Commentary  The carbon offset loophole

Carbon markets misplace the burden of emissions reduction

In the lead-up to the 21st Conference of Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) – what some hope to be a monumental moment in international climate change mitigation efforts – the government of Canada joined all major emitting nations in putting forth a commitment to cut national emissions. By 2020, the government has pledged to reduce emissions by 30 per cent from 2005 levels. Yet, even if Canada manages to avoid pulling out of this new commitment – as it did with the Kyoto Protocol – Canada, and quite a few other industrialized nations, have left one major loophole in the implementation of these domestic reductions that could drastically undermine the legitimacy of any commitments: carbon offsets.

A carbon offset is a payment for the right to emit one tonne of CO2-equivalent greenhouse gases due to a theoretically equivalent emission reduction that occurs elsewhere in the world. The UN Clean Development Mechanism (CDM) is one of several UN-sponsored systems through which governments and polluters looking to meet emission reduction targets fund projects that reduce emissions abroad. Unlike other nations, which have specified maximum percentages of reductions that can be purchased, the Canadian government’s target merely states: “Canada may use international mechanisms to achieve its 2030 target, subject to robust systems that deliver real and verified emissions reductions.”

The problem is that when it comes to international emissions trading, such “robust” mechanisms don’t exist. Plagued by wildly fluctuating prices, incidences of human rights violations, widespread corruption, and insufficient oversight, UNFCCC carbon-crediting mechanisms have largely been a disaster. A recent study in Nature found that from 2008 to 2012, poor oversight and corruption in just one of these transactions resulted in the additional release of 600 million tonnes of carbon – the equivalent of the annual CO2 emissions of the UK. Another study for the World Wildlife Fund (WWF) found that anywhere from 30 to 50 per cent of CDM-funded projects would have happened even without CDM funding, meaning that the actual emissions reduced through offsetting are drastically overstated. The same study found that, before regulatory changes in 2011, half of approved CDM projects were the construction of more energy-efficient coal- and gas-fired plants – investments that, ironically, must be justified by the burning of more coal and natural gas.

Because CDM projects are only as valuable as the quantity of emissions they can claim to reduce, regardless of the actual utility of the project, carbon offset mechanisms disincentivize funding efforts for projects that do not have easily quantifiable emission reductions or for projects that work over long timescales. However, these are the types of multi-faceted projects that are often the most valuable in addressing the diverse root causes of environmental degradation. On the flip side, carbon offset mechanisms promote “cost-effective” projects such as large-scale forest plantations, with the logic that more trees will simply absorb more CO2. One recent CDM-accredited project, the development of a large-scale forest plantation in Uganda, resulted in the displacement of upwards of 8,000 people in order to establish fenced-off forest plantations, denying the evicted inhabitants access to traditional grazing lands, farmland, and sites of worship. In order to ensure emission reduction targets were met, the company hired armed guards to defend the forest plantations from newly displaced ‘trespassers.’ The company also relied on heavy chemical use that polluted surrounding rivers and resulted in the death of local wildlife.

In other reforestation projects, offset financing has promoted tree plantation as most “efficient” in sequestering carbon emissions, even through the inclusion of fast-growing invasive species, which degrade natural biodiversity. These types of projects are considered successes in the eyes of carbon-offset mechanisms, but the need to guard forest plantations is a manifestation of the utter failure to address the intersections between poverty, insecure tenancy, food shortages, and environmental degradation. Though politicians repeatedly describe projects funded through offset mechanisms as the “low-hanging fruit” of global emissions reductions, this claim is a stretch. The structure of these mechanisms actually disincentivizes funding sustainable, long-term emissions-reducing projects, and the fruit of the projects they do incentivize is far beyond the reach of poorer countries.

Even if the UN were to perfect the design, structure, and monitoring of international carbon-offset mechanisms, the entire scheme maintains the balance of power between “developed” and “developing” countries. As nations such as Canada seek to “extract” the maximum amount of emission reductions from the Global South, they export the economic, social, and environmental burden of actually producing these emissions reductions. The drive to forcefully evict populations to construct dams or plant monocrop forests is an extension of global power dynamics – a new and “greener” neocolonialism. Mechanisms like the CDM do not primarily aim to produce a more sustainable world, but rather to extend the timeframe over which wealthy nations can continue to live, and profit from, dangerously unsustainable lifestyles.

In 2011, the Canadian government withdrew from the Kyoto Protocol on the grounds that it would cost the government $14 billion in carbon credits to meet its emissions target. While the Conservative government at the time blamed the previous Liberal government for its inaction, and the recently elected Liberal government will certainly pin blame on the Harper regime, they both misrepresent the nature of this failure to address the climate crisis. The ability for any government to rely on the amorphous purchase of carbon credits will always provide an attractive alternative to the difficult and necessary labour of drastically restructuring the Canadian energy system, economy, and standard of living.

It’s no wonder that the Canadian climate plan mentions no cap on credit purchases. A large-scale movement toward a carbon market is nothing more than a means to pass responsibility for the production and reduction of emissions abroad, and this will only exacerbate existing power inequities. It will absolve rich nations of full responsibility for their increasingly destructive lifestyles and burden those populations most vulnerable to – and least responsible for – climate change with the task of cleaning up the mess.

Ella Belfer is a U3 Economics and Environmental Studies student. To reach her,