Wednesday, November 26, 2008

The Carbon Credits Gold Rush as it pertains to Sri Lanka

Currently there are nearly 500 projects in the planning stage to make use of carbon credits available for planting of vegetation, which will suck carbon dioxide from the atmosphere and clean the air polluted by smoke billowing industries. This is a latter day gold-rush where the pitfalls are unpredictable.

Needless to say once the availability of these credits became known that potential investors pounced on the idea of its merits to make money!

Sri Lanka’s recent history is replete with projects of one sort or another to take advantage of the current craze or trend, but none of the projects appear to have succeeded either for its initial purpose or subsequently in any way for the country’s development. Just to quote an example, the 500 acres each leased to private companies in the Anuradhapura District in the 1960s to grow food crops for local and export in a large scale using the latest methods failed. All that happened were that all the forests were cleared, the trees cut and bare land remained, only to be abandoned once the first crop failed and losses were incurred in the agricultural project. Some of this land is still available for use after all these years.

The place most of the current projects are looking at due to the availability of large tracts of land is the Moneragala District. Both the state and temples own extents of land and there are about 100,000 acres that can be potentially used for these projects. At this stage not one body has been allocated land.

In the end there are various hurdles, most importantly cabinet approval and subsequent inter ministerial approval before any land is identified and allocated. It is a complex process made more difficult by a government that does not appear too keen to be seen to lease state land to private organizations for fear of political backlash, even though this land is currently lying fallow with no prospect of being developed. Most of this land is also a relic of the past attempts at planting, where forests were cleared and abandoned, by well meaning but foolish private interests who have no knowledge of the realities of agriculture, and the hazards that are faced.

In the present context basic rules have to be adopted such as elephant corridors to be protected, pockets of forest land with trees to be left as is, as well as water sources preserved and sometimes restored before permission will be granted for the balance to be leased for the project in question.
There are additional problems, as the trees are owned by the forest department, which is part of the Environment Ministry, the land is part of the Ministry of Lands or various temples. The Buddhasasana Ministry has the final say on how the temple lands can be leased. The project itself needs to show that there would be some direct benefit to the local community in terms of employment and rural upliftment. Finally in order to pass muster, it may have to be leased via another ministry to whom the annual lease payment per hectare should be made in line with the objectives of that ministry. This makes it very difficult for an initial project to be passed without amendments to take account of a multitude of interests and they are all an added cost to the project, compromising its initial viability.

In my opinion, the government should set aside a division under the purview of the President to look at all the project proposals along with the land that they have identified as being suitable for their particular projects. Then a fair assessment on the same criteria can be made for these carbon credit projects.

All the land available can thus be allocated with some upper limit per project, as it is most impractical for any organization to cultivate more than 2000 hectares each with all the will in the world. Most of these people not being farmers do not understand how long it takes just to plant 10 acres in Sri Lanka with the available labor and technology as well as climate and planting conditions. The lease terms should also be fair and enforced tightly with a longer term than the proposed 35year leases being contemplated.

In my opinion, the feasibility of the project without carbon credits should be assessed and only treat carbon credits as icing on the cake, because it is not a certain thing that these credits will be available as assumed as sometimes the tough conditions applying to the credits may not be met and the project abandoned in mid stream, which will be inevitable for at least half the projects that finally obtain approval.

For example, if one plants Rubber, then due to the vagaries of the prices this alone may or may not be profitable. Instead if the trees are spaced a little more, and Gliricidia is also interplanted in the same property, this can be used, for animal feed and the wood for a Dendro Power plant that could supply power to the National Grid. Therefore a mono crop or single product such as Jetropha may not be sufficient. Bear in mind the crops that the state permits, as Teak cultivation for wood may not get approval because elephants could ravage the crop, while also being non native and destructive.

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