a critical conversation on climate change, privatisation and power development dialogue no. 48 september 2006 Guest editor and author Subscribers are kindly requested to Larry Lohmann inform the Dag Hammarskjöld Centre of any changes of address or subscription Editors cancellations. Niclas Hällström Olle Nordberg Editorial Offi ce Robert Österbergh The Dag Hammarskjöld Centre Övre Slottsgatan 2 Sub-editor SE-753 10 Uppsala, Sweden Wendy Davies Fax: +46-(0)18-12 20 72 E-mail: [email protected] Production editors Website: www.dhf.uu.se Mattias Lasson Gerd Ryman-Ericson The opinions expressed in the journal are those of the authors and do not Design and layout necessarily refl ect the views of the Dag Mattias Lasson Hammarskjöld Foundation. Printers ISSN 0345-2328 Mediaprint Uddevalla, Sweden, September 2006 This issue of Development Dialogue is the Larry Lohmann works second in a series of What Next project with the Corner House, publications. It also forms part of a new phase a small research and soli- in the journal’s history. Development Dialogue darity organisation in the has been given a fresh look - a new cover UK. He is the co-author of design and a new layout. At the same time we Pulping the South: Industrial are introducing a new and simpler numbering Tree Plantations and the World Paper Economy system, consisting of a running number along (with Ricardo Carrere, 1996) and Whose with month and year of publication. This Common Future? Reclaiming the Commons‚ issue is No. 48 in the series of issues published (with Simon Fairlie, Nicholas Hildyard since 1972. The length of Development Dialogue and Sarah Sexton, 1993), and co-editor of issues may vary more than before. We hope The Struggle for Land and the fate of the Forests the new design of the journal will meet (with Marcus Colchester, 1993). Since then, with readers’ approval. he has published articles and book chapters on climate change, land rights, globalisation, Development Dialogue will continue to racism, forest confl icts, development, provide a space for pioneering ideas, and environmental change in Southeast Asia and the essential character of the journal will the politics of cost-benefi t analysis. During remain unchanged. the 1980s he lived and worked in Thailand, most of the time with non-governmental This issue of Development Dialogue is published organisations. in cooperation with the Corner House. Website: www.thecornerhouse.org.uk Contents Editorial note 2 Chapter 1 Introduction – A new fossil fuel crisis 5 Chapter 2 ‘Made in the USA’ – A short history of carbon trading 31 Chapter 3 Lessons unlearned – Pollution trading’s failures 71 Property rights and privatisation 73 Emissions trading vs. structural change 101 The special problems of carbon projects 137 Where’s the enforcement? 187 Narrowing the discussion 190 Summing up – Market ideology vs. climate action 198 Chapter 4 Off sets – The fossil economy’s new arena of confl ict 219 The beginnings – A story from Guatemala 222 From the Netherlands to the Andes – A tale from Ecuador 226 The story continues – Carbon forestry in Uganda 237 Costa Rica – ‘Environmental services’ pioneer 247 India – A taste of the future 254 Sri Lanka – A ‘clean energy’ project that was not so clean 272 Thailand – Biomass in the service of the coal and gas economy 280 South Africa – Carbon credits from the cities 287 Brazil – Handouts for repression as usual 302 Photo Essay Plantar vs. local people – Two versions of history 309 Chapter 5 Ways forward 329 Appendix The Durban Declaration on carbon trading 356 Editorial Note It is now accepted worldwide that the globe is warming to such an extent that the livelihoods of large swathes of the world’s population are under serious threat. Violent and frequent storms wreck people’s habitats; un- predictable weather drastically changes conditions for agriculture; new health threats emerge. As a result, awareness of global warming is in- creasingly infl uencing thinking in both the South and the North. The irony is, however, that some of the responses to the global threat of climate change are likely to cause new and severe problems, which, in a worst-case scenario, could actually increase global warming. As this special report shows, this seems to be the case with carbon trad- ing – a grandiose market scheme set up as the world’s primary re- sponse to the crisis of climate change. The main cause of global warming is rapidly increasing carbon diox- ide emissions – primarily the result of burning fossil fuels – despite international agreements to reduce such emissions. The trouble is that despite being aware of the serious situation, very few decision-makers are ready to tackle the problem at its roots. Instead of reducing the extraction of fossil fuels and searching for other solutions, current carbon-trading policies, in practice, favour the further exploitation of these fuels. Furthermore, new tree plantations, which are