Most environmentalists see the Kyoto Protocol as the last best hope to counter global warming. But a growing number of civil society critics point out that the Protocol’s “flexible,” market-based mechanisms allow corporate polluters to evade their emissions reduction obligations by buying up and trading carbon sinks, also known as carbon assets or carbon offsets.

This new trade is part of the emerging market in “environmental services,” which supporters claim can harness market forces and private property to provide economic incentives for environmental protection. But some environmentalists and indigenous peoples warn that this trade signals a new wave of enclosure and privatization of natural resources. They claim it has plenty to do with making money and nothing to do with saving the environment.

Contrary to popular belief, the Kyoto Protocol does not commit industrialized countries to any substantial cuts in their emissions of carbon-based pollutants that cause the greenhouse effect. It commits them to reduce them to 5.2% below 1990 levels by 2008-2012, a far cry from what climate experts say is necessary to avert a planetary catastrophe. According to the Intergovernmental Panel on Climate Change, global emissions must be reduced to at least 60% below 1990 levels. And even the modest 5.2% reductions might not be achieved on schedule due to numerous loopholes built into the Protocol itself.

Under the Protocol, the UN would distribute pollution rights to 38 industrialized nations. With the exception of the United States, which is boycotting the Protocol, these governments are quietly handing out these entitlements free of charge to major corporate polluters in sectors like electricity generation, oil, steel, cement, chemicals, pulp, and paper. These pollution rights are tradeable, much to the joy of free market advocates and consternation of environmental critics.

“The distribution of carbon allowances constitutes one of the largest, if not the largest, projects for creation and regressive distribution of property rights in human history,” said Larry Lohman of the UK-based activist group The Cornerhouse.

Under the Protocol’s Clean Development Mechanism, a corporation can buy a carbon sink in the global South to offset its own emissions. A carbon sink is anything that keeps greenhouse gases out of the atmosphere either by preventing their release or by sequestering them. Forests and tree plantations are the preferred sink, since trees remove carbon from the atmosphere and sequester it in their wood. Renewable energy projects are also admissible as sinks since they produce energy without burning fossil fuels.

The trade in pollution rights and carbon sinks has spawned a new form of commerce whose players include major corporations, universities, think tanks, eco-consultants, forestry industries, the World Bank, UN agencies, specialized carbon brokers like Future Forests, Natsource and Ecosecurities, and some environmental groups like the World Resources Institute and Environmental Defense.

The carbon trade’s supporters claim it is a “win-win” solution that offsets polluting emissions while providing badly needed funds for sustainable development and forest conservation in the South.

“Companies can supplement their commitments at home by purchasing potentially lower-cost emission reductions in developing countries,” states the World Bank’s Prototype Carbon Fund (PCF) at its website. “As a result, projects in these countries will get a new source of financing for sustainable development in the energy, industrial and waste management sectors, land rehabilitation, and in the introduction of clean and renewable technologies… The PCF has played a pioneering role in developing the market for greenhouse gas emission reductions, while promoting sustainable development, and offering a learning by doing opportunity to its stakeholders.”

“This challenge is creating a new opportunity for low-income farmers and rural communities to get paid by industrialized countries for growing trees that will absorb carbon from the atmosphere (carbon offsets),” says the Katoomba Group, a business organization that promotes carbon markets. “These new markets for forest carbon offsets can finance rural development investments that help to reduce poverty and conserve biodiversity. The world’s poor have much to gain from participating in forest carbon projects that improve farm and forest production, protect critical watersheds, or restore degraded lands and forests.”

“Sequestration of atmospheric carbon through afforestation and reforestation can be achieved through a wide range of land use changes, including many changes that can significantly improve rural livelihoods and restore degraded ecosystems,” said an open letter addressed to UN Climate Change Convention delegates, signed by over a dozen personalities, including former Costa Rican president and World Economic Forum CEO José M. Figueres as well as Pedro Sánchez and M.S. Swaminathan, both laureates of the World Food Prize. “Well designed carbon projects can help local people to invest in more sustainable and profitable land and forest management systems, restore degraded ecosystems, build natural assets and strengthen community organizations.”


Critical Voices

“Carbon trading will not contribute to protection of the Earth’s climate,” states the Durban Declaration on Carbon Trading. “It is a false solution which entrenches and magnifies social inequalities in many ways.”

The declaration was issued in October 2004 by representatives of people’s movements and nongovernmental organizations who met in Durban , South Africa . The signatories include organizations from Samoa , India , Brazil , the Indigenous Environmental Network, the UK-based Sinkswatch, and the U.S.-based Global Justice Ecology Project.

The document points out that the carbon trade’s players include the very culprits of global warming, and denounces that these same institutions are using the environmental crisis they themselves caused as a rationale to evade real reductions in emissions and appropriate for themselves more natural resources. “Governments, export credit agencies, corporations and international financial institutions continue to support and finance fossil fuel exploration, extraction and other activities that worsen global warming, such as forest degradation and destruction on a massive scale, while dedicating only token sums to renewable energy.”

“History has seen attempts to commodify land, food, labor, forests, water, genes and ideas. Carbon trading follows in the footsteps of this history and turns the earth’s carbon-cycling capacity into property to be bought or sold in a global market. Through this process of creating a new commodity–carbon–the Earth’s ability and capacity to support a climate conducive to life and human societies is now passing into the same corporate hands that are destroying the climate.”

Using monoculture tree plantations as carbon sinks has especially pernicious effects, according to environmentalists–they assert that the plantations eliminate biodiversity and destroy regional ecosystems. “The idea of carbon sinks is unrealistic and the pretense that tree plantations may in any way be a solution is being challenged,” said Ricardo Carrere, director of the Uruguay-based World Rainforest Movement (WRM). “More realistic alternatives to climate change have been proposed and playing roulette with an invisible dice is not among them.”

Several environmental groups in Latin America are beginning to take notice of the carbon trade and warn of its consequences. “The forestry and carbon sink projects proposed for inclusion in the Clean Development Mechanism are a way in which industrialized countries, responsible for 75% of greenhouse gases, can obtain access to cheap ways of buying emission rights without really committing themselves to reducing their actual emissions,” declared the Bolivian Forum on Environment and Development. The organization added that sequestration projects have serious implications for national sovereignty over the areas to be set aside as carbon sinks, since the requirements for sinks impose external forest management programs.

“The real solution is the conservation of energy, the reduction of consumption, a more equitable use of resources and equitable development and distribution of clean and renewable low impact energy sources,” declared the WRM in 2004 in response to claims made by self-proclaimed carbon brokers. “Yet, while it is almost a platitude to say so, the political will of governments will be necessary. This is scarce, and when it does exist, it must face very powerful and implacable interests.”

In a 2005 report, the international environmental group Friends of the Earth recommended the following alternatives to the carbon trade:

  1. Encourage discussion and negotiation about all the possible ways of dividing up existing carbon dump space equally, including ones that do not involve tradeable private property.
  2. Work toward keeping remaining fossil fuels in the ground, for example by
    • Supporting and linking existing movements (against oil drilling, for example), setting their areas off limits to mining, drilling, power production, etc.
    • Supporting energy efficiency, renewables, non-fossil-fuelled technologies and responsible tree-planting, but without trading them for continued fossil fuel extraction.
    • Regulation, taxation, and other measures that do not start with an assumption that corporations already own the world’s carbon-cycling capacity.

“That will require ensuring that the politics of climate is not confined to back rooms occupied by politicians and experts but is brought into the light of day,” said Friends of the Earth.