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Africa: Real Climate Action Options
AfricaFocus Bulletin
Dec 3, 2010 (101203)
(Reposted from sources cited below)
Editor's Note
"The current obsession with carbon trading as a primary tool for
tackling climate change is high risk, irresponsible and dangerous.
It is a distraction from more viable, more equitable, more
effective solutions for tackling greenhouse gas emissions and
providing adequate finance to developing countries for tackling
climate change and adapting to its impacts." - Clearing the Air,
Friends of the Earth England, Wales and Northern Ireland
With low expectations from global climate change talks now under
way in Cancun, Mexico, it is clear that forward movement on an
international agreement will depend on mobilization before next
year's meeting in Durban, South Africa. Whether that happens or
not, in practical terms, practical action on climate change will be
determined largely by decisions at national level, and, failing
that, by initiatives at sub-national levels as well. If the world
is to stand a chance of averting disastrous levels of global
warming, which will disproportionately affect Africa, then failure
at global talks must stimulate rather than discourage action at
other levels.
This AfricaFocus Bulletin contains excerpts from Clearing the Air:
Moving on from Carbon Trading to Real Climate Solutions, a report
from Friends of the Earth England, Wales and Northern Ireland. The
report clearly lays out policies that have a real impact, in terms
of mitigation and finance, most of which are not dependent on the
prospects of internationally binding agreements.
Another AfricaFocus Bulletin sent out today (and available at
http://www.africafocus.org/docs10/can1012a.php) contains a summary
of key issues at Cancun, from Martin Khor of the South Centre.
For previous AfricaFocus Bulletins on climate change and the
environment, visit http://www.africafocus.org/envexp.php
++++++++++++++++++++++end editor's note++++++++++++++++++++
Clearing the Air: Moving on from Carbon Trading to Real Climate
Solutions
by Sarah-Jayne Clifton
Edited by Martin Cullen
Friends of the Earth England, Wales and Northern Ireland
The report outlines why carbon trading is not the solution to
climate change and sets out some of the real solutions for cutting
greenhouse gas emissions and delivering climate finance. It calls
on national governments to urgently dedicate time and resources to
develop and implement these and other more viable, equitable and
effective solutions to the climate crisis.
This summary report is available online at:
http://www.foe.co.uk/resource/reports/clearing_air_summ.pdf
The references for this summary report are all available in a
separate online document at:
http://www.foe.co.uk/clearing_references
The full report on which this summary is based is available at:
http://www.foe.co.uk/resource/reports/clearing_air.pdf
1. Executive summary
The current obsession with carbon trading as a primary tool for
tackling climate change is high risk, irresponsible and dangerous.
It is a distraction from more viable, more equitable, more
effective solutions for tackling greenhouse gas emissions and
providing adequate finance to developing countries for tackling
climate change and adapting to its impacts. Carbon trading is
unreliable, unproven and burdens developing countries with unfair
responsibility for tackling climate change. The barriers to
reforming carbon trading are insurmountable in practice within the
time we have available to avoid catastrophic climate change. In
addition, carbon market offsets are not a legitimate source of
climate finance, and cannot guarantee a predictable flow of finance
to developing countries. This type of finance rarely supports
genuine lowcarbon development. The biggest financial beneficiary of
carbon trading is the Northern carbontrading industry.
Real solutions for climate change mitigation
- Energy: A global feed-in tariff programme with investment of US
$100 billion per year over 15 years would bring down the costs of
renewable technologies to a universally affordable level. This
would enable renewable energy to become "the default choice of the
world as a whole." Stronger regulations on energy efficiency
combined with increased taxation on carbon and energy will also
drive energy savings. ["feed-in tariffs" require energy distributors
to purchase renewable energy at specific rates designed to make
renewable sources competitive.]
- Agriculture: The expansion of small-scale, sustainable
agriculture has the potential to bring about a dramatic reduction
in global greenhouse gas emissions though reduced fossil-fuel use
in agriculture and carbon sequestration in plants and soils. It is
also critical to tackle global demand for products associated with
damaging intensive agriculture, including excessive consumption of
meat and dairy products.
- Forests: Tackling emissions from deforestation and forest
degradation necessitates measures to tackle the core drivers, most
notably demand for agrofuels, meat and forest products.
Improvements in forest governance are also essential, including
protection of the rights of forest-dwelling communities and
Indigenous Peoples and the extension of community forest
governance. Funding must also be provided to incentivise the shift
away from development based on forest destruction.
- Industry: To prevent polluting companies from using the threat of
offshoring or so-called carbon leakage to avoid taking action, the
starting point must be an agreement at the international level on
the introduction of common standards on the use of best available
technology. This will reduce carbon leakage or the threat of it,
and will help drive innovation. This will in turn require a
relaxation in intellectual property rights to ensure access to best
available technologies.
