A Dangerous Distraction
A dAngerous distrAction
Why offsetting is fAiling the climAte And people: the evidence
foreWord
negotiations to prevent dangerous
“Negotiators must recogNise
about this report
climate change are moving
that offsettiNg does Not
painful y slowly, despite the science
this report has been prepared
work, will Not work aNd
demanding urgent carbon cuts.
for friends of the earth england,
that it must be scrapped.”
developed countries are reluctant
Wales and northern ireland’s work
to set themselves reduction targets
on international climate justice. the
consistent with what the science
offsetting is now a dangerous
report is for decision makers, media
demands and provide necessary
distraction. negotiators must recognise
and campaigners thinking through
financial flows to developing countries.
that it does not work, wil not work and
robust, workable and fair solutions to
to compound this failure, they are also
that it must be scrapped. instead the
climate change ahead of the un talks
seeking to continue and extend the
world needs developed countries to cut
in copenhagen in december 2009.
use of offsetting.
their own emissions first and fast and
there is a growing and credible
this report provides the evidence
pay up for adaptation and mitigation in
body of evidence and opinion that
to show that offsetting does not work
developing countries. this course of
offsetting is not working; that it
and will not work. offsetting does not
action is not a threat to the wel -being
is undermining efforts to prevent
lead to promised additional emissions
of people in developed countries; it
dangerous climate change and
cuts in developing countries; it
is a vital step towards new jobs, new
supporting sustainable development;
delays essential structural change in
industries, a healthier global economy
that it is profoundly unjust, and that it
developed-country economies; and
and a safer and more just world.
cannot successfully be reformed.
it institutionalises the idea of cuts in
this report draws together some of
either the north or the south, when
Andy Atkins
the key evidence to ensure this view
science demands reductions in both.
executive director
is fully reflected in public debate and
As importantly, the report reveals
friends of the earth england,
international talks. it focuses on the
the inequalities of the offset approach
Wales and northern ireland
uK as an example, but the lessons are
– an approach that al ows people in
applicable to all developed countries.
rich countries to carry on pol uting
while requiring unfair reductions in
developing countries.
authors
acknowledgements
simon Bul ock
many thanks to everyone who gave help and advice in the writing of this report,
mike childs
in particular:
tom picken
larry lohmann, cornerhouse
www.thecornerhouse.org.uk
editorial team
payal parekh, international rivers
www.internationalrivers.org
editor: Adam Bradbury
tim Jones, World development movement
www.wdm.org.uk
design: luke henrion
helen Bird, Will Bugler, richard dyer, owen espley, tim Jenkins,
cover image: corbis
Ben newsome, mary taylor, Anna Watson, helen Wolfson
contents
executive summary
4
1. climate chaNge: the scale of the challeNge
6
2. the political coNtext: why decisioNs oN offsettiNg are importaNt
7
3. offsettiNg: what is it aNd how sigNificaNt is it?
9
4. why offsettiNg doesN’t work
13
4.1. less cArBon is cut: reductions in one plAce, not Both
13
4.2 mAny proJects in developing countries Would hAve hAppened AnyWAy
13
4.3. no guArAntees of emissions cuts
16
4.4. offsetting delAys necessAry infrAstructure chAnges in developed countries 18
4.5. offsetting undermines loW-cArBon development in developing countries
20
5. offsettiNg aNd iNjustice
24
6. summary: why offsettiNg caNNot be reformed, why it should Not be
expaNded, aNd why it should be scrapped
26
7. recommeNdatioNs
28
7.1 finAnciAl trAnsfers to developing countries
28
refereNces
30
further readiNg
31
A dangerous distraction friends of the earth
3
executive summAry
Tackling climate change urgently requires major cuts
for these reasons offsetting must
in global greenhouse gas emissions. At Kyoto in 1997,
not be expanded at copenhagen.
as a step towards this goal, developed countries agreed
new proposed offsetting schemes
must be dropped from negotiations,
targets to cut their emissions. Embattled negotiators
and existing offsetting mechanisms
introduced offsetting to offer some flexibility in the way
need to be scrapped.
these targets could be met.
this report analyses offsetting,
using mainly the example of
the largest scheme, the clean
the theory was that offsetting would
development mechanism (cdm).
in practice offsetting is having a
allow developed countries to meet part
however, this analysis is largely
disastrous impact on the prospects
of their targets by paying developing
applicable to the other types of
for averting catastrophic climate
countries to deliver greenhouse gas
offsetting as wel .
change. it is vital that the inherent and
reduction projects.
systemic flaws in the approach are
since then offsetting has grown
recognised ahead of negotiations.
quickly, in particular in the form of
offsettiNg is Not
these problems cannot be dealt with
the clean development mechanism
reformable
by simply reforming cdm; instead
(cdm). despite many wel -publicised
completely new approaches are
offsets are a swap of an emissions
problems1, cdm offsets are now
needed that are effective and just.
cut in developed countries for a cut
predicted to deliver more than half of
in developing countries. But action
the european union’s planned carbon
in both is needed. failure to cut in
the five central arguments
reductions to 2020.
developed countries also results in
against offsetting are that it:
delays in essential infrastructure
offsetting in general is poised for
changes necessary for deeper cuts in
further expansion, potential y bringing
1 counts action in developing
the future. offsetting results in fewer
onstream many more offset credits:
countries as part of the cuts
emissions cuts. no amount of reform
• into forests, through proposed
promised in developed countries,
can alter this.
offset-based redd mechanisms
although the science is clear that
the problems of proving
(reduced emissions from
action is needed in both developed
“additionality” – that the developing
degradation and deforestation).
and developing countries.
country project would not have
• into sectors that the CDM does
2 cannot guarantee the same
happened without cdm – are inherent.
not currently cover, such as
cuts as would have happened
the us government Accountability
nuclear power.
without offsetting.
office says it is impossible to know
• under new sectoral frameworks.
3 is causing major delays to urgently
with certainty whether a project
needed economic transformations
is additional.
offsetting has gone from being
in developed countries.
the problems of proving the
a minor, experimental idea to an
4 does not ensure positive
offset project generates the same
approach which, although it has major
sustainable development in, or
level of carbon cuts are inherent.
negative impacts on countries’ climate-
appropriate financial transfers to,
offsetting credits are created against
change strategies, is set to expand
developing countries.
hypothetical baselines – they are
further. countries are clamouring for
5 is profoundly unjust, fundamental y
not and cannot be guarantees of the
even more offsetting opportunities
flawed and cannot be reformed.
same level of cuts.
as the world prepares for crucial
climate talks in copenhagen at the
end of 2009.
4
A dangerous distraction friends of the earth
the report finds that:
credits are calculated by judging
change crisis. offsetting, however,
action against hypothetical futures
is not the tool for this job.
1. offsetting delivers lower
– things that haven’t happened.
iv there are severe equity impacts for
greenhouse gas cuts than the
developing countries if developed
science says are needed to avert
3. offsetting delays necessary
countries offset even part of
catastrophic climate change.
infrastructure changes in developed
their targets. offsetting deepens
the ipcc says that developed
countries. it weakens incentives to
inequality in per capita carbon
countries need to make major
implement strong climate policies
consumption between developed
greenhouse gas cuts and in addition
or prevent high-carbon investments.
and developing countries.
that developing countries need to
A switch to a low-carbon model in
make cuts on so-called business-as-
developed countries in time to prevent
in summary, cdm and other types
usual baselines (emissions levels).
catastrophic climate change requires
of offsetting are flawed and highly
But offsetting means that action in
that they make major investments
problematic tools for tackling climate
developing countries can be counted
now and over the next 10 years. yet
change. they are a dangerous
as part of the action needed in
offsetting means that, for example,
distraction from the urgent business of
developed countries. offsetting
eu countries can delay taking strong
decarbonising the world’s economies.
therefore institutionalises the idea
action until at least 2020. locking in
they are not open to reform (see box
of making cuts in one or the other,
their high-carbon infrastructure will
opposite), and should be scrapped.
when the science and the ipcc are
have severe consequences for the
clear that action in both is needed.
global climate and developed-
governments should:
it is incompatible with the ipcc’s
country economies.
1. Agree that developed countries
recommendation, and leads to less
must reduce their own emissions
emissions cuts. the climate loses.
4. offsetting is not delivering for
by at least 40 per cent by 2020,
developing countries.
excluding offsetting.
2. offsetting cannot guarantee
i. in many cases offsetting is not
2. reject all forms of offsetting:
the same level of carbon cuts
helping developing countries take
proposals for new and expanded
in the developing country as
a low-carbon path. in fact a large
offsetting schemes must be
would have been made in the
proportion of cdm revenues
dropped, and existing offsetting
developed country.
are subsidising carbon-intensive
mechanisms need to be scrapped.
i. it is almost impossible to prove
industries, or projects building
3. reject plans to introduce redd
that most offsetting projects would
fossil-fuel power stations.
offsets, and instead negotiate
not have happened without the
i . cdm can create financial incentives
effective and fair mechanisms to
offset finance – ie that they are
for developing countries not to
protect the earth’s forests that do
“additional”. the us government
implement strong climate policies.
not involve offsetting.
Accountability office’s (gAo)
this is because only projects that
4. negotiate a new financial
2008 review of offsets said “it is
are not required by regulation
mechanism under the authority
impossible to know with certainty
are supposed to qualify as cdm
of the un framework convention
whether any given project is
projects.
on climate change (unfccc)
additional”. Without this guarantee
i i. the financial flows involved are
to ensure adequate financial
the net effect is that greenhouse
far lower than those required
flows to developing countries
gas emissions are increasing –
to adequately or effectively
to support their transition to a
because the cdm credit al ows
support low-carbon development.
low-carbon future.
the developed country to continue
developing countries must be
polluting. the climate loses.
given far greater support – not
ii. even if a project were additional,
least because of the colossal
it is often impossible to calculate
historic debt owed to them by
accurately how much carbon a
developed countries, which have
project is saving. this is because
overwhelmingly caused the climate
A dangerous distraction friends of the earth
5
1 climAte chAnge: the scAle
of the chAllenge
The need to reduce greenhouse gas (GHG) emissions
the tyndal research indicates the
is desperately urgent. Scientists tell us we are hovering
scale of overall reduction required:
at the edge of dangerous climate change tipping points.
which countries will make what
proportion of these cuts wil be
Despite the UN Framework Convention on Climate
decided in negotiations.
