Professional Documents
Culture Documents
ii
Contents
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Democratic Republic of the Congo (DRC) 6
Guyana 6
Papua New Guinea (PNG) 7
Indonesia 7
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McKinsey’s bad influence on national plans to reduce
forest emissions from deforestation and degradation I
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a. Carbon stocks and flows in plantations 15
b. Unrealistic precision 15
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Plantations: root and branch confusion 16
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Can McKinsey add up? 19
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iii
Executive
summary
Rainforest degradation is a major
contributor to climate change, being
responsible for up to one fifth of global
emissions. If climate change is to
be tackled, the urgent prevention of
deforestation is essential.
Reducing Emissions from Deforestation and Degradation or REDD ¤ McKinsey’s advice does not, in any example studied by
schemes are intended to provide tropical forest nations with Greenpeace, lead to a cessation of deforestation or forest
financial incentives not to destroy or degrade their forests. The degradation. Often it defends destruction by industrial interests
concept of REDD has subsequently been expanded to also include on the erroneous grounds that it contributes to economic growth.
financial support for restoration, reforestation and afforestation, In DRC, for example, McKinsey legitimises a significant increase
making for an expanded mechanism widely known as REDD+. in industrial logging, with an increase of at least an additional 10
million hectares given as logging concessions.
Despite the world’s general failure to agree a deal on climate
change at the 15th Conference of Parties to the United Nations ¤ While McKinsey’s cost curve has been extremely influential in
Framework Convention on Climate Change at Copenhagen in government policy decisions, it has a number of fundamental
2009, donor countries nevertheless did pledge about $3.5 billion flaws. These include data deficiencies and dubious baseline
to kickstart REDD+. One year later more progress was made calculations, as well as basic mathematical errors and distortions
with an agreement to establish REDD+ at COP16 in Cancun (‘the within McKinsey’s carbon accounting method. Furthermore,
Cancun Agreement’). Meanwhile, around the world, rainforest McKinsey’s intellectual property rights on some of the data
nations have been endeavoring to become ready for REDD+ by underpinning its cost curve prevent proper scrutiny of its rationale.
engaging in national planning around how the scheme would be
domestically implemented. ¤ McKinsey’s approach provides an incentive to over-estimate
projected future levels of deforestation, allowing forest nations
McKinsey & Company is a giant, well-connected global consultancy to claim REDD+ funding for preventing destruction which was
firm which has been working to position itself as the market leader unlikely ever to have happened.
in REDD+ advice. According to McKinsey:
¤ McKinsey co-authored studies barely acknowledge governance
‘Our clients … look to us for honest, objective, thoughtful, and issues within rainforest nations, such as the sheer scale of
experienced advice.’1 monitoring, reporting and verification, capacity-building and
governance challenges . This casts further doubt on the value of
The McKinsey ‘Climate Desk’ has been very successful in becoming McKinsey advice.
known as a leading provider of these services. It has attracted
commissions to advise many forest nations on how to draw up national ¤ McKinsey-inspired plans not only consistently fail to address
plans for applying for REDD+ funding. It appears most probable that the major drivers of deforestation, such as mining and
the rainforest nations featured in this report are generally following logging, they actually reward the industries and interests
and implementing the advice provided by McKinsey. that cause it. For example, in the DRC study, the palm oil industry
stands to gain as much as 1bn for the ‘relocation’ of concessions
However, when rainforest countries employ McKinsey to apply its that have not even been awarded.
trademarked cost curve to their REDD+ prospects, few if any of the
resulting plans meet basic standards of accuracy, rigour, utility or ethical ¤ McKinsey promotes a methodology that effectively encourages
acceptability. If implemented in their current form, these plans could its client governments to pursue an industry-orientated
actually result in an increase of deforestation and carbon emissions. development path at whatever cost to wildlife. In Indonesia for
example, the forecast of continuing expansion of pulp and oil palm
This Greenpeace report presents case studies on McKinsey’s influence plantations is a major threat to biodiversity. McKinsey accepts that
on REDD+ plans for four forest nations – Papua New Guinea (PNG), the deforestation will shift to other, still largely forested, islands such as
Democratic Republic of Congo (DRC), Indonesia and Guyana. Our key parts of Kalimantan and especially Papua. Kalimantan is home to the
findings include that: endangered Bornean orangutan.
vi
As a matter of urgency:
¤ mnqlrhmahnknfhb`kb`qanm`bbntmshmf+
¤ sgdetkkÝm`mbh`k+rnbh`k`mcdmuhqnmldms`kbnrsr
associated with abatement options,
¤ sgdmnmb`qanmu`ktdnem`stq`kenqdrsr+
¤ etkkqdrodbsenqsgdr`edft`qcrhmbktcdchmsgd
Cancun agreement: protecting forest ecosystems
from conversion and degradation, and recognising
and implementing indigenous peoples and local
communities’ rights.
The story
of REDD+
Tropical forests are home to a staggering array of plant, animal and Two years of intense negotiations between 2007 and 2009 saw
human communities. While covering only about 10% of the total rainforest nations and potential donors fight to see their particular
terrestrial surface, they are home to considerably more than 60% of preferred blueprint for REDD adopted. As a result, there was a
all terrestrial and freshwater biodiversity.2 1.6 billion people depend significant expansion of the ground to be covered by REDD, as it
upon forests for their survival.3 They also play a vital role in stabilising moved from being a mechanism for forest protection to a tool for
global weather patterns and their degradation is a major contributor also promoting restoration, reforestation and afforestation, under
to climate change, being responsible for up to one fifth of global the new acronym of REDD+.
emissions.4 If climate change is to be tackled, therefore, the urgent
prevention of further deforestation is essential. In parallel, the World Bank continued to play a central role in
the development of REDD policy making and implementation
For this reason, and in the absence of an effective global treaty to through the Forest Carbon Partnership Facility (FCPF) and Forest
fight deforestation, many people began to see it as imperative that Investment Programme (FIP). The FCPF aims to prepare forest
reduction of emissions from deforestation and degradation of forests countries for participation in international carbon markets by
was included within the aims of the United Nations Framework supporting REDD readiness activities. It became operational in June
Convention on Climate Change (UNFCCC). In essence, REDD 2008. Thirteen countries (Argentina, Costa Rica, the Democratic
(Reducing Emissions from Deforestation and Degradation schemes) Republic of Congo, Ghana, Guyana, Indonesia, Kenya, Lao PDR,
contemplates that funding be made available for the developing Mexico, Nepal, Panama, the Republic of Congo and Tanzania) have
world to reduce emissions from deforestation and degradation so far submitted Readiness Preparation Proposals (R-PPs) for the
of forests. Later REDD+ emerged as a variant, with the plus sign FCPF, setting out potential REDD+ policies and activities, which
signifying the potential for funding flows for active enhancement of have been reviewed by ad hoc Technical Advisory Panels and
carbon stocks through programmes of reforestation or afforestation. the Participants Committee. The World Bank is conducting due
The publication of a joint proposal by Papua New Guinea and Costa diligence on these proposals with a view to entering into readiness
Rica at COP11 of the UNFCCC in 2005 proved to be the turning grant agreements of up to $3.6 million to assist these countries in
point for international interest in establishing a REDD scheme and a conducting the preparatory work they have proposed.7 The Forest
two year review into the practicalities was initiated. REDD was then Investment Program (FIP) is a targeted programme of the Strategic
formally incorporated within the climate Road Map agreed at COP13 Climate Fund (SCF), which is one of two funds within the framework
of the UNFCCC in Bali in 2007.6 of the Climate Investment Funds (CIF). The FIP supports developing
countries’ efforts to reduce deforestation and forest degradation
Complex political and methodological challenges meant that the (REDD). The following have been selected to be pilot countries for
issue had still not been resolved as countries began to negotiate the FIP: Brazil, Burkina Faso, Democratic Republic of Congo, Ghana,
the shape of a new global climate deal in the run up to the ill-fated Indonesia, Laos, Mexico and Peru.8
Copenhagen Conference of 2009.
As negotiations moved forward, pledges of funding from donor
Nonetheless, momentum for REDD was growing: reducing emissions countries grew in size, with $3.5 billion9 agreed at the UNFCCC COP15
from deforestation and degradation of forests was commonly at Copenhagen in 2009. In many cases it was unclear how much of this
described as the low hanging fruit of the UNFCCC negotiations. REDD money was additional and whether it would be disbursed bilaterally or
would aim to provide tropical forest nations with a financial incentive through multilateral institutions and processes. While less than the $25
not to destroy or degrade their forests. Rainforest countries saw billion which some estimated was required up to 201510 (or a minimum
REDD as a means of accessing some global financial value for their commitment of $10 billion over the next three years that some NGOs
standing forests, whilst rich countries saw it as a relatively cheap were calling for11), this was still a considerable amount of money,
and politically acceptable measure to address climate change. As the particularly for rainforest countries struggling with poverty alleviation
financial crisis hit and then deepened in 2008/9, it became a mantra and development needs. It was certainly enough money to attract the
that REDD offered supposed win/wins all round. attention of at least one international consultancy firm.
3
Enter
McKinsey
What is McKinsey
and who does it work for?
McKinsey has attained the position of market the world that will result in further business going
leader in REDD+ advice and forcefully advocates in the direction of The Firm.
its approach in the countries where it works.
