Decoding The Algebra of free trade in carbon
Does the much debated trade in carbon credits mitigate climate change? There is nothing to demonstrate that it has led to reduction in emissions or even in anticipated emissions growth. Genuine environmentalism holds that carbon trade is a fake solution for climate crisis. In fact, it is part of the problem. Gopal Krishna, an environmental and civil rights activist, analyses. He can be contacted at email@example.com.
The Rio+20 Earth Summit in Brazil failed to do anything to arrest the ongoing collapse of global and local ecosystems due to sustained market system failure. The fact that the advocates of Green Economy are also the advocates of carbon trade reveals the true colour of ‘green solutions’ like nuclear energy, clean coal and biofuels besides the dangerous carbon capture and storage experiments, genetically modified trees to sequester carbon, geo-engineering etc.
Will anything change at the next UN meet? Going by past processes, expectations are low from the 18th Conference of the Parties (COP18) to the United Nations Framework Convention on Climate Change (UNFCCC) and the 8th Meeting of the Parties to the Kyoto Protocol (CMP8) to be held later this year in Doha, Qatar, a major fossil fuel producing country.
The 17th session of UNFCCC in Durban failed to acknowledge that carbon markets are encouraging a reliance on fossil fuels and the financialisation of the biosphere. As a consequence, “small island states, coastal people, indigenous people, local communities, fisher folk, women, youth, poor people, elderly and marginalised communities” suffer without any legal remedy, it agreed. Lack of wisdom and any sense of history of free trade amongst those who are negotiating the renewal of the climate treaty have made them connive at carbon trade even in the second commitment period. Ironically, the patterns in carbon trade are quite similar to those of opium trade in the past and arms trading now.
The arms sale of 100 of world’s largest arms-producing companies situated primarily in the USA and EU has increased by $ 14.8 billion from 2008 to $ 401 billion by 2011. Developing countries like India have failed to underline the carbon foot print of the weapons industry in a glaring act of omission. Instead of confronting and reversing this trend, developing countries are participating in the exercise of false climate solutions like carbon trade under the influence of international financial institutions.
Durban revealed the failure in acting to stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous human interference with the global climate system. Sadly, it is sought to be done through carbon offsets and carbon trade which was incorporated in the 1997 Kyoto Protocol, an amendment to the 1992 UNFCCC, on the insistence of the USA which wished to sell it to US Senate as “economically effective” but to no avail. US lifestyle was not negotiable and is still not so.
UNFCCC has the mandate to achieve a reduced pollution level within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner. So far the entire exercise appears to be caught in the narratives of nation states. For instance, it is insincere on the part of developing countries like India to argue that carbon trade leads to poverty alleviation in the same breath as it seeks permits for survival emissions and nano cars.
As long as carbon offsets and carbon trade remain part of the text of the climate treaty, no amount of verbiage can disguise that it is not good for the developing countries. They are imitating the industrialised countries by adopting the practice of externalisation of pollution.
Some 130 bird species have become extinct since the 17th century because of alterations in the climate, landscape and their sources of food. Collapse of bee hives is quite widespread. Agricultural production depends on them. But this does not seem to matter to companies and visionless nation states especially from the industrialised countries.
Being complicit in the business of carbon trade even in the second commitment period is like an act of complicity in the opium trade. The fact is, environmentalism of any sort that supports carbon trade has been hijacked by ungovernable corporations and financial institutions. Carbon trade is emerging as the biggest free trade scandal that entails commerce in pollutants in the name of stopping dangerous interference in the atmosphere and improving the global ecosystem.
The recent frauds in the world’s largest emissions trading programme of the EU and elsewhere have damaged and discredited the carbon trade regime beyond repair. The journey of climate justice from Berlin where the first Conference of Parties to the UNFCCC happened, to Doha where the 18th COP session is scheduled, has been confronted with numerous potholes. The biggest pothole of them all is carbon trade.
Carbon trade is akin to trading of securities or commodities in a marketplace. Emissions trading instruments draw their legitimacy from Article 12 of the Kyoto Protocol. It was and is simply an ill-advised aid for industrialised countries to reduce their emissions between 2008 to 2012 to levels that are 5.2 per cent lower than those of 1990. Financial instruments like Certified Emission Reduction (CER) represent 1 tonne of CO2 equivalent of reduction in greenhouse gas emissions. The current price per CER is 3.25 Euro. It is not about environmental protection. It is about creating a purchasable commodity.
