A timely death?

In the year leading to the Copenhagen Summit, preventing climate change may now finally get a proper global hearing – but not necessarily with useful outcomes. What could be a last ditch attempt to rely on markets to reduce greenhouse gas emissions looks likely to come from carbon trading enthusiast, US President-elect Barack Obama.

His market-friendly approach to tackling climate change is not surprising. Wall Street financiers donated substantially more campaign cash to Obama than McCain. In January 2008 Obama announced: ‘We would put a cap-and-trade system [a carbon trading mechanism] in place that is as aggressive, if not more aggressive, than anybody else’s out there… So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted. That will also generate billions of dollars that we can invest in solar, wind, biodiesel and other alternative energy approaches.’

The idea is that polluters would bid against each other for a share of the emissions allowed under an agreed cap, which in turn they can trade with each other so as to improve economic efficiency.

It may sound like a neat plan. But it won’t work: in part, ironically, because the financial crisis that helped sweep Obama to power has also caused the price of carbon to collapse.

Carbon crash

The crisis crashed so many financial institutions and froze credit markets so quickly that carbon values in the emissions-trading markets plummeted by a quarter during the first weeks of October 2008, from around 30 dollars per tonne to less than 22. The price had been 37 dollars per tonne in July – showing just how quickly an incentive scheme meant to provide stability and security to clean energy investors can do the opposite.

Opponents of emissions trading still need to persuade centrist greens and the broader swathes of society that the carbon market is crazy

A low carbon price is no good for stimulating the kind of investment in alternatives needed: for example, an estimated 50-75 dollars per tonne is required to activate private sector investments in ‘carbon capture and storage’, the as-yet-non-existent technology by which coal-fired power stations could, theoretically, bury liquefied carbon emitted during power generation.

This extreme volatility makes it abundantly clear that market forces cannot be expected to discipline polluters.

Carbon trading, like most climate policies currently under consideration by élites, is what the French sociologist André Gorz would have called a ‘reformist reform’. It is addressing a market-caused problem – greenhouse gases released during most capitalist transactions – with a capitalist ‘solution’. That solution allows the North to continue emitting, through the granting and trading of brand new property rights to pollute. The only real winners are speculators, financiers and energy sector hucksters who have made billions already. As the air itself is privatized and commodified, poor communities across the world suffer and resources and energy are diverted away from real solutions.

But opponents of emissions trading still need to persuade centrist greens and the broader swathes of society that the carbon market is crazy, because conventional wisdom begins with the opposite premise. As Obama himself says: ‘This market mechanism has worked before and will give all American consumers and businesses the incentives to use their ingenuity to develop economically effective solutions to climate change.’

Will it really?

A brief history of failure

Canadian economist John Dales first justified trading in emissions rights by applying market logic to water pollution in a 1968 essay. Then, after the 1980s Reagan/Bush administrations neutered the US Government’s ability to prohibit destructive activities, the _Clean Air Act_ of 1990 was the first to legalize trade in sulphur dioxide to tackle acid rain. This approach was far less successful than parallel European ‘command-and-control’ environmental policies.

Nonetheless, in 1997, the Kyoto Protocol was negotiated to include carbon trading as a core strategy to reduce global emissions. This was because the then US Vice-President Al Gore threatened that his Congress would only sign up if corporations gained the ability to continue emitting above set limits by paying to buy someone else’s right to pollute. After co-opting critics in Kyoto, the Clinton-Gore Administration and Congress did not keep their word and, later, George W Bush pulled out of Kyoto. But the idea of carbon trading stuck and in Europe the Emissions Trading Scheme (ETS) was launched in January 2005.

Ever since, tales of scandals and market mishaps have emerged from dismayed financiers and business journalists. The intrinsic problem in setting an artificially generated market price for carbon was revealed in April 2006 when the ETS crashed, thanks to the over-allocation of pollution rights. The EU had miscalculated on how to set up the market and granted electricity generation firms far too many credits. Carbon lost over half its value in a single day, destroying many carbon offset projects earlier considered viable.