Change (UNFCCC) — signed as long ago as 1992 –
recent papers from the inter-
global emissions of GHGs have continued to increase,
governmental panel on climate
and have even accelerated since 2000.
change (ipcc) authors suggest that
2
even 450 ppmv co e wil require a
2
25-40 per cent reduction in emissions
Al signatories to the unfccc
mitigating the effects of climate
from developed (Annex i) countries by
(including the united states) have
change is also increasingly recognised 2020 and a 15-30 per cent reduction
committed to the overall objective of
as a security imperative. the uK
below baseline for developing (non-
the convention as stated in article 2
national security strategy states:
Annex i) countries by 2020.5 the
– to prevent dangerous climate change.
“climate change is potential y the
ranges summarised by the ipcc are
it is accepted that an average global
greatest challenge to global stability
“assumed to be achieved domestical y
temperature rise of more than 2
and security, and therefore to
by both groups of countries”.
degrees compared to pre-industrial
national security.”3
this allocation of responsibility
times would cause dangerous and
recent research on climate
is itself deeply unjust to developing
tipping points, which identifies the
countries, given historic contributions
temperature rises after which for
to cumulative greenhouse
“climate chaNge is
example the greenland ice sheet
gas emissions.
poteNtially the greatest
melt is likely to become irreversible,
developing countries have cal ed
challeNge to global
suggests the 2 degrees target is
for greater ambition from developed
stability aNd security,
prudent.4 maximising the chance
countries in copenhagen. the
aNd therefore to
of keeping wel below 2 degrees is
g77 and china say “much deeper
NatioNal security.”
a moral imperative for all humanity.
reduction commitments are required
and [...] must reflect their historical
even catastrophic impacts. exceeding
A synthesis of climate models
responsibility as wel as evolving
2 degrees wil create water scarcity
published in 2006 suggests that a
scientific evidence”.6 least developed
for billions of people, put billions at
concentration of 450 parts per
countries (ldcs) cal on developed
risk of hunger, make hundreds of
mil ion by volume (ppmv) of carbon
countries to accept targets of “at least
mil ions homeless because of flooding
dioxide equivalent (co e) gives a
2
40 per ent by 2020”7 and the Al iance
and threaten the very existence of
50 per cent chance of not exceeding
of small island states (Aosis)
low-lying island nation states through
2 degrees. this should be regarded
cal s for reductions of “more than
sea-level rise.
as an absolute maximum concen-
tration: a 50 per cent chance is
40 per cent”.8
not good odds when the climate is
at stake.
research by the uK’s tyndall
centre for climate change research
has suggested that to achieve this
requires global co e emissions to
2
peak in 2015 and fal by 4 per cent a
year thereafter. the emissions cuts
this trajectory involves should be seen
as the minimum required.
6
A dangerous distraction friends of the earth
2 politicAl context: Why decisions
on offsetting Are importAnt
Developed countries (those listed in Annex I of
the main offsetting proposals
the UNFCCC) agreed targets to cut their carbon
on the negotiating table involve:
emissions up until 2012 as part of the Kyoto Protocol’s
• moving away from project-based
first commitment period. There is a legal requirement
cdm to larger sectoral approaches.
for developed countries to set further targets for
• lifting bans on types of projects
subsequent commitment periods after 2012. The
that can be included, such as
Protocol allows developed countries to use offsetting
nuclear power.
• extending offsetting to forest
as a way to meet those targets. The CDM runs to 2012
carbon trading through redd
in its current form, and is set to continue beyond that
mechanisms.
date with amendments subject to further negotiations.
the effect of such an increase in
The UNFCCC is deliberating proposed changes to
the supply of offset credits would be to
the CDM and considering new offsetting schemes
further weaken the economic incentive
in the run-up to the Copenhagen climate talks in
to make real domestic emissions
December 2009.9
reductions in developed countries and
transfer the responsibility of reducing
emissions to developing countries,
the talks in copenhagen are a crucial
the focus of the cdm reform
albeit with some financial recompense.
opportunity to forge a stronger global
discussions, however, is to reduce
offsetting has become one of
agreement to prevent catastrophic
regulation of the cdm and increase
the central parameters that inform
climate change.
the supply of credits. other proposals
developed countries in defining their
it is widely acknowledged that there
aim to create entirely new offsetting
ambition, with the expectation of
are many failings with the cdm (see
schemes. consequently, the thrust of
avoiding much of the carbon-reduction
sections 4 and 5): some concerns
negotiations is creating space for even effort. this abuse of the unfccc
come from the problems in ensuring
less real action on climate at a time
mechanisms threatens to make
additionality or proving carbon
when there must be more.
a mockery of science-based
reductions; some concerns stem
target setting.
from the fact that poorer developing
“Negotiators are clearly
countries are effectively excluded
iNdicatiNg that they waNt
from any financial transfer through the
to see more of the cdm, Not
cdm; and some concerns are about
less. parties to the kyoto
the lack of sustainable development
protocol oNly receNtly
benefits and the harm that some
agreed that the mechaNism
projects cause to local communities.
would coNtiNue beyoNd 2012.”
yvo de boer, executive
secretary, uNfccc, april 200910
Annex i parties include the industrialised countries that were members of the organisation for economic co-operation
and development (oecd) in 1992, plus countries with economies in transition (the eit parties), including the russian
federation, the Baltic states, and several central and eastern european states.
A dangerous distraction friends of the earth
7
eu strategy for increasing
the overall eu strategy is to shift
offsetting
around half of its own emissions
• The EU climate and energy
reductions responsibility to developing
package established a framework
countries through offsetting, thereby
to al ow more than half of eu
avoiding an equivalent domestic effort.
emissions reductions responsibility
in addition to the offsetting
up to 2020 to be offset to
strategy, the eu is also proposing a
developing countries.
sectoral trading scheme. this would,
• The European Commission
for example, set a global cap on
strategy paper, towards a
emissions from steel manufacture.
comprehensive climate change
steel plants that make greater
Agreement in copenhagen, states
emissions cuts would be able to sell
that the eu seeks to align policy
spare permits to plants that do not
with other developed countries
have enough permits to cover the
in “generating demand for
pollution they have released.
offset credits”.
• The EU has also proposed new
in practice this scheme is likely
sectoral offsetting mechanisms
to suffer the same problems that
for agreement in copenhagen.11
continue to bedevil the eu emissions
sectoral crediting is intended
trading scheme:
to al ow whole sectors in
• politicians setting the cap too high,
certain developing countries to
leading to little or no reduction
generate carbon credits through
in emissions.
supposed reductions in their
• an excuse for allowing development
sector’s emissions growth. this
of more carbon-intensive
is in essence an expanded cdm,
infrastructure on the premise that
creating a higher volume of credits
cuts will be made elsewhere.
than project-based cdm against a
• huge windfall profits for
hypothetical baseline.
polluting industries.
considering the eu’s current
proposed reduction target is only
20 per cent by 2020, securing a
steady supply of offset credits
would effectively halve an already
dangerously low ambition and
undermine an already weak policy
framework. these problems are likely
to be exacerbated by eu proposals
to al ow member states to bank
credits (ie buy credits now and
use them later).12
8
A dangerous distraction friends of the earth
3 offsetting: WhAt is it And
hoW significAnt is it?
Offsetting is the process
in the subsequent 12 years cdm
what types of offsetting are there?
whereby developed
and other types of offsetting have,
countries pay developing
despite major and wel -publicised
cdm is the largest offset mechanism,
problems, become much larger
countries to deliver
accounting for more than four in every
mechanisms. for example, the
five tonnes of carbon offsets traded.
projects that purportedly
european union’s climate change
table 1 shows the volume of offset
cut carbon emissions
strategy allows more than 50 per cent
carbon traded in 2007.15
– in effect making carbon
of its planned emissions reductions to
2020 to come from offsetting.
cuts in developing rather
table 1: breakdown of carbon
the cdm al ows countries with
offset trading market, by volume
than developed countries.
binding targets under the Kyoto
of transactions16
protocol to buy credits from developing
countries that do not have Kyoto
offsetting emerged as a small-
market
transaction
targets and that are implementing
scale experimental idea agreed by
volume
carbon-cutting projects. the credits
embattled negotiators in the last hours
(million tonnes
are given units of tonnes of carbon
of the Kyoto protocol talks in 1997.
co e) 2007
dioxide equivalent (tco2e).13 rules
2
it was intended to give developed
have been established that are
voluntary
65
countries some flexibility in meeting
intended to ensure genuine emissions
their targets. offsetting would be
reductions – although this report
primary cdm
551
delivered via two mechanisms – the
shows that they do not work.
secondary cdm
240
clean development mechanism
the current report draws heavily
Joint implementation
41
(cdm) and Joint implementation (Ji).
on the experience of the clean
its proponents argued that
development mechanism (cdm),
total
897
offsetting would:
for two reasons:
note: proposals for mechanisms such as forest offsetting like
redd and sectoral offsets would lead to major additional future
• be an economically efficient way of
• First, the CDM is the world’s
sources of offset credits.
making carbon cuts globally.
biggest and most established
• transfer money from richer to
regulated offsetting mechanism.
poorer countries.
• Second, the CDM – and its smaller
• help with technology transfer and
companion offset mechanism with
development in poorer countries.
other developed countries, Joint
implementation (Ji) – are the only
offsets al owed in the european
union emissions trading scheme
(euets); the latter is the world’s
largest carbon-trading scheme,
accounting for around three-
quarters of the value of traded
carbon in 2008.14 A summary of
other types of offsetting appears in
the table on page 12.
A dangerous distraction friends of the earth
9
what project types are there?
who hosts the projects and
who buys the credits?
there is a variety of different offset
project types, such as:
the four countries predicted to be
uK companies are the top buyers
generating the most cdm credits in
for cdm projects, according to the
• sequestration: projects that
2012 are shown in table 3. 18
official cdm statistics, with more
trap carbon – for example forest
than 1,223 projects. these projects
projects. only a limited range of
table 3: biggest generators of cdm
are not necessarily offsetting uK
forest projects are currently al owed credits predicted for 2012
emissions, however, but the uK is the
under cdm rules.
host country for the purchase of the
• greenhouse gas destruction:
country
percentage
emissions; the credits may be sold on
for example capturing nitrous oxide
of all cers
to emitters in other countries. the next
(n o) or hydrochlorofluorocarbons
china
53
biggest buyers are switzerland (544
2
(hcfcs) emitted from factories,
projects) and Japan (480). 19 the uK
india
16
and turning them into more
is therefore at the centre of the multi-
Brazil
6
benign molecules.
billion-dollar offset market.
