The Invisible Hand of Climate Change, part 2

Clean Development and Exploitation
By James Barber

In the last post I described how Emissions Trading provides a smokescreen for the contradictions of recognising the threat of climate change and expanding fossil fuel exploration and extraction. Emissions Trading also provides an incentive for large renewable energy projects and carbon sinks which are focused on maximising profit and earning Credits rather than pursuing a just and fair way of reducing emissions. This leads to the appalling treatment of indigenous people in developing countries and workers.

Renewable Power funding Dirty Energy

One of the most disturbing elements of Emissions Trading are the methods of off-setting emissions or earning Credits. Two of these are the United Nations established, Clean Development Mechanisms (CDM), which consist of renewable development projects in developing countries, and Joint Implementation Projects (JI) in developed countries. These flexible mechanisms are part of the market based approach pushed for by the USA when the Kyoto Protocol was being negotiated. Businesses can apply under these schemes to earn Credits which are later traded or sold on the Carbon Market. Clever businesses can play the Market and use projects which qualify for Credits under the CDM or JI as money making ventures and use the Credits which they earn to cover fossil fuel industries.

One clear example of this happening is the Spanish oil giant Repsol (the company which “overestimated” potential emissions to get millions of free Credits). This company funds some of it oil exploration and burning through the Credits earned by a subsidiary called Rycopesa. Rycopesa encourages small South American businesses to switch to LPG which they produce. This earns Credits as, on face value, it produces fewer emissions than coal or oil. However, LPG is more expensive than the alternatives and businesses are locked into buying a more expensive fuel which Rycopesa profits from. The Credits earned are then sold cheaply in house to Repsol, who uses them to cover their oil and gas activities in Europe. Instead of stopping their fossil fuel business we see a company finding multiple ways of making profit using Emissions Trading.

Green Business: Putting Profit before People

The development of renewable power and carbon sinks has led to the dispossession of indigenous people and the appalling treatment of construction workers. The Credits earnt through Emissions trading, and the financial profit from the industry, gives huge incentive for this.

Megadams

The rights of indigenous people and citizens are often trampled over in the pursuit of this new form of profit; Carbon Credits. For example, there has been a huge boom in massive hydro-electric dams in Brazil. Credits provide another incentive to build these huge projects. Four of these are being built along the 3,000 km long Madeira River. The river is host to 900 species of fish and is one of the largest in South America. While these dams are built to cater native fish the potential risks of failure are catastrophic with extinction imminent. (World Watch, 2010) The largest of these are the Jirau dam (8km) and the Santo Antonio dam (3km). Both of which were built without consultation with indigenous people and have displaced or affected hundreds of local communities. (Guardian Weekly, 2013, Carbon Trade Watch 2013) In addition, companies have minimised cost through the appalling treatment of workers. The standard pay for construction workers on the Jirau dam was roughly $525 per month. Poor pay and working conditions led to a 26 day strike by the 18,000 construction workers on the dam in 2011. This strike action was only broken by the intervention of the Brazilian armed forces. (Carbon Trade Watch, 2013) Further strike action occurred by workers on both sites in 2013. Even if the incentives provided by earning Credits through the EUETS were not the sole reasons for these dams being constructed it is another example of how the ETS is rewarding companies with Credits for unjust practices.

With the construction of mega-dams it should be kept in mind that the effect on local eco-systems can more than counteract any potential environmental gains from renewable electricity. The diversion of water can of course destroy local eco-systems which rely on it, and this rotting matter of course releases huge amount of methane emissions (which are twenty times more powerful a GHG than CO2).

Wind and Solar

Similar problems have occurred with wind and solar projects. For example, eleven wind projects and five solar projects are planned or in process of construction in occupied Western Sahara. Five wind projects have already been completed. In all of these cases the indigenous Sahrawi were not consulted and oppose the occupation of their territory for these projects. With no consultation these projects are in violation of UN legal opinions on the matter which view Western Sahara as a colony of Morocco. Despite this at-least two of these projects are being considered by the CDM to qualify for Credits. (Western Sahara Resource Watch, 2013)

Carbon sinks

The dispossession of land for carbon sinks has also occurred. This has happened through the UN administered REDD programme (Reducing Emissions through Deforestation and forest Degradation). A report published in November 2014 The Darker Side of Green by “The Oakland Institute” describes what the authors call Carbon Violence. The report describes the disruption of the lives of between 8,000 and 40,000 people. This occurred when the Ugandan Government gave permission for Norwegian owned “Green Resources” to establish an 11,000 hectare plantation for a carbon sink in Northern Uganda. People were no-longer able to graze animals or grow crops in land they had used previously. In addition homes and places of cultural significance could either no-longer be accessed or access was restricted by the company. They describe first hand interviews with affected people, “Some villagers shared accounts of their homes being destroyed by company employees to make way for the establishment and recent expansion of forestry plantations. Frequently, the villagers described the forced relocation of agriculture, grazing, and other livelihood activities, including during the corporation’s 2011 expansion of tree planting areas at both sites. Community members from one village reported that company staff arrived without notice, and “just started to plant trees on top of our crops… we were evicted without discussion.” The authors attribute this to the legal framework of the privatised forest where it is now property of Green resources. “As a result of government and later company evictions, people with historical access and use rights have been criminalized as “trespassers” and “encroachers.”’ (Oakland Institute, 2014)

The Carbon Market Conclusion

The problem with a Carbon Market, such as that established by Emissions Trading, is that it only creates an incentive to create renewable power and reduce emissions in a way which maximises profit, rather than a just or sustainable way. Other factors become secondary to the driving force of maximising profit (if they are considered at all). Emissions Trading simply provides another way for companies to fulfil their purpose, which is to maximise profit. It maintains the status quo rather than providing the changes needed to mitigate climate change in a just way.

As described earlier Emissions Trading masks the bizarre contradiction of talking about the threat of climate change while drilling for more oil and gas. But it also creates another incentive for the appalling treatment of people who are in the way. Except this time it is done in the name of environmentalism. The consequences of pursuing profit can be seen in Aotearoa with the erosion of rights around consultation and protest against deep sea oil drilling. However, because of the ineffective nature of our ETS we’re not taking action against the unjust confiscation of land to build solar farms and carbon sinks, yet.

James Barber