British-Liberia 'Forest-Saving' Scheme Exposes Perils of Carbon Credit Plans

Published on
by
The Guardian/UK

British-Liberia 'Forest-Saving' Scheme Exposes Perils of Carbon Credit Plans

British deal to preserve Liberia's forests 'could have bankrupted' impoverished West African nation

by
Felicity Carus

A British company's proposal to rent out one-fifth of Liberia's forests for carbon offsetting
could have bankrupted the impoverished West African state, according to
a former government adviser. The claim came as the Liberian government
yesterday announced an interim statement on its inquiry into alleged
"improprieties" surrounding the $2.2bn deal.

City of London police
are assisting the Liberian authorities with the investigation launched
by President Ellen Johnson Sirleaf into the deal. Police last month
arrested Mike Foster, a 53-year-old British businessman from Widnes,
Cheshire, on allegations of bribery after an investigation by
campaigning NGO Global Witness. He was later released without charge.

Under
the proposed deal seen by the Guardian, 400,000 hectares of Liberia's
forests would have been granted as a concession to Carbon Harvesting
Corporation (CHC), a company based in the north-west of England. CHC
changed its name in 2008 from Elton Gaming Limited, which manufactured
Kentucky Derby and Racing Dolphins fairground games.

Inquiry head
Negabalee Warner said in a statement in Liberian capital Monrovia
yesterday: "The president's communication to the committee suggested
that certain procedural requirements relative to the granting of such
[a] concession might not have been followed. For example, the proposal
was recommended to the inter-ministerial committee without any open
competitive bidding process.

"The committee has since started a
rigorous review of all procedures and circumstances surrounding the
awarding of the proposed carbon credit concession, including allegations
of bribery and other improprieties."

Liberia is a densely
forested country, a resource it could potentially use as a major source
of revenue as part of a UN scheme to pay poor countries to protect their
forests and reduce emissionsas the country recovers from decades of
civil war. Deforestation produces around 17% of global greenhouse gas
emissions and the UN's Redd (Reducing Emissions from Deforestation and
Degradation) scheme is viewed as an effective way to cut emissions by
buying carbon credits, or "offsets", from developing countries who keep
their forests standing.

Carbon Harvesting Corporation first
proposed a deal in 2008 that was later rejected by Liberia. The company
says it requested the government's Forest Development Authority (FDA)
to carry out an "initial survey report", which it said calculated that
423 tonnes of CO2 would be stored in each hectare of forest. This would
have been worth 162m carbon credits to Liberia, and roughly the total
C02 equivalent emitted by Venezuela.

But Thomas Downing, a
financial expert employed by Liberia's anti-corruption body the
Governance and Economic Management Assistance Programme (GEMAP), called
the figure "unreasonably high" and advised the FDA to reject it.

He
said the proposed contract was flawed to the extent that it had "no
commercial value" for Liberia and advised the Forest Development
Authority to reject it in 2008. He added that the estimate of emissions
credits from the 400,000 hectares appeared to have been exaggerated.

But
this year it emerged that a similar proposal is under consideration.
Last year Downing wrote a memo to the acting head of the FDA, Kederick
Johnson, in June 2009, saying: "I had understood that the Carbon
Harvesting proposal had been definitively rejected. Thus I was surprised
to hear that it still enjoyed some support. The proposal, if adopted,
would be quite damaging to the FDA. Indeed, it could cost [Liberia]
hundreds of millions of dollars. It's important that you and other
decision-makers appreciate its nature."

"If the project produced
less than 162 million tonnes of credits (and ... failure appears likely),
Carbon Harvesting could force the FDA to purchase the shortfall in the
open market. This could cost hundreds of millions of dollars."

Under
the contract, if Liberia's forests had failed to deliver the full
estimated number of carbon credits, based on a minimum target price of
around $13.5 per tonne of CO2, it could have been liable to make up the
difference to a maximum of $2.2bn. The west African country, which is
recovering from decades of civil war, had an estimated GDP last year of
$1.6bn, according to the IMF.

Moses Wogbeh, the managing
director of the FDA, said that while the review was ongoing, he was
unable to comment on the reasons why the agency continued negotiations
after warnings from GEMAP.

The review led by Warner is expected to be completed next month.

A
spokesman said Foster denied any intention to expose Liberia to
large-scale financial liabilities and declined to comment in response to
Warner's statement, adding that he still considered the deal as "live"
and hoped to resume negotiations with the Liberian government once the
inquiry there was complete.

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