The voluntary offset market was created as an equivalent to the Clean Development Mechanism CDM offset projects with which they share some similarities. However the major difference is that the voluntary carbon market is targeted at the non-compliance market and detached from the emissions reduction targets set out for Annex 1 nations by the Kyoto Protocol. It is therefore a tool that allows individuals but also businesses to offset CO2 emissions that go beyond what has been prescribed by the Kyoto Protocol (Corbera, Estrada and Brown, 2009). Another major aspect that differs from the CDM mechanism is that the Voluntary Offset market focuses on projects that have strong social and environmental impacts with a high visibility of the benefits. Due to ‘complex and evolving regulations, regulatory inefficiencies, and capacity bottlenecks’ (World Bank, 2015) CDM projects become increasingly financially ineffective. ‘Delays and uncertainties lead to higher transaction costs, declining CER volumes, and lower market values’ (World Bank, 2015). By comparison, the voluntary offset scheme prioritize the social development aspect of their projects, thus, complicated processes, bureaucratic procedures and the aforementioned high transaction costs need to be minimized in order to maximize the development and social profits (Corbera, Estrada and Brown, 2009). However, these aims set out by the voluntary carbon mechanism are formulated in front of a backdrop of a complicated network of actors and regulations. This post will highlight the strengths and weaknesses through two steps. Firstly the most popular and widely used methodology is being analysed and evaluated for its effectiveness in achieving the set out goals in terms of mitigating GHG emissions. Secondly, I will assess the social development aspect and conceptualize the outcome by looking at it through a wide angle lens and by including the wider political, social and economic setting.
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| Kolar Biogas Project in Karnataka, India. With the carbon offset project “Kolar Biogas Project“, the myclimate foundation and its local partner SKG Sangha contribute to the reduction of greenhouse gas emissions and to less degradation of the forest (www.myclimate.org). |
Linking climate change and development
Climate change and global warming are problems on an international scale and the general notion is that those who emit the harmful greenhouse gases need to be the ones responsible for its mitigation. Hence, the focus should be on the industrialised nations in order to address this global threat. The Brundtland Report of 1987, followed by the 1992 Rio Earth Summit and finally the UNFCC all produced an increasing number of reports, which ‘link climate change and development, as well as human rights issues through concepts of justice, equity and international negotiations’ (Grist, 2008). This raises the question whether linking climate change and development is even possible or a good idea. The synergies that are being created through a pairing of the two disciplines could either be useful in fostering sustainable development or it could pose ‘potential clashes at the epistemological and methodological level’ (Grist, 2008).
Former President of the Maldives, Nasheed said just before the COP15 in Copenhagen: ‘I am sure if China shows leadership, others will follow. After all, it is not carbon we want but development. It is not coal we want but electricity. It is not oil we want but transport. Low-carbon alternatives now exist, to provide every good and service that we need for development and prosperity. Developed countries created the climate crisis; developing countries must not turn it into a calamity’ (Randalls, 2015). This statement vividly portrays the dilemma developing countries find themselves in. On the one hand they are under pressure to catch up with the rest of the world in terms of economic growth and improving living standards for its citizens, while at the same time, having to rely on major developed nations and their rethinking about the use of renewable energy. Thanks to voluntary carbon markets, the focus on the social and sustainable development aspect will receive greater attention, however, it does not come without its restraints. As shown in figure 1, the major area of mitigation in the voluntary market is forestry which represents 36% market share of the voluntary market in 2006. Based on a closer investigation of forestry projects, which will also include an overview on the increasingly popular REDD+ mechanism, this I will evaluate the overall effectiveness of forestry projects and the voluntary market as a whole.
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| Figure 1, Transactions of CO2e by project type in the voluntary OTC market in 2006. Source: Hamilton et al., 2007. P.26, as cited in Corbera, Estrada and Brown, 2009. |
REDD+
‘Reducing emissions from deforestation and forest degradation, conserving and enhancing forest carbon stocks, and sustainably managing forests (REDD+) are emerging as a central policy instrument to halt land-use related emissions from developing countries’ (Corbera and Schroeder, 2011). The basic idea of REDD+ according to Corbera and Schroeder is to motivate developing countries to protect their forests and improve their management. This is done by introducing a monetary value to the carbon that the trees can store (Corbera and Schroeder, 2011). REDD+ enjoys increased popularity in the international climate change regime. On the website of the UN it says that the deforestation and forest degradation ‘account for nearly 20% of global GHG emissions, more than the entire global transportation sector and second only to the energy sector’ (Un-redd.org, 2015). Hence, in order to stay within the 2 degree Celsius target, the forest sector’s role is vital.