According to journalist Clayton Hirst, McKinsey is: In the Democratic Republic of Congo (DRC)
McKinsey itself proposed as part of its output
‘…the ultimate old boys’ network. Its tentacles reach the inclusion of a list of key REDD+ measures
into the boardrooms of Britain’s biggest companies to be adopted.25 This element did not feature in
and snake through Westminster’s corridors of the terms of reference for the contract, but the
power…. The McKinsey mob just keeps growing. The resultant 14 programmes now form a key part of the
firm, of course, doesn’t use such crude terminology country’s Readiness Preparation Plan for REDD+.26
for its former partners; the “alumni network” is its In Indonesia, McKinsey advocated afforestation
preferred phrase. One source close to McKinsey right from its first presentation,27 and saw the
says: “The alumni are seen as ambassadors to the policy adopted by the National Council for Climate
McKinsey brand. The network isn’t openly exploited, Change.28 In the confidential proposal, ‘Institutional
but the firm maintains a database of members and capability building for low carbon growth’, prepared
holds an annual reception for the alumni.’22 by McKinsey for the Indonesian government there is
‘a heavy emphasis on coaching of local government
As one might expect, there is evidence of these officials, DNPI [Indonesian National Climate Change
business practices being applied in McKinsey’s Council] secondees and institutional partners’.29
work on REDD+. One individual involved in an
official capacity with a rainforest nation’s REDD+ According to one observer, McKinsey remained ‘highly
process has told Greenpeace on condition of influential’ within Papua New Guinea’s (PNG) Office
anonymity that McKinsey uses contacts in of Climate Change and Development (OCCD) as
one country as sales reps to help it get work in recently as November 2010, with questions raised
another, while boasting to potential developing at Technical Working Group meetings being ‘mostly
country clients of its capacity to connect them answered … by McKinsey representatives’.30 There is
with donors and taking full credit for funding even evidence that McKinsey may be responsible for
deals concluded (Guyana) or international mentoring staff in the recently established OCCD.31
influence attained (PNG) by its existing clients.23 The same observer notes that Sebastian Schienle, a
Once its foot is in the door, the company works McKinsey representative stationed permanently in
to maximise its influence. PNG, was even part of the PNG delegation in Cancun.
McKinsey states: ‘We take an overall, Yet at the same time, McKinsey plays down
independent, and fact-based view of a client’s responsibility for most of the documents on which
performance. We rely on facts because they it works. Despite extensive evidence for its having
provide clarity and align people. Facts are the played a major part in the studies considered in
global management language. We work with this briefing, it is invariably credited merely with
facts to provide credible recommendations.’24 providing data, analysis or technical support. That
The claim to strict objectivity is not reflected this is McKinsey’s decision is suggested by the
in McKinsey’s advice on REDD+ which is heavily comment in its DRC project proposal that it will not
reliant on a set of distinctly subjective policy publish a report under its own name, so as to ensure
preferences. Put simply, with McKinsey national ownership of the results.32 The exception
advice you don’t get dispassionate analysis of is the ‘Pathways to a low carbon economy’ report
transparent data so much as the advocacy of a for Brazil, notably less controversial than the other
particular – and literally patented – policy view of studies discussed here.33
6
REDD+: McKinsey’s
influence in key countries 34
Democratic One of the major problems with logging rates. The business as in December 2008. McKinsey
!"#$%&"$'()'7%.#)#8$'' the actual implementation of of deforestation and ‘facilitate The effect is to make it seem 30
95#)'(),5%1"6 PNG’s REDD+ programme. progress towards performance- times cheaper to displace a small
A financial plan for interim based payments for emissions farmer than to challenge the
¤ Almost no measures to funding requirements is being reduction’.70 Other funding for incursion of new plantations into
address the existing drivers developed.62 that period included $64.4 million natural forests.
of deforestation in Guyana. In from Australia and $30 million
fact logging would be allowed We have no information on from Germany for ‘Measures on Meanwhile, the logging industry
to increase by 20 times its who has paid for McKinsey’s Reporting and Verification’, work is declared off-limits. Discussing
current rate;54 work in PNG. towards a reference emission what it calls ‘sustainable
level and other preparation forest management’, the cost
¤ Use of REDD+ funding :+"'1/,%;")*$'/)' work.71 According to a 2009 curve report claims that: ‘The
to facilitate ‘higher value <+(,+'!,-()$".' source, the UK, Japan and Norway alternative – stopping logging
agricultural development’, have also promised funding for altogether – would have
including biofuel production in
</&="1'#1>/,#*"' capacity building of Measurement the same effect on emission
‘unique and fragile’ Savannah 9/5(,("$'(),5%1()?6 Reporting and Verification reductions [as sustainable
ecosystems and wildlife rich (MRV)72, REDD+ markets and forest management], but has
wetlands;55 ¤ Continuation of large-scale fund distribution.73 a much higher opportunity
commercial logging under a cost and would not allow
¤ Use of REDD+ funding to so-called reduced impact The Norwegian money was Indonesia to further develop
construct the Amaila Falls regime,63 yet a moratorium on paid direct to McKinsey and was its forest products industry.’81
Hydro-Electricity Project. new logging concessions not subject to a competitive McKinsey does not explain
A recent study suggests is explicitly rejected;64 tendering process as McKinsey the assumptions behind this
considerable impact on was already active in Indonesia statement, but its implication –
forests from clearance ¤ No measures to address in September 2009 when the that logging must continue and
through to building the plant mining, despite its role as a funding was agreed.74 that this will not compromise
and its access road: 750,000 major driver of deforestation; emission reductions – is central
tonnes(t) of biomass are to be Greenpeace has also seen to the proposals in the plan.
cleared from the dam site56 ¤ Major agricultural two McKinsey reports for
and the access route will intensification affecting the Indonesian government: !"#$%&"$'9&/9/$"1'()''
include 110km of a minimum subsistence farmers;65 Detailed project overview (Phase @)1/)"$(#'(),5%1"6
8m wide road cut through 3): Implementation support
primary forest.57 750,000t ¤ Afforestation and plantation for Central Kalimantan, from ¤ An additional 10 million
biomass is equivalent to 1.3Mt on pasture and other non- February 2010 and Detailed hectares of afforestation and
CO2 emissions.58 forest land, likely to impact on project overview (Phase 3): reforestation via plantations
areas with very high value to Institutional capacity building for with a lack of clarity as to
Papua New wildlife.66 low carbon growth. McKinsey whether industrial plantations
In 2010 Papua New Guinea respectively for capacity building. ¤ The payment of large sums
published three documents Indonesia is one of the initial of money, effectively
relating to its national climate UN-REDD Programme The cost curve for Indonesia compensation,83 to divert
change REDD+. Though McKinsey pilot countries and receives contains flawed assumptions, establishment of pulp and palm
is credited only with data direct support for its national which significantly bias the oil plantations from forested
and analysis for the first two programme.67 Indonesia has final outcome to protect the land when improvements to
documents, and not at all for the also been selected as a World interests of industrial forestry productivity could mean only
third, there is strong evidence Bank Forest Investment and agri-business. The cost of a marginal increase of new
for McKinsey being largely Programme (FIP) pilot country. reducing emission from limiting land area would be needed to
responsible for all three.59 At the Copenhagen conference plantation expansion into natural meet government targets for
in December 2009, President forests is set as high as possible, production expansion;84
PNG is one of the nine UN-REDD Yudhoyono pledged Indonesia to by assuming that there are no
Programme pilot countries reduce overall emissions by 26% alternative locations possible ¥ Effectively subsidising
and receives direct support by 2020 using domestic funding – nearly $30/tonne CO2e or increased greenhouse gas
for its national programme, only, while aiming to increase $20,000/ha.77,78 In contrast, emissions by proposing that
which ‘aims at initiating the that figure to 41% with help of the forecast costs of reducing the definition of ‘forest’ will
quick start phase of readiness international funding.68 emissions from smallholder be more than 30% canopy
support for REDD+’.60 In agriculture are minimised to cover. According to the
addition to funding of $6.4 As of May 2010 (the most recent include only the monetised joint Indonesia National
million from UN agencies, PNG figures available), Indonesia had value for production79 – a figure Development Planning
has received or been promised received or been pledged FCPF of $1/tonne CO2e80– which Agency–UN-REDD draft
funding from Australia (up to $3 and UN-REDD funding totalling clearly recognises neither the National REDD+ Strategy85,
million), Japan (¥700 million) $9.2 million (the UN-REDD transaction costs nor, more 10% canopy cover (the FAO
and the EU (unspecified).61 contribution of $5.6 million being importantly, the wider social, threshold for definition of
No information is available on funded by Norway69), and $80 environmental and cultural forests) would be classified as
any donor commitments for million from FIP to address drivers impacts of such an intervention. ‘high carbon’.
