Green Growth Potential Assessment Papua New Guinea Country Report July 2019 i| Page Copyright © July 2019 Photo credits Cover page: Papouasie Nouvelle Guinée. By Yves (Abode Stock). Page 8: Shallow Reef and Islands in Heart of Coral Triangle. By ead72 (Adobe Stock). Page 22: Papua village. By Nella Star (Shutterstock). Page 70: On the top of mountain in enjoy the beauty of Landscape. By dangthachhoang (Adobe Stock). Global Green Growth Institute Jeongdong Building 19F 21-15 Jeongdong-gil Jung-gu, Seoul 04518 Republic of Korea The Global Green Growth Institute does not make any warranty, either express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use or the results of such use of any information, apparatus, product, or process disclosed of the information contained herein or represents that its use would not infringe privately owned rights. The views and opinions of the authors expressed herein do not necessarily state or reflect those of the Global Green Growth Institute. ii| Page Green Growth Potential Assessment Papua New Guinea Country Report July 2019 iii| Page Executive Summary The Green Growth Potential Assessment (GGPA) is a diagnostic tool developed by the Global Green Growth Institute (GGGI). It consists of a combination of data analysis and stakeholder consultation in order to identify and prioritize a country’s opportunities for green growth. In the context of Papua New Guinea, the methodology was adapted to identify priorities in relation to climate change. For each of the identified priorities, specific recommendations were developed, building on conclusions from existing empirical research and international case studies as well as publicly available data sets, examples, and estimates from within Papua New Guinea (PNG). A crucial input to the analysis was a series of expert interviews conducted in PNG. This report presents the findings of the GGPA of Papua New Guinea and details the recommendations, each supported by a solid rationale. Data analysis and stakeholder consultation identified four priorities related to climate change in Papua New Guinea. The following priorities served as the basis for this report: • Increasing Papua New Guinea’s resilience toward the adverse impacts of climate change, given the country’s high vulnerability. • Deploying renewable energy as an opportunity to increase the country’s low electrification rate. • Improving agricultural productivity, due to the high importance of agriculture for the country’s mostly rural population, as well as food security and Papua New Guinea’s economy. • Conserving the country’s extensive forests, due to their global significance for carbon storage, the role they play in sustainable agriculture, their provision of ecosystem services, and their economic potential. First, given the breadth of areas involved in addressing Papua New Guinea’s vulnerability to climate change, this report provides a systematic overview of the phenomena the country is exposed to and their potential impacts. The assessment concludes that PNG is highly exposed to climate change, as evidenced in a rise in temperature and sea levels, increase in rainfall and ocean acidification, and decline in frequency but increase in intensity of droughts and cyclones. The report also shows that Papua New Guinea’s economy is very sensitive to these phenomena, given its dependence on sectors that experience considerable impacts from climate change—such as fisheries and agriculture—and its lack of essential infrastructure—including transportation, health, electricity, water, and sanitation. Second, the report provides a detailed assessment of the potential for electricity generation from renewable sources in Papua New Guinea. PNG is characterized by a dual economy. The country has an export-oriented extractive industry, producing oil, gold, copper, silver, and—more recently—natural gas. Despite this, more than 80% of the country’s population lives in rural areas with minimal services and infrastructure, mainly relying on subsistence agriculture. Given these conditions, this report concludes that renewable energy appears to be most relevant for two purposes. First, it increases access to electricity in remote rural areas to support basic applications, such as electric lighting and phone charging. This would help more than four-fifths of the population currently living without access to electricity to move up the energy ladder, with feasible improvements to their livelihoods and well-being. Additionally, the deployment of renewable energy appears to be relevant for the energy-intensive extractive industries as well as for agricultural processing. These private sector companies are already mostly auto-producers of electricity and do not rely on the country’s utility. Depending on the physical conditions at individual sites, geothermal energy and biomass are regarded as the most promising technologies. To support the deployment of renewable energy, this report recommends designating areas for off- grid electrification, given the high costs of grid extension to remote areas. For that purpose, a focus on solar energy is suggested, with solar home systems showing clear advantages compared to mini-grids. iv| Page This report sees a decisive role for the private sector in off-grid electrification. It is recommended for the Government of Papua New Guinea (GoPNG) to support the private sector by introducing consistent legislation and providing regulatory certainty for the (off-grid) electrification, facilitating access to finance for private sector players, and strengthening quality control of off-grid renewables equipment sold in Papua New Guinea. Finally, it is recommended for the administration to strengthen its capacity to collect, compile, verify, and disseminate data relevant to the energy sector in order to conduct reliable analyses to develop relevant policies, monitor their impacts, and evaluate their effectiveness. Third, agriculture and forestry are essential sectors in Papua New Guinea. The country’s forests are of global importance, covering more than two-thirds of PNG’s land mass and—together, with forests in the neighboring Indonesian province of Papua—comprising the third largest tract of intact tropical forest in the world. Forests provide essential ecosystem services, from soil fertility to water quality and regulation. They also play an important role in mitigating and adapting to the adverse impacts of climate change, constituting important carbon reservoirs and reducing the impact of natural disasters related to climate change. Agriculture, forestry, and fisheries are critical to Papua New Guinea’s economy and the livelihoods of its people, contributing approximately a fifth of the country’s GDP while more than 80% of the population depends on subsistence farming and resource extraction from local forests. This report provides recommendations for improving the sustainability of the agriculture and forestry sector in Papua New Guinea. In line with the energy sector, it recommends for the Government of PNG to strengthen the administration’s capacity to collect, monitor, and verify agriculture and forestry data. Forests need to be delineated consistently, clearly distinguishing user rights to strengthen conservation efforts and to provide regulatory certainty for legal commercial activities. Assessing Papua New Guinea’s forest stock is also essential to support the country’s efforts toward obtaining carbon payments for reducing greenhouse gas emissions in the context of REDD+. Changes in agricultural practices and the forestry sector are required in order to reduce deforestation and forest degradation. Commercial logging is identified as the lead cause of forest degradation in Papua New Guinea while commercial agriculture is estimated to be responsible for up to 30% of deforestation in the country. Therefore, the report suggests for the GoPNG to monitor and enforce compliance with regulations on commercial logging and commercial agriculture. It further recommends for the government to obligate the industry to adhere to internationally recognized certification schemes and sanction non-compliance. Moreover, subsistence agriculture is the principal cause of deforestation in Papua New Guinea. The traditional practice of shifting cultivation is rendered unsustainable by a rapidly growing population, demanding an urgent improvement in agricultural techniques. For that purpose, it is recommended for the Government of Papua New Guinea to strengthen extension services, providing support to communities to adopt sustainable agricultural practices. Such practices should aim to maximize the use of natural processes and ecosystems, enhance the diversity of production, tailor production intensity to the capacity of the landscape, and use a mix of traditional and new technologies. Finally, to reduce demand for fuel wood as a driver of local deforestation, the report recommends for the GoPNG to support the sustainable production of fuel wood and the use of clean cooking technologies. The recommendations discussed in this report directly support achieving the goals set out in Papua New Guinea’s Vision 2050. They are relevant for informing national, sectoral, and sub-sectoral planning as well as designing specific interventions and investment activities toward sustainable development and the mitigation of and adaptation to climate change. Furthermore, the recommendations are also intended to support the Government of Papua New Guinea