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    Features

    REDD: Seeing the forest for the trees

    Khadija Sharife

    2010-04-29, Issue 479

    http://pambazuka.org/en/category/features/64056

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    There’s a difference between carbon emissions in developed and developing countries – that of ‘extravagant’ carbon versus ‘survival carbon’, for the provision of basic services such as electricity. But it is a distinction that market-based responses like carbon trading, driven more by financial interests than a desire for sustainable development, fail to consider. Khadija Sharife takes a closer look at UN carbon trading scheme REDD (Reducing Emissions from Deforestation and Forest Degradation).

    All carbon is not created equal: One ton of carbon dioxide (CO2) generated in New York from several McDonalds burgers, for instance, clocking in at 16kg per 1kg of meat, is not the equivalent of one ton of CO2 emitted in a country like South Africa, where energy generated from coal provides basic services such as electricity. The difference – though blurred by mainstream media, which reduces the discourse to the democratisation of pollution impacts, strictly observed between ‘developed’ and ‘developing’ countries – is that of extravagant carbon versus survival carbon. Thankfully, the developed nations that engage in the process of carbon-intensive industrialisation declare that they have found an equitable solution so rational it has never been put to a vote: Carbon trading.

    Although anti-democratic ‘strong-men’ at the helm of ‘developing nations’ are deplored globally, there appears to be no problem in a global economic architecture controlled via a handful of ‘strong-states,’ such as the G7. This strange reality is evidenced in the fossil fuel consumption by the US (where 25 per cent of global oil reserves are devoured by 5 per cent of the world's population, emitting 19 tons of CO2 per capita), which is packaged by the media in vocabulary equating the former with the world's new largest polluter, China, despite the latter emitting just 4.4 tons per capita.

    At a January 2010 conference titled, ‘Investor Summit on Climate Risk’ held in New York, more than 450 investors controlling over US$13 trillion, declared that action must be taken to pre-empt international climate change treaties in order to develop sustainable economies, chiefly through the carbon market. ‘Copenhagen was a missed opportunity to create one fully functional international carbon market,’ revealed Peter Dunsombe, head of the Institutional Investors Group on Climate Change (IGCC), comprised of European financiers.

    According to the United Nations Environment Programme, 85 per cent of the finance required to make the shift will be derived from private investors. And, as outlined by the Carbon Trading Summit, also hosted in Wall Street's hometown in January, and attended by systemically important financial firms ranging from Barclays Capital to Goldman Sachs, one primary item on the agenda is ‘creating the world's largest commodity market in carbon-backed securities.’

    The commoditisation of pollution is inspired by the rationale of market efficiency: Major polluters issued with permits are incentivised to emit less, thereby enabling them to make a profit selling excess permits to those less efficient. In order to limit the pollution bubble, ‘flexibility points’ facilitate a process allowing for said polluters to finance carbon-light projects in countries that would otherwise engage in conventional methods of ‘development.’ By doing so, securities are generated through various ‘offset’ tentacles designed to exploit the ‘underdeveloped’ status of countries that fail to access and utilise their share of the atmospheric commons.

    One tentacle is REDD: Reducing Emissions from Deforestation and Forest Degradation, which has been branded a revolutionary move by the UN. The initiative is designed to protect and conserve the world's remaining lungs and carbon sinks – forests – where ongoing deforestation and degradation currently accounting for 17 per cent of global emissions from stored carbon. Success, we learn, will be achieved through halting these destructive processes taking place primarily in nations that are under-resourced, punctuated by corrupt or diminished states, unable to police or protect forested land from illegal logging. The REDD initiative also intends to finance the protection and conservation of said lungs: One-fifth of the world’s fossil fuel emissions are absorbed by forests, with Africa acting as a sink for 1.2 billion tonnes of CO2 annually.

