Kyoto’s offset mechanism is increasing greenhouse gas emissions behind the guise of promoting sustainable development
By Patrick McCully, executive director of International Rivers.
The world’s biggest carbon offset market, the Kyoto Protocol’s clean development mechanism (CDM), is run by the UN and is intended to reduce emissions by rewarding developing countries that invest in clean technologies. In fact, evidence is accumulating that it is increasing greenhouse gas emissions behind the guise of promoting sustainable development. The misguided mechanism is handing out billions of dollars to chemical, coal and oil corporations and the developers of destructive dams – in many cases for projects they would have built anyway.
According to David Victor, a leading carbon trading analyst at Stanford University in the US, as many as two-thirds of the supposed “emission reduction” credits being produced by the CDM from projects in developing countries are not backed by real reductions in pollution. Those pollution cuts that have been generated by the CDM, he argues, have often been achieved at a stunningly high cost: billions of pounds could have been saved by cutting the emissions through international funds, rather than through the CDM’s supposedly efficient market mechanism.
And when a CDM credit does represent an “emission reduction”, there is no global benefit because offsetting is a “zero sum” game. If a Chinese mine cuts its methane emissions under the CDM, there will be no global climate benefit because the polluter that buys the offset avoids the obligation to reduce its own emissions.
A CDM credit is known as a certified emission reduction (CER), and is supposed to represent one tonne of carbon dioxide not emitted to the atmosphere. Industrialised countries’ governments buy the CERs and use them to prove to the UN that they have met their obligations under Kyoto to “reduce” their emissions. Companies can also buy CERs to comply with national-level legislation or with the EU’s emissions trading scheme. Analysts estimate that two-thirds of the emission reduction obligations of the key developed countries that ratified Kyoto may be met through buying offsets rather than by decarbonising their economies.
Almost all the demand for CERs has so far come from Europe and Japan. In the next few years, Australia and Canada could become significant CER buyers. In the longer term, the US could become the largest single market for CDM offsets under legislation being debated. The climate plan by Republican presidential hopeful John McCain would allow supposed emission reductions in the US to be met through domestic and CDM offsets.
Around 2bn CERs are expected to be generated by the end of this phase of Kyoto in 2012. At their current price, project developers will sell around £18bn-worth of CDM credits over the next five years. The CDM approved its 1,000th project on April 15. More than twice as many are making their way through the approvals process.
Marginal improvement
Any type of technology other than nuclear power can apply for credits. Even new coal plants, if these can be shown to be even a marginal improvement upon existing plants, can receive offset income. A massive 4,000MW coal plant on the coast of Gujarat, India, is expected soon to apply for CERs. The plant will spew into the atmosphere 26m tonnes of CO2 per year for at least 25 years. It will be India’s third – and the world’s 16th – largest source of CO2 emissions.
Many observers had hoped that the CDM would promote renewables and energy efficiency. Yet if all projects now in the pipeline generated the CERs they are claiming up to 2012, non-hydro renewables would attract only 16% of CDM funds, and demand-side energy efficiency projects just 1%. Only 16 solar power projects – less than 0.5% of the project pipeline – have applied for CDM approval.
For a project to be eligible to sell offsets, it is supposed to prove that it is “additional”. “Additionality” is key to the design of the CDM. If projects would happen anyway, regardless of CDM benefits, then their offsets would not represent any reduction in emissions.
But judging additionality has turned out to be unknowable and unworkable. It can never be definitively proved that if a developer or factory owner did not get offset income they would not build their project or switch to a cleaner fuel supply- and would not do so over the decade for which projects can sell offsets.
The documents written by carbon consultants to justify why their clients’ projects should be approved for CDM offsets contain enough lies to make a sub-prime mortgage pusher blush. One commonly used “scam” is to make a proposed project look like an economic loser on its own, but a profitable earner once offset income is factored in. Examples include the Indian wind developers who failed to tell the CDM about the lucrative tax credits their projects were earning.