• energy efficiency: for example
south Korea
3
fuel switching and upgrades to
note: Africa is predicted to be generating 3 per cent of al cers
the chart below shows the main
by 2012.
power plants.
buyers of offsets.
• energy projects: for example
wind, biomass, solar, coal, gas,
1 united Kingdom of great Britain
and hydro-electricity schemes.
and northern ireland (29%)
2 switzerland (21%)
3 netherlands (11%)
table 2 shows the six biggest
4 Japan (11%)
categories of projects predicted
5 sweden (6%)
6 germany (6%)
to be in the cdm in 2012. 17
7 spain (3%)
8 canada (2%)
table 2: origin of cdm projects
9 italy (2%)
10 france (2%)
expected by 2012
11 Austria (2%)
12 others (6%)
type of project
percentage of
all cdm credits
12
(cers) (%) *
11
10
9
hydrofluorocarbon
17
8
1
(hfc) destruction
7
hydro-electricity
17
6
electricity from waste
10
gases or energy
energy from landfill gas
9
5
n o destruction
9
2
energy from wind
9
power
4
other
29
note: solar power is predicted to be generating 0.1 per cent
2
of cers.
* percentage of all credits from the start of cdm up to 2012.
3
source: http://cdm.unfccc.int/statistics/registration/
registeredprojAnnex1partiespiechart.html
10
A dangerous distraction friends of the earth
cdm: how significant is it?
proportion of eu emissions allowable through offsetting
the use of cdm is growing rapidly
and is predicted to account for a
significant proportion of overal carbon
reduction targets up to 2020. the un
environment programme (unep)
estimates that 5.2 billion cdm credits
(cers)* wil be issued between 2009
and 2020.20
in the eu climate package agreed
in december 2008, sectors outside
the eu emissions trading scheme
(euets) – such as surface transport
– can meet 73 per cent of their carbon
reductions required for 2013-2020 by
buying cers. some 781 million of
the total reduction effort of 1.07 bil ion
tonnes co e can be met by buying
2
cers (see chart, right).
sectors in the euets can meet
the eu has committed
50 per cent of the effort from 2008 to
to reduce its emissioNs
2020 with cers, representing
by 20 per ceNt by 2020; iN
1.6 billion tonnes co e. it is extremely
2
practice, however, with
likely that al these credits wil be used
offsettiNg it is cuttiNg
if available, as cers are cheaper than
its owN emissioNs by oNly
euets credits (known as euAs).
10 per ceNt.
the eu has committed to reduce
its emissions by 20 per cent by 2020;
in practice, however, with offsetting it
is cutting its own emissions by only
10 per cent. in summary, the high
volume of cers heavily reduces the
effort required of developed countries
to reduce their own emissions. probing
the effectiveness of cdm credits
is therefore crucial to determining
whether offsetting mechanisms
are in fact a successful strategy for
preventing dangerous climate change.
* cdm credits are cal ed cers; 1 cer is deemed equivalent to
1 tonne of co2e
A dangerous distraction friends of the earth
11
table 4: summary of types of offsetting
offset (existing and
description
Negative impact
conclusion
proposed)
on climate
cdm
un regulated projects based
very high. prevents emissions reject
approach
cuts in developed countries.
cdm gold standard
As above, with stronger
very high. improves cdm’s
reject. more effort is made on
criteria on allowed projects.
sustainable development
sustainable development and
problems, but still a major
additionality than other cdm
brake on developed-country
projects, but basic problems
emissions reductions.
of cdm unresolved.
A distraction.
Joint implementation (Ji)
capped developed countries
high. scheme is smal and
reject. delays infrastructure
make efforts to reduce
cap exists in both countries,
changes in country buying
emissions in other
but the over-al ocation
offset, creating carbon lock-in.
developed countries.
of emissions for eastern
european states due to
economic contraction in
the 1990s reduces impact
of real cuts in eu economy
as a whole.
offset-based redd
offsetting through
very high. same problems as
reject. forests could turn
avoided deforestation
cdm, but magnified by even
into sources of carbon rather
more uncertainty over carbon
than sinks within 100 years;
guarantees. possibly a huge
deforestation shifted rather
scheme.
than prevented; social justice
problems.
sectoral
cuts in a specific developed-
very high. pitched as a
reject. could create
country sectors are offset by
reform of cdm, but suffers
regulatory chill; same
cuts in the same sector in
most of the same problems,
problems with additionality
developing country.
and creates potentially far
and guaranteed cuts as cdm.
greater get-outs for developed
countries.
voluntary
includes schemes where
high. Quality of schemes
reject. even worse quality
individuals or companies
even lower than cdm.
than cdm.
can choose to offset their
creates societal 21 pressures
emissions.
and excuse for inaction.
12
A dangerous distraction friends of the earth
4 Why offsetting doesn’t WorK
This section outlines three therefore institutionalises the idea
4.2 mAny proJects
structural reasons why
of making cuts in one or the other,
in developing
offsetting mechanisms are
when the science and the ipcc are
clear that action in both is needed.
flawed and unreformable.
countries Would
offsetting is incompatible with the
It also sets out the impacts ipcc’s recommendations.
hAve hAppened
of relying on offsetting.
the us government Accounting
AnyWAy
office states that carbon offsets are
“inherently uncertain” and “involve
Before they can be cdm-registered,
4.1 less cArBon
fundamental tradeoffs and may not
project proponents have to justify
be a reliable long-term approach to
is cut: reductions
that their scheme would not have
climate change mitigation”.24
happened anyway – ie that it is
in one plAce,
the issue of distribution of effort is
additional. otherwise, the net effect
central to the unfccc negotiations.
not Both
would be that carbon global y is
taking into account the historical
increasing (as the cdm credit al ows
emissions and relative wealth of
the developed country to continue
the ipcc has said22 that keeping
developed countries – the basis of the
polluting).
global greenhouse gas concentrations
unfccc’s “common but differentiated
in practice there are three reasons
low enough to offer the greatest
responsibilities and respective
why cdm projects cannot be proved to
chance of avoiding dangerous climate
capabilities” – there is a strong
be additional:
change requires major emissions
argument that developed countries
cuts in developed countries in
should take greater emissions cuts
i) schemes are already part of
addition to deviation from baselines
than those modeled by the ipcc.
that country’s development
in developing countries. it estimates
there is a deeply unequal
some schemes are not additional
that meaningful progress towards
distribution of responsibility for
because they use technology that is
preventing dangerous climate change
cumulative global greenhouse gas
widely available, or they are already
would mean by 2020 a 25-40 per cent
emissions between developed and
common practice. in china more
cut for developed countries, and a
developing countries. inadequate
than 200 large-scale hydro plants are
15-30 per cent reduction on business-
commitments from developed
progressing through cdm validation.25
as-usual baselines for developing
countries are an unjust response to
they are al claiming that the projects
countries. these cuts are likely to be
that historic responsibility – in practice
would not have gone ahead without
inadequate because, according to
offsetting exacerbates the inequality
cdm revenues – for example, because
research by the uK’s tyndal centre
by further diluting developed-country
a coal-fired station would have been
for climate change research, the
commitments (see section 5).
cheaper to build. this ignores the
ipcc data on recent emissions were
cdm is supposed to be a way of
fact that the chinese government is
underestimates23, and in practice
making the same levels of carbon
a strong supporter of hydro-electric
they are not being delivered – for
cuts as would otherwise happen, but
development, that hydro is a major
example the eu has only a 20 per
more cost-effectively. At best it shifts
component in its five-year plans,
cent 2020 target.
a carbon cut in a developed country
and that the chinese hydro-electric
even this inadequate progress
to one in a developing country. But in
industry is expected to grow from
is further weakened by the use of
practice it does not even do this.
132-154 gigawatts (gW) of capacity in
offsetting. the ipcc is clear that
2010 to 191-240 gW in 2020 – growth
action is needed in both developed
equivalent to around 20 large coal-
and developing countries. But
fired power stations. hydro growth in
offsetting means that action in
china is continuing at previous trends,
developing countries can be counted
and there is no evidence that removing
as part of the action needed in
cdm would stop china continuing
developed countries. offsetting
its strategy of building more dams.
A dangerous distraction friends of the earth
13
these hydro stations are already
validation process[…] since
started, the developers claimed that
big revenue earners; cdm revenue
construction began wel before
without cdm support it was too risky
is a bonus, not the deciding factor.
cdm registration, it is clear that
“to reach financial closure and […]
developers stand to gain many extra
these projects stil would go ahead
commence the project construction”. it
mil ions from applying to cdm, as
even if they were not successful y
was cdm approved in August 2006.31
does the chinese government, which
registered as cdm projects.”29
taxes cers.26
the us gAo says assessing
Wara and victor analyse the
additionality wil become more
lucrative coke oveN
chinese hydro, wind and gas
complex “as host countries begin to
sector. they state that the chinese
A coke oven project in lingxi is highly
factor the cdm into their planning
government has recently introduced
economical y attractive (saving on
efforts and it becomes more difficult
strong policies to support these
electricity costs); many of the steps
to identify what would have happened
technologies, to relieve the economic
justifying its claim to be financial y
without the program”.
and pol ution impacts of heavy
unattractive are missing. it had already
reliance on coal in its massive
attracted 70 per cent funding from
ii) proofs of financial viability
increase in power-generation capacity.
the china development Bank before
are thin
they also show that “essentially all”
gaining cdm registration. it is difficult
to get cdm support projects have
new hydro, wind and natural gas fired
to demonstrate that this project would
to prove that without cdm revenues
capacity is applying for cdm credits.
not have happened anyway – ie that it
they would not be financially viable.
is additional.27
the usual method for doing is this is
Wara and victor argue:
to show that the project generates a
other sectors too are looking to
lower internal rate of return (irr)
offset opportunities to generate extra
“taken individual y, these claims
than is standard for projects in the
finance. indian government officials
may make sense – because
region, and a higher irr with the
say india’s rapidly expanding sugar
individually any particular power
cdm revenues. But there are wide
industry should seek offset credits,
plant utilizing non-coal sources
discrepancies in how different projects
as its ethanol production is displacing
probably faces greater hurdles
clear this hurdle.
