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Kyoto Protocol biotic offsets are completely unverifiable', making Kyoto a cheat's charter' ... in boreal regions would heat planet rather than cool it due to ... – PowerPoint PPT presentation

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Title: Overview

  • Overview
  • Emissions trading in trouble
  • CDM, JI (and offsets generally) in trouble

  • The trouble is different in kind and additional
    to that of public investment, subsidy-shifting,
    conventional regulation, standard-setting, taxes,
  • Emissions trading and offset trading often are
    not compatible with, or slow down or interfere
    with, other measures.
  • Beyond market design problems.

  • Emissions trading in trouble
  • CDM, JI (and offsets generally) in trouble

  • Potential AAU demand 3 Gt
  • Potential AAU supply 7-8 Gt
  • but there are reservations/technical
    problems about using hot air, helping to
    bring into prominence
  • Potential CDM credit supply 1-3 Gt?
  • ( although these can equally be regarded as
    hot air)

  • plus . . .
  • JI credits
  • Voluntary market project-based credits

  • Emissions trading in trouble beyond market
    design problems
  • measurement
  • structural change innovation
  • property rights

  • Measurement
  • Technology and political culture
  • No parallel with SO2 trading
  • There is no reason to expect that countries will
    reduce their greenhouse gas emissions to comply
    with quotas that cannot be effectively monitored
    and enforced.
  • Daniel Cole, Indiana University

  • Structural change innovation
  • Incentive for short-term changes, low-hanging
  • Disincentive for immediate start on difficult,
    long-term structural changes
  • ? both the immediate start and the structural
    nature of the changes required are esp.
    significant with global warming (cf. SO2).
  • ? contradiction between 2 objectives of market
    does the market complement long-term structural
    policy measures or interfere with them?
  • ? many practitioners of innovative shifts aimed
    at the long term see carbon market as

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  • There is so much carbon buried in the worlds
    coal seams alone that, should it find its way
    back to the surface, it would make the planet
    hostile to life as we know it.
  • Tim Flannery, 2005

  • 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
  • Source Falkowski et al., Science, 2004

  • Property rights

Quasi-Privatization of Existing Global Carbon
Dump by the UK Proposed National Allocation under
the EU Emissions Trading Scheme, 2005
  • ? Conflicts
  • N-S colonialism
  • within business community
  • between business and government ?
    overallocations ? no scarcity ? price crash
  • between trading proponents and
    environmentalists and the public

  • ? corporations encouraged to lobby for
    overallocations and to (mis)interpret
    competitiveness as requiring overallocation

  • The big six UK electricity generators are getting
    around US1.2 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.

  • CDM, JI (and offsets generally) in trouble beyond
    fixable design flaws
  • incoherence
  • measurement
  • change and innovation
  • property rights

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  • Reduction

  • Offset


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  • Measurement

  • Risk
  • Uncertainty
  • Ignorance
  • Indeterminacy

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  • Risk
  • Uncertainty
  • Ignorance
  • Indeterminacy

  • There is no technically correct answer
    Never has so much been said about a topic by so
    many without ever agreeing on a common
  • Mark Trexler, 2006

  • Measurement
  • 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
  • There is a lot of relabelling of business as
    usual as additional. Up to 50 per cent of
    projects are not really additional.
  • Michael Schlup, The Gold Standard
  • CDM carbon-accounting methodology will create
    other Enrons and Arthur Andersens.
  • Bruno vanderBorgh, Holcim Cement

  • prone to fraud and fluctuations beyond the
    control of the developer or the CDM Board.
  • O. P. R. Van Vliet et al., 2003
  • If theres an eight-fold difference in price,
    we cant be talking about the same product.
  • Francis Sullivan, HSBC, 2005
  • What, exactly, are we trading in?
  • Environmental Data Services Report,
  • 2005

  • Risk
  • Uncertainty
  • Ignorance
  • Indeterminacy

527 682
Kyoto Target
High growth
Net flux, million tons C
Low growth
Source IIASA
  • Kyoto Protocol biotic offsets are completely
    unverifiable, making Kyoto a cheats charter.
  • International Institute for
  • Applied Systems Analysis

  • Not to mention social displacement and
    innovation effects that cannot be quantified, etc.

