When Rudd Sticks

Take a cautious first step into the tropical peat swamp of Central Kalimantan, Indonesia, and it’s likely to open up before you. Sensory nerves sending messages to the brain prove unreliable as your foot, expecting to eventually find a firm surface, is painfully deceived. You sink deeper and deeper into the mud, and count yourself fortunate if you bruise yourself grabbing desperately for a tree root, lest you lose limbs and boots forever.

This is what Kevin Rudd wants to save. In the grand ballroom of a grand hotel in Indonesia’s capital last Friday, Rudd addressed an elite crowd on the "inseparable" relationship between Indonesia and Australia.

Expat Australians in the room reveled in the nostalgic reminder of home: Rudd’s perfect placing of equal weight on each syllable in his speech, delivered in iambic pentametre. But within the gentle metric rocking of his presentation was a policy that was really on song. Rudd’s guitar solo was the announcement of a Forest Carbon Partnership with Indonesia.

As part of the partnership, $30 million will be invested in the forests of Central Kalimantan. It will be used to try and do what – according to development economist Terry Lacey – has not been done before: put a monetary value on the carbon that has been saved by avoiding deforestation.

Lacey runs a development agency, Cooperation for Development, in Jakarta and is an advisor to the ASEAN Centre for Energy. He says the project will lead a future "multi-billion dollar market based on good forest management, and that is a new step forward".

"All the people that are worried about forests going and the effects of corruption and bad management have an enormous amount to gain by having a financial value based on saving forests, rather than just the value of forest products and a broad moral value to conserve forests," he says.

The "innovative, market-oriented approach", as the Australian Government PR describes the Kalimantan project, will also begin to right the wrongs of the Kyoto Protocol, Lacey says. "Kyoto 1" narrowly focuses on industrial gas emissions, neglecting those caused by forest degradation.

The fundamental problem is that under Kyoto 1, industrialised countries who fail to meet their targets can buy certificates from developing countries to make up for their shortfalls, Lacey says. At the same time, these industrialised countries impose much higher environmental standards on the poorer countries that are beginning to develop industry of their own. The Kalimantan project could be the first step to a fairer system of combating climate change.

"The more the market based on good forestry practice becomes well developed, the more chance there is the countries that have substantial forests will benefit, which includes countries in transition."

It means countries like Indonesia, Brazil and some in Africa stand to potentially raise a lot of money by preserving their forests, he says, as could Australian businesses winning contracts through the partnership.

Australia and Indonesia will both attend the climate change session at the G20 meeting in Japan next month, and are likely to push to have forest carbon trading included in ‘Kyoto 2′ after 2012.

Until now, measuring the amount of carbon in forests has been a rather rudimentary practice, despite deforestation accounting for 20 per cent of global greenhouse gas emissions. But as Rudd said in his speech, before rainforests can be protected through emerging carbon markets, "we have to know how much carbon there is". Enter Australia. It will roll out the national system it developed to measure carbon as a "best practice" instrument globally, with Kalimantan as a pet trial project.

Those with minimal environmental credentials sinking in the deep bog of Central Kalimantan could be forgiven for wondering what exactly is left to be saved. Conservative estimates by the province’s Governor class 50 per cent of its land as "critical" – to put it plainly: peat swamp forest that has been hacked into and now consists of a flailing forest canopy of regenerating trees.

In 1996, Indonesia’s former dictator Suharto cleared the middle of Kalimantan for the Mega Rice Project: a grand plan to farm enough rice for Indonesia to feed itself. A minor detail – that peat is too acidic for rice to grow in – was acknowledged after a million hectares of forest were culled and 4,600 kilometres of wide canals were built.

What was left after canals drained the water from the formerly boggy rainforest was a desert-like layer of highly flammable peat as topsoil. The next year fires raged through the former forests, contributing to between 15 to 40 per cent of 1997’s global carbon dioxide emissions, according to Wetlands International.

Today Indonesia is the third largest carbon producer in the world if peatland emissions are included. For residents in the town of Palankaraya, Central Kalimantan, the environmental damage means much more than a ranking in a world poll. For three months of the year, smoke encases the town like a bitter fog.

"Nobody goes outside, nobody goes anywhere", residents say of the "smoke months". Life stops, as peat burns for metres underground.

The University of Palankaraya’s Dr Suwido Limin was one of many scientists who watched in horror as Suharto set about destroying forest to plant rice that was never going to grow.

A weathered environmental warrior for the university’s Centre for International Co-operation in Sustainable Management of Tropical Peatland, Suwido is very familiar with the paradox of forest preservation, Indonesian style.

"In Indonesia, sometimes I say, until now we almost never use science. We almost never use science to develop this country. We don’t use science to make results and move forward. In 1995, with the peatland, we gave a warning, ‘look, based on our research finding [rice won’t grow]’. But they didn’t care," he said.

Not much has changed, he said. In fact, "it’s getting worse". Regulations that forbid timber, oil, palm and pulp (acacia) plantations from over-clearing might exist on paper, but not in reality, he says. He refuses to name particular guilty corporations, because he says there are hundreds of companies working there – and they’re all guilty. The problem is only made worse by small groups of Indonesians from outside Kalimantan coming in to carry out illegal logging and wildlife trafficking.

The big, gaping canals dug in to drain the muddy forest to grow rice have since been blocked up to allow the forest to regenerate, but illegal loggers regularly break the dams in order to float boats down the artificial rivers, leaving the peat to dry out and burn once again.

Suwido says the Indonesian government – on a local, regional and national level – isn’t listening.

"Their mentality is more difficult to change, we need to find a new strategy, new people, and a new generation. If they put new people in the government, in the parliament, in the local offices, this would help. People have been there too long."

As Indonesia country manager for Australian project management company Cardno-Acil, Gary Andrews is likely to compete for tenders through AusAid for the Central Kalimantan project. "For a company like ours it’s a good opportunity," he says.

He has known about the partnership for six months – there have been rumours of it in project management circles for one or two years – and says quite a few companies are showing interest in carbon trading projects in Indonesia.

"I wouldn’t necessarily say that that’s something only Australian companies can do, this will probably be open to international competitive bidding," he says.

But Lacey says Australian companies are especially likely to benefit from projects under the partnership – if they can deal with the endemic corruption throughout business and government in Indonesia.

"People that are more pessimistic … say that if you do this in a country that is already corrupt, then you may not get the benefits of the instruments because people will cheat on everything," says Lacey.

"Good practical solutions have to parallel with good governance. Without that we can’t be sure that these good technical measures are being monitored properly."

While Rudd’s Jakarta speech last Friday may have been characterised by motherhood statements and an embarrassing slip up, Lacey says the new carbon partnership looks like a "synergetic relationship that could do both countries a lot of good".

"I think Rudd and his administration have managed to pick out a key element in their relationship with Indonesia, which has had its ups and downs."

"Indonesia is the one right next to you, and it’s got to work for Australia, or you have an unstable neighbour on your border. Any way that can be found for Australian industry and economy to get on the frontline of Indonesia and change things, has to be used."