petrochemicals. As the industry has
than new coal-fired generation […]
for example, india’s tanjavur
expanded at 35 per cent a year for the
taken col ectively however, these
natural gas power plant claims that
past five years, this activity cannot be
individual applications for credit
the irr without cdm is 15.3 per
deemed to be additional.28
amount to a claim that the hydro,
cent, stating that “all power projects
wind and natural gas elements of
in india are considered viable only
international rivers states:
the power sector in china would not if the guaranteed returns of 16%
be growing at all without help from
on the capital are ensured”.32 this
“… of 370 chinese hydropower
the cdm. this broader implication
project was registered on 29 may
projects submitted for cdm
is simply implausible in light of the
2007. yet the Kalyani steels electricity
validation, 77% are expected to
state policies described above.”30
generation project registered on 29
start generating within 12 months
september 2006 states: “in the indian
of their validation comment
gaNsu hydro project
power sector a 16% return on equity
period...normally hydropower
international rivers cites the example
has been an established benchmark
plants take at least several years
of xiaogushan, gansu, hydro project:
for a long time […] this has recently
to build, confirmed by p[roject]
an Asian development Bank report
been revised downwards to 14% by
d[esign] d[ocuments] that provide
into the project in 2003 said it was
the central electricity regulatory
a construction start date. this
the cheapest option for expanding
commission.” 33
means that most of the chinese
generation in gansu, regardless of
if the tanjavur project had used
hydropower projects in the cdm
cdm revenue, and a priority for the
14 per cent it would have not needed
pipeline started construction
local and provincial government. yet
the cdm revenues to clear the irr
prior to beginning the cdm
in 2006, two years after construction
benchmark. tanjavur is not
14
A dangerous distraction friends of the earth
an additional project.
expectation from the developing
verifiers to check the claims made
it has been widely reported that
countries that it would provide
by project proponents. in practice,
hydro-power developers routinely
the necessary upfront financial
these verifiers, who are paid
underestimate the amount of power
and technical support for new
by the project developers, have
their dams wil generate, which has the
sustainable development projects
strong incentives to approve the
effect of reducing projected revenue
that would reduce greenhouse gas
projects they check. further, there
streams, making such projects appear
emissions. today [. . .] it is mostly
is scant oversight on the integrity
less financially attractive without
functioning to provide additional
of the verification process and
cdm revenues. international rivers
cash flow to projects that are
no record of punishing verifiers
argues that a typical hydro-power
already able to move forward with
for misconduct. lacking any
its [sic] own financing.”38
other source of information about
individual projects and facing
86 per ceNt of them agreed
the us gAo’s recent review of
pressure from both developing and
that “iN maNy cases,
the cdm and interviews with cdm
developed country governments,
carboN reveNues are
participants found:
the cdm executive Board is prone
the iciNg oN the cake, but
to approve projects. Asymmetries
are Not decisive for the
“several representatives from the
of information are rampant;
iNvestmeNt decisioN”.
cement and auto industries said
the incentives mostly align in
they would pursue clean energy
favor of approval.
load factor34 is around 50 per cent.
projects regardless of the cdm,
“this chal enge is made all
But citing michaelowa35 international
describing the cdm credits as
the more formidable by the sheer
rivers says that as of 1 march 2008
more of a ‘bonus’ than a driver
number of projects upon which
the cdm project pipeline contained 82
of investment.”39
the Board must decide. the cdm
hydro plants in china with a load factor
eB, on average, registers about
below 40 per cent and seven with a
iii) exaggerated claims
one project every day as eligible
load factor below 30 per cent.
there are structural reasons in the
to generate cdm credits. thus
these are not isolated examples.
design of cdm approval that mean
the Board cannot afford to spend
Analysis by haya36 suggests that
carbon benefits are likely to be
large amounts of time evaluating
three-quarters of registered cdm
exaggerated, additionality claims
the complexities of financial data
projects were already complete at the
abused, and sustainable development
presented to justify a project’s
time of approval. developers counter
problems ignored.40
eligibility for cdm credits nor can it
that expectation of cer revenues
delve into a project’s relationship to
was critical for the decision to go
Wara and victor write:
state energy policy. furthermore,
ahead with the project. such a claim
the cdm eB faces a financial limit
is not provable in most cases. indeed,
“the host governments and
on the costs it can reasonably
a survey of cdm professionals
investors that seek credit have a
impose on individual offset projects.
found that 71 per cent agreed that
strong incentive to claim that their
in order to remain viable, relatively
“many cdm projects would also be
efforts are truly additional. the
small carbon offset projects cannot
implemented without registration
regulator – in this case, the cdm
afford the cost and uncertainty that
under the cdm”; and found 86 per
executive Board – can’t in many
would accompany truly extensive
cent of them agreed that “in many
cases gather enough information
scrutiny. indeed, there is strong
cases, carbon revenues are the icing
to evaluate these claims. these
pressure from cdm investors to
on the cake, but are not decisive for
problems of asymmetrical
limit such transaction costs and
the investment decision”.37
information are compounded in
speed up approval.”41
An Asian development Bank senior
the cdm, to be sure, because
official said in 2008:
the cdm executive Board is
massively under-staffed and the
“When the cdm was introduced
cdm system relies on third-party
10 years ago, there was much
A dangerous distraction friends of the earth
15
4.3 no
taNjavur Natural gas
New coal-fired power
guArAntees of
combiNed cycle power plaNt,
statioNs
tamil Nadu, iNdia
emissions cuts
in september 2007 the cdm
registered in may 2007, this project
board ruled that super-critical coal-
claims to reduce carbon emissions by
combustion plants could receive
cdm projects cannot guarantee
180,000 tonnes by being cleaner than
cers. this is more efficient than
carbon cuts, and often exaggerate
existing power plants in the region,
older technology, but is stil highly
claims about the amount they will
displacing dirtier power from the grid.
carbon-intensive (produces high
cut. this is an inherent problem.
Although it is cleaner, it is stil a new
levels of carbon per unit of electricity
Any system of credits for reductions
fossil-fuel power station, average by
generated). it is not particularly new
against a hypothetical business-as-
western standards. in this case cdm
or expensive technology that requires
usual scenario, is inherently prone to
is helping india to copy and lock in to
cdm help. even by 2004, over half
questionable claims of certainty.
a high fossil-fuel, western development of orders for new coal plants in china
the us gAo reports that
path, rather than take a low-
were for the super-critical type.
carbon path.
the international finance
“the use of carbon offsets in
developing countries need
corporation is supporting the
a cap-and-trade system can
to bypass this western stage of
development of the tata ultra mega
undermine the system’s integrity,
development, not mirror it.
coal-fired power complex in gujarat
given that it is not possible to
in addition, the plant is not
india44 – a mammoth 4 gW series
ensure that every credit represents
displacing dirty power plant; it is an
of five power plants – stating that its
a real, measurable, and long-term
additional plant to meet increasing
approach involves investment focus
reduction in emissions”.42
electricity demand in the region.
on “leveraging Kyoto mechanisms
claims that the project will result
(clean development mechanism),
Because offset cuts are created
in overal lower emissions from the
to enhance the attractiveness of less
against a hypothetical business-as-
region are refuted in the project’s
ghg intensive energy generation
usual baseline, it is impossible to
design document itself which states
and delivery approaches”. david
ensure that offset credits guarantee
that a benefit of the project is that
Wheeler, senior fellow at the center
carbon cuts. not only can it not
it will “make coal available for other
for global development says:
guarantee carbon cuts, in some cases
important applications”.43
“instead of supporting critical zero-
it can increase them.
emissions energy investments, scarce
international resources are sweetening
a private sector project that will
emit over 700 million tonnes of co
2
during its operating life”.45 to put this
into perspective, the entire targeted
savings announced in the first three
uK carbon budgets, from 2008-2022,
are 800 million tonnes.
in practice, any fossil fuel
project that offers even marginal
improvements can claim cers.
yet as international rivers put it,
“[…] technological advancement
means that a power plant entering
construction today can be expected
to be more efficient than one built
five or ten years ago”.
16
A dangerous distraction friends of the earth
20 mw coke oveN gas project
hydro aNd wiNd projects
two impossibilities:
iN liNgxi, chiNa
proving additionality and
other schemes exaggerate the
proving carbon cuts
registered in february 2009 this
amount of carbon saved. for example
cdm project claims to reduce carbon
wind and hydro projects in china
international rivers says:
by using waste gas from a coke oven
routinely claim to be saving carbon
plant to generate electricity. the
because they are displacing dirty
“While baseline-and-credit trading
project says that this “wil displace grid
fossil fuel from the grid, and compare
may have made sense as a theoretical
power generated by coal-fired power
these projects with historical averages
concept to the sleep-starved
plants”. But electricity use is growing
of carbon intensity of electricity. yet
negotiators in Kyoto, applying it in the
rapidly in the region. it wil not displace
these projects are not displacing
real world has shown it to be fatal y
grid power – the coal will still get used.46
fossil-fuel stations, but are additional
flawed. the concept depends on being
stations to meet growing electricity
able to give accurate answers to two
demand. it would be more accurate
inherently unanswerable questions.
to compare the wind project with
“to know a project is eligible, one
the projected carbon intensity of the
must know whether it is being built
region’s electricity. these projections
only because the developers wil be
would include wind and hydro projects,
able to sell offsets (ie it is additional).
as they are an agreed part of the
to know how many offsets to grant to
chinese government’s strategy for
the project one must know what would
electricity generation, which gives
have happened had the project not
“priority to renewable power when
been built (ie what would the business-
transmitted to the state power grid”.
as-usual, or “baseline” emissions be).
the chinese government also says:
“english Journalist dan Welch
“china wil continue to promote
gives a neat summary of the difficulty
the comprehensive cascading
of determining the ‘right’ quantity of
development of water-power-rich
avoided emissions: ‘offsets are
river val eys. it wil quicken the pace
an imaginary commodity created
of constructing large hydropower
by deducting what you hope happens
stations.”47 it is almost impossible to
from what you guess would have
know what the wind project displaces.
happened.’”49
As international rivers puts it: “if
Windfarms r us hadn’t built their
the us gAo states:
project, would megacarboncorp have
sold more coal-fuelled power, or would
“[…] because additionality is based
standard Wind have gone forward with
on projections of what would
their project instead?”48
have occurred in the absence of
the cdm, which are necessarily
hypothetical, it is impossible to
know with certainty whether any
given project is additional.”50
A dangerous distraction friends of the earth
17
4.4 offsetting
Al owing offsetting wil have a
“a policy of relyiNg
major negative impact. for example,
delAys necessAry
too much oN purchased
the uK’s climate change commitee
credits iN the iNitial years
infrAstructure
argued in december 2008 that “any
could make a stretchiNg
path to an 80% reduction by 2050
chAnges in
2050 domestic target
requires that electricity generation
uNachievable.”
developed
is almost entirely decarbonised by
2030”.52
agreed eu effort sharing directive,
countries
the committee also said that
covering the eu’s climate strategy
electricity demand is likely to increase
to 2020, allows 73 per cent of all the
offsets weaken emissions-reduction
heavily. this means there is a huge
emissions reductions from 2013-2020
targets in developed countries,
job to do to transform the electricity
in the non-euets sectors to be made
and this in turn eases the pressure
system. given lags in putting new
via offsets.55 this covers the housing,
on polluters both to invest to cut
infrastructure in place, the next five to
transport and commercial sectors,
emissions and to avoid investments
10 years are critical in achieving the
which could be poised for a revolution
that are high carbon. pol uters are
2030 goal.53
in the generation of decentralised
more wil ing to make high-carbon
this analysis holds for other
renewable energy and electricity.
investments if they feel that they can
countries within the eu ets. so
buy cheap offsets to cover them in
decisions taken in the next 10 years
forthcoming budgets.
are crucial. the massive amount of
long-term climate stability will
offsetting via cdm al owed in the eu
require developed economies to
is perhaps the biggest single barrier to
move away almost entirely from
decarbonising electricity generation.
technologies that emit carbon dioxide,
the euets allows 50 per cent of
which requires huge changes in
al the emissions reductions in phase
their infrastructure — starting now.