Uncertainty Revealed Year by Year
  • 1998 German ACGC cautions against counting
    growth of forests as emissions reductions.
  • 1998 - Technocrats and NGOs propose
    discounting or insuring carbon credits
    derived from biospheric dumps.
  • 1999-2002 IIASA says Kyoto Protocol completely
    unverifiable due to accounting uncertainties.
    Proposes quantification and pricing of
  • 2000 VERTIC says forestry and land use must not
    be used to meet emissions reductions commitments
    since changes to carbon stocks will rarely be
  • 2000 IPCC land use panel assumes without
    evidence that emissions and removals by sinks
    can be aggregated quantitatively.
  • 2001 R. A. Houghton suggests carbon errors as
    large as 500 per cent in the forest inventories
    of northern mid-latitudes.
  • 2001 Royal Society cites urgent need to reduce
    uncertainties before land carbon sinks are used.
  • 2001 World methane sources found to be uncertain
    by 20 to 150 per cent.
  • 2003 UN, consultancy and NGO discounting and
    insuring proposals continue to leave uncertainty
    unquantified or to ignore it.

Ignorance Revealed Year by Year
  • 1990s-2003 Missing terrestrial sink of 110
    80GtC, or 3GtC/yr ( half of annual fossil fuel
    emissions), remains unfound.
  • 1990s Scientists warn that ocean warming could
    result in sudden catastrophic releases of methane
    from methane hydrates on sea floor
  • 1998 German ACGC warns that complex nonlinear
    dynamics of terrestrial ecosystems sets them
    apart from energy-related processes.
  • 2000 Review article in Science warns that
    unanticipated feedback effects between carbon
    and other biogeochemical and climatological
    processes will lead to weakened sink strength in
    the foreseeable future.
  • 2001 UK Met Office calculates tree-planting in
    boreal regions would heat planet rather than cool
    it due to albedo effects.
  • 2001 Met Office reveals lengthening of dry
    seasons could abruptly result in catastrophic
    releases of carbon through fires in Amazon,
    pushing temperatures up 6-8 º C. in 100 years.
  • 2003 UN, consultancies and NGOs continue to
    speak as if discounting and insurance can
    cover the possibility of unanticipated findings.
  • 2003 CDM Methodological Panel rejects
    methodology for Plantar project which was based
    on assumption of stable exchange rates between
    US and Brazilian Real.

Indeterminacy Revealed Year by Year
  • 1999 Michael Grubb concedes impossibility of
    measuring or defining climatic difference between
    with- and without-project scenarios but then
    reinterprets this indeterminacy as uncertainty
    or difficulty.
  • 2000 Yamin and Haites admit there is no
    correct account of what would have happened
    without a project but propose settlement by
  • 2002-3 Project certifiers express concern that
    UN rulebooks inability to screen out business
    as usual CDM projects put them in a difficult
  • 2002-3 Developers, brokers and government
    ministers counterattack, scorning the idea that
    carbon projects must be better for the climate
    than what would have happened without investment
    in them, and reinterpreting the Marrakech
    agreement accordingly.
  • June 2003 PCF forced to concede that this is a
    misinterpretation of Marrakech.
  • May 2003 CDM Methodological Panel rejects
    methodology used to claim that Brazilian avoided
    fuel switch project is not business as usual.
  • June 2003 CDM forced to reject all 12 mitigation
    projects proposed to it to date on the ground
    that they could not be proved to be activities
    which would not have happened anyway.
  • 2003 Project proponents begin to admit that some
    projects rejected by CDM are going forward
    anyway, meaning that they are indeed business as
  • June 2003 NGOs with a stake in CDM begin arguing
    that such projects are not necessarily business
    as usual e.g., that they were not BaU at the
    time of application but later became so, or that
    initial CDM interest enabled them to find other


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  • No verifiable climatic equivalence between Cu
    and Cb ?
  • No commensuration ?
  • No hybrid commodity (Cu Cb) ?
  • No exchange ?
  • No climate market

  • In lay language . . .
  • Carbon offsets do not offset.

  • Carbon neutrality cannot be verified.

  • There is no such thing as additionality or

  • The use of the word emissions reductions to
    designate CDM (or offset) project-based credits
    is unsupported is mere rhetoric although
    enshrined at the heart of the Kyoto Protocol, the
    Linking Directive of the EU ETS and various
    voluntary offset schemes. It assumes what is to
    be proved.
  • CDM and other offset investors are not investing
    in emissions reductions.