    REDD was first proposed in 2005, at the 11th Conference of the Parties (COP-11) by the Coalition for Rainforest Nations, composed of 15 member forested ‘developing’ countries, including Nigeria, Equatorial Guinea and Liberia, with numerous participants from Lesotho, Kenya, Indonesia and Madagascar. The coalition's self-described goals are to generate revenue streams derived from a programme of ‘forest stewardship reconciled with economic development’ that is chiefly driven by communities. Branches of REDD range from the UN-REDD programme to the World Bank's Forest Carbon Partnership Facility. The bank, for instance, remains a key financier with a US$300 million fund.

    The real agenda and primary incentive of the carbon market, however, was articulated by Jack Cogen, president of Natsource (recently labelled as the world's largest buyer of private carbon credits and managing over US$1 billion in ‘natural’ assets), who revealed, ‘The carbon market doesn't care about sustainable development... All it cares about,’ he continued, ‘is the carbon price.’ And Natsource would know. Kathleen McGinty, vice president of asset management was an aide to Al Gore, and key environmental advisor to Bill Clinton. Both were responsible for muscling the carbon market concept (via the pollution's trading system) through the Kyoto Protocol. Gore's Chicago Climate Exchange (CCX), self-titled ‘the world's first and North America's only legally binding integrated emissions reduction, registry and trading system’, began motivating as far back as the Rio Earth Summit in 1992 for the climate change problem to be dealt with via a ‘market-based solution to global warming.’ CCX's board included a host of powerful players such as the UN's Kofi Annan and the World Bank's James Wolfensohn.

    The carbon market system, which was eventually designed by Goldman Sachs (which incidentally holds 10 per cent of shares in CCX), draws on the tradition of Enron, a company that made its billions through exploiting the pollutions trading commodities market, enabled by an amendment to the US Clean Air Act. Ironically, it was the Enron ‘loophole’ – named as such for Enron's lobbying to remove regulation of derivatives from the Commodities Futures Trading Act – that upended systemically important financial firms such as Goldman Sachs, deliberately exploiting regulatory and oversight gaps, now on the receiving end of the US$11 trillion in bail-out funds from the US government. It was also the Enron debacle that catalysed the global recession, impoverishing those on streets with no name – and no safety nets.

    Enron traders would later proceed to capitalise on the Enron ‘model’ such as Louis Bradshaw, head of environmental markets at Barclays Capital, one of the world’s largest traders in carbon emissions and creators of the Global Carbon Index.

    Goldman Sachs employees, such as Ken Newcombe, were architects of the World Bank's Prototype Carbon Fund (PCF). Meanwhile the bank itself emerged as the most important financial instrument in the carbon market following the Rio Earth Summit, despite it bankrolling more than 130 major fossil fuel projects during the past decade, with a fossil fuel project calculated as being financed every 14 days. Since Rio, CO2 emissions from World Bank-related projects are estimated at 43 billion tons.

    The interlocking nature of these relationships is clear. The percentage of officials at the World Bank composed of economists and bankers produced by institutions such as Goldman Sachs is 50 per cent, for example, as compared to development specialists at 8 per cent. And, 75 per cent of financial institutions use standards linked to the World Bank.

    The winner of World Bank policies is none other than the US. A US Treasury report unashamedly reveals this cherished synergy: ‘The policies and programmes of the World Bank Group have been consistent with US interests. This is particularly true in terms of country allocation questions and sensitive policy issues. The character of the Bank, its corporate and voting structure, ensures consistency with the economic and political objectives of the US.’

    Through the instruments of the World Bank, ‘developing’ the economies of heavily indebted regions is now subject to the free market agenda writ large, as forested regions become classified as natural assets that can be exploited through export-oriented activities, which are inevitably dependent on foreign investment.

    Needles to say, given that there is a 92 per cent correlation between rising arms sales and oil sales, with 80 per cent of the world's oil reserves controlled by rent-seeking or rentier governments, the roots of climate change and Northern ‘wealth,’ remain intimately interlocked with that of Africa's suffering and poverty, particularly in those regions whose militarised regimes – such as Nigeria, Gabon, Angola, Equatorial Guinea and others – are dependent on oil exploitation for income.

