Free-market environmentalism

We're doomed, Chapter XXIV: The dark side of carbon trading.

Published March 8, 2006 1:16AM (EST)

In southeastern Brazil, Plantar, a forestry services company, operates a eucalyptus plantation that covers some 50,000 acres. The eucalyptus is farmed for charcoal, which is then used as fuel for local pig-iron smelters.

Plantar's eucalyptus forest is notable because it is one of the first projects to ostensibly qualify for carbon emission credits under the "clean-development mechanism" established by the Kyoto Protocol. The World Bank's Prototype Carbon Fund, which has invested in the project, claims that the forest acts as a "carbon sink" by sequestering carbon in its fast-growing trees, and further reduces emissions by preventing the pig-iron smelters from switching to much dirtier coal for their power.

The clean-development mechanism is supposed to provide a way for polluting corporations in the developed world to "offset" their greenhouse gas emissions by investing in, or buying emissions credits generated by, sustainably developed carbon sinks or clean renewable energy projects. But Plantar's project doesn't seem like the best in show.

A loosely linked group of environmental activists who organize under the name Carbon Trade Watch are not very kind to Plantar. The company is a longtime violator of human rights, they say; the monoculture eucalyptus forest is destructive of biodiversity; and any carbon sequestered is only temporary, since the trees end up being chopped down and converted to charcoal, which is then burned. Even the carbon credit vetting company, Norway's Det Norske Veritas, is on record noting that there is no guarantee the project will have a net positive effect on the environment.

And this is one of the very first projects to qualify for generating emissions credits! An industrial plantation that has displaced both grassland ecology and native residents with nonindigenous monoculture eucalyptus whose final destiny is to be burned as charcoal. Fantastic.

How the World Works was quiet on Tuesday, whiling away the hours digesting "Hoodwinked in the Hothouse: The G8, Climate Change and Free-Market Environmentalism," a long, detailed and sobering report published last year by Carbon Trade Watch.

The activists behind Carbon Trade Watch are smart, and their critique of the carbon trading system is brutal and effective. How the World Works has long been attracted to market mechanisms that would create financial incentives for reducing pollution, but after pondering the arguments marshaled by Carbon Trade Watch, we feel our optimism melting away like Greenland's glaciers. Some environmental advocacy defeats its own purposes by transparently manipulating facts to fit its own agenda, a strategy that raises hackles even when you agree with the overall cause. But Carbon Trade Watch, although clearly in pursuit of an agenda, doesn't make that mistake. In particular, the connections drawn between the root causes of climate change and the forces propelling globalization are compelling -- for example, a vast proportion of the investment capital pouring into middle-income emerging nations like Brazil, India, China and South Africa is going directly to nonrenewable energy development, with consequences for global warming that dwarf any reductions in emissions the Kyoto Protocol may accomplish, even if it works as planned.

The challenges posed by this report to Kyoto-style "cap-and-trade" solutions are not easy to reckon with. Put aside for the moment the scientific problems inherent in figuring out whether a project like Plantar's eucalyptus forest actually results in any measurable reductions in carbon emissions. Carbon Trade Watch notes repeatedly that the move to rely solely on market forces to mitigate global warming increasingly depends on the actors involved to police themselves.

"Lack of regulation and enforcement present many problems in ensuring the accuracy of emissions data. In most countries the data is provided by polluting companies, resulting in an economic incentive for companies to cheat, and it appears that the prevention of such cheating is getting more lax rather than stricter." The report notes that in the U.K. independent monitoring of industrial sites' emissions dropped by three-quarters from 2001 to 2005.

There's something of a paradox here. From the perspective of someone in the United States, where our leaders have declined to participate at all in the Kyoto Protocol, it seems a bit holier-than-thou to attack carbon trading for being insufficiently attentive to larger issues of social justice and ecological integrity. After all, in the U.S., right-wing think tanks attack the Kyoto Protocol as an example of heavy-handed regulation. But Carbon Trade Watch is denouncing it as a symbol of neoliberal infatuation with deregulated market dogma! Who's right?

There's also the very pressing question of figuring out a better alternative. Carbon Trade Watch is long on criticism but short on solutions. It's very easy to say that "combined with a political bias among many decision-makers and global economic institutions towards a neoliberal worldview -- one in which markets are considered to be the most 'efficient' forums for managing scarce resources -- the effect of [cost-benefit-analysis-based solutions like carbon trading] is to drastically narrow the parameters of debate and points of common reference. Thus, in the case of climate change, the debate gravitates towards price forecasts and carbon derivatives rather than a more all-encompassing political discussion where issues such as democracy, justice, equity and ecological integrity can come to the fore."

But isn't the problem finding a space for that political discussion even to begin? Carbon Trade Watch never says it directly, but the clear inference is that governments should simply enact tougher laws forbidding companies from polluting, rather than set up convoluted systems that rely on invisible hands. Well, what environmentalist wouldn't cheer for that? But the sorry truth is that we live in an era when such laws that already exist are constantly being weakened or done away with. In that context, a market-based system, however flawed, that creates some incentives for investing in renewable energy and sustainable development seems to be the best thing we've got going.

Either that, or we wait until the climate-change-induced flooding of coastal cities results in a long-overdue change of government. But by then it will probably be too late, if it isn't already.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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