Off-the-record, industry insiders will admit that deceitful claims in CDM applications are standard practice. The carbon trading industry lobby group, the International Emissions Trading Association (IETA), has stated that proving the intent of developers applying for the CDM “is an almost impossible task”. Industry representatives have complained that “good storytellers” can get a project approved, “while bad storytellers may fail even if the project is really additional”.
One glaring signal that many of the projects being approved by the CDM’s executive board are non-additional is that almost three-quarters of projects were already complete at the time of approval. It would seem clear that a project that is already built cannot need extra income in order to be built.
Michael Wara, a law professor and carbon trade analyst from Stanford University, and Victor show in a recent paper that “essentially all” new hydro, wind and natural gas fired projects being built in China are now applying for CDM offsets. If the developers are being truthful that their projects are additional, this implies that without the CDM virtually no hydro, wind or gas projects would be under construction in China. Given the boom in construction of power projects in China, the fact that it is government policy to promote these project types, and the fact that thousands of hydro projects have been built in China without any help from the CDM, this is simply not credible.
Additionality also creates perverse incentives for developing country governments not to bring in, or enforce, climate-friendly legislation. Why should a government voluntarily act to cap methane from its landfills or encourage energy efficiency if in doing so it makes these activities “business-as-usual”, and so not additional and not eligible for CDM income?
Waste gases
The project type slated to generate the most CERs is the destruction of a gas called trifluoromethane, or HFC-23, one of the most potent greenhouse gases, and a waste product from the manufacture of a refrigerant gas. Every molecule of HFC-23 causes 11,700 times more global warming than that of CO2. Because of this massive “global warming potential”, chemical companies can earn almost twice as much from selling CERs as from selling refrigerant gases. This has spurred concern that refrigerant producers may be increasing their output solely so that they can produce, and then destroy, more waste gases.
A rapidly growing industry of carbon brokers and consultants is lobbying for the CDM to be expanded and its rules to be weakened further. If we want to sustain public support for effective global action on climate change, we cannot risk one of its central planks being a programme that is so fundamentally flawed. In the short term, the CDM must be radically reformed. In the long term it must be replaced.
This article was published in The Guardian on Wednesday May 21 2008, and is posted on Climate and Capitalism with the author’s permission.
I wrote this article right after the Kyoto conference.
The Myth of Kyoto
by Roland Sheppard
After years of discussion, the great majority of the “experts” agree that one of the by-products of burning carbon based fuels, as the engine of industrialization, is most likely “global warming.” Based on this understanding, 150 nations met in Kyoto, Japan, to reduce the levels of carbon dioxide production. Carbon Dioxide in the atmosphere tends to let light and heat from the sun in and to not let heat escape. (Just like glass on the top of a terrarium.) Hence, we have the specter of global warming.
Eventually global warming would lead to climatic changes, higher sea levels, increases in tropical diseases and other calamities. The current Industrial (Capitalist) mode of production of pollution is changing the balance of the terrarium we call earth. To solve one of the problems, “global warming”, the Kyoto conference agreed “in principle” to the following course of action:
• The 38 primary industrial countries will reduce their carbon dioxide production to an average
of 5% below their 1990 levels by the year 2012.
• “Third World” or developing countries are asked to set voluntary limits.
• Once 55 nations representing 55% of the 1990 carbon dioxide emissions ratify the Kyoto accord, it will become legally binding. The “catch 22” is that the accord is only legally binding
on an individual nation if that country ratifies the agreement.
• By buying “pollution rights”(The right to pollute) from another country, a nation can lower its
emissions without lowering the pollution produced in that nation. These “rights” are limited in that they can not exceed the levels of pollution that the rules are trying to impose.
Trading “pollution rights” is already fashionable in this country. This has been advanced by the the Environmental Defense (Offense?) Fund. Under these rules, polluting factories, oil refineries, and other polluting enterprises, may find it more “cost effective “by buying pollution rights or credits from non-polluting industries rather than cleaning up their mess. In reality, it grants corporations and nations (under the Kyoto accords) the right to pollute. The Kyoto accords actually open up the concept of private ownership of the air. (Good air being bought and sold for bad air.)
