Sabah has been abuzz with cashing in on carbon credit sales.
Word is that it is going to earn millions, if not billions, of ringgit by just “throwing in” its totally protected forest reserves to sell carbon credits.
Sabah government signed a 100-year Nature Conservation Agreement (NCA) with little- known Singapore-based Hoch Standard Pte Ltd to not only trade in carbon, but also other non-carbon and natural capital covering 2,000,000ha of the state’s forest reserves.
Under the deal, the state government is set to earn about 70% of the revenue while Hoch Standard gets the rest.
Carbon trading involves the buying and selling of credits that allow companies or others to emit a particular amount of carbon dioxide.
The hope is that this market- based system will lead to an overall reduction of emissions by 2050.
The idea to monetise Sabah’s huge forest cover sounds good on paper but the deal spearheaded by Sabah Deputy Chief Minister Datuk Seri Dr Jeffrey Kitingan is controversial.
Native groups and environmental non-governmental organisations fear Sabah may be handing over rights to carbon and non-carbon capital to a foreign company for a century.
In addition, the state government has not made public the forest reserve areas identified for the NCA.
The groups feel it is an unpre- cedented deal in terms of area size and the duration is just too long when most deals across the world are about 30 years.
The deal needs to be vetted, they said, for its real value including precious resources like water catchments, undiscovered valuable medicinal plants and herbs within the forest reserves.
Kitingan cuts a lone figure in defending the deal as there is a general silence among his colleagues in the government.
In many recent interviews, he hinted that some people were still stuck to the old ways of exploiting the forests.
For many ordinary Sabah folk, the issue boils down to who gets the deal that promises lucrative returns.
But environmentalists have made it clear that there is no guarantee that Sabah’s forest reserves will provide high returns in carbon credit sales as it has to involve additional benefits like forest restoration.
Sabah government has not made public the forest reserve areas identified for the NCA. — Filepic
University of Aberdeen Prof David Burslem and South-East Asia Rainforest Research Partnership (SEARRP) director Datuk Dr Glen Reynolds cautioned that the state would need to bear forest restoration costs to generate possible carbon sales.
In addition, it was said the figures promoted in the Sabah NCA deal were 10 times the real market price for the kind of carbon project proposed.
“This is why the many carbon projects around the world are nowhere making the billions being claimed as possible for Sabah,” said Reynolds.
He said forest-based carbon projects, such as the NCA, must be able to show that the project activities would be directly responsible for storing carbon.
“It’s not clear to me how the NCA will be able to do this and if it can’t, then the project won’t be certifiable and won’t generate carbon sales,” he said.
The time has come for Sabah to look at its potential to use carbon credits.
Sabah climate advisor Datuk Darrel Webber believes that the state has green credentials to leverage its carbon credits to attract green economy-type businesses.
He said Sabah had a history of focusing on export commodities and selling them almost as they were.
As such, the multiplier effect of value adding, or downstreaming of commodities, was hardly ever realised.
Selling all of the carbon credits to companies overseas may not maximise benefits to Sabah, as it will be treated as a “commodity” with nothing that creates high-value jobs downstream.
“Sabah can set a sustainable path towards capitalising its green credentials that can attract green industries,” said Webber, who believes Sabah’s potential is enormous as it is a state known internationally for its focus on green conservation.
He said the state could market itself as a carbon-neutral or low-carbon tourism destination, which would potentially give it a competitive edge and diversify its tourist base.
He also believes that as climate change policies gain momentum worldwide, Sabah can position its palm oil sector as a low-carbon commodity.
“By utilising carbon credits innovatively, Sabah-sourced palm oil could gain an advantage in premium European and US markets,” Webber explained.
Many global companies, he said, were turning to carbon credits to address their carbon emissions in their transition to achieve net-zero operations.
For Sabah, the first crucial step lies with policymakers.
They must decide whether to perpetuate the status quo of the old strategies by selling commodities with zero value addition or take a calculated step that could redefine Sabah’s economic direction for generations to come.