2 and phase 3 (2008-2020) to be
decisions on the mix and relative
made via offsets54, covering major
carbon-intensity of a wide range of
electricity generation. the recently
power stations wil be made in the
coming few years, and these stations
“aNy growth iN aviatioN
wil last 40 years. the uK climate
emissioNs from the expaNsioN
change committee said: “A policy
of heathrow would be fully
of relying too much on purchased
offset by a reductioN iN
credits in the initial years could make
emissioNs elsewhere […] it
a stretching 2050 domestic target
is simply wroNg to say that
unachievable.”51
more plaNes at heathrow
meaNs there will be more
co2 emissioNs overall”.
uk traNsport miNister
18
A dangerous distraction friends of the earth
Because they are delaying these
uk goverNmeNt usiNg tradiNg the uk’s New carboN budgets
changes, offsetting is a major barrier
to justify high-carboN
aNd offsettiNg
to action to prevent dangerous climate
iNvestmeNt
change. offsetting makes it far more
under the terms of the climate
likely that developed countries will
Because high levels of al owed
change Act 2008 the uK government
continue on a high-carbon path,
offsets weaken an already very weak
has set five-year carbon budgets.
choosing to buy cheap permits
cap in the euets, very high carbon
in doing so the government has
rather than invest in low-carbon
developments are being deemed
largely adopted the climate change
infrastructure.
acceptable by eu governments.
committee’s (ccc) advice, but set out
this is not just a problem for
for example:
its intentions on offsetting for the first
developed countries. investment
period 2008-2012 only. offsetting is
• The recent UK Government
in low-carbon technologies would
al owed within eu rules in the euets
decision to allow expansion of
make them cheaper and more widely
sectors, and not allowed in the non-
heathrow wil result in an additional
available for developing countries to
euets sectors.
180 mil ion tonnes of carbon
take up, and enable them to avoid
the ccc recommends two targets
dioxide being emitted. the uK
fol owing the same high-carbon
– an interim 2020 target of 34 per
government’s transport minister
development path as developed
cent cuts in ghgs, and an intended
justified this by stating that aviation
countries.
target of 42 per cent if a “global deal”
would soon be part of euets, and
for example, rapid take-up of solar,
were done at the un climate talks in
therefore “any growth in aviation
tidal, wave and off-shore wind power
copenhagen in december 2009.
emissions from the expansion of
opportunities wil make it far more
in the traded sector, for the
heathrow would be ful y offset by a
likely that developing countries wil be
second two budget periods the ccc
reduction in emissions elsewhere
able to use these technologies rather
recommends that offsetting be al owed
[…] it is simply wrong to say that
than follow the high-carbon path of
up to eu agreed limits – which al ow
more planes at heathrow means
hundreds of new gas- and coal-fired
50 per cent of the total eu effort to be
there will be more co emissions
2
power stations.
made by offsetting.
overall”.56
Just as offsets weaken the
in the non-traded sector for
incentives for industry to avoid high-
• A leaked Government document
the second two periods the ccc
carbon infrastructure investments,
suggests one reason the uK
recommends no offsetting under
they also weaken the incentives for
government in 2007 was reluctant
the interim target, unless a global
governments to take the radical and
to pursue renewable energy targets
deal is made – in which case the
urgent action needed. not investing
is that they would threaten the
entire difference between interim and
in a low-carbon path has short- and
euets carbon price. in other word
intended could be made via offsetting.
medium-term economic costs, as well
trading is used as an argument
these proposals mean offsetting
as long-term ones through lock-in.
not to adopt a low-carbon strategy,
has a massive impact on the likely
when its ostensible purpose is to
effort the uK has to make to cut
ensure that countries do.57
carbon at home.58
A dangerous distraction friends of the earth
19
4.5 offsetting
it is also an economically inefficient
some big cdm projects are
means of funding emissions
even for major new fossil-fuel power
undermines
reductions in developing countries.
stations such as the tanjavur plant
loW-cArBon
Wara estimates that hfc projects
(see page 16). it is claimed that
in the cdm as of 2006 would
these are more efficient than existing
development
generate euros 4.7 bil ion of credits
stations. yet these projects are
in developing
for refrigerant manufacturers, but
doing no more than ensure the new
destroying the gases costs less than
stations meet the standards of existing
countries
euros 100 million. A similar situation
best-practice plants – and those are
occurs for n o projects, where the
extremely inefficient, high-carbon
2
in practice offsetting is not helping
price of cers is tens of times more
intensity plants that might have been
developing countries transform their
than the cost of introducing the
built anyway.
economies to a low-carbon path. in
technology.59
hydro plants are a major part of
many cases it is locking them in to a
for these end-of-pipe technologies,
the cdm portfolio. they too are not
high-carbon, unsustainable path.
a different mechanism is needed
using radical new technology and in
there are four main reasons for this:
that gives factory owners the cash
many countries are part of existing
they need to instal the low-carbon
development plans. new technologies
technology, freeing up resources
such as solar are expected to account
offsetting does not help with new
to spend on more projects helping
for as little as 0.1 per cent of total
technology or innovation, because
developing countries, and requiring
cdm credits by 2012.
of its focus on cheapest options
the developed country to address its
domestic emissions. this would deliver
the biggest source of cdm credits
these cuts at far lower cost.
is in applying widely available
it is likely that cdm is helping
technologies to clean up greenhouse
lock in developing countries to a
gases like n o and hfc from
high-carbon path. for example, the
2
chemical installations. the technology
revenues going to the corporations
to strip n o from nitric acid plants – a
fitting hfc and n o and fossil-fuel
2
2
secondary catalyst to convert n o
efficiency projects and new coal-
2
to nitrogen and oxygen – is decades
and gas-fired power plants – which
old. these are end-of-pipe, old-
account for well over half of the
technologies with little other economic,
total credits are not going to be
social or environmental value. this is
spent on renewable or sustainable
not to say that the projects have no
development projects. they are going
value: it is important to prevent these
to corporations that are building more
gases from being vented. But using
fossil-fuel intensive industries.
the cdm to do it prevents emissions
reductions in developed countries,
does nothing to move developing-
country infrastructure away from
a high-carbon path and distracts
attention from many sustainable
development projects in developing
countries.
20
A dangerous distraction friends of the earth
offsetting can block new laws
offsetting could have a particularly
gas flariNg iN Nigeria
or practices
undesirable impact for some types
of project. for example a Joint
the Kwale gas project in nigeria
cdm rules can lead to a regulatory
committee of the uK parliament
intends to captures gas that is being
chil , creating an incentive for
has said that:
il egal y flared, and using it to generate
developing countries not to implement
electricity. the company applying to
laws to cut carbon emissions.
“the economic incentives offered
cdm has been flaring gas for years.
A project can claim to be additional
by the cdm appear actual y to
the design document, in arguing that
only if it can show that there are no
be encouraging the building of
the project is additional because there
laws compelling the introduction of
refrigerant plants in the developing
are no laws to mandate companies
the new technology. companies will
world, simply in order that the
not to flare gas, says: “Whilst the
lobby for developing countries not to
hfc by-products from the plant
nigerian high court recently judged
implement such new laws, so that they
can be incinerated, and the credits
that gas flaring is il egal, it is difficult to
can continue to claim credits. there
generated from this sold at a
envisage a situation where wholesale
are also incentives for the government
large profit.”61
changes in practice in venting or
itself not to implement such laws. for
flaring, or cessation of oil production
example, the chinese government
proposals under discussion for
in order to eliminate flaring wil be
gets tax revenue from the sale of
a redd mechanism based upon a
forthcoming in the near term.”62
cers. cdm registration documents
baseline of deforestation also risk
in other words, there is a law, but the
for n o destruction projects in china
creating the perverse incentive for
company apparently does not feel it
2
routinely states that “there is no
countries with low current levels of
should comply and wil only comply
regulation or incentive to eliminate
deforestation to increase their level of
if paid to do so. companies are even
n o emissions for nitric acid plants”.
deforestation in order to subsequently
less likely to comply with this law if
2
nor would there be if both developer
be able to claim greater amounts
they feel that by disobeying it the
and government benefit financial y
of finance on the basis of reduced
industry wil be able to obtain
from the current situation. cdm project deforestation, thus increasing carbon
cdm credits.
documents expect the current status
emissions in the short term.
the united states government
to continue, saying: “in fact, many
Accounting office concludes:
other companies in the host country
“the cdm does not credit emission
are currently planning or developing
reductions that result from newly
similar cdm project activities”.60
imposed policies or standards, in
part because it would be difficult
“the ecoNomic iNceNtives
to demonstrate that emission
offered by the cdm appear
reductions were a direct result of
actually to be eNcouragiNg
the law. this may pose a dilemma
the buildiNg of refrigeraNt
for host countries that want to
plaNts iN the developiNg
implement low-carbon policies
world, simply iN order
but also want to attract investment
that the hfc by-products
through the cdm.”63
from the plaNt caN be
iNciNerated, aNd the credits
geNerated from this sold
at a large profit.”
