Fund targets emissions cuts in peatlands conservation

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AMSTERDAM (Reuters) - Dutch company BioX Group and environment body Wetlands International launched a fund at a U.N climate meeting in Bali this week that aims to cut greenhouse gas emissions by investing in restoration of peatlands.

AMSTERDAM (Reuters) - Dutch company BioX Group and environment body Wetlands International launched a fund at a U.N climate meeting in Bali this week that aims to cut greenhouse gas emissions by investing in restoration of peatlands.

Peat is formed when trees, roots and leaves rot, and is a natural carbon store. When burned or drained to plant crops such as palm oil, peat releases large amounts of carbon dioxide (CO2).

By preventing cultivation and draining of peatlands, the projects that the fund supports will generate voluntary emission reductions (VERs), Edgare Kerkwijk, managing director of the BioX Group said on Thursday.

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The sale of the VERs will generate returns for investors while the remaining profits of the fund's operations will be invested in community development projects, he said.

BioX group has been developing renewable energy power plants in Europe run on palm oil products but has met opposition from environmental groups that said palm oil is not sustainable because it requires the burning of tropical forests to produce.

The company has said it worked only with Asian companies that could guarantee the sustainability of their palm products and one of its power plants gained the green light from the Dutch High Court in January.

"(Degraded) peatlands are one of the biggest contributors to C02 emissions in the world," Kerkwijk told Reuters, adding that about 11 percent of greenhouse gas emissions come from cultivated or drained peatlands.

He said BioX Group was trying to make the palm oil industry more sustainable by reducing further expansion into peatlands.

"The impact is so high on climate change that companies should avoid this type of expansion," he said.

The focus of the fund will initially be in Indonesia, where non-governmental organization Wetlands International has carried out peat swamp forest conservation and restoration projects.

The fund aims to restore and protect around 500,000 hectares (1.24 million acres) of these peat swamps by 2012.

Experts estimate Indonesia has 20 million hectares (50 million acres) of dense, black tropical peat swamps.

A 2006 Wetlands International report found Indonesia's peatlands emit 2 billion tonnes of CO2 a year, more than the annual greenhouse gas emissions from Japan or Germany.

LOW COSTS

Kerkwijk said conservation of tropical peat swamps presents one of the most cost-effective means to reduce carbon emissions.

"As long as you don't cultivate anything on it, you make sure there are no fires and that the water remains at a certain level the preservation costs per hectare are very low."

Under the Kyoto Protocol, developed nations can pay poor countries to cut emissions from activities such as the manufacture of refrigerants and fertilizers as well as capturing greenhouse gases from farm waste and rubbish dumps.

But emissions cuts from forest areas such as peatlands are not yet eligible for trade, because they were excluded from the Kyoto Protocol's first round which runs out in 2012.

A 190-nation U.N. climate meeting in Bali from Dec 3-14 is aiming to launch two years of formal negotiations meant to end with agreement on a broad new U.N. pact to fight global warming.

(Reporting by Catherine Hornby, editing by Anthony Barker)