One example of a REDD+ project is the Purus Project in Brazil. This particular project made into Project Portfolio of the 2014 FIFA World Cup Carbon Offsetting Programme where the project is described as ‘The Purus project in Brazil’s Acre Sate, home to the Amazon basin, aims to prevent the deforestation of just under 35,000 hectares of pristine rainforest. Working with 18 communities living along the Purus river, the project protects and conserves tropical forest by providing them financial support in return for cooperation to prevent further deforestation.’ (FIFA.com, 2015). The Purus Project is a prime example of a REDD+ project, which combines conservation efforts, carbon emission reduction and community inclusion as well as social benefit fostering. While this specific project is financed, by the NGO CarbonCo (a subsidiary of Carbonfund.org) (Carbonfund.org, 2015), funding for REDD+ projects has been addressed on a large scale during inter-governmental meetings in the past years and funding has become more widespread, coming from more varied sources. Major institutions such as the World Bank, the UN through its UN-REDD programme and individual countries such as Germany, UK, and Norway have set aside funds to assist developing countries in setting up their own REDD+ strategies and programmes (Reed, 2010 as cited in Corbera and Schroeder, 2011). Furthermore, a multi-country partnership, consisting of 16 developed and 40 developing countries, was set up to create wider access to technical and financial resources in the REDD+ field, which should benefit developing countries (www.oclocfc2010.no as cited in Corbera and Schroeder, 2011). Later a major step towards better funding was made during the COP 19 in Warsaw: ‘U.N. negotiators on Friday agreed rules on financing forest projects in developing nations, paving the way for multi-billion dollar investments from governments, funding agencies and private firms in schemes to halt deforestation’ (Foundation, 2015). Those reports could lead to the assumption that with REDD+ the international community did finally find a common denominator, which everybody agrees to have sustainable and comprehensible results that benefit the environment as well as the local communities. However, REDD+, or voluntary offsets in forestry projects in general are in fact more controversial than other methodologies because they are being accused of frequent failure. Medilyn Manibo wrote in an article on the website Eco-Business that the REDD+ market is increasingly flagging and is looking for a financial injection over US$12 billion (Eco-Business, 2014). The article argues that REDD+ could suffer a similar fate as the UN’s CDM where demand for carbon credits has decreased steadily over the past years. It goes further to state that a slow-down in demand will lead to mitigation potential of forests becoming less relevant and what is supposed to be a major focal point in emission reduction, is suddenly being given less importance (Eco-Business, 2014). But how can a programme that seems to enjoy so much support be so prone to failure? One of the main reasons is the danger of oversupply. REDD+’s ambitions and the market it operates in do not concur. According to Manibo, REDD+ is looking to reduce the yearly deforestation figures down to 50 per cent by 2020 resulting in a hypothetical demand level that is able to absorb 9,9000 MtCO2. However, realistically, we are looking at market potentials of approximately 253 MtCO2 according to a report by the Interim Forest Finance Project. This falls short by a staggering 97% of the target, which is far from viable (Eco-Business, 2014). Nick Oakes, Finance Programme Manager of the Global Canopy Programme, mentioned, that the gap between supply and demand needs to be closed. However, this will only start happening ‘after the UN convention on climate change signs a deal that will implement a global compliance market’ (Eco-Business, 2014). Something that is only going to happen in the year 2020, that is, if it is going to happen at all.
Governance issues
This leads to the next critique point, which concerns the voluntary market as a whole, namely its lack of common legislation, rules and verification. There is no authority that oversees the voluntary market. Instead an array of standards, verification procedures and a number of registries operate in this market. With the voluntary market as a whole being increasingly complex and difficult to monitor and control, the REDD+ mechanism in itself is a rather convoluted system ‘with multiple actors, interests and activities, involving several sources of formal and informal power and authority (UN bodies, multilateral organisations, governments, but also community and indigenous organisations), which all influence each other and may or may not coincide in their interests and vision regarding how such strategy of forest and climate governance should actually look like in the near future’ (Corbera and Schroeder, 2011). Hence, REDD+ was described by Estrada as being unattractive for business in the private sector, due to its complexity and opaque participation and benefit sharing arrangements (Estrada, 2010 as cited in Corbera and Schroeder, 2011).