By 2007, the European Commissioner for Energy had admitted the ETS was: ‘A failure’. Peter Atherton of Citigroup conceded: ‘ETS has done nothing to curb emissions…[and] is a highly regressive tax, falling mostly on poor people.’ Had it achieved its aims? ‘Prices up, emissions up, profits up… so, not really.’ Who wins, who loses? ‘All generation-based utilities – winners. Coal and nuclear-based generators – biggest winners. Hedge funds and energy traders – even bigger winners. Losers…ahem…consumers!’

Even the _Wall Street Journal_ confirmed in March 2007 that emissions trading ‘would make money for some very large corporations, but don’t believe for a minute that this charade would do much about global warming’.

The Kyoto Protocol also promotes carbon trading in the Majority World via the Clean Development Mechanism (CDM). This aims to finance emissions reductions project by project: for example, by turning landfill methane into electricity, or by planting trees. But, according to a _Newsweek_ investigation in March 2007, ‘it isn’t working... [and represents] a grossly inefficient way of cutting emissions in the developing world.’

Notorious projects like the Plantar timber monoculture in Brazil secured vast funds, with dreadful consequences for local communities and ecosystems. _Newsweek_ called the trade ‘a shell game’ which has already transferred ‘$3 billion to some of the worst carbon polluters in the developing world’.

In October 2008, with the market crashing, Carl Mortished wrote in _The Times_ of London: ‘The ETS is making a mockery of Europe’s stumbling attempts to lead the world in a market-based carbon strategy. It is causing irritation and frustration to the armies of advisers and investors who seek to cajole utilities into big investments in carbon reduction.’

With friends like these...

All this mainstream criticism should spell the end for what is clearly a bad idea. But many still doggedly endorse the carbon market, including major green groups in the influential Climate Action Network (CAN), which has lobbied most visibly on the Kyoto Protocol. Why? Some would say, pragmatism: it’s the only game in town, according to Sierra Club Canada director Elizabeth May: ‘I would have preferred a carbon tax, but that is not the agreement we have. The reality is that Kyoto is the only legally binding agreement to reduce greenhouse gases. When you’re drowning and someone throws you a lifeboat, you can’t wait for another one to come along.’

But according to Michael Dorsey, professor of political ecology at the US’s Dartmouth College, there is another reason for CAN’s support: some of its leaders have personal involvement in the industry. He lists many prominent greens closely connected to carbon trading firms. Take, for example, CAN board member Jennifer Morgan of the Worldwide Fund for Nature, who took leave for two years to direct work on Climate and Energy Security at carbon trading firm E3G. Or Kate Hampton, formerly of Friends of the Earth, who joined Climate Change Capital as head of policy while simultaneously advising the EU on energy and the environment, working for the California Environmental Protection Agency, and acting as president of International Carbon Investors and Services.

Dorsey concludes: ‘After more than a decade of failed politicking, many NGO types... are only partially jumping off the sinking ship – so as to work for industries driving the problem. Unfortunately, many continue to influence NGO policy from their current positions, while failing to admit to or even understand obvious conflicts of interest.’

Tellingly, in November 2008, Friends of the Earth International formally withdrew from CAN membership.

Serious strategies

The financial crisis has proved categorically that carbon trading is not a seaworthy lifeboat. As temperatures (and sea-levels) rise we are discovering the numerous leaks, opening up space for a crucial debate about how to change the world’s economy into something that does not threaten our descendants’ future. Luckily, countering the more sluggish, corporate-sponsored elements of the environmental movement are grassroots organizations, coming together to oppose market strategies wholesale and advocate direct and equitable measures that reverse addiction to fossil fuels.

Critics from Indonesia, Thailand, India, South Africa, Brazil and Ecuador, together with Northern academics, researchers and radical environmentalists first issued the ‘Durban Declaration’ in October 2004. This sounded the alarm about the ethical and economic shortcomings in carbon trading.

A tragic setback came in July 2007 with the death of Durban Declaration host Sajida Khan. She had battled against a Clean Development Mechanism proposal for methane extraction that had kept open the Bisasar Road toxic dump next to her home – which caused the cancer that ultimately killed her. But in December 2007, the movement joined forces with broader global justice activism at the Bali climate talks and formed the Climate Justice Now! network.

