Shortly after Ecuadorean President Rafael Correa’s declaration of the Yasuní proposal, some of its official backers – such as the Clinton Global Initiative, the Wallace Global Fund and the World Resources Institute – started making noises about possibly generating carbon revenue by selling offsets and through controversial ‘debt-for-nature’ swaps.1 Former US under-secretary and lead climate negotiator Stuart Eizenstat (currently a director for greenhouse gas trading proponents Chicago Climate Exchange) began singing Yasuní’s praises.2 If the funds don’t materialize from other sources, the Correa Government may well find the lure of carbon financing too shiny to ignore. But the record of the carbon market to date has been less than sparkling.
In Terry Pratchett’s Discworld novels, the principal city of Ankh-Morpork developed an innovative approach for dealing with crime and other antisocial phenomena. The city’s budding thieves and assassins were issued licenses and tasked with the dutiful management of theft and murder, replete with annual budgets, forward planning, quotas and quarterly targets. They were permitted to carry on looting and garrotting the citizenry, provided they could produce the necessary paperwork upon request.
Perhaps a leaf was taken from Pratchett’s books when the authors of the global carbon market epic the Kyoto Protocol (and its sequels such as the voluntary offset market, the European Union’s Emissions Trading Scheme and other spin-offs), penned a comical fantasy about action on climate change. As with Ankh-Morpork, it seems the thieves and assassins in the form of the world’s biggest polluters were given license to mug the citizenry of their share of the atmospheric commons. As we lie concussed on the pavement with a killer headache and empty pockets, we have some time to think about what ills have just befallen us and a chance to warn passers-by about the dangers.
In the 10 years since Kyoto was agreed, the global carbon market has exceeded $64 billion in value, and yet little if any actual emissions reductions have been achieved.3 Despite a global recession, enormous profits have been amassed by some of the world’s most polluting industries. Royal Dutch Shell posted a record first-quarter profit of $9 billion as it celebrates winning concessions to drill in the Chukchi Sea off the coast of an ever-warming Northwest Alaska. Meanwhile BP raked in a hefty $7.6 billion as its former workers at Grangemouth Refinery in Scotland went on strike over their pensions against new owner Ineos. Food costs have been spiralling, belts tightening and little to no substantive action has been taken to reduce greenhouse gas emissions anywhere near the recommended rate. In many countries, emissions have actually increased. Amidst all this, our vision still hazy from the sharp blow to the head, we find a cautionary tale for Yasuní and any talk of tapping into the global carbon markets to finance the deal.
The carbon markets have been a colossal failure. According to Nick Pitts-Tucker of Sumitomo Bank, the Kyoto market is a ‘risible disaster’.4 Peter Atherton of Citigroup asserts that the European Union’s much feted Emissions Trading System ‘has done nothing to curb emissions’ and adds that it has led to a ‘highly regressive tax falling mostly on poor people’.5 Even billionaire über-capitalist George Soros dismisses the carbon markets as ‘ineffective’. ‘It is precisely because I am a market practitioner that I know the flaws in the system.’6
What’s been created is akin to a sub-prime market in carbon, where companies are trading cheap bogus ‘credits’ generated from dubious projects in the South to justify the West’s continued fossil fuel addiction – all in the name of ‘clean development’. And like that other sub-prime market, it could steer us into another global recession; only this time the exaggerated pronouncements of the sky crashing down on our heads may well be borne out. With all that we know about how ineffective current market-based approaches have been, you would think that at some point policy-makers would admit that their experiments with carbon markets were all so much pie in the sky and change tack. But not only has the carbon feeding frenzy continued unabated, even more ludicrous policies are being chummed into the policy sea for the sharks to feed on. Policy alternatives like Yasuní risk being consumed by this climate market hysteria.
