KOTA KINABALU, Nov 11 — The state government acknowledged the risks involved in the controversial carbon trading deal, or Nature Conservation Agreement (NCA), involving two million hectares of Sabah’s forests but said that the advantages would also be highly beneficial.
State chief conservator of forests Datuk Frederick Kugan said that the deal had yet to be finalised due to outstanding matters but said it would be cautious when it comes to developing the best mechanism and terms to protect the state.
“By virtue of being a frontrunner, the state government acknowledges that there is always the element of risk. However, the state government envisions great benefits from being a frontrunner in an era where the world is rushing towards a low-carbon future.
“The state will try its utmost to mitigate the risks but will not let the people down by shying away from being a frontrunner. We invite all stakeholders to engage and evaluate the government’s performance in relation to the implementation of the NCA. An appropriate mechanism for doing so will be developed,” he said in a statement here tonight.
He said Sabah has been a frontrunner in cutting edge solutions for the conservation of its forests and natural resources, having the first Forest Stewardship Council (FSC) certified in Deramakot Forest Reserve since 1997.
In finalising the current deal, Kugan said that there were nine outstanding matters of importance that must be resolved before the state can go ahead, including the land size and area, native customary rights and ownership, nature conservation management plan, the pricing mechanism, and others.
As of yet, the NCA is not yet complete or binding.
A “provisional framework agreement” was signed with Hoch Standard Pte Ltd, a private Singaporean company on October 30 that would market the state’s carbon through financial networks that are capable of funding and realising the objectives of the NCA.
“Addendum to the framework agreement which specifies that an initial area of 600,000 hectares is to be identified as a pilot scheme first. Only upon the success of that pilot scheme will the state government consider approving such further areas as it deems appropriate — up to a potential total area of two million hectares,” he said.
“Pre-existing native customary rights of ownership have previously attached to certain Totally Protected Areas (TPAs). As these rights belong to native communities and not the state, consent from each respective native community is required before these rights are signed away through the NCA.”
He also outlined the outstanding factors which have yet to be determined, among them carbon pricing and price discovery mechanisms agreeable to the state, independent oversight of the project and how to ensure the revenue gained from the state’s natural capital benefits meets the intended goals in relation to 17 United Nations Sustainable Development Goals.
“Lastly, a satisfactory due diligence report on and confirmation of the truth and reliability of Hoch Standard’s representations and capability,” he said.
The NCA will be placed under the purview of the Sabah Climate Change Committee (CAC) to oversee all climate change related projects since natural capital by definition, requires cross-sectoral, multi-stakeholder coordination.
Kugan said that the focus of the NCA will be on TPA forests, which are areas already locked in for conservation and protection under various state laws and international treaties.
“As such, these areas are under no threat from any mining, logging or industrial agriculture, contrary to the allegations made in the November 9, 2021 article by Mongabay.
“To be clear, the TPAs in question were not, are not and will never be in danger of commercial exploitation or deforestation,” he said.
The article referred to had first exposed the deal, taking Sabahans and conservation groups by surprise with the magnitude and novelty of the project.
The article stated that leaders in Sabah had signed on October 30 a deal to market carbon and other natural capital from more than two million hectares (4.9 million acres) of the state’s forests for at least the next 100 years; granting 30 per cent of the profits to Australian and Singaporean companies while 70 per cent remained with the state.
It also pointed out that communities were not informed of the deal, in contradiction to the free, prior and informed consent policy designated by the United Nations Declaration on the Rights of Indigenous Peoples of which Malaysia is a signatory.