Black stuff and nonsensePublished by MAC on 2007-08-14
Black stuff and nonsense
14th August 2007
Australians rely on the burning of coal for electricity to such an extent that, per capita, they are the world's largest contributors to global greenhouse gas emissions.
Canada's province of Ontario is the country's biggest guzzler of electricity, a fifth of which is generated from coal. Now it's proposing to substitute the black stuff for alternative (including nuclear) power by the year 2014. However, the prospect has aroused opposition from both sides of the argument.
The Rainforest Action Network of the US (RAN) is asking supporters to choose the nation's dirtiest bank, judged by its contribution to global warming through investment in coal. Bank of America, Citibank and JPMorgan Chase are the contending culprits.
"Carbon offsets" - backed by major funding for the so-called Clean Development Mechanism (CDM), vaunted by the World Bank - are increasingly being traded as if they contributed significantly to a reduction in global greenhouse gas emissions.
But evidence is growing that they do nothing of the kind. They may also severely threaten sustainable community development (as in the Indian state of Chhattisgarh) and pour yet more money into the coffers of companies themselves among the world's biggest contributors to global warming.
FACTBOX - Five Facts on Australia's Greenhouse Gas Emissions
14th August 2007
Australian Prime Minister John Howard, accused of being slow to tackle climate change, faced fresh criticism on Monday after four government lawmakers issued a report questioning the link between human activities and global warming.
Here are five facts about Australia's greenhouse gas emissions and climate change, likely to be key issues in national elections tipped for November.
* Australia's 2005 emissions totalled 559.1 million tonnes of carbon dioxide equivalent (Mt CO2-e), the government's Greenhouse Office estimates. This accounted for around 1.5 percent of total world emissions.
* Australia is the world's top greenhouse gas emitter per capita because of its reliance on burning coal to generate electricity.
Per-capita emissions fell 14.4 percent between 1990 and 2005, from 32.3 to 27.6 tonnes CO2-e, the Greenhouse Office says. But current per-capita totals are still double the industrialised average of just under 13 tonnes.
* Australia has not signed the Kyoto Protocol setting emission reduction targets for developed nations. Howard's conservative coalition, in power 11 years, believes Kyoto is ineffective without major emitters China and India. Australia is part of "AP6", a clean-tech Asia-Pacific climate group counting the United States, India, South Korea, Japan and China, dubbed the "pack of polluters" by critics.
* Electricity, gas and water suppliers are the country's top emitters by sector, responsible for 35.6 percent of Australia's greenhouse gas output. Primary industries such as agriculture, forestry, fishing and mining are the second largest source, accounting for 31.2 percent of 2005 emissions, including methane.
* Howard has described himself as a climate change sceptic. But with public concern growing about rising temperatures the government has allocated around A$3.4 billion to address climate change and is looking at a national carbon trading scheme.
Sources: Reuters, Australian Greenhouse Office, (www.greenhouse.gov.au/inventory/2005/economic-sector.html), Australian Department of Foreign Affairs and Trade (www.dfat.gov.au/environment/climate)
REUTERS NEWS SERVICE
Ontario Walks Tightrope on Plan to End Coal Use
10th August 2007
TORONTO - The province of Ontario, Canada's biggest energy user, aims to close its last coal-fired power plant in 2014 and become the only jurisdiction in North America to completely phase out coal, a strategy that some critics deride as reckless and others say is overly timid.
The coal plan is the major plank in the climate change policy of Ontario's Liberal government, which is well aware of the recent growth in voter concern about global warming.
But greenhouse gas-emitting coal now supplies about a fifth of the province's electricity demand and some critics fear that Ontario will be unable to find enough replacement power by the time the 2014 deadline rolls around.
Heading into an October election, the opposition Progressive Conservative Party warns the plan risks more mass blackouts during peak summer periods such as the one that paralyzed Ontario and several US states in 2003.
Ontario is unique in Canada in that summer represents peak demand, when it imports electricity from neighboring provinces and US states. It approached its record of 27,005 megawatts of demand last week as temperatures rose above 30 degrees Celsius (86 degrees Fahrenheit) for several days.
