Multi-billion dollar carbon trading deal under fire after report

4 Feb 2022

Quantum Commodity Intelligence - Malaysian lawmakers have pushed for the cancellation of a controversial carbon trading deal worth an estimated $80 billion following revelations made by Al-Jazeera this week, it emerged Friday.

The Nature Conservation Agreement (NCA) protects 2 million hectares of jungle in the Malaysian state of Sabah from logging for 100 years – a long time for a project reducing emissions from deforestation and forest degradation – against the sale of carbon credits.

Following a deal made at the end of last year, the NCA gives 30% of Sabah's revenue from offset sales to a company based in Singapore called Hoch Standard.

Al Jazeera published a critical report this week saying the agreement had been "hammered out in absolute secrecy and without credible due diligence, a tender process or public consultation", adding that Hoch Standard has "no obvious history in carbon trading."

The deal was first leaked by US environmental news site Mongabay in November, followed by whistleblower Chris Lang from REDD-Monitor in December.

Sabah's opposition leader, Seri Mohd Shafie Apda, has called for more transparency regarding the NCA and refuted claims the state assembly had given the NCA the green light.

"For the record, there was no proposal tabled by the government in the previous state assembly sitting over the deal," Shafie said Friday.

"This is a false statement which is an apparent attempt to confuse the people in Sabah and the international community as well," Shafie said.

In response, Sabah deputy chief minister Jeffrey Kitingan said the state expects to receive between MYR2.2-5.6 billion each from sales of carbon credits and other natural asset monetising deals.

According to the state's forestry authorities, the agreement would not allow the exploitation of Sabah's forests.

Around 25,000 Indigenous people live in forest reserves in Sabah, located on the northern portion of Borneo, with an undocumented number living on the fringes of reserves.