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Brazil's Attorney General Office has taken legal action against a deal signed between an Irish company and an Amazon indigenous group for the sale of carbon credits from avoided deforestation.

A federal attorney in the Amazon Brazilian state of Rondonia filed a lawsuit, seen by Reuters Point Carbon, on December 11, which seeks to cancel a contract signed by Celestial Green Ventures LLC and the Awo Xo Hwara indigenous community.

As part of the deal, the Irish company agreed to pay the local group $13 million over 30 years for the rights to explore carbon credits in an area of 260,000 hectares of rainforest.

"It is a new, dangerous and informal carbon credits market, fully speculative, lacking previously stipulated rules," said federal attorney Oberdan Rabelo de Santana in his request for an injunction that would make the deal null.

The suit highlights risks present in this promising but still legally-fragile forest carbon market.

According to the World Bank, Brazil has 58 percent of the global potential to produce carbon credits by Reducing Emissions from Deforestation and Degradation (REDD).

And although there is still no legal framework in the country for such projects, several companies have clinched deals recently to explore that potential, many times with indigenous groups, which caught Brasilia's attention.



Brazil's Attorney General Office had given indications earlier this year that contracts between foreign companies and local indigenous communities would run the risk of being scraped.

According to Brazilian law, indigenous land belongs to the state, although their permanent use was transferred to the communities, so the nation should be a part of any agreements.

But this is the first time Brazil has actually sued entities involved in these types of deals.

"The state has the land ownership and seems that people involved in this contract ignored this aspect," says the suit, which also criticized the possibility of the Irish company exploring the local biodiversity.

On Thursday, Celestial said it would temporarily suspend all of its agreements with indigenous tribal communities until it had greater clarity on the concerns of the Brazilian authorities.

Celestial CEO Ciaran Kelly said he had not yet received any official correspondence regarding the agreement with Awo Xo Hwara, but said concerns about the agreements had come to the company's attention.

The company believes that REDD projects can bring many benefits to indigenous communities, he said.

Last month, another tribe in the Amazon decided to scrap a deal it had signed with the Irish company.

At that time, Kelly said the company had not been officially informed about the desistance, but added he would respect the tribe's decision.

"We believe strongly in the ability and the rights of Indigenous communities to determine their own future and consequently decide what the most suitable path for them to take is," Kelly said in an email to Reuters Point Carbon last month.

Brazil's Attorney General said at least 30 similar contracts in Brazil are under scrutiny.

Emission reductions from deforestation schemes are not eligible to earn credits under the international U.N. framework, and are not allowed in mandatory emissions trading schemes in Europe and New Zealand.

Currently, only Japan and the state of California have said they may accept REDD credits for compliance with their carbon reduction programs.

MONGABAY, December 17, 2012: Brazil's Attorney General Office has filed a lawsuit against an Irish company and an indigenous group for unlicensed sales of carbon credits generated from an reducing emissions from deforestation and degradation (REDD+) project, reports Reuters Point Carbon.

The lawsuit aims to cancel a contract signed between Celestial Green Ventures LLC and the Awo Xo Hwara indigenous community in the state of Rondonia. The deal would have paid the indigenous community $13 million over 30 years for the rights to develop a carbon conservation project across 260,000 hectares of rainforest.

The problem is Brazil does not yet have a legal framework for avoided deforestation projects. In indigenous territories, one major issue is the state owns the land, while tribes only have the right to permanent use of the land. Therefore the Brazilian government would need to be a part of any agreements, according to Reuters Point Carbon.

In March, Brazilian officials announced they would seek to annual 30 pending deals that would have given investors legal title to carbon credits.

It's not the first time Celestial Green Ventures has had problems with its REDD+ projects in Brazil. In March, the Brazilian government’s National Indian Foundation (FUNAI) said the company's contract with the the Munduruku Indians in the state of Para was "not valid". The deal — which would have allegedly provided the tribe with $120 million over 30 years — covered 20 million hectares of rainforest.

Celestial Green Ventures last week said it would hold off on signing new agreements with indigenous communities "until it had greater clarity on the concerns of the Brazilian authorities," according to Reuters Point Carbon.

There is no global framework on REDD+. Credits generated from REDD+ projects are currently limited to voluntarily markets, although Japan and California have indicated they may allow REDD+ credits to count toward compliance under their frameworks.

Supporters of REDD+ say a well-designed mechanism could generate multiple co-benefits, while forcing important reforms in the forestry sector. Critics fear REDD+ could spur land grabs, undermine global carbon prices, and fail to reduce overall greenhouse gas emissions. Negotiations on a UN framework for REDD+ broke down earlier this month at climate talks in Doha.


Extpub | by Dr. Radut