With the prospect of catastrophic climate change looming ahead in the not-so-distant future and free-market financial capitalism in big trouble, new markets in carbon have become every big businessman’s new best friend. The United Nations Framework Convention on Climate Change (UNFCCC) will hold their 15th annual Conference of the Parties (COP15) in Copenhagen in December where they will negotiate the treaty to follow the Kyoto Protocol, so we’re dedicating this (slightly late) newsletter to understanding their new money-making bag of tricks.
*1. What is climate change?
*2. So, what’s being done about it?…International negotiations
* United Nations (UNFCCC)
* Kyoto Protocol
*3. Trading Carbon
*4. Dodgy mechanisms
*Clean Development (CDM)
*Joint Implementation (JI)
*Reducing Emissions from Deforestation and… (REDD)
*5. European Union (EUETS)
*6. World Bank
*7. Fighting back
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- What is climate change??
First things first: Climate change is basically what is says on the jar – the changing of the earth’s climate systems. It is caused by ‘greenhouse gases’ (GHGs), which trap heat from the sun inside the earth’s atmosphere. Without GHGs, the earth would be too cold to live on; with too many it will be too hot to live on. The most common greenhouse gas is carbon dioxide, which is produced when fossil fuels like coal and oil are burned. Other greenhouse gases include methane, water vapour, nitrous oxide and ozone.
As the earth’s atmosphere warms up, the systems that determine the climate are changing. This is causing the polar ice caps to melt and sea levels to rise, as well as permanent drought in some places and frequent flooding in others. Fresh-water sources are drying up and weather patterns are becoming more violent and unpredictable. These changes will also cause the ecosystems we depend on – for our food, water and other resources – to collapse, with catastrophic consequences.
For more information see:
Wake Up, Freak Out…Then Get A Grip (video)
Climate Safety report
- So, what is being done about it?… International negotiations
United Nations Framework Convention on Climate Change (UNFCCC)
The UNFCCC is the international treaty produced at the ‘Earth Summit’ in Rio de Janeiro in 1992. Currently 192 countries are members of the UNFCCC and 4 are observers.
Since 1995 all countries who have signed the treaty (‘parties’ to the Convention) meet every year at the ‘Conference of the Parties’ (COP) to discuss and negotiate agreements to reduce GHG emissions and tackle climate change. This year, in December 2009, Copenhagen in Denmark will host the 15th Conference of the Parties – COP15. This is where the new treaty that will follow the Kyoto Protocol (when the Kyoto Protocol expires in 2012) will be negotiated.
The Kyoto Protocol is an agreement that was signed by the UNFCCC in 1997, in the Japanese city of Kyoto. The Protocol agrees GHG emission cuts of an average of 5.2% from 1990 levels for industrialised countries. The agreement includes a number of ‘flexible mechanisms’ to make it easier for countries to reduce their emissions. These ‘flexible mechanisms’ are explained below.
For more information, see:
Divide and rule: the politics of climate change negotiations
Truth about Kyoto: huge profits, little carbon saved by Nick Davies
- Trading Carbon
Carbon trading is the basis of all the ‘flexible mechanisms’. The idea was proposed by the US delegation to the negotiations, and accepted by the UNFCCC as a way to keep the US on board.Instead of reducing greenhouse gas emissions by reducing the amount of fossil fuels we burn – which might also reduce the profits of powerful fossil fuel-related industries – businessmen decided that it would be better instead to treat the earth’s carbon dioxide cycling capacity as a new scarce resource to be commodified, priced and traded, for use by the highest bidder.
Carbon dioxide is divided up into units of one-tonne. For every one-tonne of carbon dioxide pollution produced, the corporation or country responsible for it must own or purchase one carbon credit. Carbon credits can be bought and sold in the new ‘carbon market’ – a stock exchange created especially for carbon. The point is that the cost of buying carbon credits to allow them to pollute will encourage companies instead to reduce their pollution.
The idea might seem logical at first – to limit carbon dioxide pollution by charging those who produce it. But as with most market-based money-making schemes, the reality is actually very different. The commodification of carbon constitutes in practice a vast expansion of private property rights. Carbon trading is effectively the privatisation of clean air, of the atmosphere, and the privatisation of permission to pollute. Those who can afford to pay the most can purchase ‘permission’ to pollute everyone’s air. While those who cannot afford to pay will not be allowed to pollute at all. Many Southern countries and movements have called it the new ‘climate colonialism’.
