New carbon offset laws in the global South facilitate more corporate land grabs

A new report released today by Milieudefensie / Friends of the Earth Netherlands warns that corporations with long track records of forest destruction and community rights violations stand to profit from carbon market laws that are being developed in Colombia, Indonesia and Malaysia. In Liberia, the report reveals a legislative process that for years has been driven by foreign agencies’ carbon trading agendas rather than the needs of forest-dependent communities. These carbon market laws risk undermining hard-won advances in the recognition of Indigenous Peoples’ rights and community control over the customary lands they depend on.

The report takes a first glance at legal changes underway to set up or expand carbon markets in four countries in the global South. The research, conducted in collaboration with Friends of the Earth Colombia (Censat Agua Viva), Indonesia (WALHI), Liberia (SDI) and Malaysia (SAM), identifies a number of worrying trends:

• In Colombia, extractivist companies have been able to substantially reduce their carbon tax payments on fossil fuel use by buying carbon credits, depriving the state of tax revenue. This way, for example, the Colombian subsidiary of Swiss mining corporation Glencore reduced its carbon tax payments by two-thirds. At the same time, the research exposes how community and Indigenous Peoples’ rights are referenced merely in a non-binding collection of existing laws – and have been violated in several existing forest carbon projects.
  
  
• In Indonesia, changes to forestry laws allow companies to use existing logging and plantation concessions to generate carbon credits. The lifting of a moratorium on new forest carbon offset projects which has been in place since 2021, combined with the government’s advances in operationalizing a national carbon market, will likely exacerbate land conflicts and expand corporate control over customary lands.
  
  
• In Malaysia, both state and federal governments are advancing carbon market legislation. The state government of Sarawak has created a “Forest Carbon Activity” license which grants timber corporations the rights to trade the carbon stored within forests. Communities in Sarawak are already facing infringement of their customary land by pilot projects under these licenses, such as the Marudi Forest Conservation and Restoration project, operated by SaraCarbon, a subsidiary of the notorious logging company Samling.
  
  
• In Liberia, intergovernmental agencies like the United Nations Development Programme (UNDP) have shaped emerging climate and carbon market regulations, raising the question of whose interests have taken priority. Even though no overarching climate or carbon markets laws exist yet, the government has already entered into two agreements that open the door to the sale of carbon credits from Liberia’s forests. Both agreements were signed without prior consultation of the communities holding the customary land rights and whose way of life stand to be affected by these projects.

“Liberia is home to the largest forest in West Africa, which can help fight climate change,” says Jonathan W. Yiah of Liberia’s Sustainable Development Institute. “We should prioritize funding that benefits Liberia and local communities, rather than supporting carbon credit regulations and agreements that primarily advantage wealthier nations. It's crucial to protect Liberia's forests, not at its expense, but to contribute to the global community.”

Johana Paola Peña Gómez of Colombia’s Censat Agua Viva adds: “What we need are not compensation mechanisms that make up for pollution, but policies that transform the economic, energy and extractive model. It is urgent to stop seeing climate as a business opportunity and start prioritizing climate justice, the rights of communities and the defence of life.”

The research shows how legislative changes, driven by international organizations such as the World Bank, UNDP, USAID and The Nature Conservancy, allow extractive industries, particularly logging and mining, to benefit from ‘scaled-up’ carbon markets. Communities, meanwhile, risk facing empty promises of ‘fair benefits’, a substantial loss of autonomy over customary lands and restrictions imposed on how they use their territories.

“These new carbon laws show that carbon offsets ultimately benefit the same companies that are to blame for the climate crisis and the destruction of rainforests, rather than the Indigenous Peoples and local communities that protect these forests,” says Danielle van Oijen of Milieudefensie.

Carbon offsetting is a false solution that does not reduce CO2 emissions. It fosters climate colonialism by violating territorial rights of Indigenous and rural communities in the global South. Governments must abandon carbon offsetting and instead promote community-based land management while regulating corporations and the financial sector to achieve genuine emission reductions at source.

Relevant information

• The full report can be found here. 
• Read more about our factsheet on False Solutions and the petition that was recently launched by SAM (FOE Malaysia) against the Marudi Forest Conservation And Restoration Project.