15 World Banks Carbon Trade Fiasco

by Project Censored
Published: Last Updated on

Upside Down World, February 11, 2009
Title: “The World Bank and Climate Change: Sustainability or Exploitation?”
Author: Mary Tharin

Student Researchers: Victoria Masucci and Christine Wilson
Faculty Evaluator: Elaine Wellin, PhD
Sonoma State University

In the name of environmental protection, the World Bank is brokering carbon emission trading arrangements that destroy indigenous farmlands around the world.
The effort to coordinate global action to reduce greenhouse gas (GHG) emissions began with the Kyoto Protocol, which was adopted in 1997 and now has been ratified by 183 nations. While many of the strategies established in the protocol are encouraging, some are proving to have fatal flaws. One such program, known as Clean Development Mechanism (CDM) investment, has become a means by which industrialized countries avoid reducing their own emissions through the implementation of “emissions reduction” projects in developing nations.

In accordance with the Kyoto Protocol, many governments have established “caps,” or limits, on the greenhouse gas emissions that can be produced in their countries. Industries can respond to these government-imposed limits by responsibly reducing their emissions, or they can bypass this process entirely by purchasing “carbon credits” from other industries in other parts of the world who, through CDM investment brokered by the World Bank, trade emission reduction “credits” in order to “offset” excessive emissions.  Joris den Blanken, a climate change specialist with Greenpeace, says, “Offsetting means exporting responsibilities to the developing world and removes the incentive for industry to improve efficiency or to invest in renewable energy.”

While the World Bank claims that this system “supports sustainable development . . . and benefits the poorer communities of the developing world,” the program in reality has become little more than a corporate profit-boosting enterprise. In fact, many transnational corporations are using cap and trade programs not only to avoid emissions responsibility, but to further profit by developing environmentally and socially destructive industries in less developed countries.

In Latin America, where a long history of corporate exploitation has already taken a steep toll, environmentalists and indigenous communities are beginning to speak out about the dangers of the CDM. Because of a myopic focus on greenhouse gas reduction only, and a lack of accountability to local communities, many projects are producing other environmental and social ills that are diametrically opposed to the program’s stated objectives.

Nevertheless, the United Nations Environmental Program reports that, to date, 4,364 projects have been approved for CDM funding, and the movement continues to gain momentum. According to the World Wildlife Fund, the number of new project proposals has risen drastically in just a few years, from less than ten per month in early 2005 to about 100 per month in 2007.

Wood and pulp industries have shown great interest in harnessing the carbon market to justify and finance projects that involve expropriating indigenous farm and grazing land for planting of enormous monospecific plantations. These plantations threaten the area’s biodiversity and can severely deplete water resources.  Author Mary Tharin warns, “From an ecological standpoint, planting large-scale plantations of non-native species in this area is clearly a step in the wrong direction. From a societal standpoint, this could spell cultural genocide.”

According to a 2008 report by Japan Overseas Plantation for Pulpwood (JOPP), entitled “Feasibility Study of Afforestation CDM for Community Development in Extensive Grazing Lands in Uruguay,” the land that would be used for the JOPP’s “afforestation projects,” is currently used for “extensive grazing” of cattle and sheep. The report, which elaborates on “land eligibility,” makes no mention of the people who own, live on, or make a living from the use of the land in question. The only allusion to this issue is the brief assurance that all displaced cattle would be “sold on the open market.” Despite the fact that “cattle and sheep production has been the traditional rural activity in the project area and all the surrounding regions since the17th Century,” the report contends that the establishment of plantations would be a more cost-effective use for the land than pasture. The question then becomes: cost-effective for whom?

The World Bank touts the CDM as an “integral part of the Bank’s mission to reduce poverty through its environment and energy strategies.” However, in Latin America as in other parts of the developing world, the global carbon market is proving to be largely detrimental to the indigenous and the poor. With little or no input on how a project is conducted, local communities have virtually no control over how their land, water, and resources will be affected.

In a recent documentary by Carbon Trade Watch, villagers explained that the massive plantations—which cover about 100,000 acres—are diverting water from local streams, causing a sharp decrease in fishing and killing off medicinal plants. In an interview, one local woman lamented that corporate plantations “continue destroying our community, destroying our citizens, destroying our fauna, destroying our flora, and nobody does anything [to stop it].”

