April 26, 2007
To reduce greenhouse-gas emissions, Canada’s federal government plans to push Canadian corporations into buying carbon credits under the so-called “Clean Development Mechanism” (CDM), a system established under the Kyoto Protocol by which companies in rich countries buy “rights to pollute” from companies in poor countries. The poor-country companies, in exchange, promise to give up their own greenhouse-gas producing activities.
The scheme, if implemented on the large scale sought by its backers at the World Bank and other Western development agencies, may or may not lead to reductions in greenhouse-gas emissions in rich countries. It will certainly succeed in harming the environment and the livelihoods of millions of farmers, fishermen and indigenous peoples in the Third World.
Over the last four decades, Western development agencies such as the World Bank, the UN’s Food and Agriculture Organization, and national aid agencies such as the Canadian International Development Agency, have financed massive hydro dams, the removal of Amazon forests, and industrial projects in the Third World, leading to the forced relocations of hundreds of millions of people from rural lands and the wanton pollution of urban communities.
The development agencies were forced to back off only after opposition from local peoples became fierce through riots and hunger strikes, and public opinion in the West turned away from these ruinous megaprojects. Hundreds of hydro dams, rainforest highways, industrial tree plantations and other boondoggles have been cancelled as a result since the late 1980s.
Today, with the Kyoto treaty and Clean Development Mechanism strengthening their hand, the very same development agencies are now repackaging the boondoggles as carbon-saving projects qualifying for carbon credits that can be sold on the global carbon market.
To qualify as a CDM project, projects must be large – the UN typically favours projects expected to save millions of tons of greenhouse gases per year. As a result, smallholders are being expropriated by large private or public corporations, or otherwise coerced into selling out. In the case of a CDM forestry project, for example, a land mass of about 1,000 hectares would need to be assembled. In countries where land holdings are small, the landholdings of hundreds of families would need to be assembled into plantations.
Even in relatively prosperous countries such as tiny Costa Rica, where the average landholding of family plots is about 50 hectares, 20 farms would need to be assembled to create a single CDM project. To exacerbate the problem, the needed land assemblies will need to grow incessantly to meet UN targets. Costa Rica, total area five million hectares, needs to assemble at least 15,000 hectares per year to meet FAO targets, leading local community organizers and environmentalists to prepare for expropriation battles.
Most of the CDM projects to date are slated for India, which has about 350 CDM projects in the works, including large hydro dams and nuclear plants. India’s record to date is not promising. For example, Jindal Steel and Power, which runs the world’s largest spongeiron plant, is developing four CDM projects, courtesy of the sale of carbon credits and amid claims of forged documents that allowed the controversial projects to go through. These projects are being fought by 32 communities that have suffered air and water pollution in the surrounding area for years.
Likewise, villagers are protesting Nalwa Sponge Iron, MSP Steel, Salasar Industries, Shivshakti Factory and Anjani Steels — all Indian CDM beneficiaries – for polluting their croplands. In 2005, villagers resorted to blocking a national highway in protest against Monnet Steel Industries’ plans to seize 120 hectares of their land. Protests also broke out in India against another land grab – this one by Ind Agro Synergy, another firm with a UN-validated CDM project. Protests against CDM projects, in fact, are o ften the order of the day. They have occurred in Thailand, where protests have stalled a biomass power plant, and in West Bengal, where villagers oppose a textile factory’s pollution, among numerous other examples.
Against the backdrop of CDM-created confrontation in developing countries that are presumably benefiting from the carbon credits, large questions arise as to whether CDMs even accomplish their goal of economically reducing greenhouse gases.
In the case of Costa Rica, studies by the FAO and the Forest and Climate Change Project in Central America concluded that they don’t have the data to account for increased or decreased carbon storage since plantations began in the 1990s.
In Ecuador’s Andes, an 8,000-hectare plantation set up by a group of Dutch power companies is absorbing far less carbon than expected. Because it is also prone to fires that release unanticipated carbon into the atmosphere, some now estimate that the net carbon balance is negative. As with other CDM projects, the local communities are aggrieved, claiming that their environment has been damaged and that the promised benefits – well-paying jobs – never materialized.
In some cases, CDM projects fail because local opposition wins the day. In Uganda, where the indigenous Benet people were left homeless and hungry after their forest lands were expropriated to make way for a plantation, the courts have set back a CDM project after the Benet took the government to court. The Benet have won the right to return to their traditional land, with the right to farm, but the conflict is carrying on.
The only clear beneficiaries of CDM projects are the aid bureaucracies that oversee growing fiefdoms, and the corporations that have learned to game the system. A striking example of how Third World corporations cash in on CDMs came earlier this week, with revelations from India of SRF, a company that produces refrigeration gases. After spending a mere $3-million to reduce its emissions, SRF then used its CDM earnings to expand production of another greenhouse gas, one that is 100 times more damaging than CO2. SRF now stands to make a profit of $670-million from its expansion, paid for by British companies Shell and Barclays.
In the last year, more egregious examples still have emerged. There can be no doubt that billions of dollars that could be well spent in legitimate development are being squandered on CDM schemes that are unwelcome in the Third World, where they do harm to the environment and the economy alike.
Grainne Ryder is policy director at Probe International, a Toronto-based environmental group.
- 39-MW Rio General dam in Costa Rica for 1.4 million credits
- 78-MW Rio Amoya dam in Colombia for 1.8 million credits
- 55-MW Hornitos dam in Chile for 1.5 million credits