After being declared illegal by the state’s top lawyer, the controversial carbon trading deal in Malaysian Borneo, worth $76.5bn, appears to have been declared unfeasible and unsellable.
The Nature Conservation Agreement (NCA), which protects 2,000,000 hectares (4.9 Million acres) of rainforest in the State of Sabah, from logging for the next 100 year, sells the carbon in the trees, soil, and rivers to commercial polluters to offset their emissions.
According to a study published in Nature Sustainability, more than half of the threatened forests in Southeast Asia could potentially be protected as economically viable carbon projects that can deliver multiple social benefits.
Al Jazeera’s long investigation found that the NCA had been hammered out in secret and with what activists and Indigenous leaders claimed was no due diligence or consultation of landowners.
Al Jazeeras investigation revealed that a Singaporean Shell company with no prior experience in carbon trading was also eligible to make up to $23bn.
According to Al Jazeera, Frederick Kugan, Chief Conservator for Forests, signed the NCA on behalf of the State. According to the document, Kugan signed the agreement in the presence Chief Minister Seri Panglima Hajiji bin Noor, and Deputy Chief Minister Jeffrey Gapari Kitingan.
One week after Al Jazeeras investigation had been published on February 2, Nor Asiah Mohd Yusof was the attorney general for Sabah and stated that the state would not honor the agreement.
Recent reporting by Al Jazeera, the Sarawak Report, has raised many issues and concerns. Yusof stated that the NCA as it stands today is legally ineffective. He also described the terms of the deal in a statement as unfair and absurd.
The attorney general stated that no agreement, scheme or device, which is against Sabahs carbon sovereignty will be allowed to proceed.
Warisan, the largest opposition group in Sabah has filed a report to the Malaysian Anti-Corruption Commission about the NCA.
Kitingan publicly condemned Al Jazeeras investigation and called it defamatory and irresponsible. He threatened to sue the publisher.
Kitingan previously stated to Al Jazeera that consultation with the Indigenous population wasn’t an issue since they had been consulted when the area was made a forest reserve back in 1968.
Al Jazeera received a series messages via Whatsapp that the deputy chief minister, an Indigenous Sabahan claims, claimed that Indigenous communities were consulted.
Many indigenous representatives attended the public briefings. As leaders, we also represent our constituencies, which are mainly Indigenousvoters, he wrote. He also threatened to expose the whistleblower atthecenter of the story.
Do you think this person is truly concerned about Indigenous people or his politics and the people manipulating them? This political colusion will eventually be proven in court.
Kitingan also claimed that the deal was not related to unproven allegations about Kitingan’s time as director at the Sabah Foundation, which is a 1.1 million-hectare (2.7 million-acre) logging concession established in 1960s with the stated purpose of promoting economic and educational opportunities for Sabahans.
Pricewaterhouse’s 1994 audit found that $1bn was missing from the Sabah Foundations coffers in the period 1986 to 1993, according a claim made by Mahathir Mohamed, former Malaysian Prime Minister. This claim is cited in Why Governments waste Natural Resources, a book written by William Ascher, an American economist.
Kitingan said he had never witnessed such an auditduringhis time at the foundation butheard about the insinuationfromMahathir.
But, since it was raised again, I have asked the Sabah Foundationto give me all the audit records while I was the directorofthe Sabah Foundation.
According to a report that was commissioned by Carbon Sovereign Sabah campaign (a coalition of nine NGOs/research organisations opposed to NCA), the NCA in current form is scientifically flawed.
The NCA will operate within pre-existing Totally Protected Areas. According to the report Sabah is already obligated conservation and would not be sold under the NCA.
A clause in the NCA proposes to restore 50,000 hectares (123.550 acres) degraded forest within the first two year of the contract. However, there are numerous logistical and technical obstacles that would prevent restoration on this scale in most remote locations. The report suggested that 10 million tree seeds, extensive site-species matching assessments, and road construction would be required to gain access.
The cost would be prohibitive at $125m over the first five year, according to the report. It also described the estimated revenues as highly exaggerated and not evidence-based.
Jeffery Kitingan seems to be pushing for a steering commission to push the NCA through. Cynthia Ong, founder and CEO of Land Environment Animals People, a NGO involved in the Carbon Sovereign Sabah campaign told Al Jazeera that she believes this is true. We believe that the NCA has already been killed.
Pioneer Natural Capital, an Australian-based investment management firm that specializes in carbon capture projects, was founded by Jeremy Bayard.
Bayard stated that the carbon capture market is growing rapidly as more countries and industries sign up to go carbon neutrality.
But it is crucial to ensure the integrity and authenticity of the offset. How can investors be sure that the offsets are real and not resold multiple times? They often don’t, which is why carbon pricing is so inconsistent around the world.
Bayard stated that the more stringent the structure, the more appealing carbon credits are for legitimate investors. This is why carbon credits in countries such as Australia with bonafiable carbon trade regimes are more costly.
Reebok or Nike would buy shoes from a factory in Asia that uses child labor? He asks. No. You will always be stigmatized if you are accused of child labour. Legitimate companies won’t be involved in this project, especially since there are many credible options to offset their carbon.
Al Jazeera was informed by Sam Fankhauser (a professor of climate economics at the University of Oxford) that carbon offsets could be part of a solution to climate change, provided they are done correctly.
Fankhauser stated that the sector is not well-regulated and that too many bad deals or dubious deals are allowed to slip through the cracks. To restore credibility and integrity to the market, we need to tighten regulation. It is important to call out bad behavior until we have it. This can deter bad projects.