Climate Change, Carbon Trading and Civil Society: Negative Returns on South African Investments Climate Change, Carbon Trading and Civil Society Negative Returns on South African Investments Edited by Patrick Bond, Rehana Dada and Graham Erion in cooperation with SANPAD SAVUSA Series Rozenberg Publishers/UKZN Press 2006 © Patrick Bond, Rehana Dada and Graham Erion, 2007 Editing and Layout: Saskia Stehouwer, SAVUSA Cover picture: Marius Bassie, Amsterdam Cover design: Ingrid Bouws, Amsterdam All rights reserved. Save exceptions stated by the law, no part of this publication may be reproduced, stored in a retrieval system of any nature, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, included a complete or partial transcription, without the prior written permission of the publishers, application for which should be addressed to the publishers: Rozenberg Publishers, Bloemgracht 82hs, 1015 TM Amsterdam, the Netherlands. Tel.: (+) 31(0) 20 625 54 29 Fax: (+) 31 (0) 20 620 33 95 [email protected] www.rozenbergps.com ISBN 978 90 5170 654 3 Co-published with : University of KwaZulu-Natal Press www.ukznpress.co.za ISBN 978 1 86914 123 3 Contents Contents v List of Figures vi Acknowledgements viii Introduction 1 Patrick Bond, Rehana Dada and Graham Erion Dirty Politics: South African Energy 23 Patrick Bond Interrogating Nuclear and Renewable Energy 53 Muna Lakhani and Vanessa Black The South African Projects 67 Graham Erion, Larry Lohmann and Trusha Reddy Low-Hanging Fruit Always Rots First: Observations from South Africa’s Carbon Market 79 Graham Erion Climate Fraud and Carbon Colonialism 107 Heidi Bachram World Bank Carbon Colonies 123 Daphne Wysham Prototype Carbon Fund Beneficiaries 139 Larry Lohmann, Jutta Kill, Graham Erion and Michael K. Dorsey Big Oil and Africans 143 groundWork Oil Companies and African Wealth Depletion 151 Patrick Bond Conclusion 171 Patrick Bond Appendix 1: South Africa’s Clean Development Mechanism Policy 177 Appendix 2: Climate Justice Now! 181 The Durban Declaration on Carbon Trading References 187 List of Figures Figure 1.1 CO2 emissions in South Africa, 1875-2000 (000 metric tonnes).................................... 10 Figure 1.2 Rise/fall in Southern African temperatures over historic norms..................................... 10 Figure 1.3 South Africa’s CO2 role in Africa................................................................................... 11 Figure 2.1 Comparative prices of electricity, 2000.......................................................................... 29 Figure 2.2 SA electricity capacity and demand................................................................................ 30 Figure 2.3 Energy sector carbon emissions, 1999............................................................................ 32 Figure 2.4 Latest available Project Viability statistics (October-December 2001).......................... 40 Figure 8.1 Who wins from World Bank PCF funding. .................................................................. 141 Figure 10.1 Rising foreign investment in Africa............................................................................ 159 Figure 10.2 Global GDP versus a genuine progress indicator, 1950-2003.................................... 161 Figure 10.3 World Bank methodology for ‘genuine saving’ calculations ..................................... 161 Figure 10.4 Dependence upon extractive resources....................................................................... 162 Figure 10.5 African countries’ adjusted national wealth and ‘savings gaps’, 2000....................... 164 Contributors Heidi Bachram is a member of the Amsterdam-based TransNational Institute’s Carbon Trade Watch collective and also works for the Africa information network Fahamu in Oxford. Vanessa Black is a Green Architect and an activist with Earthlife Africa. Patrick Bond is director of the Centre for Civil Society and professor of Development Studies at the University of KwaZulu-Natal. Rehana Dada is an environmental journalist and a post-graduate student at UKZN CCS. Michael K. Dorsey is assistant professor of environment at Dartmouth College, USA and a leading ecological anti-racism activist. Graham Erion is based at the York University School of Law and Faculty of Environmental Studies in Toronto, is a TNI Carbon Trade Watch research associate, and served as a CCS visiting scholar and trainer in mid-2005. groundWork is an award-winning Pietermaritzburg-based environmental justice NGO, whose studies include The groundWork Report 2005: Whose energy future? Big oil against people in Africa. Jutta Kill heads up SinksWatch and is a founding member of the Durban Declaration group. Muna Lakhani is a CCS energy research associate, an