When Sir Crispin Tickell had the temerity to suggest that "the business community needs to re-examine the fundamentals of economics" at the recent World Business Summit on Climate Change in Copenhagen, his discordant tone was drowned out by a chorus of over 800 delegates singing the praises of unfettered markets as a means to tackle climate change.
The commitment to carrying on with business as usual took an almost surreal form at times. Indra Nooyi, CEO of PepsiCo, proudly proclaimed "The fact that I flew here for 1 1/2 hours to sit on a panel them I´m flying straight back to the US is an example of our commitment to environmental sustainability."
More worryingly, plans for low-carbon technology give the expansion of high-carbon coal power pride of place. The promotional rhetoric is of Carbon Capture and Storage (CCS), yet those from the power sector are blunt about its shortcomings. "One of the plants we are building is CCS ready, although to be quite frank no one really knows what that is at the moment" claimed Steve Lennon, Managing Director of South Africa´s Eskom. James Rogers, CEO of US-based Duke Energy, added that CCS is at best 15 years off and is likely to prove unfeasibly expensive if it even works at all.
The underlying problem is that business adjusts the problem of climate change to neoliberal economics, which judges value according to financial cost rather than environmental sustainability or social justice. This manifests itself in a promise to massively expand carbon markets. The idea is that governments give out a limited number of permits to pollute; the scarcity of these permits should encourage their price to rise; and the resulting additional cost to industry and power producers should encourage them to pollute less.
Jos Delbeke, Deputy Director-General for the Environment at the European Commission, was in Copenhagen claiming that this is how the EU Emissions Trading Scheme (ETS) is now working. Yet his department´s own data for 2008 shows more international "offset" credits circulating than the level of claimed reductions, while lobbying pressure has resulted in a twin-track system from which every business wins.
On one side, heavy industry like the steel sector has more credits than would be needed to reduce its emissions, so it sells them. Delbeke shared a panel on carbon markets with a representative of ArcelorMittal, which alone gained an estimated subsidy of over €1 billion between 2005 and 2008 by this means.
On the other side, power companies pay less for pollution permits than the cost they pass on to consumers, generating windfall profits that could reach up to around €70 billion by 2012. The circulation of these permits does nothing to help new investment in renewables, as Zhengrong Shi, CEO of Chinese firm Suntech Power, admitted in a second session on carbon markets: "All European investment in renewables, in our sector [solar] is based on a feed-in tariff not the Emissions Trading Scheme or Clean Development Mechanism."
Carbon markets might be used to help polluting sectors avoid other obligations that are placed on them, however. As Giovanni Bisignani, Head of the International Air Transport Association (IATA), put it, "If some governments still want to implement taxes [on aviation emissions], we should get carbon credits to compensate every penny of these taxes."
Other measures to avoid business obligations displace the problem of tackling climate change onto the global South. The Summit´s final Copenhagen Call talks of a crucial role for forest protection in developing countries, with the co-organisers´ Business Case for a Strong Global Deal suggesting that such measures should represent around half of the action needed to limit climate change by 2020.
These figures are taken directly from Project Catalyst, an initiative bringing together "climate negotiators, senior government officials... and business executives", whose presentation (marked confidential) more straightforwardly emphasises the "the size of the prize for business" and, in particular, the opportunities for "companies in forest management, pulp and paper, or construction" to access a "€20-30bn value chain" in developing countries.
Strikingly similar assumptions have found their way into negotiating texts on Reducing Emissions from Deforestation and Degradation (REDD), which will be discussed when UN climate negotiations resume in Bonn next week. Yet the whole idea that deforestation can be stopped by simply putting a price on forests is flawed, with forest communities and Indigenous Peoples warning that it will encourage further land grabs by large companies. They point to evidence that the real drivers of deforestation are the major construction, mining, logging and plantation developments whose owners stand to be rewarded by REDD funds.
These are the voices that the world should be listening to as it seeks to tackle climate change - for, as things stand, even the self-proclaimed "progressives" of big business seem to be putting profit margins above environmental need. Without a more fundamental re-examination, to paraphrase one panellist, they look more like the back end of a horse that is galloping in the wrong direction.
02 June 2009
Business as usual on the climate
(An edited version of this article was published by The Guardian on 28 May)
World Business Summit on Climate Change... quote, unquote
I have a whole notebook from the summit, which will feed a report at some point. In the meantime, here´s a selection of the "finest" quotes from day 1 of the summit...
5. “Tom Burke of [E3G, also of Rio Tinto, also of the UK Foreign Office.” - Tom Burke, overselling himself somewhat whilst proving that conflict of interest is alive and well. His registration badge said Rio Tinto.
