An ambitious plan to fight climate change by making polluters pay to preserve forests has come under a cloud, with some environmentalists calling it unworkable and dangerous.

The plan, known as Reduced Emissions from Deforestation and Degradation (REDD), is being pushed as a key element for a new global agreement to fight climate change after the Kyoto Protocol expires in 2012.

The rationale for the plan is largely uncontroversial. Environmentalists say the world needs forests to absorb the carbon in the atmosphere that is causing climate change.

The world also needs to curtail the rate of deforestation, which through rotting dead trees and burning contributes around 20 percent of worldwide emissions every year -- roughly equivalent to the United States or China.

The basic idea behind REDD is to work out how much carbon can be saved by not cutting down trees, and selling that carbon on the global market for big polluters to offset their own emissions.

Developing countries with vast tracts of tropical forests and high rates of deforestation, such as Indonesia and Brazil, have been pushing REDD and made it a focus of climate talks on the Indonesian island of Bali in late 2007.

But critics have questioned whether a model for REDD that could turn unmolested trees into carbon credits would really reduce emissions, and have even raised the possibility that it could imperil the entire global fight against climate change.

A recent report by environmental group Greenpeace argues that REDD credits could flood global markets, sending the price of carbon crashing by as much as 75 percent and making it cheaper for polluters to avoid genuine emissions cuts.

"You'd have rich developed countries basically paying the poorer countries in the world to reduce emissions for them," Greenpeace forest and climate campaigner Paul Wynn said.

"It certainly has the potential to have a big negative impact on the big competitive advantage that should be given to low-carbon and renewable technologies," Wynn said.

"(Forest conservation) can be done much easier by a fund than by market cowboys racing around the world looking for cheap offsets," he said.

Other NGOs such as Friends of the Earth International also say people living in forests, especially indigenous people, would be hard-pressed to take advantage of the complex world of carbon markets and could be left worse off.

"The simple fact that forests are becoming an increasingly valuable commodity means that they are more likely to be wrested away from local people," Friends of the Earth said in a recent report.

-- There is still a lot to learn --

However, dire predictions of systemic failure are "extremely pessimistic," said Markku Kanninen, an expert from the Centre for International Forestry Research (CIFOR) who was a member of the Nobel prize-winning Intergovernmental Panel on Climate Change.

While some countries, including the United States, are pushing for a market-driven REDD, concerns over its effectiveness mean nations will likely opt for a scheme that only gradually introduces it into the market when they meet in Copenhagen in December to decide Kyoto's successor, he said.

But there are catches. CIFOR estimates it would cost 20 billion to 30 billion dollars a year to cut global deforestation by half.

While international donors could foot the bill to start with, only global markets would be able to come up with such vast sums, Kanninen said.

"No one is saying we're going to stop deforestation with this, we are going to reduce it," he said.

Worrying too is how developing countries like Indonesia can ensure their forest carbon credits are the genuine article, given high rates of corruption and bureaucratic muddle, said CIFOR expert Kristof Obidzinski.

While Indonesia has been the first country to formally introduce REDD pilot programmes, it is still laying plans to clear vast tracts of forests for timber, paper and palm oil, Obidzinski said.

Forest emissions have pushed Indonesia into position as the world's third-largest greenhouse gas emitter, after the United States and China, according to some estimates.

"It's going to be very difficult if not impossible to outdo (the money that can be made from) oil palm with REDD," Obidzinski said.

Indonesian forestry ministry secretary-general Boen Purnama said concerns over REDD's effectiveness would not get in the way of its implementation at home.

"I think there are many things we have to learn about this, but that doesn't mean there are a lot of difficulties and we have to stop," he said.

However, the country's record of protecting its own forests has raised some eyebrows at home, with Forestry Minister Malam Sambat Kaban widely perceived as a soft touch on forest destruction.

Two years ago he wrote a letter of recommendation to a Sumatra court that helped a wealthy timber baron get off charges of illegally logging billions of dollars worth of trees.