8
McKINSEY KE Y COUNTRY
C A S E S T UDIE S
COPENHAGEN DONOR
& REDD+
McKinsey’s bad influence on
C OP 1 5 C O U N T R IE S
GERMANY
McK
GUYANA BRITAIN
EUROPEAN UNION
McK
NORWAY
DEMOCRATIC
REPUBLIC
OF THE CONGO
AUSTRALIA
McK JAPAN
INDONESIA
LUXEMBOURG
© Daniel Beltrá / Greenpeace
FRANCE
PAPUA NEW
GUINEA USA
L EG E N D REDD
UN REDD+
MONE Y KE Y COUNTRY C A NC U N P O T E N T I AL
PLEDGED C A S E S T UDIE S C OP 1 6 O U T C O ME S
McK
S OC I A L IMPA C T S :
MCKINSE Y RECOMMENDS
R E S E T T L I N G S U B S I S T EN C E
FARMERS
McK
DEMOCRATIC
REPUBLIC
OF THE CONGO
© Jiro Ose/Greenpeace
McK
DEFORE S TAT ION:
MCKINSE Y RECOMMENDS
E XPANDING THE LOGGING
INDUSTRY
INDONESIA
McK
© John Novis / Greenpeace
McK McK
PAPUA NEW
GUINEA
P L A N TAT I O N S:
MCKINSE Y RECOMMENDS
E X P A N D I N G M O N O C U LT U R E
FARMING
10
the ranking of carbon abatement measures that ecosystems, wrecking livelihoods and
releasing huge amounts of greenhouse
[McKinsey] suggest.’
gases into the atmosphere. McKinsey’s
bad influence on REDD+ plans is likely
to increase the devastating impacts
Paul Ekins, Fabian Kesicki, Andrew Z.P. Smith Marginal Abatement in Indonesia, pictured, and other
rainforest nations.
Cost Curves: a call for caution, Energy Institute, April 2011 © Chedar Anderson / Greenpeace
11
The McKinsey
MAC curve: an
optical illusion
McKinsey has risen to prominence within the assumptions relied upon in its calculations.86 Due to
climate change and REDD+ spheres through its the company’s stringent application of intellectual
global greenhouse gas abatement cost curve, property rights on its data, the outside world has
which the company conceived in 2007 and no way of knowing how McKinsey arrives at the
updated in 2009. The so-called ‘McKinsey curve’ different cost estimates attributed to various
has been extremely influential in setting the terms abatement measures.87 The potential victims of
of the debate for international carbon reduction a REDD+ policy which displaces local farming will
regimes and other marginal abatement cost (MAC) thus never have access to the reasoning behind
curves inspired by the McKinsey model have since why this policy was deemed cheap in the first place,
become hugely influential in carbon abatement let alone considered acceptable.
policy. They are a simple way of ordering and
presenting different options for reducing emissions The use of projected emissions raises another set of
and typically look like a succession of rising steps, thorny issues. McKinsey cost curves typically work
each one a different potential measure, its height on assumptions about what a country’s emissions
representing its cost, and its width representing will be in 2020 or 2030, so it is necessary to
the amount of carbon abatement it could deliver. calculate, based on current trends, what emissions
are likely to be at that date before the abatement
The cost curve approach to carbon reduction potential and the associated compensation for
has many immediate attractions, not least that it REDD+ action can be calculated. This introduces
allows policymakers to focus on the least expensive a clear incentive to inflate projections in order to
measures first and to get an idea of the total cost be paid more for not actually producing emissions.
of a given level of emission reduction. But as with The dangers of this approach are clearly illustrated
many simple presentations of a complex reality, in the case studies in this report, in particular the
MAC curves can disguise significant dangers; in projections for logging yield in the DRC and PNG,
particular, where there are flaws in underlying which result directly from McKinsey advice.
assumptions about comparative costs.
Cost curves for REDD+ are not able, and do
This is especially true when it comes to costing not seek, to integrate the web of social and
the measures in REDD+. For example, if the true environmental values associated with tropical
costs of displacing local subsistence farming are forests beyond their carbon sequestration and
underestimated – as this report argues they are storage potential. MAC curves treat tropical
– by ignoring transaction costs and wider social forests like a carbon abatement technology, rather
and environmental impacts, whilst the costs of than recognising them as some of the world’s most
addressing industrial logging are overestimated (for complex living systems, supporting a staggering
example by exaggerating the economic value of variety of biodiversity, as well as being of great
logging to the economy), and these assumptions are economic and cultural importance to humans.
built-into the cost curve, then every policy decision
flowing from the use of the curve will tend to favour It is this basic lack of understanding – along with
logging interests over those of small-scale farmers. some rather fundamental mistakes in biological
The result will not just be socially destructive, but carbon accounting – which too often seduce
may prove impossible to implement, economically policymakers away from measures to protect natural
irrational, and ineffective in reducing emissions. forests in favour of plantations and industrial scale
logging, for example. Until these flaws are
McKinsey claims to ‘rely on facts because they addressed, the use of the MAC curve in forest
provide clarity and align people’, but it is entirely policy making will remain at best misleading,
unwilling to transparently disclose the data and and at worst dangerous.
12 UN B E L I E VA B L E
CO V E R T
Global consultancy firm, McKinsey advises rainforest
McKinsey’s, cost curve has nation governments on reducing
been extremely influential in emissions from deforestation. Yet
setting the terms of the debate it keeps most of its assumptions
for international carbon commercially confidential. Since
reduction regimes. these flawed cost curves are at
the heart of its advice, HOW CAN
C S THE REDD+ PLANS McKINSEY
AL
C U L AT I O N INSPIRES BE TRUSTED?
McKinsey’s FA L S E E CO N O MY
MARGINAL
The height of each bar shows how muchuch
ABATEMENT
COST
CO2e abatement measures cost. But ut
these costs are misleading because only
the missed opportunity costs gett
40
Reduced pastureland Organic
conversion soil restoration
20
Reduce slash and Geothermal
burn agriculture conversion
Grassland
management
0 5 10 15
-40
Cars full hybrid
(Sine
(!%it" %
energ
'!"" '
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effi'!essofan"on
to LED (residential) red#
#!!s,"!bars
s#
!# ''"
M
in
!'!#""!"
LO S T E M I S S I O N S
Solar CSP
Nuclear
20 25 30 35 40
40
MISSING BENEFITS
What’s wrong
with McKinsey’s
method?
The numerous errors and biases suggest that McKinsey lack an understanding
of the fundamentals of carbon accounting. The confusion of net and gross
emissions, the neglect of effects on carbon stocks and, most importantly,
the persistent failure to display a robust and transparent carbon accounting
methodology seriously undermine the documents’ credibility.
16
PLANTATIONS: FB''2#*#'1"G(,("),("$6''
ROOT AND BRANCH ()#1"H%#*"'/&'#D$")*E'
McKinsey co-authored studies repeatedly use tricks This is particularly important for programmes
of data presentation to protect or promote industrial relating to smallholder or subsistence agriculture and
logging and large-scale agricultural interests at the fuelwood collection, where implementation costs
expense of subsistence farming. The methodology are likely to be very high. The failure to include the
of the cost curve contains implicit assumptions on costs and difficulties of communication with large
the relative value of different activities, particularly numbers of people in remote areas, added to the
logging, industrial agriculture and subsistence or failure to account for the value of non-monetised
smallholder agriculture. The overall effect is that the land uses, means that the financial and social cost of
potential emissions savings from targeting small- programmes tends to be underestimated and their
scale agriculture are repeatedly overestimated, and potential effectiveness overestimated.
their costs underestimated, in comparison to tackling
the commercial drivers of deforestation. In contrast, forecast emissions reductions from
reduced plantation expansion are costed at the
The country reports for Indonesia, the DRC and theoretical opportunity cost based on the value of lost
PNG, for example, base their calculations of the cost production. In this instance the maximum opportunity
of emissions reduction from avoiding deforestation cost – nearly $30/tonne CO2e or $20,000/ha119 – is
and degradation on a theoretical ‘opportunity based on an assumption that plantations will not be
cost to the nation’ which excludes ‘transaction, established at all if they are not on forested land,120
communication and information costs,’ 116 that is, despite admitting that much expansion could be
the cost of implementing an emissions reduction relocated to non-forest land much more cheaply.121
programme. This tends to misrepresent the costs In effect, the cost of reducing plantation expansion
and desirability of different emissions reduction is inflated while the cost of reducing smallholder
options. In DRC, McKinsey is actually very explicit expansion is minimised until it is virtually meaningless.
in equating the abatement cost to ‘the reduction
of profit margin incurred by the company’.117 As The partial use of the concept of opportunity cost
the World Bank review of the DRC’s R-PP argues, also skews the cost curve’s priorities. While the
‘[Transaction and implementation costs] can REDD levers (smallholder agriculture and plantation
significantly increase costs, reduce the emissions development) are based on opportunity cost – defined
19
Above left: Industrial here as the theoretical cost to the economy of The sheer scale of the monitoring, reporting
logging: acres of
stockpiles of timber at
foregone activity – other levers, such as fire and verification, and of the capacity-building
an Asia Pulp and Paper reduction or reforestation, are costed on the basis and governance challenges in many rainforest
(APP) mill in Perawang, of implementation costs. The two methods are countries, is barely acknowledged in the studies
Indonesia, on what used to
be rainforest.
clearly incompatible, yet the cost curve attempts to produced with McKinsey advice. The neglect or
© Daniel Beltrá / Greenpeace compare them. disregard of these issues casts further doubt on
the value of its advice.