4. “We are perhaps the only company using windfarms to generate the electricity powering our oil platforms.” - Fu Chengyu, Chief Executive Officer, China National Offshore Oil Corporation provides some Greenwash, Chinese-style.
3. “Like other industry we should pay only once. If some governments still want to implement taxes [on aviation emissions], we should get carbon credits to compensate every penny of these taxes. ... we can make aviation the first global industry to achieve carbon neutral growth and I hope it will be a model for others to follow.” - Giovanni Bisignani, Head of the International Air Transport Association (IATA), presents the true reason for his industry´s promise of “carbon neutral growth” by 2050.
2. “Sustainable next generation biofuels could increase our carbon footprint by 80 per cent. We are already flying test flights with biofuels of the next generation and we will be able to certify those by 2011. For the first time aviation could have a sustainable alternative to fossil fuels.” - Giovanni Bisignani of IATA, again.
1. “The fact that I flew here for 1 1/2 hours to sit on a panel them I´m flying straight back to the US is an example of our commitment to environmental sustainability." -Indra Nooyi, Chairman [sic] and CEO of PepsiCo.
Copenhagen, 24 May
Welcome to the Bella Center
The Bella Center is in the Copenhagen equivalent of London´s Docklands, and will be site of the main UN climate conference in December. Vestas have erected a wind turbine in the car park in the front, which will be dismantled again when the UN climate conference is over. The car park is full of police vans.
I arrived by metro, walking around a building site to get there. Hardly any of the delegates to the World Business Summit on Climate Change take this route though - it is all taxis and limos.
On first arrival, the staff at registration are from the World Economic Forum and from the World Business Council on Sustainable Development - two of the six co-sponsors of the summit. I was refused a copy of the participants´ list but acquired one by other means... it is a list of men from North America and the EU, headed up by a range of dignitaries including the Queen of Denmark, UN Secretary General Ban Ki-Moon and Al Gore. Most participants are CEOs or senior executives, with a significant proportion of government officials too.
My first “networking” experience involved being approached by a Californian with a Willy Loman personality trying to sell me hydrothermal vents as “the greatest new source of energy since nuclear”. For the most part, though, the CEO club is too inward looking to bother me so I can slip by unnoticed for most of the three days of the Summit.
Copenhagen, 24 May
==
Update: Taking a page of the participants list at random, the ratio of men to women was 4:1. Four of the 43 participants named on the page were from outside of the "annex 1" industrialised countries. (I counted four other pages, where this ranged from 4 to 6 - mostly from Korea, China, South Africa and the Middle East).
The official press pack states that "The World Business Summit on Climate Change gathers more than 800 participants from 47 countries including 500 business leaders, 137 government representatives and 43 NGOs" as well as 261 journalists.
24 May 2009
Climate Greenwash: Vattenfall win
On arriving in Copenhagen, I went straight to the Climate Greenwash Awards ceremony. Swedish energy company Vattenfall won, with 39 per cent of the votes. The company was nominated for “its mastery of spin on climate change, portraying itself as a climate champion while lobbying to continue business as usual, using coal, nuclear power, and pseudo-solutions such as agrofuels and carbon capture and storage (CCS).”A special award also went to the Danish government, for its role in helping establish the World Business Summit on Climate Change, which starts today.
Someone had the bright idea to serve "greenwash" as a drink - good concept, but it tasted like mouthwash with alcohol added to it.
Boat Train
I had a 6am start from Lüneburg to connect with the Hamburg to Copenhagen train. It is literally a boat-train, as you can see from the above picture.
23 May 2009
Carrots for Copenhagen
Zapatista coffee, vegan pay-as-you-like food and a 56-page brochure of workshops... welcome to Buko 32 - a congress of international solidarity movements - being held in Lüneburg, Germany.
The event also marked the start of "The Road to Copenhagen" tour, which will see Carbon Trade Watch traverse Europe in advance of the December climate summit to expose the failings of carbon trading, and highlight alternatives that advance climate justice - or klimagerechtigkeit, as it is called here. I´ll be blogging that on this site.
I was at Buko to give a presentation on Carbon trading from Kyoto to Copenhagen, which can be found here.
The most memorable moment, though, involved Morgan Ody, formerly of Via Campesina and now "happily unemployed but still following the peasant way", inciting the audience to start community gardens and bring the resulting vegetables to protests at Copenhagen in December.
An army of German autonomists brandishing home grown carrots? Bring it on ...
The event also marked the start of "The Road to Copenhagen" tour, which will see Carbon Trade Watch traverse Europe in advance of the December climate summit to expose the failings of carbon trading, and highlight alternatives that advance climate justice - or klimagerechtigkeit, as it is called here. I´ll be blogging that on this site.