Real solutions for climate finance
- Financial Transaction Tax: A new, global tax on cross-border
financial transactions could generate additional government revenue
of US $400 billion, including US $100 billion for climate finance.
The tax is geared towards the global finance industry and would not
affect the financial transactions of ordinary consumers.
- Tackling tax evasion: Clamping down on tax avoidance in developed
countries could provide significant additional government revenue.
Tax avoidance in Europe is estimated at 2-2.25 per cent of European
Gross Domestic Product (GD P): EUR236-266 billion in 2009.
- Redirecting fossil-fuel subsidies: Global subsidies for the
production and consumption of fossil fuels are estimated at US $700
billion per year. Producer subsidies are mostly transfers from
Northern governments to companies involved in fossil-fuel
production and redirecting these would have minimal financial
impacts on ordinary people in developed countries.
- Special Drawing Rights (SDRs): New allocations of SDR s, a
reserve asset created by the International Monetary Fund, could be
issued at approximately US $100 billion per year without leading to
inflation.
- Carbon and energy taxation: An EUwide carbon tax and a graduated
'Starter Tax' in the United States could together bring in US $200
billion per year. Making only a quarter of this available for
climate finance could provide more than US$50 billion per year. A
levy on international aviation could bring in an additional US$10
billion per year.
A conservative estimate of the revenue-generating potential of
these finance solutions indicates that they could provide new and
additional climate finance for developing countries of at least US
$420 billion per year.
2. Introduction
The starting point of this report is the conclusion of Friends of
the Earth's previous report on carbon trading - that carbon trading
hasn't worked, is seriously flawed, and the barriers to reform are
insurmountable in practice within the time we have available to
avoid catastrophic climate change. Furthermore, the current
obsession with it as the primary tool for tackling climate change
is high risk, irresponsible and dangerous. Today's attention on
carbon trading is driven largely by the governments of developed
countries, in order to offset their emissions-reduction
responsibilities. Carbon traders and financial speculators are
adding to the frenzy. This focus on carbon trading and its
expansion is distracting us from the adoption of more viable, more
equitable, more effective solutions for tackling greenhouse gas
emissions and providing adequate climate finance to developing
countries.
This report shows:
- why carbon trading is not the solution to climate change
- that many of the real solutions are already available.
There is no silver bullet that will cut carbon emissions quickly
and provide the necessary international finance. Tackling climate
change requires a package of tools and policies. There will be no
easy alternative to weaning the global economy off its addiction to
fossil fuels and the unsustainable industrial and agricultural
activities which this addiction has facilitated. This report shows
that many solutions are already available and have been developed,
scrutinised and advanced for decades. All that is needed to make
them a reality is the political willingness to use them.
...
...
Key principles for climate change mitigation
It is critical that the transition to a low-carbon economy, while
driven by the need for environmental justice, does not in itself
lead to further economic and social injustices. Policies and
measures to tackle greenhouse gas emissions and support economic
transition must:
- Ensure jobs and decent work, including by minimising job losses,
maximising opportunities for job creation, and protecting pay
conditions and health and safety for workers.
- Protect low-income groups, and guard against the creation of
further economic and social injustice.
- Respect and promote the rights of local communities and
Indigenous Peoples, including rights to selfdetermination and
self-government; the right to free, prior and informed consent; the
right to management and customary use of natural resources; land
rights; and rights of redress.
- Ensure good governance, including participation of affected
workers and communities in the development of policies and measures
to tackle climate change, and transparency, accountability and
democratic control over decision making.
Problems with carbon trading as a tool for cutting greenhouse gas
emissions
Debates on carbon trading dominate discussions in the UN climate
negotiations, with proposals on the extension of carbon-trading
mechanisms globally and into new areas like forest protection put
forward by a number of countries, most notably the European Union,
the United States and Japan. Proponents of carbon trading argue
that trading allows emissions cuts to be made in the most
cost-effective way because the flexibility provided allows
emissions reductions to be made where it is cheapest to do so. They
also argue that carbon trading drives private-sector investment in
tackling climate change in developing countries. However, there are
multiple, very significant problems with using carbon trading to
tackle greenhouse gas emissions and provide climate finance. These
are examined below and in Section 5 on climate finance.
1. Carbon trading is unreliable and unproven
Carbon trading is largely unproven as a tool for driving reductions
in greenhouse gas emissions. The European Union Emissions Trading
System (EU ETS ), the world's largest emissions trading scheme, has
failed to drive emissions reductions at the pace necessary for
Europe to contribute its fair share. In the UK, the highly
respected Committee on Climate Change confirmed in 2009 that it
lacked confidence in the ability of the EU ETS to deliver the
required low-carbon investments in the energy sectors covered by
the scheme through the 2020s. It recommended that "a range of
options [such as regulation and taxes] for intervention in carbon
and electricity markets should be seriously considered."14
2. Carbon trading burdens developing countries with the
responsibility for tackling climate change
Although theoretically carbon trading doesn't have to involve
offsetting, all existing and planned carbon trading schemes in
developed countries are based on substantial offsetting of
emissions reductions. This is also the case for all proposals for
the expansion of carbon trading currently in the international
climate negotiations in the UNFCCC. Offsetting shifts the burden of
climate mitigation from developed to developing countries.
