Last year, Indonesia and Norway signed the Oslo Pact, which will pay Indonesia up to US$1 billion to reduce carbon emissions by advancing forest-conservation initiatives. As part of the deal, Indonesia must halt the licensing of new agricultural plantations and logging concessions on peatlands and natural forest for two years. Clearing and logging must instead be directed to non-forest 'degraded' lands and to existing concessions. But the pact has a big loophole.

Indonesia is the world's third-largest emitter of greenhouse gases, caused mostly by rampant felling or burning of its rainforests and carbon-rich peat-swamp forests. The loss of these ecosystems also threatens major hot spots of global biodiversity. The hope is that the Oslo Pact and follow-on carbon payments can stem this tide.

However, President Susilo Bambang Yudhoyono of Indonesia has issued a two-year moratorium on new concessions for clearing or logging of peatlands and natural primary (old-growth) forest. Contrary to the Oslo Pact, vast expanses of selectively logged forests — which sustain substantial carbon stores and much biodiversity — are classed as 'degraded' and left out of the moratorium altogether. The net effect is that these natural forests could be re-logged or cleared for oil palm and pulpwood plantations. According to its Ministry of Forestry, Indonesia has 35.4 million hectares of logged forest that can be cleared, considerably more than the upper estimate of 20 million hectares of primary forest protected under the moratorium.

Many protected forests are in steep, mountainous areas that face little threat. The most imperilled forests, in the lowlands, are largely excluded from the deal because they have been logged previously. On top of this, the moratorium fails to protect shallow peatlands from conversion, or halt primary forests and deep peatlands from being cleared for sugar cane — one of the most rapidly expanding biofuel crops.

We urge Norway to insist that logged forests and clearance for sugar cane be included under the moratorium. Without doing so, this is little more than business as usual in Indonesia.