claimed as a means of mitigating the consequences of increased carbon dioxide pollution, often drive people out of their traditional living grounds and destroy biological diversity. This special report forms part of the Dag Hammarskjöld Foundation’s What Next project. It focuses on carbon trading and is intended to in- fl uence current climate politics. In the debate on the Kyoto Protocol few actors have expressed a critical view. It is high time, for the pur- poses of debate and policy-making, to put the spotlight on the core problem – fossil fuel extraction and consumption. This publication, therefore, takes a broad look at several dimensions of carbon trading. It analyses the problems arising from the emerging global carbon market pertaining to the environment, social justice and human rights, and investigates climate mitigation alternatives. It provides a short history of carbon trading and discusses a number of ‘lessons unlearned’. Nine case studies from diff erent parts of the world provide examples of the outcomes – on the ground – of various carbon ‘off set’ schemes. The publication project has matured over time. It was fi rst discussed in connection with an early Dag Hammarskjöld What Next seminar in July 2001 on ‘Addressing Nanotechnology and Other Emerging Technologies in the ETC Century’. The editor and main author, Larry Lohmann, who works with The Corner House – a small research and solidarity organisation located editorial note 3 in Dorset, UK – pointed the Foundation to the increasing concern about carbon trading and the need for consolidation of critical per- spectives. As a result, the Dag Hammarskjöld Foundation, in col- laboration with several other civil society organisations, organised an international seminar in South Africa in October 2004. The seminar led to the ‘Durban Declaration on Climate Justice’ and gave rise to the Durban Group for Climate Justice, which is now playing an in- creasingly important role in climate politics. The meeting was also the starting point for the writing of this report. At various times in 2005 and 2006, Larry Lohmann worked on the project at the Dag Hammarskjöld Foundation as a Scholar-in-Residence. Members of the Durban Group have played an important role in the process by contributing to and commenting on the text. An interna- tional network of independent organisations, individuals and people’s movements, the Durban Group is committed to helping build a glo- bal grassroots movement for climate justice, mobilising communities around the world and pledging solidarity with people opposing car- bon trading on the ground. This special report is a thorough, well-documented work, the purpose of which is to inspire critical and far-reaching discussion. Although the topic is complex, it is our hope that the wealth of information the report contains and the dialogue form in which it is written will contribute to broader understanding of the problem and deeper engagement in one of the most important issues of our time. * * * The Foundation’s What Next project, of which this special report is part, aims to contribute to the discussion of crucial development issues in the next few decades. A diverse group of concerned people has come together to engage in intense dialogue. The project is a sequel to the Foundation’s What Now: Another Development initiative of 1975. The What Next deliberations are being compiled in several publica- tions. In addition to this special report, there will be a number of volumes of What Next papers. The fi rst, entitled Setting the Context, was published in July 2006. Volume II and III will follow. The What Next Report 2005-2035, to be published before the end of 2006, draws on the major debates of the What Next process. It presents a number of possible scenarios for the next three decades, and includes concerns about various ‘solutions’ to climate change such as large-scale ‘geo- engineering’ schemes as technological fi xes to the problem. Olle Nordberg, Niclas Hällström, Robert Österbergh Chapter 1 Introduction A new fossil fuel crisis In which the growing climate crisis is traced mainly to the mining of coal, oil and gas; the dangers to survival and livelihood are outlined; the political nature and implications of the problem explored; and reasonable and unreasonable solutions sketched. We’ve all heard about climate change. But is it really something we need to be worried about? Yes. The climatic stability that humans have grown used to over the last few centuries may be ending sooner than we think. The results are likely to include intensifi ed droughts and fl oods, changed weather patterns, agricultural breakdown, ecosystem disruption, rising sea levels, epidemics, and social breakdowns that ultimately threaten the lives or livelihoods of hundreds of millions of people. What’s the cause? Like many other social problems, climate change is closely tied to the burning of oil, coal and gas.