A new agreement reached at last year’s climate talks in Bali takes all this further by recognizing ‘avoided deforestation’. Reducing Emissions from Deforestation and Degradation (REDD) allows Northern countries to finance forestry projects such as through the World Bank’s growing portfolio of carbon funds (it currently has 10 such funds), and claim carbon credits in return. The Bank, incidentally, continues to fund the fossil fuel industry – to the tune of $1.5 billion in the last two years alone.7 Its track record on forestry is abysmal. Not long ago it provided support for the Plantar project in Brazil which is associated with human rights abuses, land grabs, water depletion and destruction of indigenous ecosystems and forests to make way for monoculture eucalyptus plantations that locals call ‘green deserts’. Indigenous groups are sounding the REDD alert. Simone Lovera of the Global Forest Coalition warned that: ‘Indigenous people are victims of climate change and now they are going to become victims of climate change mitigation.’ An unambiguous statement by a number of indigenous peoples’ representatives voices their oppostion:
Yasuní is an opportunity to articulate a different model of international co-operation on climate mitigation. One that is not a snake-pit of profiteering, improbity and inaction, but genuinely oriented towards a positive post-oil future
‘[REDD] will increase the violation of our rights to our lands, territories and resources; cause forced evictions; prevent access and threaten indigenous agriculture practices; destroy biodiversity, cultural diversity, traditional livelihoods and knowledge systems; and cause social conflicts. Under REDD, States and carbon traders will take more control over our forests.’8
The implications of these policy trends are worrying and signal what we might expect to see happening around the Yasuní campaign. How long will it be before we see proposals for ‘avoided species extinction’, ‘avoided oil spills’, ‘avoided chemical contamination’, and the like? And if you think I’m being flippant, there are already schemes underway elsewhere for ‘mercury pollution trading’, ‘wetlands banking’ and ‘oil pollution trading’; and even a pilot scheme for ‘endangered species credit trading’. Some of the schemes are so arcane you’d have to be a wizard just to get your pointy-hat-wearing head around them. Figuring out whether they have anything to do with the environment at all, or are just some complicated subsidy, tax dodge or very expensive poker game, with the planet and its people as the stakes, is another matter.
The price we pay for pricing nature
Another area of concern is with regard to ecological debt. For years, environmental justice activists have been pointing out that there is a great ecological debt owed by the industrialized countries to the Majority World for the North’s disproportionate consumption of natural resources, lion-share of responsibility for global climate change and lingering impacts of colonialist and neo-colonialist enterprises that have literally asset-stripped whole countries bare. But it’s one thing to rally behind ecological debt as a campaigning platform, and a wholly different matter when inventories and stock-taking actually start taking place. There are no doubt many accountants and ‘environmental economists’ who are already wondering what Yasuní’s net worth might be in terms of its ‘ecosystem services’. Putting a price on carbon stored in forests, water filtration in wetlands, prevention of soil erosion in grasslands, etc, is already a booming industry; and such values are already being used by governments to decide whether to allow a coal-fired power station to be built on a bird sanctuary, or a landfill to be sited near a low-income community.
Carbon pricing has been the overriding consensus for many years. A cosy understanding between industry, government and some leading NGOs dominated climate talks on the subject for over a decade. Al Gore famously praised ‘the magic of markets’ after returning from the 1997 climate talks that created the Kyoto Protocol. The much-hyped but rarely read nor understood Stern Review on the Economics of Climate Change relied primarily on the cost equations of carbon and its impacts. So too did the equally hyped and equally misread UN Millennium Ecosystem Assessment, peppered with language like ‘natural capital’ and a rather rosy assertion that: ‘While some functions of nature will always struggle to be reflected in markets, new opportunities are emerging to put a price on services previously assumed to be free.’ Groups like the World Resources Institute (one of the backers of the Yasuní proposal) asked themselves: ‘What are Mother Nature’s life-support services worth?’, and have spent years tallying up a rough back-of-the-envelope calculation with help of the UN and the World Bank in an effort to derive a neat summation (apparently they reckon about $33 trillion).9 It’s like some surreal television game show. Whoever can come the closest to guessing the value of the planet’s net worth wins an all-expenses paid eco-holiday for two to Yasuní National Park. Carbon Neutral® of course…
The real danger is that once a dollar value has been assigned to something as arguably incalculable as a tree, a forest or, yes, even a human life, it allows the bean counters to start comparing costs and benefits. Economists can start to ask, when the price of oil hits $200 a barrel: ‘Does the benefit of extracting a billion barrels of oil outweigh the cost of destroying the Yasuní National Park and the communities of people that live there?’ Such cost-benefit analysis is the calculus of globalization – a branch of mathematics accessible only to the mighty wizards at the World Bank, the UN and various governmental, non-governmental and corporate institutions. Tom Goldtooth, of the Indigenous Environment Network, argues that it is this market-oriented paradigm that has brought about the climate crisis and, as a result, should not be where we find the solutions. ‘They [government leaders] come from an industrialized mindset that looks at technical or market-based solutions. We’re saying that we have to look at the values that have gotten us into this situation. Industrialization separates community from nature.’10
The struggle continues...