A dangerous distraction friends of the earth
21
offsetting doesn’t deliver
some cdm projects wil actual y
eNergy from waste iN bali
sustainable development
harm existing projects with strong
sustainable development benefits,
in Bali, indonesia a new cdm-
as wel as failing to deliver carbon
compliant waste-to-energy incinerator
many cdm projects have major
benefits themselves.
claims to avoid the release of methane
negative environmental and
the average cost of the cdm
from the breakdown of organic waste
social impacts, as documented by
approval and monitoring process is
in landfil s. yet “most organic waste
organisations such as international
an initial us$ 100,000-265,000, plus
is fed to pigs; the project would take
rivers and cornerhouse.64 this
annual costs of us$ 15,000-25,000
that waste from farmers to throw
is not to say that cdm is causing
in subsequent years.67 this creates
into landfil in order to purposeful y
these problems: as argued earlier
a bias towards large-scale projects,
increase methane generation. some
many projects would have happened
and against smal er ones that tend to
portion of these emissions would then
anyway. But cdm is not only meant
work with local communities to deliver
be captured and burned in order to
to help mitigate climate change but
sustainable development.
claim carbon credits.”
deliver sustainable development
the us gAo reports that
the project is threatening the
benefits. these benefits have not
existence of an award-winning
materialised.
“it may be possible to achieve the
sustainable development recycling
An analysis in 2007 of a sample
cdm’s sustainable development
project employing 40 local residents.69
of cdm projects found that a mere
goals and emissions cuts in
the coordinator of the recycling
1.6 per cent of cers were issued to
developing countries more directly
project says “the local environment
projects with sustainable development
and cost-effectively through a
agency has told me that we need to
benefits.65
means other than the existing
shut down our recycling operation in
mechanism”.68
order to send more waste to the landfill
michaelowa and michaelowa
to generate cdm credits”.70
report that
“projects addressing the poor
directly are very rare and […] even
smal renewable energy projects
in rural areas tend to benefit
richer farmers and the urban
population”.66
22
A dangerous distraction friends of the earth
risks from redd
cash flows from offsetting
hydro plaNt, iNdia
proposals for a market redd
are not effective
A large hydro plant on the Bhilangana
mechanism pose significant risks
offsetting creates the idea in
river, india, is threatening to destroy
to sustainable development. the
developed countries that such
an “ingenious, extremely low carbon
definition of a forest under the Kyoto
investment is a prime way to help
system of agriculture” where local
protocol allows for the replacement of
developing countries move down a
farmers run a finely-tuned terraced
natural forest with plantations. if this
low-carbon path, and of discharging
irrigation system to produce rice,
definition were to be carried over into a developed countries’ responsibilities
wheat, mustard, fruit and vegetables
redd mechanism then redd finance
set out under the unfccc. But even
– a “uniquely sustainable modern
could wel be used to fund conversion
if the many problems with offsetting
technology”.*71
to plantation forestry which stores as
could be ironed out, it is not an
* further case studies at http://www.internationalrivers.org/
little as 20 per cent of the carbon that
appropriate mechanism to achieve
cdm_comments/date
intact natural forest does.
adequate and effective financial flows.
proposals for a market redd
cdm revenues to developing
mechanism are likely to drive up the
countries from the eu are likely to
value of forest lands, which risks
be less than us$ 5 bil ion a year to
increasing the likelihood that forest
2020.72 this is around a tenth of a
lands will be wrested away from forest-
fair eu contribution toward the global
dependent communities, who are likely mitigation costs estimated by the un.73
to be marginalised already within their
proponents of offsetting argue
countries. the commodification of
that the cdm and other offsetting
forest carbon is likely to be inherently
mechanisms need to expand
inequitable as it discriminates against
massively to achieve larger financial
women and other marginalised
transfers. But the root problems with
groups who rely on free access to
swaps – proving additionality and
forest resources.
proving carbon reductions – are not
denying local and indigenous
capable of reform. expansion would
communities access to forest
worsen the impact of offsetting on
resources could have severe
climate change. mechanisms of a
impacts on poverty al eviation and
completely different scale and nature
the achievement of the millennium
are needed to support developing
development goals.
countries to pursue a low-carbon path.
these mechanisms must not delay
developed countries sprinting down
their own low-carbon path.
A dangerous distraction friends of the earth
23
5 offsetting And inJustice
Any defined emissions cuts by
even under the scenario without
the scenarios in this section have
developed countries as a whole have
any offsetting, 80 per cent emissions
been concerned with equity issues
major implications for development
reductions in developed countries are
of current and projected per capita
and equity for developing countries, as
not sufficient to ensure a levelling of
emissions only. however, data on
analysis by the third World network
per capita emissions in 2050.
cumulative emissions from 1850 show
(tWn) has highlighted.74
inadequate ambition from
that developed countries bear an even
in particular, developing countries
developed countries, combined with
greater responsibility. some 76 per
could be indirectly committing
offsetting, equates to a steep relative
cent of emissions from 1850 to 2002
themselves to inequitable cuts if
worsening in inequality for developing
came from developed countries; in
industrialised countries follow current
countries. Whereas the current
2002 developed countries
ambition levels and seek offsetting
per capita carbon consumption in
had less than 20 per cent of the
supply credits.
developed countries is at least three
global population.75
table 5 below is an indication of
times that of developing-country
this analysis is not intended to
what per capita emissions scenarios
per capita emissions, the offsetting
paint an impossibly bleak picture or
might look like in 2050, based on
scenario presented here would
to blame everything on developed
publically declared emissions targets,
increase this inequality to a factor
countries. it is intended to demonstrate
current rates of offsetting, and un
of more than eight. such scenarios
that the current negotiating positions
projections of population growth to
are morally unjustifiable, conflict with
of developed countries are inadequate
2050. the table demonstrates the
agreements under the unfccc,
and unfair, and need to change
implications for developing countries’
and would probably undermine
urgently. even an 80 per cent 2050
per capita emissions, with and without
other international treaties including
target for developed countries as part
offsetting, if developed countries
the un declaration on the right to
of a 50 per cent global cut is not a fair
agree an 80 per cent reduction by
development.
distribution for developing countries,
2050 under an overall global goal of
given historic contributions. offsetting
50 per cent by 2050.
would deepen the injustice, as it is
fundamentally a financial instrument
to transfer the responsibilty to reduce
emissions to developing countries.
table 5: total and per capita emissions implications under a global 50 per cent 2050 target.
scenario
total
developed
developing
developed
developing
greenhouse
countries’
countries’
countries’
countries’
gas emissions
emissions
emissions
per capita
per capita
(billion tonnes)
(billion tonnes)
(billion tonnes)
emissions
emissions
(tonnes)
(tonnes)
1990 reference base
38.6
18.2
20.4
15.3
5.0
year
2050 – developed
19.3
3.6
15.7
3.0
2.0
meeting 80 per cent
target, no offsetting
2050 - developed
19.3
10.9
8.4
9.2
1.1
meeting 80 per cent
target, using offsets
for half of this total
reduction
24
A dangerous distraction friends of the earth
inequitable and unjust outcomes
A fair global transition to a low-
implications of developed-country
can be avoided only if developed
carbon future must be achieved
offsetting
countries take on much greater
through cooperation between
cuts than currently agreed, and
developed and developing countries
developed countries
ensure these are achieved entirely
acting in good faith. the relentless
domestical y without any recourse
finger-pointing by developed countries
to offsetting.
at total emissions from populous
Just as crucial y, developed
developing countries cannot mask the
countries must commit to additional
injustice of the developed countries’
e in emissions
finance and technology to enable
positions and the implied developing
hang
energy efficiency and appropriate
country emissions pathways in
% c
renewable technologies for clean
per capita terms.
sustainable development in
Without assurance from developed
1990
1995
2000
2010
2015
2020
developing countries.
countries that they will substantially
final y, the climate impacts on
raise their emissions reductions
developing countries
developing countries must be ful y
commitments, do so domestically,
compensated by developed countries
and ensure a radical shift in global
through adequate adaptation funding.
financing toward the global good, it
is highly unlikely effective col ective
action will be achieved.
e in emissions
hang
% c
1990
1995
2000
2010
2015
2020
ipcc recommended range of cuts
eu commitment for 2020 using carbon offsetting
eu commitment for 2020 without carbon offsetting
implications for developing countries if developed
countries do not offset 20 per cent cuts (eu target)
implication for developing countries if developed
countries offset half of their 20 per cent target
inequitable impact of offsetting on developing
Baseline
country per capita emissions
A dangerous distraction friends of the earth
25
6 Why offsetting cAnnot Be reformed,
Why it should not Be expAnded,
Why it should Be scrApped
summarising sections 4 and 5,
the swaps are not equivalent
some people argue for reform of
offsetting suffers from the
to cuts in a developed country and
cdm to ensure that it does deliver
fol owing problems:
are therefore less beneficial for
guaranteed and additional cuts. As this
the climate.
report has il ustrated, however, proving
• It merely swaps action in
these failings are routinely
additionality is virtual y impossible, and
developed countries for action
dismissed by advocates of a global
proving guaranteed cuts is impossible
in developing countries, when
cap and trade, who argue such
in the absence of agreed targets. on
both are needed.
problems would be overcome if
the grounds of swap, additionality and
developing countries also operated
guaranteed emissions, cdm is not
As action is needed in both
under a legally-binding cap. it is,
capable of reform.
developed and developing countries,
however implausible that such a
in practice, creating a carbon offset
cdm – based on swaps – is at heart
scheme could be established within
market through cdm is not leading
preventing this from happening. cdm
the timeframes necessary to avoid
to more and more ingenious ways to
means delays in developed countries.
dangerous climate change, even
cut carbon; it is creating more and
reform cannot stop this.
if it could be politically agreed or
more ingenious ways to count things
the developing-country projects
made operational y effective. the
as carbon credits (ie creating loop-
don’t guarantee the same level of
eu’s emissions trading scheme
holes). examples of the creation of
carbon savings as could have been
demonstrates the operational failings
loopholes would include attempts
made in the developed country:
of over-al ocation of al owances
now to broaden cdm and offsetting
and corporate influence in achieving
to forest sinks and so-called sectoral
• Usual y it is impossible to say
specific sector exemptions. further,
offset approaches. this is al a huge
whether a project is additional –
even an ideal cap and trade would
distraction from getting massive
that it would not have happened
in any case produce significantly
investment into new low-carbon
without cdm support.
worse equity outcomes in per capita
technologies in developed countries.
• In the absence of targets, there is
emissions consumption as outlined in
no way of calculating accurately
section 5 above. the most effective
how much carbon equivalent
and fair alternative is to ensure
is being saved – there are no
developed countries agree on, and
guaranteed carbon reductions.
begin delivering, significantly deeper
reductions at home, and provide the
substantial financial and technology
flows necessary to begin emissions
deviation in developing countries.