The price of carbon has no mitigation effect on adverse global warming. In such a backdrop, the Indian government’s claim that carbon trade helps in poverty eradication is completely misplaced. Most projects under carbon trade are unmindful of their cumulative impact on environmental degradation, pollution and loss of livelihood. Delhi’s three waste-to-energy incinerator projects, aimed at earning carbon credits amidst bitter people’s resistance, reveal the true nature of carbon trade. They emit greenhouse gases, heavy metals like mercury and persistent organic pollutants like dioxins that subsequently enter our food chain. These projects destroy livelihood of waste recycling workers. Despite this, they got registered as UNFCCC-recognised carbon projects. These projects are part of India’s 2,123 approved carbon credit projects claiming to reduce green house emissions.
Assuming that business enterprises are able to avoid reducing greenhouse gases through carbon trading, how can it be ignored that they are not going to be reducing other pollutants that harm local ecosystem and communities either.
Carbon trade is modeled on the Sulphur di Oxide cap and trade programme of the USA. Under the scheme, more than half of the country’s dirtiest power plants increased their annual soot-forming SO2 emissions between 1995 and 2003. Consequently, communities that are living in the shadows and downwind of these polluting power plants are actually breathing dirtier air.
In 1997, when the amendment to UNFCCC was being negotiated in Kyoto, the US experiment with cap and trade was bulldozed into the text of the Kyoto Protocol by the US negotiators. It was a Himalayan blunder that diluted the Protocol. Despite this, the US did not join the Protocol. Even today it is one of the biggest promoters of carbon trade. Europe which had opposed it initially has chosen to join the bandwagon with a closed mind. The system of such trade is designed to be indifferent to ecological effects of such pollution. The revenue earned from carbon trade is invested in fossil fuels based industrialisation and urbanisation that aggravates the problem instead of solving it.
There is a compelling reason to rigorously examine the valuation of carbon as commodity and the financial derivatives. India and other developing countries ought to initiate the process of disassociating themselves from this questionable trade and its artificial market. Those who advocate the carbon trade regime are in effect discouraging adoption of a fossil fuel free economy based on alternative sources of energy and alternative models of industrialisation and urbanisation.
Ahead of the 18th session of the Conference of Parties to the UNFCCC and the 70th Meeting of the UN CDM Executive Board in Doha, a rationale has emerged for India to come out with a white paper on the impact of carbon trade on global and local ecosystem. Given evident financial insecurities and the current collapse in the carbon market, India should consider withdrawing from carbon trade.
Our legislatures must scrutinise the influence of international financial and military institutions on the goings on in this sector. While unwilling to embrace reductions in carbon emissions, the US government has been internally examining the challenges. According to the report, ‘National Security and the Threat of Climate Change,’ by the government-funded national security think tank, the Center for Naval Analyses, global climate change presents a serious national security threat which could impact Americans at home, impact US military operations and heighten global tensions. The Military Advisory Board and the study team that has authored the report received briefings from the US and UK intelligence community, climate scientists and business and state leaders. The report recommends, “Military planning should view climate change as a threat to the balance of energy access, water supplies and a healthy environment and it should require a response.”
It draws an analogy with the Cold War saying, “The situation, for much of the Cold War, was stable,” One of the authors of the report, General Gordon R Sullivan, Chairman, Military Advisory Board and former Chief of Staff, US Army, said, “And the challenge was to keep it stable, to stop the catastrophic event from happening. We spent billions on that strategy. Climate change is exactly the opposite. We have a catastrophic event that appears to be inevitable. And the challenge is to stabilise things to stabilise carbon in the atmosphere. Back then, the challenge was to stop a particular action. Now, the challenge is to inspire a particular action. We have to act if we’re to avoid the worst effects.”
It is noteworthy that in 2004, North Atlantic Treaty Organisation (NATO), an intergovernmental military alliance, joined five UN agencies to form the Environment and Security Initiative. NATO is currently engaged in environmental security initiatives through its science programme. It is considering ways to help member and partner countries to address the impact of climate change in vulnerable regions.
Continued failure of developing countries like India in getting rid of false solutions from the negotiations due to their incestuous relationship with carbon credit earning companies will lead to a resource conflicts.
The question that needs reflection is whether or not to omit of weapon manufacturing industry and their trade linked to carbon trade, in the un-folding military industrial complex? This appears to be a case of pushing the client states towards agreeing to discuss climate crisis in the UN Security Council (UNSC) which has already been attempted on at least on two occasions.
There is a democracy deficit at the heart of NATO, UNSC, climate negotiations and the carbon trade. There is need for more democracy to combat dangerous interference with real solutions. To begin with, how about holding genuine public hearings on specific carbon trade projects? There is no other way to deal with the algebra of carbon trade that is aimed at maintaining the status quo with brute logic.