    It is in this context that the carbon market, estimated at US$3 trillion by 2020, will be realised, rendering it as vulnerable to gaming as derivatives.

    Thanks to the Kyoto Protocol's ‘flexibility points’ – mechanisms that include Emissions Trading (also known as Carbon Trading), the Clean Development Mechanism (CDM) and Joint Implementation – major polluters need not reduce their own emissions. One example of gaming is evidenced in the more than 70 per cent of accredited CDM projects generating Certified Emission Reductions (CERs) directly related to trifluoromethane (HFC-23), a greenhouse gas used a refrigerant. The secretariat of the Clean Development Mechanism estimates that a ton of HFC-23 in the atmosphere has the same effect as 11,700 tons of CO2. However, records reveal that some refrigerant manufacturers deliberately produced excess HFC-23 in order to offset it and claim financial benefits. According to a 2009 paper, ‘Scaling The Policy Response To Climate Change [PDF],’ by researchers, Benjamin Sovacool and Marilyn Brown, the value of this scam exceeded €4.7 billion – well over the estimated €100 million.

    (Sovacool and Brown’s study also evaluated 93 randomly selected CDM projects and found that ‘in a majority of cases the consultants hired to validate CERs did not possess the requisite knowledge needed to approve projects, were overworked, did not follow instructions, and spent only a few hours evaluating each case.’)

    But the incentive for African states to receive funding via carbon credits by establishing ‘farming forests’ is certainly compelling from a financial and ecological point-of-view. After the Amazon, the Central African Rainforest remains the world's second largest forest cover at 18 per cent. Kenya's 400,000-hectare Mau Forest Complex – East Africa's primary water catchment area – for instance, may average 160 tons of carbon per hectare. The carbon stock trapped beneath the land is not the only sink: Each year, African forests sink over 1.2 billion ton of CO2, even though Africa alone contributes less than 3 per cent of emissions globally, with almost half of this generated from activities such as Shell and Chevron's gas flaring in the Niger.

    Multinationals like Shell – precluded from the Copenhagen Climate Summit table as both a major industrial polluter and a duty-holder responsible for reparations – emit more carbon than 150 countries cumulatively. And, despite the intention of carbon markets (and architects) to grant rights to major polluters, by enabling such polluters to circumvent actual emissions reductions by purchasing credits from CDM projects in ‘underdeveloped’ countries, such ‘rights-talk’ remains narrow as it relates to climate change's geographically-fixed discourse composed solely of states and citizens. The former are pegged as duty-holders (whether developed or developing) and the latter as claimants with minimal enforceable rights.

    Studies by the University of Berkeley in the US have calculated that industrialised States could owe US$2.3 trillion in climate change damages that have been inflicted on the ecosystems of developing nations through greenhouse gas emissions as well as depleted water sources and desertification.

    The World Bank estimates the costs of adaptation and mitigation at US$400 billion per annum for developing countries by 2030 if steps are not taken to prevent continued degradation. But just US$10 billion per annum was allocated to all developing countries for the first phase (2010–2012). Paradoxically, in 2009 – the year of Copenhagen Climate Summit – developed governments subsidised fossil fuel industries to the tune of US$300 billion.

    Copenhagen's vocabulary – limited to North-South binaries – was manipulated to represent financial reparations as foreign aid, shifting the discourse from that of equity to charity. It is no wonder, then, that an alleged 50 per cent of first phase climate funds was derived from diverted foreign aid, with little accountability and monitoring. Ethiopia's dictator, Meles Zenawi, who unilaterally decided Africa's fate with France's President Sarkozy, is at the helm of a country facing severe ecological crises due to mass deforestation caused by illegal logging. The country's under-resourced Agricultural Research Institute (EARI) reporting a loss of 200,000 hectares per annum. The head of Ethiopia's Institute of Forestry Development, Dr Alemu Gezahegn, revealed that Ethiopia would lose all forested land by 2020 if deforestation continued at the current ‘alarming pace.’

