Carbon markets cannot deliver, say researchers

A recent report by a dozen researchers from around the world has charged that the move to establish carbon markets under the Clean Development Mechanism (CDM) in Africa has failed and is hurting the most vulnerable populations.

Nick Meynen and Khadija Sharife

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THE financialisation of markets - a natural extension of capitalism - has created the perfect neoliberal storm. No longer are markets strictly limited to tangible goods and services, i.e., the real economy. These days, it extends to the expansion and proliferation of intangible and speculative assets such as carbon, locating emissions reduction in a futures market controlled by polluting elites. Better understood as 'first world' government politically-backed property rights over atmospheric ecosystems functions, emissions trading markets - specifically that of carbon - represent a bubble propped up by those seeking to eliminate a) origin and 'real seat' accountability in reductions and b) reparations from polluting elites for the lethal impacts. Nowhere is this scam more prominent than in Africa.

Yet, as EU carbon emissions permits drop to a record low price of under 6 euros a ton with no hope of recovery, many wonder why EU policymakers are trying to keep a zombified carbon market alive despite its obvious failings. The overload in credits is caused partly because limits on discharges were set before the euro area entered recession in 2008 and have not been tightened. Yet, the Clean Development Mechanism (CDM) market has even deeper flaws and is hurting and costing the EU, the climate and Africans. A recent report - 'The CDM Cannot Deliver the Money to Africa: Why the Carbon Trading Gamble Won't Save the Planet from Climate Change, and How African Civil Society Is Resisting' - explains why.

The 120-page report was published as part of the EJOLT (Environmental Justice Organisations, Liabilities and Trade) project. In the report, a dozen researchers from around the globe, under the guidance of Professor Patrick Bond from the Centre for Civil Society at the University of KwaZulu-Natal in South Africa, examine in full detail - and through case studies from South Africa, Niger, Kenya, Mozambique, Ethiopia, the Democratic Republic of the Congo and Tanzania - why and how the CDM has failed.

The West's strategy to reduce emissions is causing more harm than good to Africa - the continent that contributes the least to climate change but that suffers the heaviest. Disguised as a 'solution' to the climate change crisis, the CDM is now creating further injustice as the most vulnerable populations suffer the adverse impacts of mitigation and adaptation policies. This is not to mention a massive loss of the EU's supposed credibility as a leader in democracy, transparency and climate change legislation. Here are some of the key problems with the CDM:

* The idea of inventing a property right to pollute is effectively the 'privatisation of the air'.

* The most polluting corporations and the World Bank - which is most responsible for fossil fuel financing - are the driving forces behind the market. They engage in systemic corruption to attract money into the market even if this prevents genuine emissions reductions. Examples of proven fraud, suspected fraud and double-counting cover the big majority of projects.

* Many projects, such as monocultural timber plantations, forest 'protection' and landfill methane-electricity projects, have devastating impacts on local communities and ecologies.

* The carbon sequestered is often far more temporary (as trees die) than the carbon emitted.

* Carbon markets are fast becoming a multi-trillion-dollar speculative bubble, similar to exotic financial instruments associated with Enron's 2002 collapse.

* As a 'false solution' to climate change, carbon trading encourages merely small, incremental shifts, and thus distracts us from a wide range of radical changes we need to make in materials extraction, production, distribution, consumption and disposal.

After the launch of the report last April, the EJOLT team asked all companies that were written about for a reaction, through EJOLT partner Business and Human Rights. Four companies responded. None was able to challenge the fundaments of the research and the report's conclusions.

The authors of the report suggest an immediate moratorium on all new carbon credits in the CDM and the EU Emissions Trading Scheme (ETS) as a first step. Following this, they argue that the CDM and the ETS should be decommissioned - while maintaining and upgrading the level of emission cuts the EU has committed to. Finally, this decommissioning should not decrease adaptation money for Africa but increase it, for the simple reason that they have the right to compensation for the considerable damage caused by these carbon markets. A fair plan to stop climate change must look beyond market solutions to market failure and move towards recognition of responsibility for breaking the climate, binding emissions cuts and transfers to victims in order to foot the bill for the climate debt.

The full report is available on the EJOLT website www.ejolt.org.     

Nick Meynen is head of EJOLT's media arm. Khadija Sharife, an investigative journalist based in South Africa, is coordinator of EJOLT at the Centre for Civil Society at the University of KwaZulu-Natal.

*Third World Resurgence No. 269/270, Jan/Feb 2013, p 46