For more information see:
‘Made in the USA’: A short history of carbon trading by Larry Lohmann
http://www.thecornerhouse.org.uk/summary.shtml?x=544235Climate Markets Six Soundbites by Larry Lohmann
http://www.thecornerhouse.org.uk/summary.shtml?x=563127Carbon Trading: Solution or Obstacle? by Larry Lohmannhttp://www.thecornerhouse.org.uk/summary.shtml?x=561553Carbon Trading: A Lecture at Brigham Young University (video) by Larry Lohmann http://www.thecornerhouse.org.uk/item.shtml?x=561388
- Dodgy Mechanisms
In the Kyoto Protocol the UNFCCC agreed on several ‘mechanisms’, to create new carbon credits to allow industrialised countries and big companies to avoid reducing their emissions by paying to reduce emissions elsewhere. In reality, every single one of these mechanisms actually encourages more carbon pollution, while creating new markets and lots of money for powerful corporations. By diverting attention, these mechanisms also prevent any real solutions from even being discussed.
The term ‘offset’ can be used to describe almost any project that creates carbon credits in one place to cancel out emissions made in another place – so it can include all of the mechanisms described below – but here we will focus on the voluntary offsets market. In the most common type of ‘offset’, new companies tell people that they will plant trees to absorb the carbon dioxide emitted by that individual or organisation’s cars, flights and other carbon-emitting activities. Simple, no?
But there are some real problems with this: – Firstly, measuring the carbon ‘reduced’ is pretty tough, as it depends on many different factors. But the most basic and obvious problem of offsets is that fossil fuel carbon is different to forest carbon. Fossil fuel carbon brought out from under ground can’t be put back under there. Trees are part of the above-ground ‘carbon cycle’, they absorb carbon dioxide throughout their lifetime but then release it again when they die. Therefore they cannot compensate for the huge quantities of fossil fuel carbon that we bring out from under the ground – which took millions of years to get there!
The worst part is that local communities across Latin America are being kicked-off their common lands as they are privatised for corporate tree-planting to ‘offset’ western consumer lifestyles. And because new trees grow faster and absorb more carbon dioxide than older trees, some companies are even buying and burning down old rainforest to plant monoculture plantations of baby trees. There are even offset projects that sell the credits created by making communities in the global south improve their energy efficiency!
For more information see:
The Inconvenient Truth About the Carbon Offsett Industry by Nick Davies http://www.guardian.co.uk/environment/2007/jun/16/climatechange.climatechange
Offsetting Democracy by Kevin Smith
The Carbon Neutral Myth: Offset Indulgences for Your Climate Sins
Cheat Neutral (video)
Clean Development Mechanism (CDM)
The CDM was designed to help industrialised countries to reach their national emissions reduction targets while simultaneously encouraging the development of low-carbon technologies in the global south. Companies based in the North are given carbon credits for investing in projects that reduce emissions in the global South. These credits can be counted towards meeting the northern country’s emission reduction targets, or sold on the carbon market.
But the mechanism is twisted by corporations to gain massive subsidies for projects such as coal-fired power stations, mega-dams and chemicals factories. In brief: the CDM only accounts for greenhouse gases, ignoring other toxic waste chemicals produced by the company or the social, environmental and human rights abuses they are responsible for. By giving money to dirty industries the CDM increases the pollution of carbon dioxide and other toxic chemicals as the money received is used to build more factories.
The CDM system is is based around the concept of ‘additionality’. This can mean either that the project needs investment money from the sale of carbon credits, or that the project reduces emissions compared to what emissions might have been without it. But cheating by project developers – either claiming the project needs CDM money when really it does not, or by exaggerating the prediction of alternative future emissions – means that billions of dollars of credits have been given to and sold by projects that never needed assistance from the CDM to be built at all. Strangely, the companies applying for the carbon credits are responsible for calculating their own emissions reductions, writing their own reports, and paying the companies who check their books! In this way, the CDM creates carbon credits that allow industrialized countries to emit more than their Kyoto targets without really reducing pollution elsewhere at all.