Climate Justice Now! is committed to exposing the false solutions promoted by governments, financial institutions and multinational corporations – such as forest carbon markets, agro-fuels and carbon offsetting. Instead, its members are campaigning to leave fossil fuels in the ground and invest in clean, efficient, community-led renewable energy. These are the only serious strategies in place: to halt climate change at the supply side. They will go much further than market gimmicks towards saving the planet.

*Patrick Bond* directs the Centre for Civil Society at the University of KwaZulu-Natal in Durban, South Africa, and is co-editor of the new book, _Climate Change, Carbon Trading and Civil Society_, available from UKZN Press and Rozenberg Publishers (Amsterdam).

The new apartheid

There has always been a rift between the ruling African National Congress (ANC) and the Congress of South African Trade Unions (Cosatu) on privatization. But it deepened substantially in January when the Government decided to sell the state telephone company, Telkom, under the rubric of ‘black economic empowerment’.

A great deal is at stake here because the probably inevitable departure of Cosatu and the SA Communist Party from the ANC-led alliance will occur over ideological differences – such as whether basic services should be operated on a for-profit basis. Cosatu won a minor victory early in the new year when some railroad privatizations were halted by Transport Minister Dullah Omar. But President Thabo Mbeki has cemented his agenda for ‘restructuring state enterprises’. He labels his trade-union and community opponents ‘ultra-Leftists’ and has so far combined intimidation with divide-and-rule tactics to maintain the pretence of unity.

It has not been an easy job. The union placards say: ‘We did not fight for liberation only to sell it to the highest bidder!’ In October last year a partially successful, two-day strike of a quarter of the national workforce highlighted how far matters had deteriorated. A previous two-day strike had, for Mbeki, badly marred the August 2001 World Conference Against Racism. Then, a year later, the World Summit on Sustainable Development (WSSD) featured a march of 20,000 activists who attacked the ‘privatization of the WSSD’ – including the crucial water and energy sectors.

Access to water and electricity has become a key struggle in South Africa’s townships. One study conducted through the Government’s Human Sciences Research Council found that an estimated 10 million people have suffered water cutoffs and electricity disconnections under privatization, mostly because they couldn’t afford new, higher rates.

As a result the country’s cholera epidemic continues, with more than 140,000 cases since August 2000. Millions of people – especially children – get diarrhoea each year because of unaffordable purified water and atrocious sanitation. Tuberculosis and other respiratory diseases are also rampant since without electricity women are forced to cook and heat with coal or wood.

As the Government prepares to sell off 30 per cent of the national electricity company, Eskom, next year, it too has clamped down on customers in arrears. In Soweto 20,000 households were disconnected every month in 2001 – until resistance from militant communities rolled back the process.

Access to water and electricity has become a key struggle in South Africa's townships...

With Cosatu again campaigning against Telkom’s privatization, there appears to be renewed scope for an ‘alliance of the dispossessed’. Municipal Workers Union members sometimes dispense with traditional ANC loyalties to join Anti-Privatization Forums (APF) in the major cities, even while the latter are tentatively preparing for a future political party challenge to the ANC Government. Most importantly, the APFs and other militant communities continue taking matters into their own hands – including illegal reconnections of electricity and water.

The privatization of Telkom will provide another rallying point for ANC opponents. Telkom’s delivery statistics since liberation in 1994 are shocking. According to Cosatu:

• Since its partial privatization and full commercialization Telkom has increased tariffs for services used by poor households – basic rental and local calls – while slashing rates for rich families and businesses, especially international calls and the internet. Rates recently jumped 13 per cent for low-income families but only 6 per cent for the high-income group.

• Because of high basic costs, poor people can no longer afford phone lines. This has led Telkom to cut 80 per cent of the new land lines installed over the past five years.

• At the same time the company has slashed employment by a third and cut back on investment.

The cost to South Africa’s development, especially to the poor, is unacceptably high warns Cosatu. ‘Privatization can only worsen conditions for the majority. The reality of the Telkom sale is that property is being expropriated from 46 million South Africans to be auctioned off to, at best, 1 million ‘investors’ in the name of black economic empowerment.’