"We have a need in Ontario to have the facilities to generate power for both industry and residences, and the simple math says that we have to have more generating capacity," John Tory, the leader of the right-of-center Progressive Conservatives, told Reuters.
Environmentalists, meanwhile, have criticized the 2014 deadline for coal as too distant to have a meaningful impact on Ontario's rising greenhouse gas emissions. They are irked that the government backed off its original pledge to shut Ontario's four remaining coal plants by this year.
A coalition of environmental groups put forward an alternative, 20-year plan last week that they say would shut the coal plants in the next couple of years and replace nuclear power with renewable sources.
"What we found is that the greener models can cut greenhouse gas emissions in half compared to the current plan, and it can save money in the end," said Cherise Burda, spokeswoman for the Pembina Institute, one of the groups behind the 20-year plan.
She said it would cost more in new capital projects over the short term than the government's strategy, but would lead to savings of 11 percent for electricity consumers by 2027.
The Liberal government, elected in 2003, wants to refurbish existing nuclear plants, which now represent about 37 percent of installed power, and possibly build new ones. It also plans to push conservation, reinvest in renewable supply sources such as wind power, and boost by 15 percent its reliance on natural gas to supplement what's lost from coal.
"We want a balanced plan -- one that is cleaner and greener but also one that ... ensures we have the supply and generation on line, and that's why we're maximizing conservation as much as possible," said George Metter, spokesman for the government's energy department.
A poll of Ontario voters conducted last month found concerns about pollution and global warming trumped all other issues, including health care.
But a report earlier this year said that carbon dioxide emissions from Ontario's coal stations increased by more than 90 percent from 1995 to 2005. The increased coal output came as the province ramped-up power exports.
The Nanticoke Generating Station on Lake Erie, for example, is Canada's largest emitter of carbon dioxide, producing about 17 million tons of greenhouse gases each year. Carbon dioxide is the major greenhouse gas that causes climate change.
Benjamin Tal, a senior economist at CIBC World Markets, wrote in a recent study the government's plan for re-balancing Ontario's power supply over the next eight years will be "tight" but possible.
But he warned in an interview that the coal shutdown is slated to happen around the same time that four reactors at the Pickering nuclear station, supplying 2,000 megawatts, are to be shut down for refurbishment, and that any transmission glitch could jeopardize supply.
Story by Jonathan Spicer
REUTERS NEWS SERVICE
Choosing the dirtiest US bank
Rainforest Action Network, Weekly Panther
14th August 2007
RAN is about to pick a new corporate target, and we want your input!
Our Global Finance Campaign is set to launch a new campaign to get U.S. banks to stop funding coal -- the single biggest cause of global warming.
We want to know which bank you think is America's dirtiest!
Not surprisingly, the nation's three biggest banks are tops in the running; :
- Bank of America: http://ga3.org/campaign/target_bofa/ws8xdu649ii3n7n?
- Citi (formerly Citibank): http://ga3.org/campaign/target_citi/ws8xdu649ii3n7n?
- JPMorgan Chase: http://ga3.org/campaign/target_jpmc/ws8xdu649ii3n7n?
Be it for coal extraction or processing, the coal industry depends on funding from these three banks. And by investing in coal, Bank of America, Citi and JPMorgan Chase are knowingly financing catastrophic climate change.
Here's how they do it:
Bank of America, http://ga3.org/campaign/target_bofa/ws8xdu649ii3n7n?
::Responsible for a $175 million loan to the "poster child" of mountaintop removal coal mining: Massey Energy.
::Major funder of Peabody Energy, the largest mining company in the world. Peabody was recently implicated in the contamination of Navajo and Hopi water sources in the Black Mesa area that extends through northern Utah and Arizona. Furthermore, Bank of America financing is allowing Peabody to build three new coal-fired power plants in Illinois, Kentucky and New Mexico.
::Financial backer of the largest greenhouse gas emitter in the nation: American Electric Power (AEP). AEP is heavily involved in the U.S. coal rush, building five new coal plants around the Mid-West and South. AEP will also manage up to nine coal-fired power plants within 10 miles of Meigs County, Ohio -- a community already ravaged by health and environmental impacts associated with coal development.
