The CDM Cannot Deliver the Money to Africa – December 2012 ejolt report º no. 2 December 2012 The CDM Cannot Deliver the Money to Africa Why the carbon trading gamble won’t save the planet from climate change, and how African civil society is resisting Patrick Bond, Khadija Sharife, Ruth Castel-Branco (Coord.) With contributions by Fidelis Allen, Baruti Amisi, Keith Brunner, Michael Dorsey, GerardoEJOLT GambirazzReport No. 02io, Terri Hathaway, Adrian Nel, Will Nham The CDM Cannot Deliver the Money to Africa – December 2012 December - 2012 EJOLT Report No.: 02 Report coordinated by: Patrick Bond, Khadija Sharife, Ruth Castel-Branco T he CDM (CCS - UKZN) With chapter contributions by: Fidelis Allen (CCS - UKZN), Baruti Amisi (CCS - UKZN), Keith Brunner (Global Justice Ecology Project), Michael Dorsey cannot (Dartmouth College), Almuth Ernsting (Biofuelswatch), Gerardo Gambirazzio (Dartmouth College), Terri Hathaway (International Rivers), Adrian Nel (Otago University), Will Nham (Carleton University, CCS - UKZN) deliver the Editorial review: Beatriz Rodríguez-Labajos, Leah Temper, Joan Martinez-Alier (ICTA – UAB) money to Design: Jacques bureau for graphic design (Netherlands) Layout: Africa Stephen Murphy (South Africa) Series editor: Beatriz Rodríguez-Labajos Why the Clean The contents of this report may be reproduced in whole or in part for educational or non-profit services without special permission from the Development Mechanism authors, provided acknowledgement of the source is made. This publication was developed as a part of the won’t save the planet from project Environmental Justice Organisations, Liabilities and Trade (EJOLT) (FP7-Science in climate change, and how Society-2010-1). EJOLT aims to improve policy responses to and support collaborative research and action on environmental conflicts through capacity building of African civil society is environmental justice groups around the world. Visit our free resource library and database at www.ejolt.org or follow tweets (@EnvJustice) or resisting updates on our facebook page (EJOLT) to stay current on latest news and events. This document should be cited as: Bond, P., Sharife, K., Allen F., Amisi B., Brunner K, Castel-Branco, R., Dorsey D., Gambirazzio, G., Hathaway, T., Nel, A., Nham, W., 2012. The CDM cannot deliver the money to Africa. Why the Clean Development Mechanism won’t save the planet from climate change, and how African civil society is resisting, EJOLT Report No. 2, 120 p. EJOLT Report No. 02 The CDM in Africa Cannot Deliver the Money Abstract At a time the carbon markets face a profound crisis, this report provides critical policy analysis and case documentation about the role of the Clean Development Mechanism (CDM) in Africa. Instead of providing an appropriate flow of climate finance for projects related to greenhouse gas mitigation, the CDM has benefited large corporations (both South and North) and the governments they influence and often control. South Africa is a case in point, as both a victim and villain in relation to catastrophic climate change. Many sites of emissions in Africa – e.g., methane from rotting rubbish in landfills, flaring of gas from oil extraction, coal-burning electricity generation, coal-to-liquid and gas-to-liquid petroleum refining, deforestation, decomposed vegetation in tropical dams – require urgent attention, as do the proliferation of ‘false solutions’ to the climate crisis such as mega-hydro power, tree plantations and biofuels. Across Africa, the CDM subsidises all these dangerous for-profit activities, making them yet more advantageous to multinational corporations which are mostly based in Europe, the US or South Africa. In turn, these same corporations – and others just as ecologically irresponsible – can continue to pollute beyond the bounds set by politicians especially in Europe, because the Emissions Trading Scheme (ETS) forgives increasing pollution in the North if it is offset by dubious projects in the South. But because communities, workers and local environments have been harmed in the process, various kinds of social resistances have emerged, and in some cases met with repression or cooptation through ‘divide-and-rule’ strategies. The first chapters in this report set the context for the carbon markets and the CDM mechanism, revealing its gloomy future prospects, and map the players in CDM markets and voluntary schemes. The next chapters dissect six case studies from eight African countries: the DRC, Ehiopia, Kenya; Mozambique, Nigeria, Tanzania, Uganda and South Africa. They consider the fraud of a landfill methane- electricity project; CDM corruption of local governance from gas-flaring-related subsidies; the emergence of trees, plantations and forests within CDM financing debates; failed CDM proposals involving the exploitation of gas reserves; mega- dams searching the CDM status; and the rise of Jatropha biofuel industries All these cases suggest the need for an urgent policy review of the entire CDM mechanism’s