This article explains carbon market trading and argues that like any market it will lead to fluctuations and crashes and is therefore not a sustainable solution for climate justice.
As COP17 draws to a close the only game in town is the market-based mechanisms that are false solutions to climate change. The same institutions, corporations and governments who have led the world into economic chaos are leading us towards climate chaos.
However, the cracks in the façade are starting to show. Carbon trading and offsetting, the Clean Development Mechanism (CDM) and Reducing Emissions from Deforestation and Degradation (REDD) have failed to cut carbon emissions, which reached record high levels in 2010, whilst further impoverishing the worlds poorest people, facilitating the largest land grab in history, destroying biodiversity and trampling the rights of indigenous communities. In a new video released today, critics of the markets and even the architects and gatekeepers of climate ﬁnance admit to its failure.
Martin Hession, Chairman of the CDM Executive Board says:
We have had allegations in respect of a project in Honduras; people have been killed by people associated with the CDM project…. I don’t think the CDM can take on the job of being a human rights commission, I don’t think the CDM can take on the job of resolving every social problem in every country.
The failure to look at climate change in the wider context of climate and social justice is leading to gross human rights violations as well as environmental degradation. Those responsible are economists and ﬁnanciers who are solely concerned with the numbers and tweaking them to create a positive balance in their books, both in terms of proﬁts and “ﬁctitious” emissions reductions.
As Prof Michael Grubb, Senior Research Associate, Faculty of Economics, University of Cambridge says:
Having created a market-based mechanism to cut carbon a lot of people seem to expect it to behave in a non-market way and deliver poverty alleviation, deliver sustainable development co-beneﬁts, but fundamentally; you create a market, it’s behaving the way markets do, it chases where are the most cost eﬀective things, where can they make the most proﬁts and I think that anyone who didn’t expect a market instrument to behave in that way didn’t understand what they were doing.
So why are these carbon market mechanism now dominating the UN climate negotiations? Larry Lohmann, Co-founder of the Durban Group for Climate Justice explains:
The biggest buyer of carbon pollution rights, these oﬀsets bought in from countries in the Global South today, the biggest buyers are not actually polluting ﬁrms in Europe, they’re not actually the steel mills, they’re not actually the electricity generators, although of course they also do buy pollution rights, the biggest buyers are Wall St and the City of London, they’re ﬁnancial actors. Why are they buying these pollutions rights? Obviously they’re not buying them because they need to oﬀset the huge amounts of smoke coming out of their smoke stacks in the City of London, they’re buying them to speculate with, they’re buying them because proﬁts are to be made in the trading of them. Carbon markets are not a way of solving the climate problem, the impetus for them is not coming from people who are suﬀering from climate change, the impetus for them is not coming from environmentalists even, the impetus is largely coming from people like Fortis Bank.
As with all markets, the carbon market is subject to ﬂuctuations and crashes. The price of carbon is already at an all time low, which has lead the International Emissions Trading Association (IETA) to oppose the European Energy Efﬁciency Directive because they claim it will have a negative effect on the price of carbon.
We now ﬁnd ourselves in the insane situation where we have schemes designed to cut emissions being blocked by those whose ability to proﬁt from climate change is predicated on emissions continuing and climate change getting worse.
There is no doubt that money is needed to tackle climate change and to help developing countries adapt to and mitigate the effects of climate change. But the volatility and single-minded nature of the markets is clearly not the way to do it. Developed nations must pay their historical climate debt, and this payment should not be in the form of loans, but rather in reparations. They may claim that there is no money available, but this is patently nonsense when trillions of dollars miraculously materialise when their own economies are in peril, only to vanish into the never-ending coffers of their ﬁnancial institutions.
Rights of Mother Earth
We support the People’s Agreement on Climate Change and the Rights of Mother Earth, agreed by more than 30,000 people from over 100 countries who took part in the World People’s Conference on Climate Change and the Rights of Mother Earth in Cochabamba, Bolivia. We consider inadmissible that current negotiations propose the creation of new mechanisms that extend and promote the carbon market, for existing mechanisms have not resolved the problem of climate change nor led to real and direct actions to reduce greenhouse gases.