    France itself maintains an extensive logging footprint in former African colonies and other ‘Francafrique’ territories, such as Cameroon and the Democratic Republic of Congo, with the former being one of the world's top five wood exporting countries in the world, chiefly dominated by a small handful of French companies such as Coron and Rougier and Thanry.

    Al Gore's industry-friendly convenient film, An Inconvenient Truth squarely placed deforestation via illegal logging on the shoulders of individuals; however, records reveal that logging companies exploit as much as five times an individual’s territory. In 2005, the Inter-Press Service quoted (’Corruption Rooted in Logging Industry’) a senior official at the Cameroonian Centre for Environment and Development based in Yaoundé as saying that NGOs could not name the logging companies for ‘fear of reprisal’ while ‘the police shy away from investigating the matter as well... because those who are profiting illegally from logging allegedly include senior police officials.’ As one French national involved in the logging industry revealed to IPS, ‘We're asked for bribes amounting to millions of CFA francs, and we often pay these out.’

    Logging is big money. One aged or old forest Burmese teak can sell for between US$25,000–$30,000 dollars per log. Though wood from Africa and Asia is increasingly treated and finished in China, Europe remains the primary market. Illegal logging of forested lands, generally termed as common property resources (thereby indicating government ownership), or as customary or community ownership and/or lacking ownership altogether, has rendered barren millions of hectares within the Mau Complex in Kenya, and across the continent. Sudan, for instance, has experienced the loss of more than 8.8 million hectares (ha); the Democratic Republic of Congo, 6.9 million ha; Tanzania, 6.2 million ha; Nigeria, 6.1 million ha; and Cameroon, 3.3 million ha.

    Paradoxically, REDD's process is capital intensive, allegedly requiring an average of US$2,000 for every hectare certified after ownership has been legally proved. This renders the process of establishing farming carbon projects similar to other enclave capital-intensive industries where States tend to lack the funds required to finance the ‘investment,’ thus paving the way for foreign financiers. And regimes, whether corrupt or democratic, automatically remain on the receiving end of ‘profit,’ so long as these forests remain open to investment designed to cash in on pollution as well as circumvent emission reductions. As Newcombe stated at 2004's Carbon Expo in Cologne, ‘The World Bank is reducing the risk for private investors.’

    And for private investors, the opportunity is tempting. At the Rukinga ranch in Kenya, for example, wealthy ‘Western’ dotcom entrepreneur Mike Korchinsky and his partner Bob Dodwell spent over US$400,000 over a period of six months certifying and analysing the 80,000 acres of land they purchased for US$10 per acre, engineered as a deal that would benefit from the REDD scheme. They can expect well over US$2 million in returns annually, revealed the UK’s Guardian newspaper.

    But for the Mau Complex's Ogiek peoples who were marginalised from ancestral lands during the days of the British Empire, such conservation observed in Rukinga, informing the thrust of efforts by the Kenyan government to reclaim the Mau, amounts to nothing more than criminality, resulting in the forced displacement of more than 1,650 families since November 2009.

    Unsurprisingly, the US, Canada, New Zealand and Australia collectively rejected the rights of indigenous peoples in the December 2008 Conference of the Parties (COP)-14, as outlined by the heavily bracketed REDD text, discussed at Bali's COP-13.
    Policies resulting in the displacement of vulnerable peoples like the Ogiek mark the general trend of REDD projects: Of 144 projects assessed by the International Institute for Environment and Development (IIED), just one project ‘included a proposal to make community-managed forests or indigenous peoples’ rights a binding part of REDD,’ revealed the UK's Guardian newspaper.

    And despite peoples such as the Ogiek possessing the complex knowledge base required to monitor and protect the Mau Complex, this cannot be done without according legal rights to indigenous peoples occupying such land through customary and community ownership – branded by the Kenyan government as squatters. According to the Washington-based Rights and Resources Institute, the process would cost just US$3.50 per hectare. But the ‘paper parks’ backed by the UN have failed to acknowledge forests as ‘socio-ecological ecosystems,’ preferring instead to protect ‘natural’ land devoid – or cleansed – of peoples, lending to the rationales of the conservation and privatisation tradition.