I was at Buko to give a presentation on Carbon trading from Kyoto to Copenhagen, which can be found here.
The most memorable moment, though, involved Morgan Ody, formerly of Via Campesina and now "happily unemployed but still following the peasant way", inciting the audience to start community gardens and bring the resulting vegetables to protests at Copenhagen in December.
An army of German autonomists brandishing home grown carrots? Bring it on ...
08 May 2009
UN Climate Negotiations: analysis of latest positions
The US has played its hand, finally, if rather tentatively in the negotiations leading to a new UN climate treaty to be signed in Copenhagen this December. You can find them, with a range of other submissions, on the UNFCCC website. In fact, the US position remains thin on detail - other than to reiterate Obama´s previous statement that the US will reduce emissions to 1990 levels by 2020. To put this in some context, the Clinton administration had agreed to a 7% reduction on 1990 levels by 2012 - before renaging on its promise. The cost extracted for this "generous" concession to binding targets at the time was a system of carbon offsetting, put on the table by Al Gore (the chief negotiator at Kyoto) that still plagues the talks today.
The EU and sectoral carbon markets
There is some admission that these offsets are not working. The European Commission, in particular, now claims that it wants to see "substantial reform" of the Clean Development Mechanism, the controversial system that allows credits from a serious of dubious corporate projects in the global South to be treated as equivalent to "reductions" in industrialised countries.
The EU acknowledges the failings of this system, but its actual proposals for reform currently take the worst aspects of the scheme and exacerbate them. In particular, it advances a proposal for sectoral carbon markets, which is presented as a move away from controversial offset projects. Yet these proposals for ´sectoral crediting´ are being made within the framework of the Clean Development Mechanism, and have the potential to massively increase its scope. At the same time, they would lower the already inadequate checks on environmental sustainability and social justice, bypassing the current requirement to assess each project individually. This has been the dream of dodgy offset developers the world over.
The EU is proposing that CDM offset credits can be generated by any practice that alters ´business-as-usual trends´ in particular sectors - but this is not the same as a reduction. In most sectors, for example, the trend since 1990 (the usual baseline) has involved enormous increases, while the recent growth trends are slower. Depending on the baseline that is chosen, a baseline target could allow for continued increases over and above those that are currently being witnessed.
Another problem is that the existing data is often extremely poor - which means that assessments of business-as-usual are in the hands of the companies active in those sectors themselves. There is a clear incentive here for companies to talk up current emissions levels, in order to then maximise the number of carbon credits they would receive as a result. The over-allocation in the first phase of the EU Emissions Trading Scheme is a clear precedent for just such a practice.
The EU is proposing a separate "sectoral trading" scheme alongside this sectoral crediting - which is as confusing a mess as that sounds. One of the major failings of carbon trading has been this mix-and-match approach, where a finite "cap" is set with one hand, only for that to be lifted with the other hand by "offsets" that increase undermine it.
Since these credits can be sold on an international market, there is a very serious change they would further undermine the integrity of the EU ETS as well.
More new carbon market proposals
There are a serious of other proposals on the table too. These include a whole paper from Korea advocating a National Appropriate Mitigation Actions (NAMA) "crediting mechanism," ie. carbon market credits in relation to emissions benchmarks, which would be set in non-binding national action plans. Norway has a proposal on NAMA carbon credits that ostensibly looks quite similar.
The South Africa delegation, which appears to have swallowed an acronym dictionary, suggests that "NAMAs may comprise individual mitigation actions, sets of actions or programmes. Developing countries may choose from a variety of forms of action, including SD PAMS, REDD, programmatic CDM, no lose sectoral crediting baselines and others"
These are mostly market-mechanisms, although Sustainable Development Policies And Measures (SD PAMS) and REDD can be market-based or regulatory.
By contrast to all the above, Brazil seems to suggest that NAMAs should not generate offset credits.
Watering down EU ambition
Another new and re-iterated aspect of the EU´s proposals relates to its emissions reduction target of 20 per cent to be achieved irrespective of the agreement - although most of this could, if the EU wanted, be met with reductions from abroad - and 30 per cent in the context of an international agreement.
In a joint submission with Australia, Belarus, Canada, Norway, Switzerland and Ukraine, it is reported that the EU defines the 30 per cent as "including Land Use, Land Use Change and Forestry." These emissions are notoriously difficult to verify, for which reason they are currently excluded from the EU´s Emissions Trading Scheme. They also don´t count towards the 20 per cent target.