For more information, see:
Global Coal Gets A Boost From The Carbon Market by Kevin Smith
Offsets Under Kyoto: a dirty deal for the South by Kevin Smith
Abuse and incompetence in fight against global warming by Nick Davies
Clean Development Mechanism: dump it, don´t expand it
International Rivers CDM Factsheet
Joint Implementation (JI) and sustainable development in Eastern Europe
The mechanism of Joint Implementation allows any industrialised country or Eastern European ‘transition’ economy to invest in reducing emissions in any other industrialised or Eastern European country instead of reducing their own national emissions. The difference between JI and the CDM is that JI projects happen in countries which have emissions reduction targets whereas CDM projects happen in developing counties which do not.
For the ‘economies in transition’ in Eastern Europe the Kyoto Protocol agreed that emissions reductions are measured from a ‘base year’ in the pre-transition period (1985-1990) – before the big industries in these countries shut down. Because emissions in the base year were higher than they are now, these countries have many spare carbon credits to sell. These extra credits act as compensation for the costs of transition. But if sold without restrictions, these spare credits could simply allow industrialised countries to meet their Kyoto targets without actually reducing any emissions. Once again, where there is money to be made, things seem to go a bit wrong…
The first Joint Implementation projects in Hungary focused on three projects to switch from coal to biomass for electricity generation at the Ajka, Pécs, and Kazinczbarcika power plants. The company said that the carbon credits sold through Joint Implementation provided the money needed for the project, but in reality a plan to raise the money already existed. Switching from coal-fired to wood-fired electricity generation produced a 1 million ton increase in the demand for wood fuel. This increased wood prices, put enormous pressure on local forests and increased wood imports from Romania, Ukraine and Slovakia where forestry regulations are weaker than in Hungary.
For more information see:
UNFCCC Joint Implementation Website
Hot Air? Carbon Markets and Sustainable Development by Gábor J. Takács http://www.developmentandtransition.net/index.cfm?module=ActiveWeb&page=WebPage&DocumentID=689
Reducing Emissions from Deforestation [and Forest Degradation // in Developing countries] (REDD)
Around 20% of our carbon emissions come from deforestation and forest degradation. Forest ecosystems store lots of carbon dioxide and when they are cut down or burned, most of this is released back into the atmosphere.
The REDD mechanism currently being negotiated at the UNFCCC wants industrially developed countries to fund the protection of forests in the global south by estimating how much carbon dioxide is stored in forests and then paying for it to be kept there. The details are still being discussed, but all of the proposals have some important problems.
Who owns the forest? Without secure land rights, indigenous and local communities will be forced off their homelands as the value of forests increases and corporations move in to capture the profits. Like carbon trading, REDD is just another capitalist expansion of land and property rights.
If the scheme is funded by paying out carbon credits, the millions of extra credits created would force down the price of carbon, making it cheaper for other polluters to buy credits than to reduce their emissions. It would also make deforestation depend on the market price of carbon credits – when the price of carbon is low it will be more profitable to cut down the forest for industrial use than to sell the credits from protecting it.
The UN definition of ‘forest’ currently includes plantations. Plantations store only 20% of the carbon dioxide that forests do, and they damage biodiversity and soil. Clearing forests to develop plantations has serious consequences when indigenous and local peoples are removed to make space for industry, and the plantations divert local water supplies. This definition will make it more profitable to clear the forest, sell the wood and then create plantations to earn REDD carbon credits.
Although in theory anyone can participate in REDD and indigenous and local peoples can earn extra money – in reality, language barriers and technical complexity mean that most people will not be able to participate – unless they can pay for translators and consultants.
For more information see:
REDD Myths: A critical review of proposed mechanisms to reduce emissions from deforestation and degradation in developing countries.
World Rainforest Movement: From REDD to HEDD
- European Union Emissions Trading Scheme (EU ETS)
The EU ETS is the largest carbon trading scheme in the world. To minimise the economic cost of emissions reductions, EU countries set up an internal market for companies to trade carbon dioxide pollution credits. Under the EU ETS each member state creates a National Allocation Plan, setting an emissions cap for each individual plant in the country. The plan is then approved by the European Commission. Companies that exceed their quotas then buy unused credits through the ETS from companies that reduce their emissions.
