing the REDD+ guidelines and safeguards, through a process of genuine consultation, but they’re clearly under pressure from political and outside pressures to approve new projects under the voluntary market,” he said.

Mayur Renewables purchased three carbon permits in Western province on Jan. 7, 2022, which were issued expressly for carbon credits. But in the public notice issued July 20 canceling Mayur’s carbon credit project, the PNG Forest Authority announced it had revoked the permits because the company had twice breached the Forestry Act: “The Cancellation of the Carbon Permits emanates as a result of the National Forest Board’s resolution dated 14th April 2022 in lieu of the manner in which the Carbon Permits were issued, that in total is contrary to and is in breach of the Forestry Act 1991 (as amended) and further that; the company Mayur Renewables (PNG) Limited, is not recognized as a Forest Industry participant is again contrary to and in breach of the Forestry Act 1991 (as amended).”

It’s unclear if the breach is particular to Mayur Resources or due to a blanket moratorium on carbon credit schemes announced by the environment minister on March 2. Mayur Resources did not respond to Mongabay’s request for comment for this story.

The moratorium was imposed with immediate effect on voluntary carbon standards (VCS) after multiple accounts of unaccredited and inexperienced companies sweeping into the nation to take advantage of the new market created by the U.N.’s Kyoto Protocol. Activists raised the alarm in particular over a project with “significant red flags” in Oro province. Voluntary projects currently have no international regulatory framework, opening vulnerable communities up to exploitation by what local politicians have called “carbon cowboys.” PNG’s environment ministry is using the moratorium, which includes a ban on all new projects, to create a legal framework for existing and future deals.

The governor of Oro province, Gary Juffa, slammed Mayur Resources for ignoring the moratorium. “In the absence of this framework, no individual company should be coming in here and taking advantage of this situation,” he said. “This is no different from these colonialists who came in and plundered these resources … They need to respect the Papua New Guinea government which represents the people of this country, and leave this area alone for a time until those frameworks and laws are in place.

“We’ve already seen a number of insidious characters come into Papua New Guinea and take advantage of an uninformed people who do not know much about the carbon trade space,” Juffa said. “They’re taking advantage of this lack of awareness and basically driving deals that benefit themselves as individuals or companies, deals that are often not in the best interest of the genuine resource owners.”

Mayur Resources had already started work on its carbon credit scheme by hiring a PNG consulting firm, Social Environmental Research and Consultancy Services (SERACS), to canvass the communities in the proposed project area. The aim was to establish free, prior and informed consent, a legal requirement for all land projects — from mining to carbon credits — which seeks to protect landowners from exploitation.

In its statement rebuffing the cancellation, Mayur Resources said it had established “very strong landowner support” for its carbon offset projects and suggested the PNG government is contractually bound to support the projects. Referencing the announcement published by the Forest Authority in The National newspaper, Mayur Resources responded: “The notices do not make reference to the contractual arrangements that MR has in place with the PNGFA, the [CCDA] and the relevant landowner company.”

This public statement was the first suggestion that Mayur Resources may have been granted an exemption to the moratorium.

But Governor Juffa’s stance is clear: “I would like to ask that Mayur Resources, and companies and individuals like that, respect our country, respect our resource owners, respect our laws, and respect our need to put in place the appropriate mechanisms before they can come and participate in this space.”

Banner image: Loggers cut down a tree with a chainsaw in a logging concession in Gulf Province. Image © Greenpeace / Jeremy Sutton-Hibbert.