Offsetting undermines the equitable sharing of the remaining global
carbon budget - the volume of greenhouse gas emissions that can
still be emitted globally while keeping overall emissions in the
atmosphere below levels considered to present an unacceptable risk
of catastrophic climate change. Forthcoming research by Friends of
the Earth illustrates how little space there is left in the
atmosphere to be traded.
3. Carbon trading could make tackling climate change more expensive
overall
Carbon trading removes incentives for polluters to make adjustments
which are more expensive, by allowing them to buy pollution permits
or offset credits from others in the carbon market. The overall
effect of this perverse incentive structure is that the hardest,
most expensive economic adjustments are put off. Countries covered
by carbon trading schemes continue to develop along high-carbon
pathways until they have no choice but to take the most expensive
mitigation actions. This has the knock-on effect of wasting time we
can ill afford if a transition to low-carbon economies is to take
place before climate tipping points are reached.
4. Carbon trading is a tax on consumers to pay polluters to pollute
The structure and regulatory context of existing carbon trading
schemes allows industries covered by them to dodge the additional
costs that failure to reduce pollution is supposed to engender, by
passing these on to consumers. Uwe Leprich from Saarbrcken
University in Germany has tracked electricity prices since the
establishment of the EU ETS in 2005. His research demonstrates that
even though energy companies initially received the majority of
their pollution permits under the scheme for free, the companies
included the full price of the permits in electricity prices. This
led to increases in wholesale electricity prices of 30 per cent in
Germany and France, 50 per cent in Scandinavia, and over 80 per
cent in the UK.16
5. Carbon trading incentivises increased pollution for profit
Research on the Clean Development Mechanism (CDM) - the official
offsetting scheme sanctioned by the Kyoto Protocol - has exposed
major market scandals. Widespread gaming and abuse of the system
have been carried out by polluting industries in developing
countries, seeking to qualify for offset credits under the scheme.
Most recently, CD M-Watch has exposed gaming and abuse of the CD M
by the producers of HFC -23, a potent greenhouse gas which is a
by-product of the refrigerant gas HCFC -22. The offsetting watchdog
has argued that the HFC -23 destruction projects under the CD M
offsetting mechanism are actually having the opposite of the
intended effect: they are contributing to increasing global
greenhouse gas emissions.
Can carbon trading be Reformed?
Numerous loopholes need to be closed in order to reduce the threat
posed by existing carbon trading schemes to our chances of avoiding
dangerous climate change. Addressing these would require setting
caps on emissions in line with science and justice; removing all
offsetting from trading schemes; prohibiting speculative trading;
auctioning all pollution permits; global regulation to prevent a
'race to the bottom' - where countries are forced to lower their
regulatory standards to match the lowest standards globally;
disaggregation of industrial sectors covered by the schemes to
allow for trading only within sectors; and supplementary
interventions to drive innovation.
It is questionable whether the resulting mechanisms could be
distinguished from other regulation such as standard setting,
except that they would be far more complex than other regulatory
instruments which could achieve the same purpose, and thus more
time consuming, expensive and difficult to implement.
Critically, ongoing calls for reform of the EU ETS to address some
of the worst loopholes have led to very few improvements. This
failure is attributable to the power and excessive influence over
government decision-making of the considerable vested interests -
polluting industries, financial actors and others - that have grown
up around the scheme.
The likelihood of wholesale reform of carbon trading in the time we
have available to achieve a peak and decline in global carbon
emissions thus looks entirely unrealistic.
Solutions for climate change mitigation
This section explores priority policies and measures to bring about
emissions reductions in the energy, agricultural, forest governance
and industrial sectors of national economies. The exact package of
solutions required will vary from country to country. There will be
significant differences in the types of policies needed in
developed and developing countries.
Energy
Investment in renewable energy Energy supply is responsible for
around one quarter of global greenhouse gas emissions.17 Only a
fraction of the world's population benefit from current global
energy use, with a significant proportion of people still without
access to energy to meet even their basic needs. Globally around
1.63 billion people lack access to electricity and 2.4 billion
people cook with firewood, with many suffering the health effects
that result from exposure to wood smoke.
Delivering the cuts in emissions from global energy use needed
requires a dramatic switch from unsustainable fossil-fuel based
economies. This can be achieved through a reduction in unnecessary
energy consumption, and increased use of renewable energy sources
to meet basic energy needs.