But the EU ETS is widely considered to have been a big failure. Because of heavy lobbying by big corporations, many industries were not included, such as shipping, aviation, transport and buildings. Member states could have individual plants excluded from the system, and in times such as very cold winters, additional emissions allowances could be issued by national authorities.
Powerful corporations lobbied for the carbon credits to be handed out for free, and far too many were given away, meaning that no companies had to reduce their emissions because more credits were handed out than were needed to cover all the carbon dioxide emitted by all the companies that were part of the scheme. So many credits were handed out that the market price of carbon collapsed as most companies had spare credits to sell and few needed to buy any to cover their excess emissions.
For more information see:
EU Emissions Trading Scheme
Companies clean up – in the wrong way
- World Bank
Anyone who knows anything about the World Bank might be surprised to hear that it is jumping on the bandwagon to save the planet from climate change…or at least it is pretending to.
The World Bank has created a range of Climate Investment Funds that buy emission reduction credits from Clean Development Mechanism, Joint Implementation and Forest projects. From 2005-2007 the Bank ran ten emission-reduction funds, earning itself around $260 million for doing so. At the same time the Bank invested over $1.5billion in high-emissions fossil fuel (coal, oil and gas) projects and in 2008 the Bank increased its funding of coal projects by 256%!
One example of a project the World Bank is funding is the ‘FaL-G Brick and Blocks project’ in India. The Bank will buy emissions reductions made when 200 small brick-makers switch from using coal-fires to harden their bricks to using self-hardening fly ash. But fly ash is a radioactive by-product of coal-fired power plants. The Bank has turned toxic waste products into assets, rewarding fossil fuel dependent power plants and factories. The Bank claims that these projects help the poor by bringing jobs to India, ignoring that the inputs for these bricks come from polluting sources and are poisonous for humans to handle. The UN body that regulates North-South carbon trading asked the Bank to include these emissions in the projects’ carbon footprint, but the Bank said no!
The Bank continues to fund mega-dams which cause serious environmental and social damage and emit lots of GHGs. It has also been condemned by its own Inspection Panel for continuing to support industrial logging, soy and palm oil plantations and cattle ranching – violating the rights of indigenous and other forest-dependent communities. Ultimately, the World Bank’s emission-reduction deals pour money into projects that produce cheap and easy carbon credits: not only does this reduce the money available for real, small-scale renewable energy projects, but also often these ‘carbon credits’ don’t produce any emissions cuts at all.
For more information, see:
The World Bank and the carbon market : Rhetoric and Reality by CDM Watch
FoE International: The World Bank and Climate Change
The World Bank’s Climate Investment Funds: Still Fueling Global Warming
The World Bank’s Carbon Deals by Janet Redman
- Fighting Back
There are many groups and organisations who are researching, documenting and fighting against carbon trading and the mechanisms created by the UNFCCC. Some of these are listed below and their websites contain a lot of useful information and reports.
Many of these groups are coming together to mobilise against the COP15 summit it Copenhagen in December under the network name ‘Climate Justice Action’ – www.peoplesclimateaction.org. There are already two mass actions being planned by this network – see their website for more details. Another network mobilising against the summit is ‘Never Trust A Cop’ – http://nevertrustacop.wordpress.com – who are calling for autonomous groups to come and do affinity group actions throughout the summit.
It is vitally important that activists around Europe do not ignore this summit. Climate change is being used by governments and corporations around the world to expand property rights, create new markets and revive a dying capitalist system by painting it green. Only another Seattle will raise the possibility to stop this.
Carbon Trade Watch – www.carbontradewatch.org
CDM Watch – www.cdmwatch.org
Biofuel Watch – www.biofuelwatch.org.uk
Sinkswatch – www.sinkswatch.org
Oil Watch – www.oilwatch.org
Red Monitor – www.redd-monitor.org
World Rainforest Movement – www.wrm.org.uy
International Rivers – www.internationalrivers.org
CEE Bankwatch – www.bankwatch.org
Corporate Europe Observatory – www.corporateeurope.org
The Cornerhouse – www.thecornerhouse.org.uk/subject/climate
Climate Justice Now! – climatejustice.blogspot.com
La Via Campesina – www.viacampesina.org
(see especially www.viacampesina.org/main_en/index.php?option=com_content&task=view&id=745&Itemid=1)