::Funds destructive strip mining and mountaintop removal from the American Southwest to Appalachia.
::Co-owner of Texas-based utility TXU, which just got permits to build three outdated and dirty pulverized coal-fired power plants in north and central Texas.
JPMorgan Chase, http://ga3.org/campaign/target_jpmc/ws8xdu649ii3n7n?
::Funds Dynegy, which is sponsoring the building of 12 new coal-fired power plants -- the largest coal build-out in the country.
::Helped Mid-American Energy secure $350 million in financing for construction of a new coal-fired plant in Council Bluffs, Iowa. Mid-American Energy operates dozens of power plants across the U.S. and England.
The Carbon Credit Con
ANALYSIS - London Profits While Africa Awaits Kyoto Benefit
14th August 2007
LONDON - Huge profits made by London-based brokers who arrange emissions-cutting projects in developing countries contrast with little benefit for the world's poorest nations, company and United Nations data shows.
The Kyoto Protocol on global warming allows rich countries to meet greenhouse gas emissions targets by paying poor nations to cut emissions on their behalf, using the so-called clean development mechanism (CDM).
But evidence is emerging that while brokers stand to make enormous profits, least developed nations, especially in Africa, will get next to nothing -- raising questions over whether Kyoto is fulfilling its social as well as environmental goals. "We're either going to have bend the rules and be softer with CDM in Africa or forget it and give them more aid," said Mike Bess, an Africa specialist working for London-based project developer Camco.
The text of the Kyoto Protocol calls for its carbon trading scheme to assist poor countries in achieving sustainable development. The text of Kyoto's umbrella treaty, the United Nations Framework Convention on Climate Change, says that action to combat climate change should help economic development, too.
But action so far has seen the biggest potential profits going to London-based project developers, instead of projects on the ground, most of which are based in China and India.
Africa has seen just 21 out of a total of 751 CDM projects officially registered with the UN climate change secretariat.
A common argument is that Africa has a tiny fraction of the world's carbon emissions, that these emissions are widely dispersed and so difficult to bundle into profitable projects, and that the continent has high investment risk.
But projects are slowly emerging.
The World Bank's International Finance Corporation formally launches later this month an initiative called "Lighting the Bottom of the Pyramid", which aims to supply low-carbon lighting to some of the 500 million Africans who have no electricity access. It aims to apply for carbon finance through the CDM, because solar power would replace higher carbon kerosene lamps used now.
"Ten years ago you'd say there was no market for mobile phones in Africa, that people couldn't afford it," said Fabio Nehme, IFC team leader for the project, who estimated that there were now over 100 million mobile phone users on the continent.
UN Secretary General Kofi Annan launched last November in Kenya an initiative called the "Nairobi Framework" to try and increase the number of CDM projects in Africa.
Since then just 10 new projects have been registered in Africa, versus 348 extra elsewhere, UN data show, but the UN official leading the project defended progress so far.
"Let's give it some time," said Daniele Violetti.
UN agencies, the World Bank and the African Development Bank will pool resources for a joint CDM project, with details likely in October following a meeting in Ethiopia, he said.
Western project developers are under no obligation to show that their projects contribute to sustainable development.
"The investors should be proud," said Michael Wara, research fellow at Stanford University.
"You want the market to work and find the low-hanging fruit, but you want to be able to modify the system when people start extracting these kinds of profits."
In one of the biggest money-spinning projects yet, 10 investors including London-based Climate Change Capital and New York-based Natsource bought 129 million tonnes of carbon credits for 6.2 euros ($8.49) per tonne from two projects in China.
The price of such carbon credits for guaranteed delivery closed last week at some 16 euros per tonne, implying potential profits for these investors of well over 1 billion euros.
Climate Change Capital said last week it had a carbon credit portfolio of over 65 million tonnes, more than double Africa's entire registered portfolio of 32 million tonnes, Reuters data shows (http://www.reutersinteractive.com/CarbonNews/67999).