26
A dangerous distraction friends of the earth
on top of this, the extra
• Financial transfers are small,
benefits claimed for cdm are
they are going to the wrong
not being realised:
sectors, and they are not helping
low-carbon development.
• Sustainable development
benefits are very low.
the majority of financial transfers76
are currently not going to activities that
sustainable development benefits
help developing countries move along
could potential y be improved by
a low-carbon path.
reforms such as better participation in
even if cdm were reformed so that
decisions, or bans on certain types of
a higher proportion of funds went to
project. however, these approaches
low-carbon projects, the scale of cdm
would make the validation stage of the
is such that it cannot be a main tool
cdm process even slower than it is
for getting the needed funds to
already. At present there is such high
developing countries.
pressure to increase the flow of credits
mechanisms are needed to help
that it is likely that any such reforms
developing countries constrain their
would simply drive the expansion of
emissions growth, without leading
offsetting into other arenas (such as
to reduced effort from developed
forests). the problems of additionality,
countries.
guaranteed reduction and failure
final y, in practice cdm can
to ensure sustainable development
hinder the development of laws and
benefits that bedevil current offsetting
policies to deliver a low carbon path
schemes would apply to new offsetting in developing countries, through
mechanisms also.
“regulatory chill”.
cdm should be scrapped, not
reformed, and developed countries
should honour their targets by making
carbon cuts at home.
A new set of mechanisms is
needed to deliver financial transfers
and to aid sustainable development
in developing countries.
A dangerous distraction friends of the earth
27
7 recommendAtions
governments should:
reject plaNs to iNtroduce
7.1 finAnciAl
1. Agree that developed countries
redd offsets
must reduce their own emissions
trAnsfers to
by at least 40 per cent by 2020,
forest offsetting suffers from al of the
problems with cdm, but with some
developing
excluding offsetting.
2. reject all forms of offsetting:
important additions:
countries
proposals for new and expanded
• Carbon reductions are even
offsetting schemes must be
the stern review estimated that
less guaranteed — forests could
dropped, and existing offsetting
mitigation to stabilise at even 500
become a net source of carbon
mechanisms need to be scrapped.
ppmv co e (itself an extremely
instead of a sink as the planet
2
3. reject plans to introduce redd
dangerous level) would cost around
warms up.77
offsets, and instead negotiate
2 per cent of global gdp annual y
effective and fair mechanisms
• Protecting forests is a complex
– more than us$1 trillion; and that
to protect the earth’s forests that
socio-economic issue requiring
adaptation costs are likely to rise to
do not involve offsetting.
policies that respect the land rights
hundreds of billions of dollars a
4. negotiate a new financial
of indigenous peoples and forest
year (depending on the scale of
mechanism under the authority
communities.
climate change).
of the un framework convention
the African group of nations in
• The complex pressures on forests
on climate change (unfccc)
the un climate negotiations argue
(demand for forest products, il egal
to ensure adequate financial
that developing nations wil need
logging, displacement of people
flows to developing countries to
at least us$ 200 billion a year for
from other lands) demand complex
support their transition to a low-
mitigation, and us$ 67 billion a year
governance arrangements not
carbon future.
for adaptation by 2020.79 the size
suitable to forest carbon trading.
of revenues needed is very large.
the scrapping of cdm and non-
Any mechanism intended to stop
research undertaken by the uK’s
expansion of offsetting into other
deforestation must be designed to
new economics foundation (nef)
areas are clear policy demands.
ful y address these issues for it to be
[80] summarises the rationale and
how to protect forests in other
effective and just. further reading is
need for developed countries to fund
ways is covered in other friends of
available at the friends of the earth
the bulk of these costs:
the earth briefings* (see also forests
international website.78
and offset-based redd mechanisms,
“unlike their developed country
for these reasons, proposals to link
right). for more detail on financial
counterparts, who grew their
redd finance to the offset market
tranfers see section 7.1.
economies generating energy at
should be rejected outright.
low cost and without particular
* friends of the earth international, 2008. redd myths.
environmental consideration, the
http://www.foei.org/en/media/archive/2008/forest-carbon-trading-
exposed
responsible trajectory now asked
and
of developing countries wil require
http://www.foei.org./en/publications/pdfs/04-foei-forest-climate-
significantly greater investment.
english
As with adaptation, there is
therefore a degree of moral
obligation for developed countries
to finance this process. As well,
there is practical necessity.
developing countries simply do
not have the capacity to address
poverty and human development
while simultaneously adapting to
and mitigating climate change.”
28
A dangerous distraction friends of the earth
not only is this a matter of moral
exactly what mix of sources
• capacity building and
and practical necessity however,
countries agree to, what governance
strengthening of rights. people
developed countries have unfulfil ed
arrangements are in place, and what
should be at the heart of financing
binding commitments under the
types of activities wil be funded, will
proposals, with resources directed
unfccc relating to financing and
be a matter for critical negotiations
to building local capacity, and
technology transfer.
leading up to the copenhagen un
sharing of expertise. Key global
Although significant differences
climate talks.
agreements, such as the un
remain between developed and
A new financial mechanism
universal declaration of human
developing countries on the form and
under the unfccc should have the
rights and the un declaration on
scale such a financial mechanism
following basic organising principles81:
the rights of indigenous peoples
should take, it is widely accepted that
must be upheld, as well as the right
current international financial flows
• adequate levels and
to development, food and energy
are simply not working (as stated by
predictability of finance. finance
sovereignty, and gender justice.
the chair of the unfccc working
must be obligatory and contributed
group on finance in plenary, poznan
on agreed responsibility indicators
final y, in addition to new
december 2008).
according to historical and current
international climate finance, we
private capital flows through
per capita emissions that meet the
propose major reforms to two existing
offsetting mechanisms are not
needs identified for mitigation and
financial flows which are currently
sufficient or appropriate to address the
adaptation in developing countries.
major barriers to global clean
root causes and solutions to climate
sustainable development.
change, as demonstrated throughout
• representative governance.
this report; new mechanisms must be
developing countries should
• stop carbon-intensive financial
agreed. friends of the earth believes
have strong, direct equitable
flows.there are major public and
a significant increase in developed
representation in any fund’s
private investment flows channel ed
country public sector funding is
decision-making and technical
into high-carbon infrastructure via
necessary to achieve the shared goal
bodies, with representation for
multilateral bodies such as the
of avoiding dangerous climate change.
civil society groups and indigenous
World Bank and the european
such a mechanism can only
people. the governance of
investment Bank. the World Bank
effectively operate under the
any fund must be democratic,
alone financed 26 gigatonnes
governance of the unfccc. to most
accountable and transparent.
of co emissions (45 times uK
2
developing countries, it is simply not
emissions) between 1997 and
acceptable to distribute climate funds
• participatory planning and
2007, and increased lending for
through existing channels such as
access for the most vulnerable.
coal, gas and oil by 94 per cent in
the World Bank, which have been
people potential y affected
the past year.82
and continue to be dominated by
by projects must be central y
western governments. further, the
involved in decisions around how
• cancel debt. At least us$ 400
wel -documented negative social and
and whether these projects are
bil ion of debt relief is immediately
environmental impacts of their policies
developed and implemented.
needed to enable developing
have effectively discredited them from
countries to meet the united
holding any competent governance
nations millennium development
or regulatory role in international
goals.83 developing countries pay
climate finance.
more than us$ 30 bil ion a year in
there are various financial
debt-interest payments.84
mechanism proposals currently under
consideration in the unfccc. it is
likely no one single proposal wil be
sufficient, but rather a package of
sources required.
A dangerous distraction friends of the earth
29
references
01 see for example, international rivers,
16 other major offset mechanisms, such as
35 international rivers, 2008. op. cit. pp8-9.
2008. Bad deal for the planet. http://
“redd” (reducing emissions through
36 http://internationalrivers.org/files/
internationalrivers.org/en/node/2826 and
deforestation and degradation), and
foe%20ir%20cdm%20fact%20
united states government Accountability
sectoral offsets, are still at the proposal
sheet%20finAl3,%2010-08.pdf
office, 2008. lessons learned from the
stage.
37 schneider, 2007. op cit.
european union’s emissions trading
17 http://www.cdmpipeline.org/cdm-projects-
38 http://www.adb.org/documents/
scheme and the Kyoto protocol’s clean
type.htm, as of April 2009.
speeches/2008/ms2008014.asp
development mechanism.
18 http://www.cdmpipeline.org/cdm-projects-
39 us gAo, 2008. op. cit. p41.
02 Anderson, K. and A. Bows, 2008.
region.htm#1, as of April 2009.
40 pressures on does are set out
reframing the climate change chal enge
19 http://www.cdmpipeline.org/cers.htm#4,
in schneider, 2007. op cit, p20.
in light of post-2000 emission trends.
as of, as of may 2009.
international rivers, 2008. op cit. also
http://www.tyndall.ac.uk/publications/
20 http://www.cdmpipeline.org/overview.
covers these issues in depth.
journal_papers/fulltext.pdf
htm#2, as of 1 march 2009.
41 Wara and victor, 2008. op. cit.p14.
03 http://interactive.cabinetoffice.gov.uk/
21 this is because individuals buy offsets,
42 us gAo, 2008. op. cit. p8.
documents/security/national_security_
eg against flights, rather than change
43 http://cdm.unfccc.int/projects/dB/
strategy.pdf
their behaviour, creating demand for new
rWtuv1173779090.0/view
04 lentol, t et al, 2008. tipping elements in
runways, which get built, which keep
44 http://www.ifc.org/ifcext/spiwebsite1.nsf/1
the earth’s climate systems. pnAs, vol
prices low, which increases demand and
ca07340e47a35cd85256efb00700cee/15
105, no. 6, p1786-1793. http://www.pnas.
so on.
84eA74dA3979AB852573A0006847BB
org/content/105/6/1786.full.pdf
22 ipcc 2007. chapter 13. policies,
45 http://carma.org/blog/carma-watch-red-
05 http://unfccc.int/files/kyoto_protocol/
instruments and co-operative
light-for-the-world-bank-group-on-coal-
application/pdf/emission_reductions_for_
arrangements. p775. “emissions from
fired-power/
stabilizing.pdf
developing countries need to deviate
46 By comparison, demand for electricity
06 philippines on behalf of the g77 and
– as soon as possible – from what we
in the uK is growing slowly and uK
china, “submission of the g-77 and
believe today would be their baseline
power plants are coming to the end of
china, contact group on mitigation and
emissions, even if developed countries
their lives and need replacing. they
means of implementation” in fccc/
make substantial reductions”. http://www.
should be replaced with much cleaner
AWglcA/ 2008/misc.5/Add.2 (part ii) at
ipcc.ch/pdf/assessment-report/ar4/wg3/
technologies. so in the uK new stations
page 48
ar4-wg3-chapter13.pdf
are more likely to be replacements; in
07 statement delivered by the maldives,
23 Anderson and Bows, 2008. op cit.
india they are extra capacity.
chair of the ldc group at the opening
24 us goA, 2008. op cit. p55 and p8.