Above right: Subsistence
farming: a local fisherman
The overall effect of this skewed perspective is to
on a boat sets his nets emphasise programmes targeting the poorest and For example, during a presentation of the DRC REDD+
in a bee farming area least powerful members of society and the least- plan, the environment minister admitted that ‘in the
in Semangit, West
Kalimantan, Indonesia.
understood drivers of deforestation, while deterring Congo today, implementing REDD would be impossible
© Vinai Dithajohn / Greenpeace actions which target large commercial drivers, which given the limited capacity of the country to absorb the
are made to appear relatively more expensive. This is investments necessary’.127 But there is little indication
much more than a technical flaw – it is a systematic that the cost curve methodology takes account of
bias with far-reaching social consequences. such issues of practical capacity, even in monetary
terms, let alone in terms of the relative practicality
LB''!/)(*/&()?'#)1',#9#,(*.6' of different levers. Indeed the DRC study seems
%)<#&&#)*"1'/9*(;($; blissfully unaware of the scale of the challenges: it talks
of ‘finalising’ institutional reform128 as if this system
The DRC study notes two key levers for REDD+ was more or less ready to go, and blithely notes in
implementation – ‘participation enablers’, including one sentence the need to provide MRV bodies with
basic monitoring systems that allow for credible adequate financial and human resources.129
measurement, reporting and verification (MRV) of
REDD+ activities and a revenue sharing system, and Much the same criticisms apply to the MRV plans
‘policy enablers’ requiring rapid legal and institutional in Papua New Guinea’s UN-REDD National Joint
reform.122 Given the glacial pace of timber sector Programme Document, with which McKinsey was
reform in the country,123 the woeful lack of forest apparently involved, which were denounced as ‘highly
governance,124 the sector-wide corruption125 and unlikely to achieve the necessary precision’ and ‘likely
the failure to distribute a share of existing logging untenable’ by the programme’s independent technical
revenues,126 this seems rather optimistic. review – carried out by the World Bank.130
20
The impact
of McKinsey’s
advice
AB''C#(5()?'*/'#11&"$$'*+"'&"#5' uses. The PNG’s ‘Climate Compatible Development
‘[We] bring
1&(>"&$'/G'1"G/&"$*#*(/)' Strategy’ describes this approach:
innovations in
In addition to distracting attention from the
commercial and industrial drivers of deforestation,
‘For every driver of deforestation and degradation
there are multiple abatement options, including
management
McKinsey’s co-authored country reports often full abatement by stopping an activity, or partial practice to
clients… Our
simply do not include measures to reduce or halt abatement by reducing the carbon intensity of
destructive activities. the activity. In this report, our approach has been
IB'@;9#,*()?'/)')#*%'G/&"$*$
The McKinsey-inspired plans for PNG, the DRC,
Indonesia and Guyana do not aim to stop clearance of
natural forest, nor even propose zero deforestation
as a long-term aspiration. These are plans designed to
maximise (supposedly) cheap emissions reductions in
the land use sectors of developing countries, NOT plans
to protect carbon- and wildlife-rich natural forests.
Forests:
more
than just
carbon
23
AB'':+&"#*")()?')#*%'+#D(*#*$'#)1'<(515(G"
The REDD+ documents on which McKinsey has savannah as ‘marginal zones’ in what may be a
worked say little about the potential biodiversity deliberate attempt to belittle its importance.
impacts of their proposals. The measures proposed Strategic use of language is certainly part of the
in these documents could have serious negative McKinsey toolbox. One McKinsey consultant
consequences for natural ecosystems and the told Greenpeace in a face to face meeting that
global benefits they provide. McKinsey promotes a McKinsey had attempted to define the ‘common
methodology that effectively encourages its client language for stakeholders to speak with’ as part of
governments to pursue an industry-orientated its work on REDD+.
development path at whatever cost to wildlife or
local communities. For example, its project proposal Similar measures for PNG are again expressed in
to support the development of PNG’s climate change loaded language: afforestation is proposed for
plans summarises a wide range of variables to be ‘marginal’ land,166 which is not defined, while a
considered but does not suggest a need to even proposal to establish all new oil palm plantation on
assess the impacts on the wildlife of the forests.155 non-forest land specifies that the land in question
For McKinsey, a rainforest is just a store of carbon, will be ‘degraded lands (e.g., pasture land,
waiting to be turned into money. grassland)’167 suggesting a dubious equivalence
between grassland and degraded habitat. The
In Indonesia, the forecast continuing expansion of Indonesia cost curve document proposes afforesting
pulp and oil palm plantations is a major threat to or reforesting for sequestration 10 million hectares
biodiversity. Chillingly, the report accepts that due of ‘degraded non-forested and forested land’, and
to already extensive forest loss in Java and Sumatra establishing new pulp and palm oil plantations ‘on
‘deforestation will shift to other, still largely forested already degraded or deforested areas’.168 Here too,
islands such as parts of Kalimantan and especially no definition of ‘degraded’ is provided.
Papua’.156 Kalimantan is home to the endangered
Bornean orangutan157 while Papua is ‘perhaps the In reality, in both countries grasslands are often
biologically richest and most diverse collection of the habitat for an abundance of wildlife. The Trans
ecosystems in the Tropical Pacific region’ with almost Fly lowland savannah and grasslands (shared
half of Indonesia’s total biodiversity.158 between Indonesia and PNG) for example, host a
number of endemic mammals and birds,169 while
Extensive reforestation (or conversion to plantation) PNG’s Central Highlands grasslands, already subject
of ‘degraded’ forest and commercial replanting of to at least one afforestation project,170 have very
Plants, animals, insects and people depend
former plantations are advocated in the DRC (4 high plant diversity.171
on the tropical forests in countries that are
being misled by McKinsey’s advice. million hectares reforestation, 1.6 million hectares
Clockwise from top right; Local family © replantation),159 Indonesia160 and PNG161 without Finally, Guyana’s LCDS includes proposals to spend
Philip Reynaers / Greenpeace , Young flying
reference to any need for biodiversity safeguards; REDD+ income on infrastructure and drainage to
dragon © Wolfgang Pekny / Greenpeace,
Melipotes honeyeater © Steven Richards / indeed, monoculture is suggested as an option for facilitate ‘higher value agricultural development’172
Conservation International / Greenpeace sequestration reforestation in PNG.162 Scientists of the Intermediate Savannahs, described even by
Black stag beetle © Takeshi Mizukoshi /
and researchers have noted that logged Southeast the pro-government Guyana Chronicle as ‘a unique
Greenpeace, Red capped Mangabey ©
Kate Davison / Greenpeace Asian forest described as ‘degraded’ often retains and fragile eco-zone’,173 and the Canje Basin, one of a
Young Sumatran elephant © Daniel Beltrá significant biodiversity.163 number of coastal river basins characterised as ‘fragile
/ Greenpeace, Tropical forest © Takeshi
and vulnerable neotropical wildlife resources’174 and
Mizukoshi.
Yet another threat to biodiversity posed acknowledged by the Agriculture Minister to be
by McKinsey’s approach is their repeated ‘virgin lands’.175 McKinsey’s involvement in this policy
legitimisation of large-scale land use change of is compounded by its production of a 2008 study on
non-forest habitats. The DRC study proposes to agricultural export potential, cited by the government
establish plantations for sequestration on 30% of in a recent brochure soliciting investment in the
the country’s shrubby savannah and savannah- development of both areas.176
forest mosaic habitats (7 million hectares) and
to ‘relocate’ up to 3 million hectares of as yet Some of the documents considered do propose
unawarded intensive agriculture (eg palm oil) conservation measures, such as the unexplained
concessions to similar habitats.164 While the DRC ‘potential conservation payment’ shown on the
has some savannah-type areas of little biodiversity PNG cost curve as a dotted line attached to
value, the loss of nearly half the country’s savannah some abatement levers,177 or the 50% increase
habitat would be likely to affect more biodiverse in protected areas included among the DRC
areas such as the miombo savannah woodland proposals.178 However, these either reflect pre-
in the south, a habitat type of ‘outstanding existing national targets or are so vague as to
international importance for the conservation of suggest they have been included solely to legitimise
plants and birds’.165 The study repeatedly describes the prevailing pro-industry approach.
24
FB'N/,(#5'(;9#,*$
McKinsey’s abstract view of REDD+ actions as established through commercial logging’184 –
simply a source of carbon market revenue without despite the findings of official review teams that
real world impacts is all too evident in the treatment logging royalties (often not paid in full) and jobs
of the wider social value of forests. created (generally poorly paid) contribute little
to local welfare, and that companies fail to fulfil
Perhaps the most glaring example is the attitude to agreements to provide infrastructure.185
traditional agriculture based on shifting cultivation.