  • Structural clean energy transition through CDM?
  • In the North? No.
  • Making housing carbon neutral through offsets
    elsewhere is not what we aim for . . . If we
    want to make a difference, we will use our
    strengths to drive policies into a low-carbon
    economy. James Beale
  • In the South? Also no.

of CERs generated/yr (April 2006)
  • The CDM is not working.
  • CDM Gold Standard staff member
  • It is not encouraging companies to devote funds
    to renewable energy sources . . . to the extent .
    . .hoped
  • Wall Street Journal, 11 August 2005
  • It is widely recognized that . . . the
    end-of-pipe developments that so far constitute
    the bulk of CDM projects have no direct
    development benefits.
  • Holm Olsen, UNEP
  • While there were high hopes that the CDM would
    usher in climate-friendly FDI . . . this remains
    largely to be seen.
  • R. A. Alburo Guarin,
  • Development Bank of the Philippines

  • Property rights
  • Concern within business community (legal staff,
    NZ forest owners, etc., etc.)
  • Conflicts with grassroots
  • Few in the market can deal with
    communities . . . We ran into a big storm . . .
    we had a lot of permanence rocks thrown at us.
  • . . . It was like stepping into a stream full
    of piranhas. Rabobank official
  • Property ownership in purported new carbon dumps
    dependent on command of expertise.

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  • Closure orders were slapped on several of these
    plants for pollution violations in December 2006.
  • Similar plants in Karnataka have
    already-registered CDM projects that are
    described by even an ex-member of the CDM Meth
    Panel as blatantly business as usual.

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  • Complementarity between credit trading and
    constructive measures on climate change?

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Demonstration against deserto verde, Espirito
Santo, Brazil, 2005.
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Plantars CDM Project
  • Part of the World Bank Prototype Carbon Fund
  • 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

  • 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
  • Letter from 50 trade unions, local
  • groups and academics, Minas Gerais, Brazil

  • Again, does giving carbon a price (partly
    through project-based mechanisms) complement
    other environmental policies, or interfere with

  • 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?

  • 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

  • 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
  • dont dare eat the fish
  • from the streams here.

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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.

  • Again, is the carbon market complementary to
    other measures?

  • The carbon market doesn't care about
    sustainable development. All it cares about is
    the carbon price.
  • Jack Cogen, Natsource

  • The Sandor Sequence
  • 1. Structural change needed demand for capital
  • 2. Uniform commodity standards
  • 3. Legal instrument providing evidence of
  • 4. Informal spot/forward markets
  • 5. Emergence of exchanges
  • 6. Futures, options, etc.
  • 7. Proliferation of OTC markets, etc.
  • Were at stage 6.
  • Well, yes and no. Stages 2 and 3 are
    unachievable, so are succeeding stages
    sustainable? Cant measure, cant manage. Let
    the market do it? Garbage.

  • 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

Two kinds of climate action
  • Continue extraction but find
    new CO2 dumps.
  • Overuse?
  • Cut extraction.
  • Entrench inequalities through Unequal use?
    privatization so big users can keep using
    most dump space.
  • Find ways of using dump more equitably.

  • What does the offset market teach?
  • Emissions are due to individuals.
  • We can exercise our social responsibility by
    individual consumer action.
  • Fundamental change is really hard (offsets cant
    change the fundamentals of energy use no
    large-scale social change has ever been achieved
    by consumer choice).
  • Climate action is highly technical.

  • I am astonished I have been such a monster.
  • Executive trainer Charlotte Robson, on learning
    that her personal carbon dioxide footprint was
    24 tonnes per year
  • A cost of 156 is nothing. Think of the money
    you spend on lipstick and magazines.
  • Charlotte Robson, on learning that a payment to
    CNC would neutralise her emissions.

  • What does the offset market NOT teach?
  • Climate change is a problem of historical power
    imbalances and large-scale social/technical
    processes and has to be tackled by political and
    social organising.
  • Even what offset companies present as
    unavoidable emissions are avoidable through
    social action.
  • There are limits to using unseen Southerners to
    assuage middle-class individual Northern guilt.
  • The emerging climate movement has many
    encouraging precedents, not in consumer choice,
    but in other social movements against inequality
    and exploitation.

  • 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
  • Contact Larry Lohmann at larrylohmann_at_gn.apc.org.
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