Even if everything in the accord were enforced or capable of being enforced, the plan can not work. The developing nations are rapidly becoming the main producers of carbon dioxide (See my article on this page about the forest fires in Southeast Asia.). Along with this increase and the 5% of the 1990 levels the carbon dioxide levels are guaranteed to double!
The basic problem is that the present economic system cannot stop from producing pollution. Individual capitalists may be for controls, but the system is based on production for profit. this causes anarchy in production plus intranational and international competition. Capitalist production is not based on human needs let alone on needs of the rest of the environment. Can one expect the developing nations to increase their costs in order to save the world from pollution? If there is a recession will this be possible? Will the present collapse of the “Asian Boom” lead to non-profitable expenditures to prevent pollution?
The only conceivable solution under capitalism would be one super power monopoly that would own and control all of production. That would require wars of such magnitude that humanity would not survive.
In reality, it requires collective ownership of the air by everyone who breaths and collective expropriation of all who pollute in order to stay the present course and maintain the balance necessary for humanity to survive within the terrarium called Earth.
The Burning of Southeast Asia
A recent article in Socialist Action, on the forest fires in Asia failed to point out the basic cause of the fires. The essence of the problem was reported in the November 29, 1997 New York Times . In his article “Asian Pollution Is Widening Its Deadly Reach”, Nicholas Kristof captured the degree of pollution from the burning of the forests in Southeast Asia:
“‘We have no health problems and no drop-off in attendance,’ Ratnajuwita, the matronly principal of a private school in the Sumatran city of Jambi, said as she sat on a couch in her office. ‘Everyone is fine. The only problem is that we can’t use the blackboards in the classrooms.’ Why? ‘The smoke is so thick in the classrooms that students can’t see what is written,’ Ratnajuwita explained patiently. Then she smiled reassuringly and added, ‘But there are no health problems.”’
“The smoke is so thick…that the students can’t see what is written.” This horrifying description is a graphic example of the extent of the pollution caused by the burning of the forests throughout Southeast Asia. The statement: “But there are no health problems”, just reflects the position of the Indonesian government and the ruling rich.
It is estimated that Indonesia’s forest fires, these past few months, have released as much greenhouse gas as the whole continent of Europe will emit this entire year. The escalation of “forest burning”is fueled by the drive to produce more goods (such as palm oil and rubber etc.) at a lower cost for the world market. Forest fires are being lit by the profit motive throughout the world’s rainforests. Rainforests are a basic resource that consume carbon dioxide and produce oxygen through photosynthesis. This destruction of the forests takes away the natural means of dealing with “greenhouse effects”.
Along with the fires, the growth of industry throughout Asia, with no controls over the burning of coal, gas, and wood, has led to a huge increase in greenhouse gas emissions. At its present rate, Asia will soon become the world leader in the production of these emissions.
The rapid development of industry in China and the rest of Asia has been done with no controls. Cars and other motor vehicles are being run with leaded gas. Factories are pouring their toxins into the rivers and sending toxins into the air. This is being done despite the present knowledge about pollution. Capitalists, on a world wide basis are well aware of the dangers of pollution, but they act like sharks in a feeding frenzy as they enter new markets in their quest for maximum profits.
What we are witnessing is the impact of capitalism through out the world and the logic of the “New World Order”opening up new markets on a world scale. Capitalism, at the present time, is running unchecked. Forests, never to return, are being turned into deserts. Streams are being turned into cesspools of industrial waste throughout Asia as a by-product of its “economic boom”.
What we are witnessing is the globalization of pollution along with the expansion of capitalism throughout the world. No place on this planet is safe from pollution. Basically, these acts of capitalism are acts against nature’s current equilibrium. To be more precise, this are acts against the natural order that human beings need to survive. The capitalist system is working against the interests of humanity.
The problems of the environment are so immersed in our everyday lives, that it requires that everyone has to take control of the environment. In the long run, humanity needs a socialist society that has social control over production. Production for use and for the benefit of the human environment — not production for profit with its by-product of pollution.
Nature can and will survive humanity.
The question is will humanity survive, or will the cockroach prove to be the superior species?