Transcript Document 7323041

Carbon Trading:
Ownership,
Accumulation,
Political Conflict
ATTAC
Orebro
10 March 2007
• The earth has the capacity to handle the equivalent
of 5 cubic kilometres of graphite being released to
the air each decade.
• But in fact the equivalent of 28 cubic kilometres
of graphite are going into the air every decade.
Q. What role is carbon
trading supposed to
play in managing the
overflow (= scarcity of
dump space)?
A. It is supposed to find
the cheapest way of using
less of it (= the cheapest
way of cutting emissions
or achieving a numerical
target imposed by state
regulation).
Q. What is being
bought and sold in the
“carbon market”?
A. The earth’s carboncycling capacity
= carbon “dumps” in
oceans, air, vegetation,
soil, etc.
Q. And how does the
market make the use of
this scarce good “more
efficient”?
Carbon trading’s two aspects
Emissions trading (“cap and
trade”)
Trading in carbon credits
from “offsets” or special
“carbon-saving” projects
Emissions Trading
Q. Governments say that
this is “just an
instrument”, “just a tool”
to make climate action
cheaper? True?
A. Not quite, because it means
governments have to create
• Private property, which they
then have to make
• Scarce, and do the
• Arithmetic needed to make
exchange possible.
Quasi-Privatization of Existing Global Carbon Dump by the UK
Proposed National Allocation under
the EU Emissions Trading Scheme, 2005
Industrial
Sector
Annual gift of
pollution
rights
(mtCO2)
+/- Average
annual
emissions
1998-2003
% of
‘available’
world aboveground carbon
dump
Approx. value
@ €26/tCO2
(early 2006,
pre-crash)
Power
145.3
-6%
1.5-3.0
€2.180b
Iron/steel
23.3
+16%
02.-.05
350m
Refineries
19.8
+11%
02.-.04
297m
Offshore
19.1
+14%
02.-.04
287m
Cement
10.7
+18%
.01-.02
161m
Chemicals
10.1
+12%
.01-.02
152m
Other
23.7
+17%
.02-.05
357m
TOTAL
252.0
+2%
2.6-5.1
€3.780b
• The big six UK electricity generators are
getting around US$1.2 billion per year in
windfall profits from the EU ETS.
• Metals manufacturers threaten to stomp out
of Germany over having to pay for the EU
pollution allowances German utilities got
from their government for free.
 corporations encouraged to lobby for
overallocations and to (mis)interpret
“competitiveness” as requiring
overallocation
Offset
+
Q. Governments say that
this is “just an
instrument”, “just a tool”
to make climate action
cheaper? True?
• Closure orders were slapped on several of
these plants for pollution violations in
December 2006.
• Similar plants in Karnataka have alreadyregistered CDM projects that are described
by even an ex-member of the CDM
Methodological Panel as blatantly business
as usual.
CARBON POOLS (billion tonnes)
Atmosphere
720-760
Oceans
38,400-40,000
Rock
>75,000,000
Land biosphere
living biomass
600-1,000
dead biomass
1,200
Fresh water
1-2
Fossil fuels
>4,130
coal
3,510
oil
230
gas
140
other
250
Fossil Fuels:
Oceans
Forests, Soil, other Vegetation
Oil Coal Gas
Fossil Carbon Pool:
Active Carbon Pool:
Carbon is always moving between the
forests, atmosphere and oceans
The overall amount in all three carbon
stores together does not increase
Carbon is locked away and does
naturally not come in contact with
the atmosphere
Fossil carbon is stored permanently
in coal, oil and gas UNLESS
humans mine coal, extract oil & gas
Once released, it will not move
back into the fossil carbon pool for
millennia – the time it takes for
fossil carbon to be created
Atmosphere
Oceans
Forests, |Soil, other vegetation
Active Carbon:
Fossil Carbon:
Fallacy of Kyoto Protocol carbon accounting:
1t active carbon =
Temporary Storage
=
1t fossil carbon
Permanent Release
Where carbon is stored
Atmosphere
Oceans
Forests, other Vegetation, Soil
Active Carbon Pool
Fossil Carbon Pool
Plantar carbon project,
Minas Gerais
• Part of the World Bank Prototype Carbon Fund
(PCF)
• Carbon credits will finance expansion of already
vast eucalyptus plantations by another 23,100ha
• After approx. 7 years trees will be cut to make
charcoal – produce pig iron – make steel –
manufacture cars – allow more CO2 in the
atmosphere
Charcoal
“The eucalyptus planted over
here is meant for charcoal. It is a
disaster for us. They say it
provides jobs, but the maximum
is 600 work places in a
plantation of 35,000 hectares.