Climate Change Capital also told Reuters that it had no registered projects in Africa, but had at least one in the pipeline.
While China levies a tax of up to 65 percent on CDM profits made by local companies -- to invest in Chinese renewable energy projects -- no such tax is levied on these potentially much bigger margins made by western brokers.
"The (profit) margin isn't going into sustainable development. A lot of the money is staying in London," Wara said. (Additional reporting by Michael Szabo)
Story by Gerard Wynn
REUTERS NEWS SERVICE
CHEMICAL COMPANY PROFITS FROM DOUBLE COUNTING OF CARBON CREDITS
UN Official Daniele Violetti "Not Aware" of the Problem
Excerpted from The ENDS Report
ENDS has learned that chemical corporation Rhodia is using carbon credits from the Clean Development Mechanism (CDM) to meet voluntary corporate targets -- only to sell them at a profit to be counted again elsewhere. Cement company Lafarge has not ruled out the same practice.
Companies like Rhodia can use CDM credits to comply with mandatory targets under the EU Emissions Trading Scheme. But they can also use them to meet voluntary carbon reduction commitments or to make "carbon neutral" claims, or sell them on the market.
Rhodia and other companies are counting the credits they generate towards their own voluntary emissions reductions and then selling them, thereby enabling other organizations to claim the reductions as well.
The practice is necessarily harming the climate. In the carbon market, one tonne of credits is designed at best to "neutralize" one tonne of emissions. If the same one tonne of credits is used to license two tonnes of emissions, the net effect is negative.
Rhodia's 2006 sustainable development report says two CDM projects that cut emissions of the greenhouse gas nitrous oxide at its plants in Paulina, Brazil and Onsan, South Korea "will enable Rhodia to . . . place 11-13 million tonnes of carbon dioxide emission credits on the quotas market." The report adds "the initial reductions were audited and 1.6 million tonnes of CO2 emission credits were received and sold". With CDM credits trading at around EUR10 each, the sale may have earned Rhodia about EUR16 million. But the cuts have also contributed significantly to the emissions reductions Rhodia claims in the report.
A spokesperson for Rhodia claimed that "there is absolutely no double counting" because the company was not using the credits from the two projects toward its EU ETS targets. She appeared unaware that counting credits, which it later sells, toward its voluntary targets is also double counting.
Lafarge is meanwhile claiming to be meeting its voluntary emissions reduction targets partly through a CDM project in Malaysia that employs oil palm kernel shells in place of coal as a fuel for its cement plants. Yet it also contemplates selling the same credits on to a third party. Vincent Mages, Lafarge's climate change vice president, says that this "just means a revenue for Lafarge as for any company doing the same type of CO2-reducing investment in a [developing] country".
In a baffling statement, Mages said that "the buyers of such credits are buying a tradable financial product, a commodity, but certainly not a CO2 reduction recognition". This contradicts official UN language, which claims that CDM credits are "emission reductions".
The comments come as a further embarrassment for environmental group WWF, which has a seven-year-old partnership with Lafarge aimed at reducing its climate change impacts. No one was available for comment at WWF. In June, ENDS revealed that WWF has no effective strategy for curbing the cement giant's rapidly growing CO2 emissions from operations in developing countries like China.
Daniele Violetti, UN CDM registry and issuance team leader, said that the UN was "not aware" of the problem. "Officially the companies are not doing anything wrong," he said. The use of credits to meet voluntary company targets was, he explained, "outside the purview" of the CDM Executive Board.
Carbon Offsets Not Welcome Here
27 February 2007
Night falls early in the flat landscape outside Raipur, the capital of India's Chhatisgarh state. Towering above the dry rice fields, factory after factory producing sponge iron for export to China pumps out smoke that dims the setting sun and blackens trees, soil and workers' faces alike.
Welcome to the frontier of the global 'carbon offset' market. Here, as in hundreds of other locations around the world, polluting private companies are setting up new 'profit centres' to capture green finance. In return for documents claiming that they are cleaning up part of their operations, industries such as Chhatisgarh's crude iron works hope to sell carbon credits to Europeans, Japanese or North Americans bent on compensating for some of the CO_2 emissions of their factories and cars.