Having discussed the topic of voluntary carbon markets and especially the specific case of REDD+ at length from a market economy perspective, I now want to turn to the local community, evaluate their role in this scheme and answer some questions regarding the ethical and behavioural dimensions of voluntary offsets.
‘The rush to make profits out of carbon fixing engenders another kind of colonialism’ (Centre for Science and the Environment, India as cited in Bachram, 2004). Bachram argues in her article that we are experiencing a very serious turning point in terms of global atmosphere and CO2 levels and that a lot is being talked about, but what is being actually done is very prone to misuse, which she terms as ‘climate fraud’. It needs to be noted that the article was written 13 years ago and the voluntary carbon market and carbon trading underwent some changes since then, however, the major claims still stand. I will firstly look at the direct claim that the developed north is practicing what Bachmann refers to as ‘Carbon Colonialism’. It is important to note that climate change and global warming even though it does affect the whole planet, takes place in an unequal world. Unequal in terms of political, economic and social structures and we need to clearly differentiate between survival emissions versus luxury emissions. In other words: CO2 might take on different meanings in different contexts. Every developed nation has become a developed nation by going through industrialisation and emitting a vast amount of GHG in the process. It could be argued that by restricting developing nations from doing the same, there is a form of top-down, north-south carbon colonialism. The lack of options to go through industrialisation is the exact reason why the poor countries remain underdeveloped. If poor countries want to address inequalities and catch up with the rest of the world, chopping down trees in order to boost their economy, like for example in Brazil where vast parts of the forests were cleared for livestock, is becoming necessary. So we basically find ourselves in a catch 22 situation where we try to battle something by reducing the activity, which would actually be helping to solve the issue (even though in a very unsustainable way). This begs the question whether there is an alternative to industrialization for countries to lift themselves out of poverty.
Carbon Colonialism
Debates about the behavioural framing of climate change and voluntary offsets play a vital role in understanding why there is such a clear divide between the north and the south. We already touched on the critique of carbon colonialism and the accusation that the north is putting systems in place which dictate to the southern regions how to take care of their environment, however, carbon mitigation projects do nothing to bring about a change in behavioural patterns around the globe. A crass example of this stance is FACE International, an entrepreneurial company, which According to Bachram, are heading plantation projects while at the same time stating that a behavioural change is not needed and the problem can be solved my merely planting trees in the south (Bachram, 2004). It is easy to see how problematic such an approach is, especially in the climate change debate which is often described as a tragedy of the commons. While certain resources can be more easily managed, elements such as water or air are more difficult to manage. One rather important example of a country’s self-interest was the US, which during the George W. Bush legislation, pulled out of their Kyoto obligations, because the negative economic impact which adherence to the CO2 emission targets would have on the US’s economy, would inevitably lead to layoffs of workers and drastically increase consumer prices (Hulme, 2009, p. 109). These conflicts of interests are comprehensible, however, we do not know exactly how much the costs will be of climate change induced natural disasters on a social and economic level. Those costs could outweigh any costs of measures that need to be taken now. In the light of countries acting in their self-interest, it becomes clearer, why voluntary carbon offsetting poses an attractive alternative to actually having to agree to binding measures set out by inter-governmental organisations. There is a notion of acknowledging the responsibility the developed world has towards developing countries, and we feel a moral obligation to help, however, rather than changing our own behavioural pattern, or risking to hamper economic growth, environmental governance in the southern hemisphere appears to be a more viable course of action. The topic of governance already came up once in this essay in relation to REDD+ projects, however it applies to other climate mitigation projects both in CDM schemes and voluntary markets. Those projects aim to influence the relations local societies have with their environment and the governance of those projects include various levels of stakeholders, from NGOs to local governments, and most importantly, the local societies. ‘Such governance perspective emphasizes the interrelated and increasingly integrated system of formal and informal rules, rule-making systems and actor networks at all levels of governance that are set up to steer societies towards preventing, mitigating and adapting to global and local environmental change’ (Corbera and Schroeder, 2011). Implementing projects such as installations of efficient cook stoves in villages or encouraging communities to use energy saving lamps or solar energy to light their huts represents a radical attempt to re-orientate local behaviour which is traditionally considered to be harmful and backwards. By linking those changes to social benefits, nobody argues against them and everybody welcomes the new technologies. Whereas behavioural changes in the polluting, industrialized nations are being rather moderate where we are being gently nudged in the right direction, through adverts by government agencies, NGOs or even on a smaller scale, by suggestions from friends or family. Living a green life has almost become synonymous to living a healthy life and has mutated into a lifestyle choice.