Renewable energy is still far from being cost competitive with
fossil fuels, not least because of the substantial state subsidies
to the fossil-fuel industry. The 'Green Energy Revolution' Strategy
from the United Nations Department for Economic and Social Affairs
(UN -DESA ) asserts that globally, investment in renewable energy
needs to meet the dual needs of tackling climate change and
expanding energy access to those who need it. Of all of the policy
mechanisms with the aim of increasing investment in renewable
energy deployed so far, the most dramatic expansion of renewable
energy capacity was witnessed under the feed-in tariff programmes
enacted in countries such as Germany and Spain. Overall, around 90
per cent of the expansion of wind power in Europe since 1995 has
occurred in countries that apply feed-in tariffs to power
suppliers.
Feed-in tariffs oblige electricity grids to purchase renewable
energy as it becomes available and to offer the providers of
renewable energy a guaranteed price, the 'tariff' or rate paid for
the electricity. Prices are set at levels that ensure renewable
energy producers can recover their investments and make a
reasonable profit. Prices are also regularly reviewed to prevent
over-rewarding, including taking into account reductions in the
costs of technology and deployment.
Feed-in tariffs are institutionally light and their ease of
implementation in Germany and Spain suggest it would be relatively
simple to roll them out across other developed countries. However,
in developing countries the ease with which feed-in tariffs could
be implemented is severely restricted by the limited government
revenue available to subsidise the tariffs until the price of
renewable technology is low enough so that subsidies are no longer
necessary. The solution to this problem proposed by UN -DESA is
international support for a global feed-in tariff programme. It
estimates that additional investment of US $100 billion per year
over 15 years would bring down the costs of renewable technologies
to a level that is universally affordable so that renewable energy
becomes "the default choice for the world as a whole."
Energy efficiency
An indication of the global potential of energy-efficiency measures
has been provided by the International Energy Agency (IEA ). It has
put forward 25 recommendations for action on energy efficiency by
governments and estimates that if these were implemented globally
they could save 8,200 Mt (million tonnes) CO 2 per year by 2030.
This is equivalent to half of the EU 's annual emissions.21
Stimulating energy savings and increasing energy efficiency
requires direct government target setting, monitoring, enforcement
and evaluation of energy-efficiency measures, supported by public
investment to overcome financial barriers to the meeting of
targets.
According to the IEA , buildings account for about 40 per cent of
energy used in most countries. Tackling this energy use requires
new building codes, innovative construction methods, and
building-certification schemes. Electrical appliances and equipment
represent one of the fastest-growing energy demands in most
countries. IEA recommendations include action on mandatory energy
performance requirements or labels; lowpower modes including
standby power for electronic and networked equipment; energy
savings from effective lighting technology; and energy-performance
test standards and measurement protocols. Finally, with around 60
per cent of oil consumed in transport globally, this sector must be
a key target for energysavings measures. Such measures include
mandatory fuel-efficiency standards for light-duty vehicles and
fuel economy of heavy-duty vehicles.
Carbon and energy taxes
In developed countries where affordable energy is more readily
accessible and excessive energy consumption is a significant
problem, taxation of carbon and energy has an important role to
play. If well targeted, and with an escalator - a mechanism which
allows the tax to start low and then be increased incrementally -
taxation, in combination with other measures, can help reduce
excessive energy consumption, incentivise energy efficiency and
drive emissions reductions.
The UK, Demark, Finland, Ireland, the Netherlands, Sweden, and
Norway all have carbon taxes. Sweden's escalating carbon tax was
introduced at a rate of EUR28 per tonne but is now over EUR100 per
tonne. The country's Ministry of Finance estimates that Sweden's
emissions would be 20 per cent higher without the tax.23
The UNFCCC could play a major role in helping to share learning and
best practices among developed countries on the use of taxation to
tackle greenhouse gas emissions, providing a space for the
development of more effective taxation policies which parties to
the UNFCCC could implement nationally.
Taxation has a number of advantages over carbon trading, including
a more stable and predictable price impact; greater ease of control
by governments; and greater simplicity and ease of implementation.
Ensuring that largescale industrial polluters who are targeted by
any taxation instrument actually pay will necessitate great care in
the design stage. It may require regulations to ensure that the
extra costs are not passed on to consumers or measures to reimburse
consumers who lose out. In addition, if carbon taxes are directed
at households they must be accompanied by measures to mitigate any
regressive impacts and to protect vulnerable households.
Agriculture
[see on-line version at
http://www.foe.co.uk/resource/reports/clearing_air_summ.pdf]
Forests
[see on-line version at
http://www.foe.co.uk/resource/reports/clearing_air_summ.pdf ]
Industrial processes
[see on-line version at
http://www.foe.co.uk/resource/reports/clearing_air_summ.pdf]
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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