Notwithstanding academic evidence that its Beyond the forest, the ubiquitous proposals for
contribution to degradation or deforestation may so-called afforestation, plantation establishment
be trivial or non-existent,179 subsistence-level or commercial agriculture in grassland or
shifting cultivation is held up with unrestrained savannah threaten social as much as ecological
zeal as one of the key drivers of deforestation. The damage since they ignore the existence of people
assumption – made explicit in the DRC study – is who depend on these lands. In PNG, for example,
that commercial agriculture is a desirable norm the only indication of any compensation for those
to which forest dwellers would obviously want who lose pasture to oil palm is a passing reference
to ‘evolve’, if only circumstances would permit.180 to an unexplained ‘community benefit payment’
There is no mention of people’s right to free, prior on which ‘further discussion is needed,’ while
and informed consent or how forest people who those who lose land to sequestration plantations
do not wish to comply with these plans will be dealt are not even promised this.186
with. At its worst this could represent the mass
displacement of people and human rights abuses. McKinsey’s indifference to consultation is
emblematic of its wider disengagement from
The proposals in PNG, meanwhile, give with one the effects of the measures it proposes. Yet
hand and take away with the other, holding out what might be seen as naïveté becomes culpable
the prospect of intensification bringing increased when it assists injustice and oppression. The DRC
rural incomes and food security181 while concluding government’s breach of its promise to distribute
that increased yields would enable some land logging revenues to the local level has already been
currently used for subsistence to be ‘freed up for noted187 in the section on McKinsey’s monitoring
reforestation through natural regrowth’182 – in and capacity on p19. In PNG, failure to curb
other words diminishing the land area at indigenous logging, and proposals for large-scale plantation
farmers’ disposal, rather than empowering them and ‘afforestation’, threaten to combine with new
to grow a profitable surplus without increasing legislation depriving communities of the right to
their land take. The assumption that increased appeal or receive compensation when land is taken
productivitiy frees up land, known as the Borlaug for projects ‘in the national interest’, to unleash
hypothesis, has itself been questioned by some.183 a wave of dispossession.188 In Guyana the stated
rights of Amerindian communities to profit from
The contrast between the intolerance of shifting the LCDS189 are undermined by the government’s
agriculture and the laissez-faire approach to heel-dragging over as-yet untitled land (which
logging and other destructive industries is is not eligible for payments)190 and its co-opting
reflected in the downplaying or ignoring of and manipulation of several of the supposedly
industry’s social impacts. The PNG ‘Climate- representative indigenous bodies.191 The leader of
compatible development’ study thus enthuses one resolutely independent Amerindian body that
that forest communities will ‘continue to benefit has criticised the LCDS process has apparently
from the roads and public services that are received death threats.192
26
It is clear that when rainforest countries employ scenario on a projected business as usual The international
McKinsey to apply its methodologies to their
REDD+ prospects, they are in danger of wasting
approach, against UNFCCC recommendations199
and calls for this approach to be reviewed in
institutions
money on advice that harms their own interests light of lack of quantitative data and lack of concerned with
and threatens the biosphere. A failure to insist
on adequate safeguards for biodiversity or the
agreement over ‘adjusted scenarios’.200
REDD+ are
rights of forest-dwelling peoples, or indeed to It may be assumed that similar scepticism is becoming
provide a realistic assessment of the technical
and economic feasibility of proposals, does
beginning to permeate bilateral donors, though
they tend not to make public pronouncements increasingly
not merely threaten harmful consequences for on the subject. But with the exception of critical of the
the client country, but actually jeopardises the Norway, no individual donor country is yet
whole future of its REDD+ plan, and arguably recorded as having committed to funding final shortcomings of
the credibility of the REDD+ concept. Such
failure may also be in violation of the Cancun
implementation of any of the national REDD+
plans discussed. Whether they will do so must
plans prepared
agreement on REDD+ and other decisions of the now be an open question. with McKinsey’s
UNFCCC, UN CBD and other international and
regional institutions. It is also clear that in some cases rainforest
advice.
countries themselves are beginning to
The governments of the UK, Norway and acknowledge McKinsey’s shortcomings and
others have funded McKinsey’s work in develop more credible REDD+ plans. This is
the countries considered by this report, most notable in the DRC, whose R-PP (despite
sometimes without any kind of competitive the criticisms noted in this report) does display
tendering and with no effective control over a note of realism and caution absent from the
performance.194 A number of donors have also REDD+ Potential study – for example, insisting
committed funds to other aspects of these on the inclusion of indirect effects such as
countries’ REDD+ preparations. However, migration in any impact analysis of mining
the international institutions concerned with or large-scale agriculture,201 and admitting
REDD+ are becoming increasingly critical the government’s breach of its pledge to
of the shortcomings of plans prepared with distribute forestry tax revenue locally.202 A
McKinsey’s advice. source close to the country’s REDD+ planning
has told Greenpeace anonymously that the
In PNG, ‘Climate-Compatible Development’s’ DRC Environment Ministry commissioned the
rejection195 of the possibility of stopping REDD+ Potential study from McKinsey (despite
logging entirely, despite the acknowledged UN-REDD and FCPF opposition) to strengthen
huge emission savings that would result, and its its negotiating position for Copenhagen, but
successor’s failure to mention even the partial that McKinsey’s intervention compromised the
restriction that it proposed as possibly worth national REDD+ process and has now outlived
considering,196 exemplify the pro-industry its usefulness:
bias that persists through the documents on
which McKinsey has worked. Unsurprisingly, ‘There is no doubt that the DRC’s increasing
the UN-REDD secretariat has questioned the credibility in REDD terms is based above all
sincerity of PNG’s approach and called on the on the long-term fieldwork conducted by the
PNG government to enact a moratorium on national team along with all its partners. Once
new timber and agricultural leases as a sign of the McKinsey comet has passed, it makes
commitment.197 Meanwhile, the Independent more sense to count on credible and less
Technical Review of the UN-REDD National greedy partners to develop and implement the
Joint Programme document doubts whether profound transformations that will be critical to
the abatement measures proposed in the REDD success.’203
forthcoming third draft of ‘Climate-compatible
development’ (reduced impact logging, The ‘Indonesia climate change sectoral
sustainable forest management, reforestation,
‘relocating’ plantations to degraded land and
roadmap’204 is another non-cost curve-based
plan showing a more measured way forward,
Some rainforest
intensifying agriculture) ‘are in fact additional or albeit one that actually preceded McKinsey’s countries are
achievable’.198 This scepticism from UN-REDD
is an instance of real reputational damage done
approach and related proposals for Indonesia.
Produced by the development planning
beginning to
to the PNG programme by adhering to the pro- ministry and the Ministry of Forestry, it gives acknowledge
business approach advocated by McKinsey. more emphasis to forest protection than some
other REDD+ planning documents proposed McKinsey’s
Criticism has also been levelled at McKinsey- by Indonesia.205 Specifically, it uses a baseline shortcomings
inspired aspects of the DRC’s plan. The FCPF derived from present-day emissions rather than
Technical Advisory Panel review has questioned aggressive projections of industry expansion,206 and develop
the usefulness of a cost curve that excludes
transaction and implementation costs, and
and emphasises the need to protect community
land rights.207 Which approach dominates in
more credible
has criticised the plan for basing its reference Indonesia is yet to be determined. REDD+ plans.
28
Recommendations
Action must be taken now to ensure that
further destruction of forests and other
natural habitats does not result from
McKinsey’s disastrous and ill-conceived advice.
Full implementation of the Cancun Agreements should also now further strengthen the scrutiny
applied to REDD+ plans and help to ensure that plans are not considered for funding unless they clearly
prioritise the protection of natural forests, protect biodiversity, and recognise the rights of local
communities and indigenous peoples as requested in the UNDRIP.208
These principles must provide the foundations for a new round of REDD+ plans, which reject advice
based on faulty assumptions and poor quality analysis and build instead on the willingness of the
international community to protect once and for all the global heritage of our natural tropical forests
and all who depend on them.
30
Endnotes
List of documents referred to in 1 www.mckinsey.com/aboutus/whatwedo/ from the other country reports under
endnotes by abbreviations: 2 www.unesco.org/new/en/natural-sciences/ discussion in that it ‘does not evaluate the
about-us/single-view/news/protecting_ economic value of the standing forest itself,
POT Ministry of the environment, nature biodiversity_protecting_forests/ which consists of the revenue from selling
conservation, and tourism ‘Potentiel 3 www.un.org/en/events/iyof2011 deforested timber and the alternative use
REDD+ de la RDC’ French version, (‘The 4 IPCC WGIII (2007) Figure SPM.1 of the land’33 and does not claim REDD
Democratic Republic of Congo’s REDD+ 5 See Humphreys, D (2006) Logjam: credits based on opportunity cost. Brazil
Potential’ - English version) December Deforestation and the Crisis of Global is ahead of other major tropical forest
2009 Wholly or partly McKinsey- Governance (London: Earthscan). countries in developing its approach to
authored report on application of its cost 6 UNFCCC2007 decision 2/CP.13 deforestation and it appears that, in this
curve methodology to the DRC 7 www.forestcarbonpartnership.org/fcp/ report, McKinsey has turned its cost curve
sites/forestcarbonpartnership.org/files/ to supporting existing policy rather than
CIAD Office of the President of Guyana Documents/PDF/Nov2010/FCPF%20%20 attempting to influence future plans.