Critics threaten to disrupt further attempts to privatize by targeting merchant banks, foreign firms and international agencies that are promoting the panacea. Whatever the outcome, it is safe to say that President Mbeki’s faith in privatization is jeopardizing the future re-election of the ANC.

*Patrick Bond* teaches at Wits University in Johannesburg and is author of _Unsustainable South Africa: Environment, Development and Social Protest_ (Merlin Press, London). He also co-directs the Municipal Services Project:

Welcome to Jo'burg

As thousands of delegates arrive in the South African city of Johannesburg for the World Summit for Sustainable Development (WSSD) at the end of August, the post-apartheid geography of the city – a microcosm of unsustainability – hints at why the summit will fail.*]*

You fly into Africa’s richest city through a thick brown cloud. Concentrated industrial pollution hangs over the east-west factory strip and power plants while gold-mine dumps to the south of the city perpetually blow sand and dust. Smoke rises from periodic bush fires and the burning of coal and fuelwood in black townships like Soweto and Alexandra (where electricity privatization is the cause of supply cut-offs to tens of thousands of households who cannot afford price increases). The air also carries tuberculosis and rampant respiratory infections that threaten the lives of South Africa’s five million hiv-positive people.

Below, you notice the silvery glinting of tiny metal-roofed shacks in the bright sun, like cauterized wounds on the yellowish skin of a wintry Africa. That’s where the township slums stretch to the horizon and house the majority of Gauteng Province’s ten million inhabitants. Because of a stingy government policy based on World Bank advice, Johannesburg’s post-apartheid squatter camps are worse served with community amenities, schools and clinics than even apartheid-era ghettoes.

Your eyes are drawn away to the contrasting bright green of well-watered English gardens and thick alien trees that shade mostly white suburbs broken by sky-blue swimming pools. To achieve the striking green effect requires a lot of water in a city that, in 1886 when gold was discovered, became the planet’s largest metropolis with no natural water source.

Water waste occurs not only here in the residential zones sprawling north and east of the city centre, but in the southern mining belt, the corporate-dominated farms and the electricity plants. South Africa brags about supplying the world’s cheapest energy for industrial use. It doesn’t price in the damage to the environment, including the world’s worst greenhouse-gas emissions (corrected for population size and income).

Apartheid-era engineers and World Bank project officers have tried to solve looming water shortages with an eight-billion-dollar dam and water-tunnel scheme that draws water several hundred kilometres from across a mountain range in the small and perpetually impoverished nation of Lesotho. Africa’s largest infrastructure project, it is now less than half finished but has already displaced tens of thousands of Basotho peasants, inundated sacred land and threatened ecosystems.

Who pays the bills? Johannesburg water prices went up by 35 per cent during the late 1990s, but township residents with the lowest consumption rates found themselves paying 55-per-cent more because of the cost of the Lesotho dams. The Government has rejected demands by campaigners from Alexandra, Soweto and Lesotho that water-users in the mines, factories and mansions be responsible for paying the dam’s bills and conserving water so as to avoid future dam construction. Such ‘demand-side management’ would also have included repair of perpetual leaks in the apartheid-era township infrastructure; half of Soweto’s water is lost in this way.

The Johannesburg landscape is also being defaced by other greed-driven processes. One reason is ongoing ‘crime and grime’ downtown. The old Central Business District spent the 1990s being virtually emptied of white professionals.

Much of the smart money fled just 15 kilometres northeast of the old business district to the edge-city of Sandton. The area, back to back with the poor black township of Soweto, has attracted billions of dollars worth of world-class commercial property investment, traffic jams and conspicuous consumption. Only the world’s least socially conscious financial speculators would trash their ex-headquarters downtown to build a new city while draining South Africa of capital. Only the most aesthetically barren rich would build their little Tuscanies on Africa’s beautiful highveld (prairies), behind three-metre-high walls adorned with barbed wire to keep out the criminals.

Sandton, then, is the location of the conference centre that will host the WSSD. A Social Forum, or people’s alternative to the official meeting, is a necessity – not least to challenge those local and global rulers who have made such a mess of Africa’s wealthiest city.

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