And, when everything has been
planted, one has to wait for six
years. So, what work does it
generate?”
Jorge, former Plantar
worker: “When I started
working at Plantar I was
OK. One day I fainted
after lunch. I was already
applying the insecticides,
fungicides. Then there
were headaches, weakness.
My superior told me,
‘I am firing you because
you do not know if you are
sick or not.’ Six or seven
people died. Plantar said it
was heart failure. Now I
don’t dare eat the fish
from the streams here.”
Demonstration
against deserto
verde, Espirito
Santo, Brazil,
2005.
How nearby
indigenous
people feel
about
commercial
eucalyptus
plantations in
their territories.
What people in the Uganda forest
department said
“We just have to admit that we know
nothing about the trade in CO2, neither how
it will function nor how much the foreign
investor will profit from it.”
Unverifiability makes gaming easy
Example: 125 MW registered wind project in
Karnataka
– Wind energy investments attract accelerated depreciation of
80% in the first year
• Effective tax shelter of 24% of the project cost (at corporate tax rate
of 30%)
– Wind energy gets a 10 year income tax holiday
– IRR in PDD: 7.3%
– IRR without tax benefits calculated by independent observer:
11%
– IRR with tax benefits: 22%
Source: Axel Michaelowa, Perspective GmbH
“The argument that producing pig iron
from charcoal is less bad than producing it
from coal is a sinister strategy . . . What
about the emissions that still happen in the
pig iron industry? What we really need are
investments in clean energies that
contribute to the cultural, social and
economic well-being of local populations.”
Letter from 50 trade unions, local
groups and academics, Minas Gerais, Brazil
“We used to produce coffee and pasta and
cotton. Several different little factories in
their suitable regions. Nowadays, there is
only the eucalyptus. It has destroyed
everything else. . . . Why do they come to
plant in the land suited for agriculture
instead of most suitable areas? Because it
takes ten to 20 years and over here only
seven. All the best pieces of land went to
the eucalyptus plantations, pushing the
small producers away and destroying the
municipalities.”
“In India, people see their land taken away and destroyed both for big and
‘sustainable’ developments, for large dams and small hydros (Uttaranchal),
new carbon sinks (ITC, Andhra Pradesh), environment-friendly wind mills
(Maharashra, Satara), and liquid and gaseous filth from the ‘clean and
green’ companies poison their soils, rivers and air. Beyond boundaries of
their everyday lives and knowledge, climate games go on with baselines,
BAUs, additionality and CER vintages. The Himalayan glaciers meanwhile
continue to melt, cloudbursts and flash floods wipe away whole villages,
prolonged droughts and extremes of temperature create havoc with
agriculture, and cyclones devastate fisherfolk villages. The real and
perceptible danger of climate change is offset by the illusion of the most
absurd and impossible market human civilization has ever seen.”
Soumitra Ghosh,
National Forum of Forest Peoples
and Forest Workers
Conflicts
*N-S
colonialism
*within business community
*between business and government 
overallocations  no scarcity 
price crash
*between trading proponents and
environmentalists and the public
Join us!
•
•
Exchange information
Help hasten return to
constructive solutions
For more information
http://www.thecornerhouse.org.uk
http://www.sinkswatch.org
http://www.carbontradewatch.org
http://www.wrm.org.uy
Download Carbon Trading: A Critical
Conversation on Climate Change, Privatisation
and Power from http://www.dhf.uu.se.
Contact Larry Lohmann at
[email protected].
Two kinds of climate action:
Continue extraction but find
new CO2 dumps.
Overuse?
Cut extraction.
Unequal use?
Entrench inequalities through
privatization so big users can
keep using most dump space.
Find ways of using dump more
equitably.
