Indonesia's President Susilo Bambang Yudhoyono inked into law a two-year moratorium on new permits to clear primary forests, as part of a $1 billion climate deal with Norway, a presidential adviser on climate change said on Thursday.
The moratorium ordered government institutions to freeze issuing new permits to log or convert primary forests and peatlands — a move that could slow the expansion of palm oil, timber and mining firms in Southeast Asia's biggest economy.
"We mean business when we say we would like to reform our forest and peatland management. There will be no new permits on 64 million hectares (158 million acres)," Agus Purnomo, presidential adviser on climate change, told Reuters Television.
"We mean business in the sense that we are continuing to grow our economy, because we allocate 35 million hectares of degraded forest for agriculture, mining and other development uses," he said in an interview.
The moratorium was due to start on January 1 but has been delayed because of wrangling between government ministries over how much forest to include, a symbol of the long-running tension between a nationalistic business old guard and more internationally minded reformers in the government.
The dispute shows how difficult it will be for Indonesia to reach a target of slashing emissions by at least 26 percent by 2020 while still spurring economic growth, as the country earns billions each year from cutting down forests.
"It's a stepping stone toward fixing long-standing problems of land conflict, forest governance and other issues," said Dharsono Hartono, whose firm is developing a project to protect a large area of carbon-rich peat swamp forest in Central Kalimantan.
The details of the final draft will be scrutinized by plantation firms, green groups and Norway, which has pledged $1 billion if Indonesia can reduce greenhouse gas emissions from deforestation. Norway's environment ministry was not immediately available for comment.
Its implementation will also be a test of bilateral climate deals, after the inability of nations to agree a concrete pact to limit global greenhouse gas emissions at U.N. talks so far.
Billion Not Enough
Plantation and mining firms opposed the moratorium, which could slow the land expansion of firms such as Astra Agro Lestari and delay coal and mining projects worth $14 billion by firms such as BHP Billiton.
The details of the moratorium have not been made public yet, but a previous draft seen by Reuters said it would exempt the extension of old permits, projects given permits in principle by the forestry ministry, and issuance of permits to log secondary non-peatland forests or convert degraded land.
Andreas Prasetiya, head of investor relations at Gozco Plantations, said the palm oil firm had permits for 70,000 hectares out of a total 124,000 hectares of land, but the moratorium could affect its land in a greenfield area in west Kalimantan on Borneo island.
"I don't see the benefits of it just yet. We are receiving a $1 billion contribution from the Norwegian government ... two or three years ago maybe it seemed like big money, but with crude palm oil prices now, $1 billion doesn't seem like big money," he told Reuters.
"They say if your area is affected with the moratorium, they will give you another replacement area — come on, let's be realistic. Everybody is competing for land — who is going give up their land?"
The forestry ministry has defined primary forest as forest that has grown naturally for hundreds of years, of which there is estimated to be around 44 million hectares in the sprawling tropical archipelago.
The draft version also exempted projects to develop energy supplies such as geothermal power, as well a huge food plantation project in the lushly forested Papua province, since both energy and food security are seen as critical by Yudhoyono.
Forests soak up large amounts of carbon dioxide, the main greenhouse gas blamed by scientists for causing global warming. Cutting down forests for timber or clearing for agriculture releases large amounts of CO2, particularly from peat forests.