World News

Indonesia says forest-CO2 revenue rules months away

JAKARTA (Reuters) - Forest-carbon project developers will have to wait six months or more to learn what portion of revenue will be shared with the Indonesian government, a finance ministry official said on Thursday.

Earlier this month, Indonesia became the world’s first country to formally enact regulations governing a U.N.-backed scheme called reducing emissions from deforestation and degradation.

REDD allows developing countries to potentially raise billions of dollars in carbon credits in exchange for conserving forests.

How to share carbon credit revenue between REDD project developers and the Indonesian government has proved complicated and the outcome will be closely followed by many other developing nations looking to embrace REDD.

“We are still considering what kind of tax should be implemented on the carbon credits,” Noeroso L. Wahyudi, a senior research officer from the Finance Ministry.

“We are not sure how long it will take because it’s not just the Finance Ministry but also the Forestry Department that is writing the rules. It could be possible within six months or possibly a bit longer.”

Wahyudi said the government had not decided whether carbon credit revenue would be taxed as income or as a commodity, or if it would be taxed at all.

“We need to calculate the cost-benefit. That means how much can the government get compared to what infrastructure the government might need to provide to collect the tax and what is the social and economic benefit of the tax,” he said.

“We are also looking at non-taxation instruments, such as those we have for oil and gas. We are looking at licencing too,” he said. “There is no deadline for this project.”

REDD is likely to be included in a broader climate pact under negotiation that is meant to replace the Kyoto Protocol from 2013.

But many issues, such as funding arrangements, forest monitoring and verification standards, still need to be resolved.

The head of the National Council on Climate Change, Agus Purnomo, said: “I am aware that this issue is still being discussed by the Finance and Forestry Ministries but the NCCC is not involved in these discussions or negotiations.”

A forestry ministry spokesman did not return calls.