This is the international environmental policy context in which the Yasuní proposal inevitably finds itself. The real challenge is to see just how much it can stay the course and not fall prey to the greenhouse gangsters lurking behind every corner. Activists on the ground argue that the struggle to protect the integrity of the Yasuní proposal is ultimately one of sovereignty.
Ecuadorian activist and founder of the Southern-based Oilwatch Network, Esperanza Martinez, argues that the carbon market’s intrusion into the political space opened up by the Yasuní proposal represents an enormous threat. ‘This framework emboldens those actors who believe that it is possible to accommodate the proposal within the sale of environmental services… Sovereignty as a concept and practice, both in terms of the ecosystems and cultures of indigenous people, cannot be turned into a commodity to be sold on the market of political policies or quick-fix carbon-shifting “solutions”.’11
There are many things that give cause for optimism. The Yasuní proposal – while yet to be formally postulated – puts flesh on the bones of some of the core demands climate activists have long been calling for. It is an implicit recognition of the concept of ecological debt that the over-polluting North owes the South. It asserts indigenous peoples’ land rights. It provides genuine financial incentives for protecting one of the world’s most significant biodiversity hotspots. It’s a genuine civil society policy proposal with an engaged support base, thanks to the excellent work of grassroots groups in Ecuador including solid organizations like Acción Ecológica and Oilwatch, as well as numerous indigenous rights groups and local communities. It doesn’t attempt to value the carbon of either the forest or the oil beneath. It bases the proposal on the very real and incontestable value of the extracted oil as saleable commodity (at a $135-a-barrel peak at the time of writing). And it endeavours to keep an estimated one billion barrels of oil in the ground, where it belongs if we are to make any progress on cutting the fuel supply to dangerous climate change.
Yasuní is an opportunity to articulate a different model of international co-operation on climate mitigation. One that is not a snake-pit of profiteering, improbity and inaction, but genuinely oriented towards a positive post-oil future. Various actors are attempting to lay claim to its future, and the battle lines are being drawn around issues of self-determination, control of resources, land rights and environmental justice. As Martinez writes: ‘Sovereignty is at the root of resistance to the commodification of land and life. Who can lay claim to it, and practice it, promises to be an ongoing struggle.’11 While the stakes couldn’t be any higher, only time will tell who will emerge the victor.
- ‘Leaving Ecuador’s Oil in the Ground, 2007’, Commitment by Wallace Global Fund, Clinton Global Initiative. http://tinyurl.com/64tuul
- Transcript of ‘Energy & Climate Change: Protecting Tropical Forests’, 26 September 2007. http://tinyurl.com/5egd62
- World Bank, ‘State and Trends of the Carbon Market 2008’, 7 May 2008. http://tinyurl.com/5mm9r3
- Presentation at Said Business School, Oxford University, September 2007. As quoted in: ‘Carbon Trading: Solution or Obstacle?’ forthcoming in The Impact of Climate Change on India, Larry Lohmann, The Corner House, 2008.
- As quoted in MK Dorsey, ‘Corporate Responsibility & the Politics of Fossil Fuels’, Dartmouth College, Durban Group for Climate Justice, International Co-operation for Development to Address the Climate Change Challenge 19-20 November 2007, United Nations.
- Hugh Wheelan, ‘Soros Slams Emissions Trading Systems: Market solution is “ineffective” in fighting climate change’, Responsible Investor, 18 October 2007.
- Janet Redman, ‘World Bank: Climate Profiteer’, Sustainable Energy and Economy Network / Institute of Policy Studies, 10 April 2008. http://tinyurl.com/6gubz7
- Indigenous Environment Network et al, ‘Communiqué from the Indigenous Environmental Network (IEN) on the matter of the World Bank, REDDs’ issue, resulting in the action on the last day of the Permanent Forum’, statement circulated by email.
- World Resources Institute, ‘Valuing Ecosystem Services’, World Resources 1998-99. http://tinyurl.com/66jatz
- As quoted in: Hillary Bain Lindsay, ‘Who Owns The Climate?’, The Dominion, 16 January 2006. http://tinyurl.com/5re49t
- Esperanza Martinez, ‘Yasuní – Our Future in Their Hands?’, translated by Cara Leavey, Carbon Web Newsletter, Issue 8, 24 October 2007.
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