47 White paper, china’s policies and
session of Ad-hoc Working group
25 http://internationalrivers.org/node/1892
actions to tackle climate change.
on long-term cooperative Action, at
26 schneider reports that for hfc
http://www.gov.cn/english/2008-10/29/
the climate poznan conference , 1st
and n20 projects, the government
content_1134544_6.htm
december 2008, poznan, poland
“taxes 65% of these project types.
48 international rivers, 2008. op. cit. p7.
08 Aosis submission on shared vision
the taxation of cers is expected to
49 Welch, d, 2007. A Buyer’s guide to
to the chair’s Assembly document, in
generate 1.5 billion eur for the chinese
offsets. ethical consumer 106, may/
fccc/AWglcA/2008/misc.5/Add.2
government by 2012”. schneider, 2007.
June. cited in international rivers, 2008.
(part i) at page 47
is the cdm fulfilling its environmental
op cit.
09 european union proposals from April
and sustainable development
50 united states government Accountability
2009. http://unfccc.int/files/kyoto_
objectives?Öko-institut, p11.
office, 2008. op. cit. p41.
protocol/application/pdf/czechec280409.
27 http://cdm.unfccc.int/usermanagement/fi
51 committee on climate change, 2008.
pdf
lestorage/hlrtsyoKu3n1cQfK66uil
op cit. p160. http://www.theccc.org.uk/
10 http://news.bbc.co.uk/1/hi/sci/
vAQ355QK6
pdf/tso-climatechange.pdf
tech/7444881.stm
28 “given the scale of the sugar enterprises
52 ibid.
11 http://unfccc.int/files/kyoto_protocol/
in india, the industry should come up
53 ibid.
application/pdf/czechec280409.pdf
in a big way to encash the potential of
54 the eu package of december 2008
12 http://unfccc.int/files/kyoto_protocol/
certified emission reductions (cers)
allows a total of 1,600 million tonnes
application/pdf/czechec280409.pdf
trading.” indo Asian news service,
of offset credits in phase 2 and 3; this
13 there are a variety of greenhouse
29 April 2009. http://in.news.yahoo.
amounts to 55 per cent of the total
gases, with differing impacts on global
com/43/20090429/836/tbs-sugar-
reduction effort in 2008-2020. there is
warming. tco2e expresses the impact
industry-should-focus-on-carbo.html
a provision in the legislation however to
of each of these gases using a
29 http://internationalrivers.org/node/1892
limit offsets to 50 per cent.
common unit.
30 Wara and victor. A realistic policy on
55 cdm use can be 782 mtco2e, total
14 sBi, 2008. carbon emissions
international carbon offsets. http://iis-db.
reduction needed is 1,073 mtco2e.
trading Worldwide. cited in http://
stanford.edu/pubs/22157/Wp74_final_
56 http://www.publications.parliament.uk/
www.carbonpositive.net/viewarticle.
final.pdf
pa/cm200708/cmhansrd/cm081111/
aspx?articleid=1500
31 international rivers, 2008. op cit. page 9.
debtext/81111-0007.htm, column 655
15 ecosystem marketplace and new
32. http://cdm.unfccc.int/projects/dB/
57 ends 2373, 15 August 2007, “leaked
carbon finance, 2008. state of the
rWtuv1173779090.0/view
note reveals uK’s renewables angst.”
voluntary carbon markets, 2008.
33. http://cdm.unfccc.int/projects/dB/
58 hm-treasury, 2009. http://www.
http://www.carbonpositive.net/viewfile.
BvQi1146639607.87/view
hm-treasury.gov.uk/d/Budget2009/
aspx?fileid=147
34 load factor is the ratio of average output
bud09_carbon_budgets_736.pdf and
to maximum output
committee on climate change, 2008.
op cit.
30
A dangerous distraction friends of the earth
59 lohmann, 2008. op. cit. reports that
76 http://www.cdmpipeline.org/cdm-projects-
further reAding
“rhodia, a french chemical firm, makes
type.htm shows that 25 per cent of
adipic acid at a factory in south Korea.
credits go to hfc and n2o projects,
1
cornerhouse briefings on offsetting,
By investing $15 mil ion in equipment
using old technology and funding fossil-
at http://www.thecornerhouse.org.uk/
that destroys nitrous oxide – an
fuel-intensive industries, a further 17 per
subject/climate/
unwanted byproduct – the company is
cent are going to hydro projects which
2
haya, 2007. failed mechanism. http://
set to produce $1 billion in un-approved
are not using new technology and which
internationalrivers.org/files/failed_
carbon credits”. Analysis by Ben
were going to be developed anyway and
mechanism_3.pdf
newsome for friends of the earth found
at least a further 10 per cent are going to
3
international rivers, 2008. Bad deal for
that 24 chinese nitric Acid plants will
fossil-fuelled power sector.
the planet. http://internationalrivers.org/
obtain between them us$ 200 mil ion a
77 http://www.guardian.co.uk/
en/node/2826
year in credits for projects costing less
environment/2009/mar/11/amazon-
4
Wara and victor, 2008. A realistic policy
than us$16 million a year. see also
global-warming-trees
on international carbon offsets.
Wara and victor, 2008. op cit.
78 http://www.foei.org/en/publications/pdfs/
http://iis-db.stanford.edu/pubs/22157/
60 http://cdm.unfccc.int/usermanagement/
redd-myths
Wp74_final_final.pdf
filestorage/BmgAgyff4Wo3Qxf8xh
79 reuters, 20 April 2009. Africa says poor
5
schneider, 2007. is the cdm fulfil ing
Q3oKi9WyJrn0
need billions to fight climate fight. www.
its environmental and sustainable
61 Joint committee of parliament on
reuters.com
development objectives? Öko-institut.
the draft climate change bill. (2007).
80 new economics foundation,
6
sub-prime carbon report at http://www.
final report: volume i. August 2007.
2009 (forthcoming). Assessing the
foe.org/subprimecarbon
http://www.parliament.the-stationery-
Alternatives.
7
cdm case studies at http://www.
office.com/pa/jt200607/jtselect/
81 see also “towards a global climate
internationalrivers.org/cdm_comments/
jtclimate/170/17006.htm#n72
fund” statement from the international
date
62 http://cdm.unfccc.int/usermanagement/
forum on globalisation, 16-16 november
8
cdm project data at: http://cdm.unfccc.
filestorage/t2n9g73gcsuW91eJue7
2008. http://www.ifg.org/pdf/global%20
int/projects/index.html
BJrW9ngiolu
climate%20fund%20statement%20
9
cdm general data at http://www.
63 us gAo, 2008. op. cit. p38.
and%20signatures,%20dec08.pdf
cdmpipeline.org/
64 see www.internationalrivers.org and
82 from statement to the World Bank by
10 http://www.carbon-financeonline.com/,
www.thecornerhouse.org.uk/subject/
friends of the earth international, focus
news on carbon trading.
climate/
on the global south and international
65 cited in http://unfccc.int/resource/
rivers http://www.internationalrivers.org/
docs/2009/smsn/ngo/119.pdf, sutter and
en/node/3560
parreno 2007.
83 from new economics foundation, 2008.
66 michaelowa, A and michaelowa, K, 2007.
debt as if people mattered. net present
climate or development: is odA diverted
value of public and publicly guaranteed
from its original purpose? climatic
debt us$ 1,350 billion. nef estimates
change, vol 84, p5-21.
that us$ 423 billion would need to be
67 us gAo, 2008. op. cit. p47.
written off, based on governments not
68 us gAo, 2008. op. cit. p56.
spending more than 40 per cent of net
69 see http://www.goldmanprize.org/2009/
feasible revenue for debt service, and
islands and http://www.no-burn.org/
not taxing people earning less than
article.php?id=684
us$ 3 a day.
70 http://internationalrivers.org/en/
84 World Bank figures for 2008, cited
node/4244
in Jubilee debt campaign, 2009.
71 lohmann, 2008. six soundbites
A new debt crisis? http://www.
on carbon markets. http://www.
jubileedebtcampaign.org.uk/
thecornerhouse.org.uk/pdf/document/
soundbites.pdf
72 maximum use of cdm under eu rules is
set at 2,400 mtc to 2020. current price is
us$ 10 a tonne. the uKccc estimates
a central price at 2020 of 16 euros (op
cit, p162). Assuming u$ 20 a tonne over
the period, this is us$ 4 bil ion a year for
12 years.
73 http://unfccc.int/files/cooperation_and_
support/financial_mechanism/application/
pdf/background_paper.pdf
74 http://www.twnside.org.sg/title2/climate/
pdf/tWn%20submission_global%20
goal.pdf
75 Wri, 2005. navigating the numbers.
http://pdf.wri.org/navigating_numbers.pdf
A dangerous distraction friends of the earth
31
A dAngerous distrAction
scientists tel us that taking action
the report finds that offsetting:
on climate change is more urgent
• is profoundly unjust, fundamental y
than ever.
flawed and cannot be reformed.
since 1997 offsetting has been
• counts action in developing
championed as a key tool to deliver
countries as part of the cuts
cuts in greenhouse gas emissions,
promised in developed countries,
and financial and technological flows
although the science is clear that
to developing countries.
action is needed in both.
this report examines the record
• cannot guarantee the same level
of the main offset scheme, the clean
of carbon cuts as would have
development mechanism (cdm). it
happened without offsetting.
asks what the effects are likely to be
• is causing major delays to urgently
of expanding offsetting as proposed in
needed economic transformations
the un climate talks.
in developed countries.
it finds that in practice offsetting
• does not ensure positive
is not leading to global emisssions
sustainable development in, or
reductions or benefits to deveoping
appropriate financial transfers to,
coutries. instead, it is simply leading
developing countries.
to more ingenious ways to avoid
5
7
.
3
cutting emissions.
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friends of the earth is:
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• the UK’s most influential national environmental campaigning organisation.
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organisations worldwide.
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