NCA forest restoration a costly affair, unlikely to create revenue

KOTA KINABALU: A recent report states that carbon pricing and forest recovery projections spelled out by promoters of Sabah’s Nature Conservation Agreement (NCA) are highly inflated and not based on scientific evidence, and the project is unlikely to be certifiable to any internationally recognised carbon standard.

The “Technical and financial impediments to the viability of the Nature Conservation Agreement” report states that the factor of additionality, the defining concept of forest-based carbon offsetting, remains a major question mark in the NCA, suggesting that carbon from this project may not be saleable.

Carbon is only regarded as “additional” and therefore marketable if generated as a direct result of the project’s activities, over and above what would have happened had the project not taken place.

For the NCA to create additionality, the project would need to demonstrate that action taken will help the forest to absorb (sequester) additional carbon above and beyond what would have happened under existing protection and restoration obligations already in place in Sabah’s conservation areas.

The report, which focused on additionality requirements in forest-based carbon financing projects, said existing Totally Protected Areas (TPAs) in Sabah generally have high carbon stocks, averaging 165 tonnes per hectare in forests gazetted as parks and 110 tonnes per hectare in Class I forest reserves.

“It has been stated that the NCA will operate in up to two million hectares of pre-existing TPAs. This constitutes the entirety of Sabah’s current TPAs. The carbon stored in trees in preexisting TPAs would not meet additionality criteria and would not be saleable under the NCA.

“Carbon accumulation as a result of the natural regeneration of forests within existing TPAs, such as the recovery of previously logged forests without active restoration, would have occurred in the absence of the project. This is not additional and would also not be saleable through the NCA,” coauthors Professor David Burslem of the University of Aberdeen in the United Kingdom and Datuk Dr Glen Reynolds, director of the South East Asia Rainforest Research Partnership (SEARRP) said.

Burslem has conducted numerous research projects in Sabah since the mid-1990s, often in partnership with the Sabah Forestry Department and Yayasan Sabah, and his work includes a 20-year Danum Valleybased study on carbon recovery rates in logged-over and restored rainforests.

Reynolds has worked in the state for over two decades, has a PhD in forest restoration from Imperial College and, through SEARRP, and has led and collaborated on many climate change, carbon financing and forest recovery research programmes in Sabah and the wider region.

The report states that the only feasible route for the NCA to achieve additionality within TPAs would be through forest restoration, namely increasing the forest’s capacity to absorb carbon over and above quantities that would have accumulated through natural regeneration.

However, achieving additionality through the active restoration of degraded areas within pre-existing TPAs is not standard practice and may not meet additionality criteria.

The report also questioned the scale of restoration proposed under the NCA – restoring at least 50,000 hectares of degraded forest within two years (the NCA’s performance target) is an effort that has never been achieved in the tropics.

Furthermore, even if restoration of 50,000 hectares was achieved it would lose money, because under the terms of the NCA, the Sabah Government would have to bear restoration costs which could total over RM600 million during the first five years of the project alone, while generating carbon revenues of only RM40 million over the same period (based on current carbon prices).

“It is highly unlikely that the NCA could generate sufficient saleable carbon to meet the costs of restoration.

There is no reasonable prospect of the project generating any additional revenue for the state for several decades.

“Revenues projected under the NCA are based on highly unrealistic forest recovery rates and inflated carbon pricing assumptions,” the authors said.

“The prices in voluntary markets where forest-based carbon offsets can be sold averaged US$5 per tonne in 2021.

The figure of US$50 per tonne, as quoted by proponents of the NCA, is only available in compliance markets and not applicable to forest-based programmes such as the NCA.”

Sabah Deputy Chief Minister Datuk Dr Jeffrey Kitingan who has championed the controversial 100-year NCA claims that the project could generate RM3.2 billion to 5.6 billion a year for Sabah.

The business case for the NCA has not been shared with the public.

It has been stated that the NCA will operate in up to two million hectares of pre-existing TPAs. This constitutes the entirety of Sabah’s current TPAs. The carbon stored in trees in pre-existing TPAs would not meet additionality criteria and would not be saleable under the NCA.

Professor David Burslem and Datuk Dr Glen Reynolds