Plantations, poverty and power - Critical Information Collective

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25 Investment in plantations in the South could be set to increase. In March 2008, more than 100 potential investors in plantations took part in the “Timberland Investing Latin America Summit” in Sao Paulo, Brazil. According to a recent survey of US pension funds and university endowments, more than US$8 billion is available to be invested worldwide in forest and plantation operations. 91 Another type of investment institution investing in plantations are called “Timberlands Real Estate Investment Trusts (T-REIT)”. These have grown rapidly since 2000. The largest private plantation owner in the world is a T-REIT called Plum Creek. 92 TIMOs and T-REITs tend to invest in plantations rather than native forests. They have invested in plantations in Oceania, Chile, Brazil, South Africa and Uruguay. One US based-fund is establishing plantations in Tanzania. Another new development in plantations investment is the development of specialist country funds. In 2007, a Colombian plantation investment fund was launched, and a Japanese plantation fund may start up in 2008. 93 Sovereign Wealth Funds (SWFs) are yet another new source of funding which could start investing heavily in plantations. They certainly have enough money to do so. At the end of 2006, these funds held a total of US$2.5 trillion. This figure could grow to US$5 trillion by 2010 and US$12 trillion by 2015. In September 2007, a new SWF, China Investment Corporation was launched, with US$200 billion to invest. 94 So far, these new investment vehicles have had little influence on the way that pulp mills and plantations are established in the South, as the profiles of pulp projects in Section 2 of this report illustrate. Pulp mills and plantations have been established in the South, with more traditional sources of funding – and the help of generous subsidies from public institutions in Europe and the North. Carbon trading Carbon trading could provide a massive new subsidy for the pulp industry’s expansion in the South. Companies attempt to claim that the trees they are planting in the South are absorbing carbon from the atmosphere and thus helping to reduce climate change. Awkward facts, such as the impossibility of predicting what would have happened if the tree plantation had not been established, are brushed aside. Botnia, for example, is taking advantage of the Clean Development Mechanism (CDM) under the Kyoto Protocol of the United Nations Convention on Climate Change. The CDM allows companies to offset their greenhouse gas emissions by buying carbon credits from projects in the global South which are 91 Renata Mercante (2008) “Global investors look for timberland opportunities in Latin America”, RISI blog, 13 March 2008. http://risiinfo.com/blogs/Global-investors-look-for-timberland-opportunities-in-Latin-America.html 92 Dennis Neilson (2007) “Corporate Private Sector Dimensions in Planted Forest Investments”, Forestry Department Food and Agriculture Organization of the United Nations Planted Forests and Trees Working Paper Series, Working Paper FP/40E, October 2007. http://www.fao.org/forestry/site/10368/en/ 93 Dennis Neilson (2007) “Corporate Private Sector Dimensions in Planted Forest Investments”, Forestry Department Food and Agriculture Organization of the United Nations Planted Forests and Trees Working Paper Series, Working Paper FP/40E, October 2007. http://www.fao.org/forestry/site/10368/en/ 94 Dennis Neilson (2007) “Corporate Private Sector Dimensions in Planted Forest Investments”, Forestry Department Food and Agriculture Organization of the United Nations Planted Forests and Trees Working Paper Series, Working Paper FP/40E, October 2007. http://www.fao.org/forestry/site/10368/en/
26 supposed to reduce greenhouse gas emissions. Botnia hired two consulting firms: Carbosur from Uruguay, and Finland’s Pöyry to investigate the possibilities of gaining financing through the CDM. Botnia’s CDM project involves burning black liquor from the pulping process to generate electricity. The pulp mill generates more electricity than it needs, and sells surplus electricity to the public electricity network in Uruguay. Botnia thus claims to be reducing emissions in Uruguay. In addition to selling electricity, Botnia will sell carbon credits. But to qualify for the CDM, a project must be able to prove that it is “additional”. That is, it must prove that carbon credits are not being granted to a project that would have been carried out anyway – without carbon financing. In fact, Botnia’s CEO Erkki Varis said in 2005, “I expect the factory to be very competitive, with estimated production costs of about half of those of modern Finnish pulp factories.” 95 There is no evidence to show that Botnia would not have used waste products from the pulping process to produce electricity if it were not financed through the CDM. The CDM is simply a way for Botnia to increase its profits. Oji Paper hopes to get financing for its plantations in Laos through the Clean Development Mechanism. To do so, it will have to convince CDM’s board that it is planting on “degraded land” and that it is not clearing forest in order to establish its plantations. But researchers in Laos have documented that Oji Paper has in fact cleared forest, including large trees, to make way for its plantations. It is also planting on villagers’ land, currently being used for swidden agriculture or cattle grazing. 96 Oji Paper will also have to convince the CDM’s board that the project is “additional”. Since Oji Paper started planting trees in Laos in 2004, and the area of plantations has expanded each year since then, arguing that the project is “additional” and could only go ahead with carbon financing, would simply be a lie. 97 By selling carbon credits from plantation projects and pulp mills, the industry is not addressing climate change. Even if we assume that the project is genuinely additional and would not have taken place without CDM financing, the net result is not a reduction in emissions. The CDM is in fact making things worse by allowing emissions of greenhouse gases to continue. No more subsidies! The generous subsidies handed out to the pulp and paper industry raises the question of why industrial tree plantations are established in the South and for whose benefit. In 1993, Ricardo Carrere wrote that “The economic convenience of tree crops for Third World countries must be questioned. Despite the obvious