Conclusion
It can be said that beyond all the debates regarding responsibility and ethical as well as moral aspects of voluntary carbon emissions, it can clearly not be the solution to climate change, and no one would argue that it is. However, at the same time, those small scale attempts on mitigating CO2 emissions should not be dismissed based on their limitations of CO2 volumes they avoid, or because of the current lack of an overarching authority that regulates and controls the market and labels. There is still a great deal of work to do in order to make the voluntary market more efficient and transparent. But despite all the drawbacks, the benefits they bring to the local communities cannot be denied. While CDM projects claim to bring about new sustainable development it is often questioned whether the funds that are supposed to go to the poorest countries are actually reaching their destination. Whereas voluntary offset projects, precisely because of their small size, have the ability to reach the communities much more directly. If there is supposed to be serious attempts in tackling climate change, the approach needs to come from a different angle. Governments in both developed and developing countries need to step up their game and move away from the soft paternalism approach and become more credible in their attempts at tackling the climate change. Complex scenarios that have been so far rather confusing and neglected need to be more clearly evaluated, such as the case of for example a British company producing goods in China and the question of who is responsible for the emissions. Even though climate change is a tragedy of the commons, it cannot be expected that nations agree on this and act accordingly. The self preservation and economic growth is still paramount for any government. Therefore a more radical approach that steers the behavioural and consumption patterns of people in a more sustainable direction, without hampering economic growth, is essential (see for example Germany), while at the same time small scale project are just as vital for the local communities’ improved living standards in developing countries.
References
Bachram, H. (2004). Climate fraud and carbon colonialism: the new trade in greenhouse gases.Capitalism Nature Socialism, 15(4), pp.5-20.
Carbonfund.org, (2015). The Purus Project A Tropical Forest Conservation Project. [online] Available at: http://carbonfund.org/reforestation-and-avoided-deforestation/item/2743-acre-brazil-redd-forestry-projects [Accessed 4 May 2015].
Corbera, E. and Schroeder, H. (2011). Governing and implementing REDD+. Environmental Science & Policy, 14(2), pp.89-99.
Corbera, E., Estrada, M. and Brown, K. (2009). How do regulated and voluntary carbon-offset schemes compare?. Journal of Integrative Environmental Sciences, 6(1), pp.25-50.
Eco-Business, (2014). REDD+ needs $12 billion boost to avoid failure: report. [online] Available at: http://www.eco-business.com/news/redd-needs-12-billion-boost-avoid-failure-report/ [Accessed 4 May 2015].
FIFA.com, (2015). Sustainability - FIFA.com. [online] Available at: http://www.fifa.com/sustainability/index.html [Accessed 4 May 2015].
Foundation, T. (2015). UN agrees multi-billion dollar framework to tackle deforestation. [online] Trust.org. Available at: http://www.trust.org/item/20131122133817-l7kq9/?source=dpagehead [Accessed 4 May 2015].
Foundation, T. (2015). UN agrees multi-billion dollar framework to tackle deforestation. [online] Trust.org. Available at: http://www.trust.org/item/20131122133817-l7kq9/?source=dpagehead [Accessed 4 May 2015].
Grist, N. (2008). Positioning climate change in sustainable development discourse. Journal of International Development, 20(6), pp.783-803.
Hulme, M. (2009). Why we disagree about climate change. Cambridge, UK: Cambridge University Press.
Randalls, S. (2015). Climate Change as a Development Issue.
Un-redd.org, (2015). UN-REDD Programme -- About REDD+. [online] Available at: http://www.un-redd.org/AboutREDD/tabid/102614/Default.aspx [Accessed 4 May 2015].
World Bank, (2015). State and Trends of the Carbon Market 2010. Washington D.C.: Carbon Finance, p.47.
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