But to many Indian activists, the Chhatisgarh iron magnates' plans look like little more than opportunism on the part of a dirty and exploitative industry. With or without efficiency improvements, Chhatisgarh's largely coal-fired iron works will continue to spoil farmland and crops, displace villagers, deplete and contaminate water reserves and damage the health of local residents. In December, closure orders were slapped on several of the plants for pollution violations. Out of fear for their livelihoods, residents of one affected local village, Charenga, have even resorted to vigilante action to block company access to a recently-built factory nearby. Today the plant lies idle.
Such conflicts may come as a surprise to idealists convinced that carbon offset projects -- whether set up under the auspices of the Kyoto Protocol's Clean Development Mechanism (CDM) or under voluntary private schemes -- will bankroll community-friendly renewable energy and set the South on a low-carbon path to industrialization. But the Chhatisgarh case is hardly exceptional:
* In Minas Gerais, Brazil, farmers, trade unions, churches and rights organizations are incensed about a land-grabbing plantation and pig iron firm that has tried to peddle credits on the ground that without carbon offset finance it would have to replace its charcoal fuel with mineral coal.
* On Ecuador's high plains, peasants complain bitterly about the financial losses they suffered after signing a contract to maintain tree plantations designed to offset carbon dioxide emissions from a coal-fired power station in The Netherlands.
* In South Africa, the giant chemicals, mining and fuels corporation Sasol has stirred controversy by arguing that it should be able to sell carbon credits for a natural gas pipeline that its own executives admit has already been paid for as part of the company's normal expansion.
* In Maharashtra, India, wind farms are stirring controversy by taking over land needed by local people.
* Around Mount Elgon in Uganda, villagers are being beaten and shot at by authorities attempting to keep them out of a national park, part of which is now a carbon plantation aimed at exporting credits to Europe.
A quick look at market fundamentals suggests why such conflicts are almost inevitable. The biggest offset buyers want cheap carbon credits, and lots of them. The most reliable providers will be big, highly-capitalised firms or agencies in a position to hire carbon consultants and accountants, liase with officials or pay the fees needed for UN registration.
Carbon-saving schemes that take the trouble to respect community rights, on the other hand, tend to be fiddly, expensive, low-yield, or difficult to implement politically. Revealingly, only around 2 per cent of carbon credits from registered CDM projects are generated by renewable energy projects, while over two-thirds come from big installations that destroy industrial gases or burn methane from waste dumps or coal mines.
Against this market logic, well-meaning schemes like the CDM Gold Standard -- developed by the World Wide Fund for Nature and other organisations to promote carbon offset projects that foster 'sustainable development' -- have little chance. As a RaboBank executive recently observed, 'Few in this market can deal with communities.'
*Where does that leave corporations who want to be seen taking a responsible approach to global warming? One answer is obvious: abandon carbon offsets and help push for structural, long-term changes that can actually be effective in keeping coal, oil and gas in the ground. Shifting subsidies away from fossil fuels, supporting communities defending their lands against carbon extraction, investing in low carbon energy and transport systems, and instituting tougher regulation on pollution are all necessary steps to a carbon-free future.*
Aid, the Clean Development Mechanism and Some Open Questions Soumitra Ghosh
Development Today (Oslo)
3rd May 2007
Countries with colonial pasts always view the word "aid" with scepticism. Questions multiply when aid appears in conjunction with CDM -- the Clean Development Mechanism -- a construct of our own times.
In India, we remember the labyrinthine connotations of aid -- the good Samaritans and missionaries who formed one half of the colonisation narrative -- and the other half that smelled of gunpowder and death. We recall also the role of donors like the World Bank in the more recent neo-colonial past; billions of dollars of aid money funnelled to poor countries to ensure that political resistance can be quashed. The questions are accentuated when "aid" appears in conjunction with CDM.