‘Creating incentives to avoid one%20pager%2011-21-10%20.pdf Because of this, the Brazil report is only
deforestation’ December 2008 8 www.climateinvestmentfunds.org/cif/ occasionally referred to below.
www.lcds.gov.gy/images/stories/ node/5 34 Information on countries’ readiness
Documents/Guyana%20Office%20 9 www.economist.com/node/15129518 activities under the FCPF, and
of%20the%20President%20 10 www.economist.com/node/15129518 their participation in the Forest
Avoiding%20Deforestation%20 11 www.conservation.org/newsroom/ Investment Program, is taken from
Paper.pdf Wholly or partly drafted by pressreleases/Pages/Reaction- the FCPF website, specifically the FCPF
McKinsey, this is the first published Developed-Pledge-Forest- Dashboard (revised October 2010,
source for Guyana’s baseline-setting ProtectionIsNotNearlyEnough.aspx www.forestcarbonpartnership.org/
strategy and claims for REDD+ funding 12 www.mckinsey.com/aboutus/whatwedo/ fcp/sites/forestcarbonpartnership.
13 www.businessweek.com/magazine/ org/files/Documents/PDF/Nov2010/
LCDS ‘Low Carbon Development Strategy: content/02_27/b3790001.htm FCPF%20Readiness%20Progress%20
Transforming Guyana’s Economy 14 www.mckinsey.com/aboutus/whoweare/ MASTER_103110.pdf), the chronological
while Combating Climate Change’ 15 www.mckinsey.com/aboutus/locations/ digests of individual countries’
May 2010 www.lcds.gov.gy/ 16 www.mckinsey.com/aboutus/whatwedo/ R-PP submissions (indexed at www.
images/stories/Documents/Low%20 17 www.mckinsey.com/aboutus locations/ forestcarbonpartnership.org/fcp/
Carbon%20Development%20 18 www.businessweek.com/magazine/ node/257), and the individual countries’
Strategy%20-%20May%202010.pdf content/02_27/b3790001.htm REDD Readiness Progress Fact Sheets
Follow up to CIAD and incorporates 19 www.businessweek.com/magazine/ (September’October 2010, indexed at
much of its strategy wholesale content/02_27/b3790001.htm www.forestcarbonpartnership.org/fcp/
20 http://uk.reuters.com/article/2009/10/20/ node/283). Information of countries’
SDCCD ‘Climate-compatible development for mckinsey-insider-trading- UN-REDD programmes is taken from the
PNG - Second draft’ March 2010 Largely idUKLNE59J00L20091020 UN-REDD website (www.un-redd.org/
McKinsey-authored report on application 21 www.themonthly.com.au/nation-reviewed- UNREDDProgramme/CountryActions/
of its cost curve methodology to PNG. malcolm-knox-hard-stuff--2507 tabid/584/language/en-US/Default.
22 www.independent.co.uk/news/business/ aspx and specific country pages as
IAP GoPNG Office of Climate Change and analysis-and-features/the-might-of-the- indicated). Information on the measures
Development ‘Interim action plan for mckinsey-mob-664081.html and approaches advocated by McKinsey
climate-compatible development’ June 23 Pers. comm. to Greenpeace, 3 November summarises information given in more
2010 Study incorporating and updating 2010 detail in the body of this briefing.
much of SDCCD’s analysis – probably 24 www.mckinsey.com/aboutus/whatwedo/ 35 DRC dossier, section 9.a.I p38 for
largely authored by McKinsey 25 McKinsey & Company (2009) Elaboration further discussion
d’une analyse exploratoire du potentiel 36 DRC R-PP p147; Intergovernmental
NPD ‘UN-REDD PNG National joint REDD+ de la Republique Democratique du taskforce (2010) REDD+ survey: Democratic
programme document’ GoPNG, FAO, Congo: Dossier de candidature 23 October Republic of Congo p1, www.oslocfc2010.no/
UNDP, UNEP September 2010 REDD+ p9-10 pop.cfm?FuseAction=Doc&pAction=View&
Plan incorporating much analysis from 26 POT para 11, p4: ‘Ses ambitions pDocumentId=24929
IAP – probably worked on by McKinsey dans le cadre de cette stratégie sont 37 Republique Democratique du Congo:
d’actionner à la fois tous les leviers de Fonds Commun Multibailleurs pour
CC DNPI (National Council on Climate mitigation envisageables à des coûts le Renforcement de la Gouvernance
Change) ‘Indonesia’s GHG Abatement acceptables de même que ceux de Forestiäre (2010) Rapport Final August p.1,
Cost Curve’ August 2010 Partly séquestration.’ 9, 11, 14
McKinsey-authored report on application 27 McKinsey & Company (2009) 38 Ibid. p14
of its cost curve methodology to Indonesia Mengembangkan cost curve pengurangan 39 POT paras 47, 59
– main target of this dossier carbon untuk Indonesia p8, 19-22 40 http://unfccc.int/files/methods_science/
28 CC p21 redd/country_specific_information/
While we haven’t directly quoted from the 29 McKinsey & Company (2010) ‘Creating low application/pdf/eng_final_report_
Rainforest Foundation UK’s report ‘McREDD carbon prosperity in Indonesia: Detailed exploring_redd_potential_071209.pdf p35
How McKinsey ‘cost-curves’ are distorting project overview (Phase 3): Institutional 41 POT para 59
REDD’, we would like to acknowledge it as a capability building for low carbon growth’ 5 42 POT para 47, p19
comprehensive resource showing how advice February 5 2010 43 POT para 59, p28
given by international consultants, McKinsey & 30 Dr Justin Ondopa, Climate Change 44 80 Mt CO2e at 13 Euros / t CO2e POT p27
Company, to governments of forested nations Coordinator with PNG Eco Forestry Forum 45 POT p27
could harm the scheme to stem destruction of and observer to the REDD Technical Working 46 Ibid p39
the rainforest, known as REDD. Group, pers. comm. to Greenpeace, 10 47 Endundo, J (2011) ‘Clôture du processus
November 2010; corroborated by a 28 du conversion des anciens titres forestiers
September 2010 letter from Kenn Mondiai, et perspectives dans le secteur de
Chairman of PNG EFF to Dr Wari Iamo of the l’exploitation forestière en RDC’, press
OCCD, available at http://pngexposed.files. release 29 January p5
wordpress.com/2010/10/ngo-letter.pdf 48 Guyana dossier, section 9.a.I, p52-53
31 PNG dossier, section 8a p31 49 Ian Gray, DFID Openness Unit, letter
32 McKinsey & Company ‘Elaboration d’une of 10 November 2010 and attached
analyse exploratoire du potential REDD+ de la Memorandum of Understanding
Republique Democratique du Congo: Dossier (undated, but apparently drafted before
de candidature’ 23 October 2009 p10 1 June 2008 when the project was due
33 McKinsey’s cost curve report Pathways to commence, though signed by UK
to a low carbon economy for Brazil differs and Guyanese representatives on 20
31
March and 26 March 2009 respectively) Indonesia: Readiness phase, draft, August, 109 POT, p19 140 CC p17
in response to Greenpeace Freedom Table 4 p35 110 POT, p25 141 Greenpeace International ‘REDD en RDC:
of Information Act request. See also 74 Mogstad, Per (2010) Email to Greenpeace 111 IAP: p7 Menace ou solution?’ November 2010 p14
discussion in our Guyana dossier, section from Norwegian Ministry of Foreign Affairs 112 Overseas Development Institute (2007) 142 Greenpeace International ‘REDD en RDC:
6.a, p41-42. in response to freedom of information ‘Issues and opportunities for the Forest Menace ou solution?’ November 2010 p14
50 ‘Memorandum of understanding request, 26 November Sector in Papua New Guinea’ 143 based on 381.9MtCO2e (DNPI (Dewan
between the Government of the 75 Excluding 10% VAT but minus a discount 113 CC p19 Nasional Perubahan Iklim – National
Cooperative Republic of Guyana and equivalent to roughly $1.5 million 114 Greenpeace International ‘REDD Alert: Council on Climate Change) ‘Fact Sheet
the Government of the Kingdom of 76 Excluding 10% VAT and minus a discount Protection Money’ November 2010 – Carbon Emissions and Development’ 2
Norway regarding cooperation on issues equivalent to roughly $2.5 million www.greenpeace.org/international/en/ September 2010 p4) at $29/tonne (CC p21)
related to the fight against climate 77 CC p21 publications/reports/Protection-Money/: 144 LCDS: 26
change, the protection of biodiversity 78 Greenpeace International ‘REDD Alert: 42-43 145 Robert Goodland, ‘Guyana: Amaila Falls
and the enhancement of sustainable Protection Money’ November 2010 115 LCDS p91 Hydro: Social and Environmental Aspects’
development’ reproduced in LCDS p67- www.greenpeace.org/international/en/ 116 POT para 142, p55; similar disclaimers Bank Information Centre, 19 October 2010
68 publications/reports/Protection-Money/: appear in other countries’ reports www.bicusa.org/en/Document.102355.
51 See our Guyana dossier, section 2.d p4-10 31-32, CC p21 117 POT p25, p31 Etude potential REDD+ aspx p2
for further discussion 79 CC p21 118 Forest Carbon Partnership Facility ‘Revised 146 Robert Goodland, ‘Guyana: Amaila Falls
52 www.forestry.gov.gy/Downloads/Guyana_ 80 CC p20 FCPF TAP Synthesis Review of R-PP of Hydro: Social and Environmental Aspects’
MRVS_Interim_Measures_Report_2010_ 81 CC p22 DRC’ 17 Mar 2010. p8-9 Bank Information Centre, 19 October 2010
Final_January_2011.pdf, p iv 82 DNPI (2010a): 21 119 CC p21 www.bicusa.org/en/Document.102355.