Lack of accountability to local populations is a fundamental flaw in the way CDM projects are presented, evaluated and implemented. The official “Project Design Document Form”—which the CDM Executive Board uses to approve or deny funding—largely disregards the impact of projects on local communities. The document contains no binding legal language, asking only for a “report on how due account was taken of any comments received” by local stakeholders. In their assessment of four CDM projects carried out in Brazil and Bolivia, the EEP found that “participation of local community members was found to be limited.”

While the World Bank pays constant lip service to the importance of sustainability and poverty alleviation in the CDM, it continually fails to deliver positive results for either the environment or disadvantaged communities in the developing world. The global carbon market is proving to be simply another weapon used by multinational corporations to accelerate their incursion on the rights of indigenous peoples and small-scale landholders in Latin America.

The irony of this situation takes on an especially tragic hue since many of the communities at risk have been living in a sustainable manner for centuries and thus should be seen as models in the fight against environmental degradation and climate change. Instead, the World Bank has adopted a system that inadequately addresses one pressing environmental hazard at the expense of other important environmental issues and the wellbeing of the world’s most vulnerable, and often most knowledgeable, of populations.

Janet Redman at the Institute for Policy Studies says, “Farmers [in the global south] are trading communal land rights and their ability to feed themselves for the whims and price fluctuations of the international carbon market.”

Update by Mary Therin
As governments, environmentalists, and industry leaders gear up for UN Climate Change Conference this December in Copenhagen, the debate over carbon offsets has taken center stage. Groups including the European Commission have acknowledged the many shortcomings of the Clean Development Mechanism and are calling for reform. In late April 2009, delegates from all over the world attended the Indigenous People’s Global Summit on Climate Change, producing a declaration which called on governments to abandon “false solutions to climate change that negatively impact Indigenous Peoples’ rights . . . such as carbon trading, the Clean Development Mechanism, and forest offsets.”

Unfortunately, the CDM Executive Board, instead of addressing issues of transparency and accountability, has proposed an expansion of some of the carbon offset scheme’s most problematic aspects. The board has put forth plans to expand its forestry mechanism and ease the funding application process. According to Oscar Reyes of Carbon Trade Watch, these reforms would drastically expand CDM while “lowering the already inadequate checks on environmental sustainability and social justice.”

Meanwhile, the Clean Development Mechanism continues to expand. In May 2009 alone, 132 new CDM projects were submitted for approval, marking an all-time high in the application process. At the same time, more evidence is cropping up all over the globe that many “emissions reduction” projects in the developing world are doing more harm than good. In June 2009, the UK-based Daily Mail published an exposé on a UN-funded chemical plant that has poisoned the local water supply in Gujarat, India. According to Eva Filzmoser of CDM Watch, large hyrdo and gas projects are the most damaging receivers of CDM funding. These projects, she argues, rarely save additional emissions and in fact provide perverse incentives to expand environmentally degrading industries.

In the United States, debate over carbon offsets and cap and trade schemes has erupted since the American Clean Energy and Security Act, also known as the Waxman-Markey bill, was passed by the House Energy Committee in May 2009. While many environmentalist groups are heralding the bill as a huge step toward reducing greenhouse gas emissions in the United States, others point to the prominence of carbon offsetting in the bill as a way for corporations to skirt any real commitment to emissions reductions. According to the Institute for Policy Studies (IPS), up to 2 billion tons of carbon (about 30 percent of current US emissions) could be purchased as offsets under the legislation, half of which would come from developing countries through programs like the Clean Development Mechanism.
While most of the mainstream media and many environmental groups have jumped on the cap and trade bandwagon, organizations such as the Institute for Public Studies, Carbon Trade Watch, and CDM Watch continue to boost public awareness on the dangers of cap and trade. A number of voices, including The Economist, have come out in favor of a Carbon Tax as a more effective way to motivate emissions reductions. These groups are calling for people in the developed world to take the lead by shrinking our own carbon footprints, and demanding a real solution to climate change that starts at home.

For more information, see:
Sustainable Energy and Economy Network (Institute for Policy Studies): http://www.seen.org
Carbon Trade Watch: http://www.carbontradewatch.org/
Friends of the Earth: http://www.foe.org/global-warming
CDM Watch: http://www.cdm-watch.org/