CDM, according to the Danish government, "promotes sustainable development while mitigating climate change". Governments who thought up the CDM wanted us to believe it was a scenario that had everything -- unimpeded industrial production, splashy lifestyles, economic growth, equity and clean air sans greenhouse gases. A lot of people welcomed the idea; the rest either did not understand it or just went along. No one could have guessed that in four or five years CDM would turn out to be a playground for the world's corporations.
It has not mattered whether projects labelled CDM are clean or climate-friendly. The official attitude is that a system comprising Designated National Authorities (DNAs), Designated Operating Entities (DOEs), validators, project designers, consultants, international financial institutions and the UN will have little space for error. But what about delivery? How does one know that projects which claim on paper to reduce emissions are doing so in practice?
India is consistently rated as one of the world's top three CDM countries. It now has more than 600 on-going projects, generating more than 383 million "certified emissions reductions" -- CERs. At the current rate of EUR13 for each Indian CER, this adds up to some EUR5 billion.
No wonder that CDM has "emerged as a buzzword in the Indian corporate sector", as a recent press release from the Federation of Indian Chamber of Commerce and Industries puts it. Indian CDM projects have already earned US$234 million from selling the 18 million CERs issued so far.
The larger share of this went to HCFC abatement projects. In 2006, one of these (GFL in Gujrat) posted a return from CER sales more than 3.5 times its net profit the year before. Comparatively smaller projects in waste heat recovery, biomass and wind power categories also earned fat profits. The asking price for primary Indian CERs (credits traded before UNFCCC issuance) is EUR16, much in excess of the market price for secondary CERs! Indian projects are also holding back issued CERs to fetch a better price at a later date. In the domestic stock market, Indian companies with CDM are automatically being tagged as blue-chip.
Growth, yes. But what about sustainability and climate change mitigation? With the market taking the lead, these concerns recede to the fringe. The Indian DNA pursues a policy of fast-track clearance for CDM projects. It neither scrutinises project documents nor monitors projects after clearance. Validator agencies and DOEs maintain a respectable silence about both delivery and sustainability aspects. That leaves the CDM Executive Board, which sometimes refuses to register projects on methodological or other grounds. But it too leaves issues like project impacts and community participation in the hands of the national authority.
The result of this corporate-friendly CDM (about three-quarters of Indian projects are owned by large corporations) are visible enough. Companies and industrial plants with documented bad social and environmental track records reap rich harvests. Meanwhile, pollution from HCFC project holders like SRF and GFL (both CDM giants) continue in Gujrat. Substantially subsidised by returns from the carbon market (55 waste heat CDM projects so far), polluting industries like sponge-iron continue to belch black filth into the air, destroying agricultural fields and ruining people's health in Bengal, Jharkhand, Chattisgarh and Orissa. In Andhra, the tobacco and paper and pulp giant ITC fills fertile agricultural lands with eucalyptus monocultures. Its "carbon-neutral" clean plant in Bhradachalam (six CDM projects in the same plant) illegally occupies tribal lands, and pollutes rivers and underground aquifers. In Maharashtra in Western India, corporate-owned wind turbines destroy village pastures and agricultural lands. In Uttaranchal, "small" CDM hydropower projects vie with big dams in displacing people from their fields and homes. Indian, Chinese, Latin American (and, yes, African) CDM and other carbon projects simply mean blatant corporate profiteering, aided by governments and donor agencies.
The Danish government talks about selecting projects with a "high sustainability profile" and buying back credits. One understands their imperatives: aid goals have to be met, Kyoto target must be achieved. What baffles and intrigues us is the "sustainability" and climate interplay. Does the Danish government seriously believe, even after all the exposés of CDM projects worldwide, that the key rationale for CDM is anything but profit?
Perhaps it would be wiser to remember that aiding CDM means perpetuating a lie, perhaps the worst humanity has ever been told. The myths of colonial philanthropy did not survive the scrutiny of history. Will this "aid" fare any better? Will the lie of CDM cleanse the emitters of their sins? These are open questions.
The writer is with the National Forum of Forest, Peoples and Forest Workers, and is based in Siliguri. His email is firstname.lastname@example.org.