Including LULUCF "reductions" would help the EU to meet its "more ambitous" target without making that task more ambitious, as a result of which they are included. To give a sense of scale of the difference that might make, the current figures on LULUCF from the European Environment Agency are as follows (countries can choose whether or not to count these towards their current Kyoto Protocol reduction target): "Overall, activities under Articles 3.3 and 3.4, thirteen EU‐15 Member States are projected to remove 57.5 Mt CO2 per year of the commitment period. This is equivalent to 17% of the EU‐15 reduction commitment of 341 Mt CO2 per year of the commitment period, or 1.3 of the 8% reduction target."
That needs decoding. Articles 3.3 and 3.4 relate to aforestation and reforestation (tree planting). 341 Mt is how much CO2 per year the EU is commited to reduce. This means that LULUCF changes accounts for a net decrease of around 1.3 per cent of the EU´s overall emissions, but this is almost one-fifth of the action needed to make a reduction.
In other news: binding reductions for China?
The emergence of a US negotiating position of sorts has been reported with a flurry of excitement about how it has, in turn, pushed China closer to a position from whichit could strike a deal. In fact, the Guardian report names an unofficial source, who floats a potential commitment to "intensity targets." These are not emissions reductions, but relate to the proportion of emissions per unit of GDP. If the economy grows, emissions will be carried along with it.
REDD plus
On deforestation, various countries make proposals for REDD plus. According to the Bali Action Plan of December 2007, which kicked off the current negotiation round, this means: “Policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries”.
REDD-Monitor explains some of the drawbacks here
The best of these positions is from Bolivia which argues for this to be directly funded rather than tied to the carbon market. It says:
"1. A fund based mechanism allows for equitable distribution of funds.
2. It will not allow for off-set mechanisms.
3. Is more likely to ensure environmental integrity.
4. Is able to protect the rights of indigenous peoples and local communities as there is no transfer of rights of carbon ownership to the market.
5. Ensures sovereignty and national as well as local control over REDD-plus activities. Where the REDD plus activities must be framed under the national laws and policies and to not affect the national interests.
6. Forest conservation can be funded, including adaptation activities related to forests."
Climate finance
Some of the key debates concern financing. China, amongst other things, restates that:
"The developed country Parties shall fulfill their financial commitments under the Convention in a measurable, reportable and verifiable manner; any funds pledged outside the UNFCCC shall not be regarded as the fulfillment of commitments by developed country Parties for the implementation of Article 4.3 of the Convention and the Bali Action Plan."
The implication of this is that it still does not accept that controversial World Bank Climate Investment Funds would be counted as financial commitments from developed nations. These funds have the backing of (and funding from) the EU and US, amongs others.
EU Commissioner Stavros Dimas recently let slip that climate financing for development"will have to be both brand new funds and existing development monies." He then stressed that "mostly it should be new," but the fear lingers on that a lot of this money will be a repackaging of previous commitments, topped up by revenues from carbon markets.
The EU and sectoral carbon markets
There is some admission that these offsets are not working. The European Commission, in particular, now claims that it wants to see "substantial reform" of the Clean Development Mechanism, the controversial system that allows credits from a serious of dubious corporate projects in the global South to be treated as equivalent to "reductions" in industrialised countries.
The EU acknowledges the failings of this system, but its actual proposals for reform currently take the worst aspects of the scheme and exacerbate them. In particular, it advances a proposal for sectoral carbon markets, which is presented as a move away from controversial offset projects. Yet these proposals for ´sectoral crediting´ are being made within the framework of the Clean Development Mechanism, and have the potential to massively increase its scope. At the same time, they would lower the already inadequate checks on environmental sustainability and social justice, bypassing the current requirement to assess each project individually. This has been the dream of dodgy offset developers the world over.
The EU is proposing that CDM offset credits can be generated by any practice that alters ´business-as-usual trends´ in particular sectors - but this is not the same as a reduction. In most sectors, for example, the trend since 1990 (the usual baseline) has involved enormous increases, while the recent growth trends are slower. Depending on the baseline that is chosen, a baseline target could allow for continued increases over and above those that are currently being witnessed.
Another problem is that the existing data is often extremely poor - which means that assessments of business-as-usual are in the hands of the companies active in those sectors themselves. There is a clear incentive here for companies to talk up current emissions levels, in order to then maximise the number of carbon credits they would receive as a result. The over-allocation in the first phase of the EU Emissions Trading Scheme is a clear precedent for just such a practice.
The EU is proposing a separate "sectoral trading" scheme alongside this sectoral crediting - which is as confusing a mess as that sounds. One of the major failings of carbon trading has been this mix-and-match approach, where a finite "cap" is set with one hand, only for that to be lifted with the other hand by "offsets" that increase undermine it.