• Subsidy shifting
• Public investment in structural
change
• Taxation
• Legal action
• Support for existing initiatives
c. 400 BC – State environmental
management, China.
c. 1300s – 2005: Community and
inter-community irrigation
management systems, upland SE
Asia.
c. 1850s – 2005: First national
“environmental regulation” in the
UK.
10,000 BC – 1970s: No pollution trading
systems.
1960s: Academic economists in US &
Canada come up with the idea.
1970s: US lead trading programmes begin.
1990s: Acid Rain (SO2) Programme, Los
Angeles trading schemes.
1997: Kyoto Protocol trading schemes
begin.
2005: EU ETS comes into force.
OVERVIEW: Carbon trading
 Delays transition away from fossil fuels in the North 
“tipping points” come closer in South as well.
 Impedes transition away from fossil fuels in South 
livelihood problems including (again) climate problems.
 Provides new finance for corporate or state “bad citizens”
in local areas, destroying lives and livelihoods.
 These are not mere “anecdotes” or “exceptions.”
 They are (by and large) not “aberrations” that can be
“fixed” but are built into the trading system.
 Carbon trading is not compatible with more constructive
approaches (i.e., it is not a mere “instrument” or “tool”).
 We have a choice – join us.
 Trading delays transition away from fossil fuels in the
North  “tipping points” come closer in South as well.
Why?
• ET creates and hands out property rights to the biggest
polluters in the North, increasing their power and the
inertia of a fossil-intensive system.
• Neither ET nor CDM selects for immediate
investment in long-term structural change in the
North.
• Climatic benefits of CDM credits can never be
verified, injecting climatically meaningless currency
into a system already awash with a surplus of
pollution permits.
• Measurement and enforcement is currently insufficient
even for ET.
 Trading impedes transition away from fossil fuels in the
South  livelihood problems including (again) climate
problems.
Why?
• Most CDM projects have zero or negative effects on a
transition from fossil energy: gas capture projects generate
72% of CDM credits, renewables 2%  associated effects
on life and livelihood.
• Genuinely constructive Southern movements and
initiatives are not recognized in the carbon market.
Property ownership in purported new carbon dumps is
dependent on command of technical Northern expertise.
Carbon credit generators are generally in conflict with
local people.
 CDM tends disproportionately to provide new
finance for corporate or governmental “bad
citizens” in local areas  destroying lives and
livelihoods.
Why?
• Well-capitalized, highly-polluting firms are best
able to hire consultants, get official approval,
generate large blocks of cheap credits, etc.
• Local-friendly renewable projects tend to be
fiddly, small, expensive per credit generated, and
unable to capture green finance.
• The trade is structured in order to annex land, air
and community futures in the South.
“The carbon market doesn't care about
sustainable development. All it cares
about is the carbon price.”
Jack Cogen, Natsource
“[F]ew in the market can deal with
communities.”
Rabobank official
• CDM, JI (and offsets generally) in
trouble beyond fixable “design
flaws”
incoherence
measurement
change and innovation
property rights
Reduction
Offset
+
+
Offset accounting
methodology “will create
other Enrons and Arthur
Andersens.”
Bruno Vanderborght,
Holcim Cement
Many carbon project proponents
“tell their financial backers that
the projects are going to make lots
of money” at the same time they
claim to CDM officials “that they
wouldn’t be financially viable”
without carbon funds.
James Cameron,
Climate Change Capital
Kyoto Protocol biotic offsets
are ‘completely
unverifiable’, making Kyoto
a ‘cheat’s charter’.
International Institute for
Applied Systems Analysis
“[I]t is not an exaggeration to
brand the mechanisms of the Kyoto
Protocol as ‘Made in the USA.’ . . .
The sensitivity of the Protocol to
the market was largely instigated
by the negotiating positions of the
USA.”
Michael Zammit Cutajar,
former Executive Secretary, UNFCCC, 2004
“. . . the EU – now fully committed
to emission trading – was insistent
[at first] that trading should be
supplementary to domestic action .
. . seen as essential to the
development of technologies that
would open the way to a lowcarbon future.”
-- Zammit Cutajar
“The complete
relinquishment of land and
labor to the market
mechanism would result in
the demolition of society.”
Karl Polanyi (1944)