Cambodia's first large-scale private-sector sale of carbon credits was finalised yesterday, with conservationists predicting that it could pave the way for more public-private partnerships, making millions of dollars of funding available for local carbon-based initiatives.
US entertainment giant Walt Disney Company has officially purchased $2.6 million in carbon credits from a climate change mitigation project in Keo Seima Wildlife Sanctuary, which covers 300,000 hectares in Mondulkiri province, in a bid to offset its global footprint.
The project, under the UN-backed Reducing Emissions from Deforestation and Degradation program (REDD+), is projected to avoid 14 million metric tonnes of carbon dioxide equivalent emissions over the first 10-year period between 2010 and 2019.
Ross Sinclair, country program manager for Wildlife Conservation Society (WCS), the US-based conservation organisation that brokered the deal, said the sale marked a turning point for conservation funding in Cambodia and that more private-sector investment would likely follow.
“We believe that more interest from the private sector will follow, but maybe on a smaller scale as the investment has to prove that it has the proper environmental safeguards in place,” he said.
While he said that there is currently little appetite for carbon credits becoming a tradable commodity, more Western corporations were looking to offset their carbon footprint.
“The days of trading carbon are gone, but that is not necessarily a bad thing because companies are still looking for ways to make positive environmental impacts,” he said.
Funds from the $2.6 million sale are earmarked to help the government protect the Keo Seima Wildlife Sanctuary and will be handled through the Ministry of Environment.
“The beauty of this scheme is that it is subject to performance-based payments with very strict targets to meet before funds are distributed,” he said, adding that this fits in with Disney’s corporate governance policy.
While carbon credits have long been seen as a way to engage the private sector into adopting sustainable projects, it has been difficult to pitch the “voluntary” market in which the credits exist – a market with plenty of supply and little demand.
However, Ana Aires Carpinteiro, a spokesperson for sustainable energy company Nexus Carbon for Development, said carbon credit initiatives provide for sustainable financing that can offset traditional developmental aid.
“Carbon credits are really about having an additional source of funding that complements socially sustainable initiatives,” she said, adding that companies in Cambodia have already used them to fund clean water projects and a low-carbon emitting cook stove initiative.
She added that carbon financing, by necessity, brings corporate marketing practices into projects to make them viable. The private-sector push into the market, she said, was based on corporations looking for ways to offset the carbon emissions that they are unable to stop in their home countries.
Marcus Hardtke, the Southeast Asia coordinator for German conservation group ARA, however, doubted the effectiveness of any large-scale private-sector carbon investment in Cambodia.
“The Disney funding cannot be interpreted as a success for REDD+ in Cambodia,” he said.
“It is rather regular conservation funding pitched under a currently fashionable buzzword. For Disney, this kind of funding is part of the company’s marketing and corporate identity.”
With that, he added that it would not matter how many millions were poured into carbon credits until there was a systematic overhaul and the government finally places conservation as a top priority.
“Many millions have been pumped into conservation in Cambodia, with rather limited results,” Hardtke said.
“It’s a question of good governance and a responsible government policy.”
He suggested that a better system for REDD+ and carbon credits would be to establish a trust fund with a clear and transparent management structure that allocates resources based on tangible results.
US Ambassador to Cambodia William Heidt, who presided over the signing ceremony for the $2.6 million deal, said the public-private partnership with Disney would attract more private-sector funding into forest preservation. However, he said the agreement would need to produce results that show a genuine reduction in the carbon footprint.
“This is a very nice model for Cambodia and the first for an internationally credible project,” he said. “It will be easier to get funding for a second project, but they all have to succeed, and the carbon reduction has to be real.”
Nevertheless, Heidt said that the deal marked a critical turning point for carbon credit initiatives that adds additional sources of funding to donor projects.
“Private-sector money flowing into forest preservation – you have to love that,” he added.