    The intellectual structure of pollutions trading was initially created by economist John Dales in his 1968 essay ‘Pollution, Property and Prices’. The essay, which proposed a market for pollution rights and trading, did so by defining a set of ‘transferrable property rights’ that could be utilised using the vehicle of allowable quotas of pollution emissions that could be bought and sold. This, in essence, is used to justify the privatisation and propertisation of natural resources and ecosystems by financiers. As David Victor stated to the US’s Council of Foreign Relations (CFR), emissions permits ‘are assets that like any other property right, owners will fight to protect.’

    In that same year, Garrett Hardin's infamous ‘Tragedy of the Commons’ essay, published in the prestigious journal Science, stipulated that without centralised control or private ownership, land that is ‘held in common’ by multiple users (such as the Maasai) would be subject to overuse and exploitation from individual self-interest and greed. Hardin, who advocate for the denial of food aid in ‘overpopulated’ countries and continents, would later amend this theory, declaring that an unregulated commons was the heart of the problem. Hardin's rationale has become a self-evident truth, with leading property rights specialist and economist Hernando de Soto claiming that property rights are ‘at the core of the capitalist system.’

    It is a system that many in Africa – where just 2-10 per cent of land is privately held (usually acquired through State connections) – simply cannot afford to compete in, even less so under REDD. In Kenya, chunks of the Mau Forest Complex have been acquired by bogus companies related to the State with concessions large and small, such as the Moi-connected Sian Enterprises. Others include Olalarusi Inv Far (9,887 acres), the Catholic Church of St Francis (7,305 acres), Ilgina Contractors (3,202 acres) and the Kiptagich Tea Estate. Ironically, many like Ilgina, whose directorship is comprised of the powerful Ntutu family (Agnes Naropil Ntutu, Kiteleiki Ntutu and Kunini Ole Ntutu), were party to the registration and allocation of land via the Ntutu Presidential Commission (1986) demarcating the boundaries of the Maasai Mau Forest. According to the hard-hitting Nation newspaper, ‘members of a powerful [Ntutu] family in Maasai amassed chunks of land, virtually owning the entire Maasai Mau Trust Land Forest in Narok.’

    Unlike Korchinsky and Dodwell’s plan at Rukinga ranch, where 50 community ‘shareholders’ will receive returns from the project, and US$600,000 will be ploughed back into protection, there exists little accountability for the bulk of forest concessions. ‘Logging companies may turn into carbon companies. In most countries in Africa you can do what you like, log out the trees, put in roads, do anything. There is little or no monitoring. The rewards could be 99 per cent for me and 0.5 per cent for the communities,’ stated Dodwell.

    Nor is there input for law enforcement agencies in multinational home countries such as France, or host countries, such as Kenya and Cameroon, with leakages between markets and territories left at the discretion of financial firms such as Goldman Sachs and financial institutions like the World Bank.

    ‘Alarm bells are ringing. The potential for criminality is vast and has not been taken into account by the people who set it up,’ stated Peter Younger, an Interpol Environment Crimes Specialist, to the UK's Guardian newspaper. ‘Organised crime syndicates are eyeing the nascent forest carbon market,’ he said. ‘Carbon trading transcends borders.’

    These syndicates operate through the same shadow networks established by financial firms, banks and accounting firms that facilitate illicit capital flight from the continent, artificially impoverishing Africa – at a price tag of US$148 billion per annum, according to the African Union.