contradiction in a world ruled by the neo-liberal ideology, tree plantations are being subsidised in a number of countries with support from a wide range of agencies, including the World Bank. “The question is why If investment in plantations were great business, subsidies would not be necessary. The answer lies in the industrialised countries’ wish to secure the supply of this raw material at the lowest 95 “Uruguay: The Botnia pulp mill project intends to profit from climate change”, World Rainforest Movement Bulletin no. 109, August 2006. http://www.wrm.org.uy/bulletin/109/Uruguay.html 96 Keith Barney (2007) “Power, Progress and Impoverishment: Plantations, Hydropower, Ecological Change and Community Transformation in Hinboun District, Lao PDR. A Field Report”, Probe International, York Centre for Asian Research, Centre for International Forestry Research, Rights and Resources Initiative, YCAR Paper No. 1, June 2007. http://www.probeinternational.org/catalog/pdfs/Power_Progress_and_Impoverishment_Barney.2007.pdf 97 Chris Lang (2006) “Laos: Indian and Japanese pulp giants move in”, World Rainforest Movement Bulletin no. 104, March 2006. http://chrislang.org/2006/03/25/laos-indian-and-japanese-pulp-giants-move-in/
Page 2 and 3: 1 Plantations, poverty and power: E
Page 4 and 5: 3 CONTENTS Introduction 1. Plantati
Page 6 and 7: 5 New investors have emerged recent
Page 8 and 9: 7 1. Plantations do not plant thems
Page 10 and 11: 9 plantations established on grassl
Page 12 and 13: 11 Nations Food and Agriculture Org
Page 14 and 15: 13 Another reason for the move to t
Page 16 and 17: 15 In his book, “Khor Jor Kor, Fo
Page 18 and 19: 17 Between 1991 and 2006, the numbe
Page 20 and 21: 19 are asking for”, notes WWF. 60
Page 22 and 23: 21 consume fewer goods. Less advert
Page 24 and 25: 23 credit crunch, unstable oil pric
Page 28 and 29: 27 possible price. Subsidies, linke
Page 30 and 31: 29 2. The anatomy of five pulp proj
Page 32 and 33: 31 However, while the Bank confirme
Page 34 and 35: 33 make way for its tree plantation
Page 36 and 37: 35 In April 2004, about 2,000 famil
Page 38 and 39: 37 Sappi, Swaziland: 50 years of in
Page 40 and 41: 39 after an assessment by the Soil
Page 42 and 43: 41 impact of the plantations on wat
Page 44 and 45: 43 Advance Agro, Thailand: Deforest
Page 46 and 47: 45 confiscation and liquidation of
Page 48 and 49: 47 management was facing a bankrupt
Page 50 and 51: 49 Indah Kiat, Asia Pulp and Paper,
Page 52 and 53: 51 company owners want profits to b
Page 54 and 55: 53 • US$4.5 billion owed by APP i
Page 56 and 57: 55 explained that “association wi
Page 58 and 59: 57 Indah Kiat faces a series of lan
Page 60 and 61: 59 logging. While the investigation
Page 62 and 63: 61 experimental areas and not from
Page 64 and 65: 63 Staples and Office Depot in the
Page 66 and 67: 65 “the exhaustive studies have c
Page 68 and 69: 67 CEDHA has also filed complaints
Page 70 and 71: 69 of converting grasslands to indu
Page 72 and 73: 71 3. Pulp Inc. Profiles of seven p
Page 74 and 75: 73 Thailand, a power plant for a Ne
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75 Management’s experts the possi
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77 A year after Aracruz’s third p
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79 In January 2003, Pöyry announce
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81 Bank in the early 1990s. Groome
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83 Pöyry’s role in the Baikal Pu
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85 Under carbon financing, Pöyry o
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87 Pöyry is working on second gene
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89 The Confederation of European Pa
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91 CEPI Eurokraft states that “it
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93 sectors need to reduce by 21% co
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95 The ADB’s report notes that th
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97 Nepal In Nepal, the target area
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99 loan for the second plantations
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101 International Finance Corporati
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103 •In December 2000, IFC approv
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105 firm’s activities. After his
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107 safeguards are in practice.
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109 Bank projects are approved by a
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111 •€80 million to Portucel to
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113 The Food and Agriculture Organi
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115 Nevertheless, Poore and Fries n
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117 failure to define industrial tr
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119 FAO’s guidelines recommend th
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121 Rosengren did not reply to my e
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123 Forest Stewardship Council: Mis
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125 body that rubber stamps operati
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127 Criterion 1.6, for example, sta
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129 fast wood plantations have take
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131 Principle 10.8 should prevent t
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133 By April 2004, FSC had, at last
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135 plantations, because it creates
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137 integrated set of common Princi
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139 for clearing areas of Atlantic
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141 Colombia were certified by SGS.
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143 The dissociation became necessa
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145 4. Future planned pulp mills As
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147 Planned pulp projects: 698 Comp
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149 UPM and Sveza Group Vologda Rus
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151 paper industry along ecological
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