activist with Earthlife Africa, and founder of the Institute for Zero Waste in Africa. Larry Lohmann works at The Corner House, a British eco-social thinktank, and recently edited a special issue of Development Dialogue on carbon trading. Trusha Reddy was a CCS visiting scholar in early 2005, subsequently pursued post- graduate studies at the New School for Social Research in New York City, and currently works at the Institute of Security Studies. Daphne Wysham is the founder and co-director of the Sustainable Economy and Energy Network and a fellow at the Institute for Policy Studies in Washington. Acknowledgements This book was made possible not only because of dedicated CCS/TNI researchers and a very capable team at Rozenberg Publishers in Amsterdam along with UKZN Press, but also because of our farsighted financial sponsors, the SA-Netherlands Research Programme on Alternatives in Development. SANPAD pursues the following objectives, with which we agree entirely: ‘To stimulate and promote quality research; to produce research outputs intended and useful for development purposes; to promote co-operation between Dutch and South African researchers, and between institutions within South Africa; and to develop research capacity and a culture conducive to research, aimed particularly at researchers from historically disadvantaged communities’. SANPAD director Anshu Padayachee is especially thanked for her support, as are the TransNational Institute’s CarbonTradeWatch, TNI director Fiona Dove, and TNI public services/energy specialist Daniel Chavez, who assisted us in February 2004 with project design. In June and October 2005, and July 2006, SANPAD and TNI supported Centre for Civil Society colloquia on energy and climate change, the latter arranged by the Centre for Civil Society with assistance from Durban-based TimberWatch. We also appreciate the support of the Netherlands Institute for Southern Africa in facilitating contact with the Amsterdam team. Naturally we also thank our contributors to this volume, including some from institutions with which we have strong relations, such as the Dag Hammarskjold Foundation (whose carbon trading seminars in Uppsala in September 2006 and at the Nairobi World Social Forum in January 2007 were invaluable at the late stages of this book’s compilation), The Corner House, SinksWatch and the Sustainable Energy and Economy Network at the Institute for Policy Studies. An earlier version of this book – Trouble in the Air – was published as a ‘civil society reader’ by TNI and CCS in October 2004, and contained journalistic articles and reports from sites of struggle, which are posted at the CCS and Carbon Trade Watch websites. We thank the additional contributors to that volume, including Janet Wilhelm, Shankar Vedantam, Megan Lindow, Richard Worthington, Juggie Naran and especially Mpumelelo Mhlalisi and Caroline Ntaopane, who maintain a vigilant grassroots watch on CDM projects in Cape Town and the Steel Valley. Additionally, we have used graphics and data originally assembled by, amongst others, Mark Jury of the University of Zululand and Anton Eberhardt of the University of Cape Town, as well as by the environmental economics staff at the World Bank (an institution whose policies have been profoundly damaging in this and so many other areas). We’re very grateful for the hard work that went into these. Mostly, we’re grateful for our colleagues in the Durban Group, who from October 2004 have been encouraging our efforts, and many others’ struggles for climate justice across the world. Patrick Bond and Rehana Dada, Centre for Civil Society Graham Erion, TransNational Institute Carbon Trade Watch 1 Introduction Patrick Bond, Rehana Dada and Graham Erion Around the world, a dizzying debate on the merits and perils of the new trade in emissions credits is underway. Here are some 2005-2006 highlights: • February 16, 2005, Moscow: The Kyoto Protocol comes into force after Russian government ratification, thereby entrenching the nascent global emissions market into international law. • June 21, 2005, Johannesburg: A mid-level manager at Sasol, one of South Africa’s largest companies, admits its gas pipeline project proposal to the Kyoto Protocol’s Clean Development Mechanism (CDM) lacks the key requirement of ‘additionality’ - i.e., the firm doing something (thanks to a lucrative incentive) that it would not have done anyway – thus unveiling the CDM as vulnerable to blatant scamming. • November 29, 2005, Montreal: Confirming that the US will not take its responsibilities to the rest of the world seriously, Harlan Watson, Washington’s top negotiator to the Conference of Parties for the Kyoto Protocol, claims, ‘With regard to what the United States is doing