ENVIRONMENT

B. Harikumar

I
deas are like dreams. Unbelievably
romantic. And, such one is carbon
trading – an idea that lays its
foundation on ‘tena thyektena bhunjeeta’
(earn by giving).
Born in the 1997 World Earth
Summit held at Kyoto, Japan, this dream-
child can make miracles on society if
practised rightly.
The convention, participated by 160
countries of the world, was to negotiate
binding limitations on greenhouse gases
for the developed nations pursuant to the
objective of the Framework Convention
on Climate Change of 1992.
The outcome was the Kyoto Protocol,
in which the developed nations agreed to
limit their greenhouse gas emissions,
relative to the levels emitted in 1990 or
pay a price to those that do. At this point
comes the carbon trading.
The idea was to make developed
countries pay for their wild ways with
emissions while at the same time
monetarily rewarding countries with good
behaviour in this regard. Since developing
countries can start with clean
technologies, they will be rewarded by
those stuck with ‘dirty’ ones. This system
poises to become a big machine for
partially transferring wealth from wealthy,
industrialised countries to poor,
undeveloped countries.

Say a company in India can prove it
has prevented the emission of x-tonnes
of carbon, it can sell this much amount
of points (or carbon credits) to a company
in say, the US which has been emitting
carbons. The World Bank has built itself
a role in this market as a referee, broker
and macro-manager of international fund
flows. The scheme has been entitled
Clean Development Mechanism, or more
commonly, Carbon Trading.
This allows industries in developed
countries to off-set their emissions of
carbon dioxide by investing in
reforestation and clean energy projects in
developing countries such as large-scale
tree plantations as a lucrative alternative
to reducing emissions.
Planting 100,000 hectares of new
forest can remove one million tones of
carbon per year from the atmosphere. As
trees grow, they absorb carbon dioxide
from the air. They use this to make sugar,
starch and complex molecules like
cellulose and lignin, forming wood,
branches, roots, leaves and bark.
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Carbon Trading
About 50 per cent of a tree’s dry
weight is carbon. If a forest is planted on
land, which has already been cleared, the
growth of the trees dramatically increases
the total carbon stored on the land.
The amount of carbon captured by
trees is estimated from the volume of the
trees, calculated from the heights and
diametres. The tree volume is then
converted to tonnes of dry wood. The
weight of dry wood is then divided into
the weight of carbon and other elements
such as hydrogen and oxygen.
For example, a fast-growing eucalypt
plantation averaging a stem growth rate
of 20 cubic metres of wood per hectare
may yield 500kg of dry wood per cubic
metre, that is 10 tonnes per hectare and
contain 50 per cent carbon, that is 5
tonnes per hectare of carbon in one year.
Such carbon projects could potentially
recover habitat on millions of hectares of
heavily populated forest and farmlands.
This would bring social, economic, and
local environmental benefits to hundreds
of thousands, and potentially millions, of
poor rural people in the developing world.
According to the researchers, there are
126 million hectares (311 million acres)
of low-yielding crop and pastureland.
Converting some of these areas to higher-
yielding agro forestry would sequester five
to 50 tons of carbon per hectare per year.
Rehabilitating dry forests in India could
double sequestration from 27 to 55 tons
of carbon yearly for every hectare of dry
January 2005 z KERALA CALLING
 CO2
forest improved.
For example, in the Handia Forest
range of Madhya Pradesh, India, 95 very
poor rural villages would jointly earn at
least US$300,000 every year from carbon
payments by restoring 10,000 hectares of
degraded community forests, if their
project succeeds. Healthy forests bring all
kinds of other benefits too. They would
help to protect endangered leopards and
monkeys and improve local water
supplies. At the same time, villagers, many
of whom own no cropland would earn
money from the sale of fuel wood, high-
value timber, and tendu leaves used for
wrapping cigars. Many community-
based projects can sell carbon credits at
the expected global market price of
US$15 to $20 per ton of sequestered
carbon.
Few countries are close to making the
Kyoto limits without buying credits. So
there is considerable demand. Even as
more countries get their emissions in
order, the emissions allowed will gradually