    The potential trade in carbon rights and carbon farming is already bringing out the big guns around the globe. More than US$100 million in bogus credits had been extended to indigenous tribes in South and Central America. Meanwhile, near Australia, Kevin Conrad, Papua New Guinea's Special Environmental Envoy and Ambassador for Climate Change, revealed: ‘We found that because Papua New Guinea was advocating a regime shift in forests, we had every carbon cowboy in the world descend upon Papua New Guinea and try to get a deal with some landowners ...that [would] somehow gave them some credibility.’ World News Australia reported, for instance, that Papua New Guinea leader, Abilie Wape was kidnapped at gunpoint by the police to ‘legally’ surrender the carbon rights of the Kamula Doso peoples forest. ‘Police came with a gun. They threatened me. They told me, ‘You sign. Otherwise, if you don't sign, I'll ... lock you up,’ Wape is reported as saying.

    This warning was similar to that of Kenyan Prime Minister Raila Odinga in 2009, when he suggested that every single Ogiek would face arrest if they did not voluntarily move as part of the government's plan to ‘reclaim’ the Mau Forest Complex. This move had been promoted as part of the agenda to secure the Mau's crucial forested land, which also generates East Africa's primary water catchment area that supplies major rivers and lake systems, including the Nile and Lake Victoria, and feeds into Uganda, Tanzania, Somalia, Ethiopia and Sudan.

    This was, of course, never directly connected to the REDD process that is still in the planning stage. According to a source, a special consultation process is still being planned for indigenous peoples living in forests in the coming weeks, including issues related to compensation.

    If any forest peoples remain, that is.

    BROUGHT TO YOU BY PAMBAZUKA NEWS

    * This article first appeared in The Thinker (April 2010).
    * Khadija Sharife is a journalist and visiting scholar at the Centre for Civil Society (CCS). She is based in South Africa.
    * Please send comments to [email protected] or comment online at Pambazuka News.

    NOTES

    WHAT IS A CARBON SINK?

    A carbon sink is a reservoir that can absorb or ‘sequester’ carbon dioxide from the atmosphere and include forests, soils, peat, permafrost, ocean water and carbonate deposits in the deep ocean. Most of these carbon sinks are very large and very slow moving; human influence on these sinks is generally deemed fairly minimal, with the possible exception of soils and agriculture. The most commonly referenced form of carbon sink is that of forests. Plants and trees absorb carbon dioxide from the atmosphere via photosynthesis, retain the carbon component as the building block of plant fibre and release oxygen back into the atmosphere. Therefore, long lived, high biomass plants, such as trees and forests represent effective carbon sinks as long as they are maintained.
    Source: International Emissions Trading Association

    WHAT ARE THE KYOTO PROTOCOL FLEXIBILITY MECHANISMS?

    The central feature of the Kyoto Protocol is its requirement that developed countries limit or reduce their greenhouse gas emissions. By setting such targets, emission reductions took on economic value. To incentivise and help countries meet their emission targets, and to encourage the private sector and developing countries to contribute to emission reduction efforts, negotiators of the Protocol included three market-based mechanisms (also known as ‘flexibility mechanisms’) – Emissions Trading, the Clean Development Mechanism (CDM) and Joint Implementation. The CDM, for example, allows emission-reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one ton of CO2. These CERs can be traded and sold, and used by industrialised countries to meet a part of their emission reduction targets under the Kyoto Protocol.
    Source: www.globalissues.org

    WHAT IS CARBON FARMING AND CARBON TRADING?

    Carbon Trading is a market-based mechanism for helping mitigate the increase of CO2 in the atmosphere. Carbon trading markets are developed that bring buyers and sellers of carbon credits together with standardised rules of trade.
    Source: www.carbontrading.com

    WHO ARE POTENTIAL BUYERS FOR CARBON CREDITS?

    Any entity, typically a business, that emits CO2 to the atmosphere may have an interest or may be required by law to balance their emissions through mechanisms of carbon sequestration.
    Source: www.carbontrading.com

    WHO ARE POTENTIAL SELLERS OF CARBON FARMING CREDITS?

    Entities that manage agricultural land might sell carbon credits based on the accumulation of carbon in their agricultural soils either through preventing release of trapped carbon as well as potential sink capacity. Similarly, business entities that reduce their carbon emission may be able to sell their reductions to other emitters.
    Source: www.carbontrading.com


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