Since these credits can be sold on an international market, there is a very serious change they would further undermine the integrity of the EU ETS as well.
More new carbon market proposals
There are a serious of other proposals on the table too. These include a whole paper from Korea advocating a National Appropriate Mitigation Actions (NAMA) "crediting mechanism," ie. carbon market credits in relation to emissions benchmarks, which would be set in non-binding national action plans. Norway has a proposal on NAMA carbon credits that ostensibly looks quite similar.
The South Africa delegation, which appears to have swallowed an acronym dictionary, suggests that "NAMAs may comprise individual mitigation actions, sets of actions or programmes. Developing countries may choose from a variety of forms of action, including SD PAMS, REDD, programmatic CDM, no lose sectoral crediting baselines and others"
These are mostly market-mechanisms, although Sustainable Development Policies And Measures (SD PAMS) and REDD can be market-based or regulatory.
By contrast to all the above, Brazil seems to suggest that NAMAs should not generate offset credits.
Watering down EU ambition
Another new and re-iterated aspect of the EU´s proposals relates to its emissions reduction target of 20 per cent to be achieved irrespective of the agreement - although most of this could, if the EU wanted, be met with reductions from abroad - and 30 per cent in the context of an international agreement.
In a joint submission with Australia, Belarus, Canada, Norway, Switzerland and Ukraine, it is reported that the EU defines the 30 per cent as "including Land Use, Land Use Change and Forestry." These emissions are notoriously difficult to verify, for which reason they are currently excluded from the EU´s Emissions Trading Scheme. They also don´t count towards the 20 per cent target.
Including LULUCF "reductions" would help the EU to meet its "more ambitous" target without making that task more ambitious, as a result of which they are included. To give a sense of scale of the difference that might make, the current figures on LULUCF from the European Environment Agency are as follows (countries can choose whether or not to count these towards their current Kyoto Protocol reduction target): "Overall, activities under Articles 3.3 and 3.4, thirteen EU‐15 Member States are projected to remove 57.5 Mt CO2 per year of the commitment period. This is equivalent to 17% of the EU‐15 reduction commitment of 341 Mt CO2 per year of the commitment period, or 1.3 of the 8% reduction target."
That needs decoding. Articles 3.3 and 3.4 relate to aforestation and reforestation (tree planting). 341 Mt is how much CO2 per year the EU is commited to reduce. This means that LULUCF changes accounts for a net decrease of around 1.3 per cent of the EU´s overall emissions, but this is almost one-fifth of the action needed to make a reduction.
In other news: binding reductions for China?
The emergence of a US negotiating position of sorts has been reported with a flurry of excitement about how it has, in turn, pushed China closer to a position from whichit could strike a deal. In fact, the Guardian report names an unofficial source, who floats a potential commitment to "intensity targets." These are not emissions reductions, but relate to the proportion of emissions per unit of GDP. If the economy grows, emissions will be carried along with it.
REDD plus
On deforestation, various countries make proposals for REDD plus. According to the Bali Action Plan of December 2007, which kicked off the current negotiation round, this means: “Policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries”.
REDD-Monitor explains some of the drawbacks here
The best of these positions is from Bolivia which argues for this to be directly funded rather than tied to the carbon market. It says:
"1. A fund based mechanism allows for equitable distribution of funds.
2. It will not allow for off-set mechanisms.
3. Is more likely to ensure environmental integrity.
4. Is able to protect the rights of indigenous peoples and local communities as there is no transfer of rights of carbon ownership to the market.
5. Ensures sovereignty and national as well as local control over REDD-plus activities. Where the REDD plus activities must be framed under the national laws and policies and to not affect the national interests.
6. Forest conservation can be funded, including adaptation activities related to forests."
Climate finance
Some of the key debates concern financing. China, amongst other things, restates that:
"The developed country Parties shall fulfill their financial commitments under the Convention in a measurable, reportable and verifiable manner; any funds pledged outside the UNFCCC shall not be regarded as the fulfillment of commitments by developed country Parties for the implementation of Article 4.3 of the Convention and the Bali Action Plan."
The implication of this is that it still does not accept that controversial World Bank Climate Investment Funds would be counted as financial commitments from developed nations. These funds have the backing of (and funding from) the EU and US, amongs others.
EU Commissioner Stavros Dimas recently let slip that climate financing for development"will have to be both brand new funds and existing development monies." He then stressed that "mostly it should be new," but the fear lingers on that a lot of this money will be a repackaging of previous commitments, topped up by revenues from carbon markets.
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