53 CIAD p19, LCDS p20 83 Based on $28-29/tonne CO2e and 192t 120 Greenpeace International ‘REDD Alert: aspx p2
54 www.forestry.gov.gy/Downloads/Guyana_ carbon (705tCO2e) per hectare. Source: Protection Money’ November 2010 147 At conversion factors of 0.47 biomass:
MRVS_Interim_Measures_Report_2010_ DNPI (2010a): 21 Exhibit 12, 22 www.greenpeace.org/international/en/ carbon, 3.67 carbon: CO2
Final_January_2011.pdf, p iv 84 P42 Greenpeace report Protection Money publications/reports/Protection-Money/: 148 Robert Goodland, ‘Guyana: Amaila Falls
55 LCDS p10, 12 2010 31-32, CC 21 Hydro: Social and Environmental Aspects’
56 Robert Goodland ‘Guyana: Amaila Falls 85 BAPPENAS /UN-REDD (2010): 41 121 CC p21 Bank Information Centre, 19 October 2010
Hydro: Social and Environmental Aspects’ establish a technical carbon threshold for 122 POT para 124, p50-51 www.bicusa.org/en/Document.102355.
Bank Information Centre, 19 October 2010 land suitable for low carbon development 123 For example, no implementing legislation aspx p3
www.biscusa.org/en/Document.102355. (<35tC/ha), as well as land meriting has yet been produced for the 2002 Forest 149 Robert Goodland, ‘Guyana: Amaila Falls
aspx p2 conservation purely for its carbon storage Code (DRC R-PP p130) nor, astonishingly, Hydro: Social and Environmental Aspects’
57 Robert Goodland ‘Guyana: Amaila Falls potential (potential to store >100tC/ha) for the Land Tenure Law of 1973 Bank Information Centre, 19 October 2010
Hydro: Social and Environmental Aspects’ 86 www.mckinsey.com/aboutus/whatwedo/ (Cotula, L and Mayers, J (2009) Tenure www.bicusa.org/en/Document.102355.
Bank Information Centre, 19 October 2010 87 McKinsey confirmed this to Greenpeace in in REDD: Start-point or afterthought?, aspx p6
www.biscusa.org/en/Document.102355. face to face meeting International Institute for Environment and 150 POT Planche 10, p26
aspx p2 88 For more on this problem, see: Ekins P, Development, London, p35) 151 IAP: 10, further discussion in our PNG
58 At conversion factors of 0.47 biomass: Kesicki, F, Smith, A ‘Marginal abatement 124 To give one of many possible examples, dossier section 2.e, p10
carbon,3.67 carbon: CO2 cost curves: a call for caution’ 2010 p19 the whole vast country has only 50 forest 152 DNPI (Dewan Nasional Perubahan
59 The evidence is set out in detail in our 89 POT para 56, p27 agents (DRC R-PP 58) Iklim ‘National Council on Climate
PNG dossier, section 9.a.I (p35-36). 90 POT Exhibit 13 (NB only in English version). 125 For example, local forest administrations are Change) ‘Fact Sheet ‘Carbon Emissions
Among the most compelling instances Calculation based on 900 ha planted largely dependent upon logging companies and Development’ 2 September 2010:
are the fact that the Properties box of the annually for 5 years (4500 ha total) and themselves for information, logistics, p4 gives emissions reductions from
‘Climate-compatible development’ PDF 2.5m tCO2 (681,199tC) sequestered after transport and finance, and bribery is frequent stopping plantation development
gives the producer as ‘McK PDF Writer’ 30 years, ie 556t CO2e uptake per hectare, (Greenpeace International (2008) Étude as 190.95MtCO2e for each of estate
(just like the second draft of Guyana’s equivalent to 151t carbon. Sectorielle: Exploitation forestière en République crops and timber plantations - ie
(LCDS) and the fact that the official body 91 Humid, low-altitude dense forest in Congo Démocratique du Congo, October, p3). 381.9MtCO2e (eq. 104Mt carbon)
credited with producing the ‘Interim Basin 126-275tC/ha Souce: ‘Un aper’u des 126 Acknowledged by the DRC’s Readiness for the two combined. Divided by
Action Plan’ did not start work until two stocks de carbone et leurs variations dans Preparation Proposal (Ministry of the CC’s figure of 192tC/ha in forest land
months after its publication. les foràts du bassin du Congo’ Nasi, R et al, Environment, Nature Conservation and (CC p22) this gives an estimated
60 www.un-redd.org/UNREDDProgramme/ in Etat des Foràts 2008 p207 Tourism (MECNET) (2010) Readiness Plan 542,000ha of avoided deforestation
CountryActions/PapuaNewGuinea/ 92 Ekins P, Kesicki, F, Smith, A ‘Marginal for REDD, 2010-2012 ‘R-PP Final Version, from plantation establishment in
tabid/1026/language/en-US/Default.aspx abatement cost curves: a call for caution’ July, p131). See also Cotula, L and Mayers, 2030. On the same logic, avoided
61 Ibid. p32-33 (2010) p25 J (2009) Tenure in REDD: Start-point or deforestation from smallholder
62 IAP p27 93 IAP: 10, CC p21 afterthought?, International Institute for agriculture in 2030 would be around
63 IAP p11 94 POT para 56 p27 Environment and Development, London, p21 273,000 hectares. BAU deforestation
64 SDCCD p18-19, IAP p11 95 See for example Greenpeace International 127 www.forestcarbonpartnership.org/fcp/ in 2030 is predicted at 1.1m ha
65 IAP p10 ‘REDD Alert: Protection Money’ November sites/forestcarbonpartnership.org/files/ annually (CC p20), suggesting that
66 IAP p11 2010 www.greenpeace.org/international/ Documents/PDF/APR2010/4b-DRC_R- even under full implementation of
67 www.un-redd.org/UNREDDProgramme/ en/publications/reports/Protection- PP_Presentation_FCPF_LOPE_ENG_2.pdf, CC’s plan, 285,000ha of natural forest
CountryActions/Indonesia/tabid/987/ Money/ : 39-42 p24 would continue to be cleared each year.
language/en-US/Default.aspx 96 Greenpeace International ‘REDD Alert: 128 POT para 77, p37: ‘la finalisation de la 153 CC p22
68 eg BAPPENAS (Indonesian Ministry Protection Money’ November 2010 rÇforme institutionnelle’ 154 McKinsey & Company, ‘Pathways to a low
for National Development Planning) www.greenpeace.org/international/en/ 129 POT para 80, p38 carbon economy for Brazil’ 2009: 7
(2010) Indonesia Climate Change Sectoral publications/reports/Protection-Money/ : 7-8 130 Chatterton, Paul (2010) Review of the 155 McKinsey & Company‘Supporting the
Roadmap: Synthesis Report, March, p6 97 IAP p10-11 UN-REDD Joint Program in Papua New development of PNG’s national REDD
69 DNPI (National Council on Climate Change) 98 McKinsey & Company, ‘Pathways to a low Guinea, pp2-3, http://un-redd.org/ and climate change plans: draft project
/UNFCCC ‘National Economic, Environment carbon economy for Brazil’ 2009 p31 PolicyBoard/5thPolicyBoard/tabid/1002/ proposal’ June 2009 p6
and Development Study (NEEDS) for 99 POT Planche 16, p59 Default.aspx 156 CC p18
Climate Change: Indonesia Country Study’ 100 Series of articles by Janette Bulkan in 131 www.mckinsey.com/aboutus/whatwedo/ 157 http://en.wikipedia.org/wiki/Bornean_
December 2009 p76 Stabroek News July-August 2009 www. 132 LCDS website FAQ www.lcds.gov.gy/faqs. Orangutan
70 Intergovernmental taskforce (2010) REDD+ redd-monitor.org/wordpress/wpcontent/ html#18: 158 Rhee, S, Kitchener, D, Brown, T, Merrill,
survey: Indonesia, p1-2, available at www. uploads/2009/08/REDD_SN_series_July_ 133 IAP p8 R, Dilts, R and Tighe, S (2004) Report
oslocfc2010.no/pop.cfm?FuseAction=Doc August_2009_carbon_in_Guyana.pdf p26 134 Mining and hydrocarbon extraction are on biodiversity and tropical forests in
&pAction=View&pDocumentId=24932 101 IAP p10 predicted to be responsible for 9% of BAU Indonesia, USAID/Indonesia, Jakarta, p7.12,
71 Ibid, p2-3 102 SDCCD p19 deforestation to 2030. POT para 47, p22 available at www.rmportal.net/library/
72 MRV are monitoring systems that allow 103 SDCCD p2 135 POT para 59, p31-32 content/1/118_indon
for credible measurement, reporting and 104 www.mckinsey.com/aboutus/whatwedo/ 136 IAP Exhibit 7, p10 159 POT paras 59, p29-31and 106, p44
verification of REDD+ activities 105 LCDS p77 137 IAP Exhibit 3, p6 160 CC p21
73 Ministry of Forestry (2009) National 106 LCDS p51 138 http://en.wikipedia.org/wiki/Ok_Tedi_ 163 IAP p11
Strategy: Reducing emissions from 107 CC p18 Environmental_Disaster 164 IAP p29
deforestation and forest degradation in 108 POT, p19 139 SDCCD p17 165 Edwards, D, TH Larsen, TDS Docherty, FA
32
Ansell, WW Hsu, MA DerhÇ, KC Hamer and 180 POT para 98, p42 whatwebelieve/
DS Wilcove (2010) Degraded lands worth 181 IAP p10 194 For a fuller discussion of this issue, see our
protecting: the biological importance of 182 SDCCD p20 Guyana dossier, section 6.a, p41-42.