decline over time, making the remaining
credits inevitably more expensive.
Countries will therefore have an economic
incentive to be carbon credit producers
instead of consumers. It is definitely an
incentive for developing countries to
adopt cleaner technologies sooner, so as
to continue being sellers and not buyers
as they continue to grow. We’re now
starting to see how these markets will
play out.
According to a report, a
partnership between a Norwegian
firm and a Brazilian landfill to trap
and burn methane emitted by the
landfill to the atmosphere. This will
reduce the addition of methane, a
greenhouse gas twenty one times
more powerful than CO2. Norway
would get the credit equivalent to
670,000 tons of CO2 and Brazil the
cash, currently $10.98 per ton. While
this is one of the first deals signed, it’s far
from the only one around.
Problems
It should be pointed out that carbon
trading is hugely contentious and many
environmental and social justice activists
oppose it due to its many inherent
problems.
Most emissions trading schemes have
large loopholes which distort the whole
system. These range from reliance on
‘credit-generating projects’ such as
KERALA CALLING z January 2005
monoculture tree plantations, as well as
lack of credible enforcement and
verification systems to the use of financial
instruments such as carbon hedge-funds,
banking systems, derivatives, etc.
Besides, the production of emissions
such as greenhouse gases inevitably
involves the production of toxic co-
pollutants. These often include Volatile
Organic Compounds (VOCs), Polycyclic
Aromatic Hydrocarbons, Particulate
Matter, benzene, arsenic, dioxins,
mercury, cadmium, etc. All of these co-
pollutants have huge public health
consequences.
Like way, trading only deals with a
general reduction, while individual
polluting sites and industries may in
practice actually be able to increase their
emissions. The reality is that most
polluting industries are sited in areas of
predominately low-income and
communities of colour. Existing schemes
have actually demonstrated that massive
increases have happened in such
communities, resulting in dramatic
impacts on the people living there. It was
the result of such schemes, which is one
of the main factors behind the emergence
of the environmental justice movement.
Trading in emissions effectively
creates a commodity literally out of thin
air. As such, global pollution trading is a
form of privatisation of the atmospheric
commons (you can’t sell what you don’t
own) and allows the market and corporate
actors (many of whom are the world’s
biggest polluters) to determine the pace
and development of the ‘carbon market’.
It is precisely for this reason which
corporate lobby groups such as the
WBCSD and IETA support it. It is said
that these groups have played an
enormously obstructive role in efforts to
negotiate effective environmental
agreements and both have some of the
world’s most notorious polluters as their
key members.
Trading is a distortion of what really
needs to happen which is reductions at
source across the board. No source should
be allowed to increase its emissions due
to the above reasons.
The carbon market creates
transferable rights to dump carbon in the
environment and vegetation far in excess
of the capacity of these systems to hold
it. Billions of dollars worth of these rights
are to be awarded free of charge to the
biggest corporate emitters of greenhouse
gases in the electric power, iron and steel,
cement, paper and other sectors in
industrialised nations who have caused
the climate crisis and already exploited
these systems most.
Though there may be such anomalies,
we can lay faith on the goodness of
humankind. Private businesses and
NGOs can act as intermediaries to
combine the carbon offsets produced by
communities and sell them jointly to
buyers. For example, in Mexico, a local
environmental organization helped to
organize 400 small-scale farmers in 20
communities to sequester carbon by
planting trees around their crop fields.
With the NGO as the intermediary, the
farmers sold carbon credits equal to
17,000 tons of carbon to the International
Federation of Automobiles for between
US$10 and $12 per ton of carbon. The
CDM rules should make all community-
based forestry projects eligible for the low-
cost “fast-track” approval process.
This is too good an opportunity to let
pass by – says experts. If business leaders
are willing to take up this not so difficult
initiative, companies around the world
stand to save money while doing good
things for people and the environment, a
brave new world awaits us.
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