operation, with the logical conclusion that the system should be decommissioned and at minimum, a moratorium be placed on further crediting until the profound structural and implementation flaws are confronted. The damage done by CDMs to date should be included in calculations of the ‘climate debt’ that the North owes the South, with the aim of having victims of CDMs compensated appropriately. Keywords Carbon Trading Climate Finance CDM Kyoto Protocol Clean Development Mechanism UNFCCC EJOLT Report No. 02 Contents Foreword 5 1 Climate financing crisis and the CDM’s crash 7 1.1 Durban, or the tiresome insistence on markets solutions 8 1.1.1 COP17 in Durban, December 2011 8 1.1.2 Faith in markets dashed by Durban 11 1.1.3 The critique from the Durban Group for Climate Justice 16 1.2 Zooming out: emission trading in international perspective 19 1.2.1 Never-ending market failures 19 1.2.2 Emissions trading’s flawed friends 22 1.2.3 Europe’s bad example 23 1.3 Africans ‘build faith in the carbon market’ 29 2 A critical geography of the global CDM 33 2.1 Setting the stage 35 2.2 Carbon market oligopoly and oligopsony 40 2.3 Market abstractions from market power 41 Appendix: The data 43 3 South Africa’s landfill, fraud, division and racism 45 3.1 The Bisasar Road CDM project 46 3.2 Municipal racism and community conflict cemented by climate finance 48 3.3 CDM as necessary ‘additional’ finance – or part of a multifaceted fraud? 51 3.4 Does Bisasar Road work as advertised? 54 4 Niger Delta oil flares, illegal pollution and oppression 57 4.1 Gas flaring avoidance as a CDM? 57 4.2 Rewarding illegality 59 4.3 Ongoing community suffering 60 The CDM in Africa Cannot Deliver the Money 5 East African trees and the Green Resource Curse 62 5.1 Afforestation/Reforestation CDMs 63 5.2 Case studies of A/R CDM projects 65 5.2.1 Tanzanian trees 65 5.2.2. Ugandan plantations and the New Forests Company 69 5.2.3. Busoga Green Resources AS (Norway) Plantation 70 5.2.4 Rehabilitation of Mt. Elgon and Kibale National Parks 72 5.2.5 Nile Basin Reforestation Project 74 5.2.6 Mozambique – Green Resources AS Niassa Project 75 5.2.7 Democratic Republic of Congo – Ibi Batéké Carbon Sink Plantation 75 5.3 Conclusion 76 6 Manipulating gas in Mozambique 77 6.1 The exploding Mozambican gas industry 77 6.2 Sasol’s CDM scam 79 6.3 Fuel switching by Cimentos de Mocambique-Matola Gas Company 81 7 Disempowering hydropower: Ethiopia, DRC and Egypt 85 7.1 Mega-dams and hydric injustice in Africa 85 7.2 Gibe III in Ethiopia 88 7.3 Conclusion 93 8 ‘Climate-smart’ agriculture in Kenya and Mozambique 95 8.1 Climate-’smart’ agriculture and soil-carbon credits 96 8.2 Local communities’ response in Kenya 98 8.3 Response in Mozambique 101 8.4 Conclusion 102 9 Conclusions 104 Appendix: The media’s blind faith in markets 108 References 117 EJOLT Report No. 02 The CDM in Africa Cannot Deliver the Money Acronyms A / R Afforestation and Reforestation GAIA Global Alliance for Incinerator Alternatives ADB African Development Bank GCF Green Climate Fund AFD French Development Agency GHG Greenhouse gas ANC African National Congress ICBC Industrial and Commercial Bank of China ARWG Africa Resources Working Group IETA International Emissions Trading Association BNN Canada’s Business News Network IFC International Finance Corporation CDM Clean Development Mechanism IPCC Intergovernmental Panel on Climate Change CERs Certified Emissions Reductions IR International Rivers COP3 UN 3rd Climate Change Conference of the Parties ITPs Industrial Timber Plantations COP17 UN 17th Climate Change Conference of the Parties JI Joint Implementation CSO Civil society organisations MGC Cimentos de Mocambique-Matola Gas Company DRC Democratic Republic of Congo MIT Massachusetts Institute of Technology DSW Durban Solid Waste NAOC Nigerian Agip Oil Company EC European Communities NNPC Nigerian National Petroleum Corporation EEPCo Ethiopian Electric Power Corporation LDC Least developed country EIA Environmental Impact Assessment PDD Project Design Document EJO Environmental justice organisations REDD Reducing Emissions through Deforestation and Forest Degradation in Developing Countries ENH Empresa Nacional de Hydrocarbonetas tCO2-e Tonnes of CO2 equivalent EPA US Environmental Protection Agency UKZN-CCS University of KwaZulu-Natal ERA Environmental Rights Action Centre for Civil Society EU-ETS European Union Emissions Trading Scheme UNFCCC United Nations Framework Conventions EWS Environmental Waste Solutions on Climate Change FAO Food and Agriculture Organization WCD World Commission on Dams of the United Nations WWF World Wildlife Fund FoLT Friends of Lake Turkana FSC Forest Stewardship Council The ISO 4217 standard is used for the currency codes (e.g. USD for US dollar or ZAR for South African rand.) Note that EUR 1 is approximately ZAR 10. EJOLT Report No. 02 The CDM in Africa Cannot Deliver the Money Foreword Conflicts over resource extraction or waste disposal increase in number as the world economy uses more materials and energy.