Southeast Asia’s repeatedly logged forests, 183 Thomas K. Rudel, Agricultural 195 On the grounds that, while this would yield
Proc.R. Soc. B, published online 4 August intensification and changes in cultivated three times the emission savings of reduced
2010. doi: 10.1098/rspb.2010.1062 areas, 1970-2005 impact logging, it would do so at a higher
166 POT paras 56, p27; 59, pp29-31; and 90, 184 SDCCD p19 opportunity cost – though scarcely higher
pp40-41 185 NPD p7-8 than that for afforestation (see IAP p10) and
167 Chidumayo, E (1999) Using Natural 186 IAP exhibit 7, p10 with an abatement potential at least three
Fertilizers in Miombo Woodlands, Issues in 187 Acknowledged by the DRC’s Readiness times as great as any other lever discussed.
African Biodiversity 2, Biodiversity Support Preparation Proposal (Ministry of the 196 IAP p11
Program, p1, available at pdf.usaid.gov/ Environment, Nature Conservation and 197 UN-REDD Programme (2010) National
pdf_docs/PNACK011.pdf Tourism (MECNET) (2010) Readiness Plan Programme Submission Form – Papua
168 IAP p11 for REDD, 2010-2012 ‘R-PP Final Version, New Guinea, p10, un-redd.org/
169 IAP p11 July, p131). See also Cotula, L and Mayers, PolicyBoard/5thPolicyBoard/tabid/1002/
170 CC p21 J (2009) Tenure in REDD: Start-point or Default.aspx
171 WWF (2001),Trans Fly savanna and afterthought?, International Institute for 198 Chatterton, Paul (2010) Review of
grasslands, www.worldwildlife.org/ Environment and Development, London, p21 the UN-REDD Joint Program in Papua
wildworld/profiles/terrestrial/aa/aa0708_ 188 The legislation in question is the New Guinea, p1, http://un-redd.org/
full.html Environment (Amendment) Act 2010: see PolicyBoard/5thPolicyBoard/tabid/1002/
172 Dr Justin Ondopa, Climate Change Callick, R (2010) PNG law to shield resource Default.aspx
Coordinator with PNG Eco Forestry Forum giants from litigation, The Australian 199 Forest Carbon Partnership Facility ‘Revised
and observer to the REDD Technical (Canberra), 2 June, p24. For a more detailed FCPF TAP Synthesis Review of R-PP of
Working Group, pers. comm. to Greenpeace, analysis of the act and its implications, see DRC’ 17 Mar 2010 p9, 14
10 November 2010 www.actnowpng.org/sites/default/files/ 200 Carbon Partnership Facility ‘Revised FCPF
173 WWF (2001) Central Range sub-alpine BRIEFING%20PAPER%20%20enviro%20 TAP Synthesis Review of R-PP of DRC’ 17
grasslands, www.worldwildlife.org/ amend%202010.pdf. Greenpeace Mar 2010 p14
wildworld/profiles/terrestrial/aa/aa1002_ Australia Pacific has been advised by a 201 Ministry of the environment, nature
full.html legal expert that the Act is applicable to conservation, and tourism ‘Readiness Plan
174 LCDS p10, 12 any development deemed in the national for REDD, 2010-2012 – R-PP Final Version’
175 Evans, Pamela (2002) Agricultural interest (potentially including forestry, July 2010 p59
development on the move in the agriculture and plantation), not merely to 202 Ministry of the environment, nature
Intermediate Savannahs, Guyana Chronicle, mining, although the latter has so far been conservation, and tourism ‘Readiness Plan
1 September, www.landofsixpeoples.com/ the focus of objections. for REDD, 2010-2012 – R-PP Final Version’
news022/nc209016.htm 189 LCDS p35 July 2010 p131
176 Hanif, M and Otto, R (1978) Impact 190 An injustice of which Amerindian 203 Anon. pers. comm. 3 November 2010
identification and evaluation: Guyana Small communities are keenly aware: see for 204 BAPPENAS (Indonesian Ministry for
Farm Development Project, Annex IV, example Amerindian Peoples Association/ National Development Planning) ‘Indonesia
Exhibit 1 in Department of State, Agency for Forest Peoples Programme (2009) Climate Change Sectoral Roadmap:
International Development (1978) Proposal Indigenous peoples’ rights, REDD and the Synthesis Report’ March 2010
and Recommendations for the Review of draft Low Carbon Development Strategy 205 For example BAPPENAS (Indonesian
the Bilateral Assistance Subcommittee: (Guyana): A summary report of a workshop Ministry for National Development
Guyana – Small Farm Development, Black held in the Regency Suites, Georgetown, 24- Planning) ‘Indonesia Climate Change
Bush Region, p6-7, http://pdf.usaid.gov/ 26 June 2009, p3-4, www.forestpeoples. Sectoral Roadmap: Synthesis Report’
pdf_docs/PDAAA043B1.pdf org/sites/fpp/files/publication/2010/08/ March 2010 p88: ‘It is far more effective
177 Naipaul, Chamanlall (2007) $6.5M guyanareddiprightswshoprepjun09eng.pdf. to avoid deforestation than to rehabilitate
needed to kick-start ethanol production See also discussion in our Guyana dossier, forestland’
– UN report, Guyana Chronicle, 1 May, section 5.b, p33-35. 206 BAPPENAS (Indonesian Ministry for
www.landofsixpeoples.com/news702/ 191 See for example posting from Nelly Avila on National Development Planning) ‘Indonesia
nc0705013.html REDD+ Monitor website, 30 October 2010, Climate Change Sectoral Roadmap:
178 Cited in Government of Guyana (n.d.) www.redd-monitor.org/2010/10/13/redd- Synthesis Report’ March 2010 p9-10
Investing in Guyana’s Low Carbon Future: rubber-hits-the-road-in-guyana-skid- 207 BAPPENAS (Indonesian Ministry for
Agriculture, www.agriculture.gov.gy/ marks-a-plenty/ (re TAAMOG and NADF); National Development Planning) ‘Indonesia
Investment%20in%20Guyana/Investing%20 Amerindian Peoples Association/Forest Climate Change Sectoral Roadmap:
in%20Guyana%27s%20Low%20Carbon%20 Peoples Programme (2009) Indigenous Synthesis Report’ March 2010 p80, 85
Future.pdf peoples’ rights, REDD and the draft Low 208 United Nations Declaration for the Rights of
179 IAP Exhibit 7, p10. It is unclear what the Carbon Development Strategy (Guyana): A Indigenous Peoples, adopted by 144 states.
levers included have in common, as two summary report of a workshop held in the
(agricultural extension and afforestation/ Regency Suites, Georgetown, 24-26 June
reforestation) might be assumed to have 2009, p5 (re National Toshaos Council (NTC);
negative biodiversity impacts that needed and APA executive members and others
mitigating, while the third (secondary forest (2010) Indigenous peoples demand action
management) presumably would not. on land rights, consent issues, press release
180 POT paras 87-89, p40 from workshop on ‘Indigenous Peoples’
181 For example, in the context of PNG, Keenan, Rights, Extractive Industries and National
Rodney J (2009) ‘Disturbance, degradation, Development Policies in Guyana’, 9 March,
and recovery: forest dynamics and climate www.forestpeoples.org/topics/extractive-
change mitigation’ (XIII World Forestry industries/news/2010/08/press-release-
Congress Buenos Aires, Argentina, 18 - 23 guyana-indigenous-peoples-demand-
October), p6; in the context of Guyana, action-land (re NTC). On the NTC, see also
Cedergren, Jonas (2009) ‘Measurement our Guyana dossier, section 5.b, p35-36.
and reporting of forest carbon in Guyana: 192 Widely reported, eg Kaieteur News (2010)
Preparing for REDD implementation’, UN- 38 foreign groups write Jagdeo to protect
REDD, p.5, www.fao.org/climatechange/ Amerindian leader, 21 December, www.
unredd/53128/en/ (ironically the one kaieteurnewsonline.com/2010/12/21/38-
country surveyed where, perhaps due to foreign-groups-write-jagdeo-to-protect-
the relative strength of the indigenous lobby amerindian-leader/; REDD-Monitor (2010)
as well as the special nature of the approach President of the Amerindian Peoples
taken to REDD+, shifting agriculture is not Association gets death threats in Guyana,
proposed to be targeted in the documents 21 December, www.redd-monitor.
on which McKinsey has worked, though the org/2010/12/21/president-of-the-
government itself has equivocated over the amerindian-peoples-association-gets-
issue – see the discussion in our dossier, death-threats-in-guyana/
section 5c, p39) 193 www.mckinsey.com/aboutus/
33
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