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Carbon markets aren’t working. Time to stop burning fossil fuels

This year sees the 20th anniversary of the Kyoto Protocol. That’s 20 years of wasted time in addressing climate change. Don’t believe me? The graph above shows the Keeling curve – the concentration of carbon dioxide in the atmosphere measured at Mauna Loa Observatory. On 22 May 2017, it stood at 410 parts per million.

The vertical red line is 1997, when the Kyoto Protocol set up carbon trading as the solution to climate change. Twenty years later, there is no doubt. Carbon trading is not working.

Burning fossil fuel is the problem

On its website, NASA points out what is driving the increase in CO2 in the atmosphere:

This recent relentless rise in CO2 shows a remarkably constant relationship with fossil-fuel burning, and can be well accounted for based on the simple premise that about 60 percent of fossil-fuel emissions stay in the air.

But the United Nations negotiations on climate change do not address burning fossil fuels. The words “fossil fuels” do not appear in the Paris Agrement, negotiated in 2015 as the Kyoto Protocol’s successor.

NASA explains the implications of this:

If fossil-fuel burning continues at a business-as-usual rate, such that humanity exhausts the reserves over the next few centuries, CO2 will continue to rise to levels of order of 1500 ppm. The atmosphere would then not return to pre-industrial levels even tens of thousands of years into the future.

Carbon markets are not the solution

Yesterday, Ecosystem Marketplace released its State of Voluntary Carbon Markets 2017 report. In a foreword to the report, Michael Jenkins, CEO of Forest Trends, acknowledges the fact that we passed 400 ppm of CO2 in the atmosphere in 2016. But the report makes no mention of fossil fuels, or the urgent need to leave fossil fuels in the ground if we are to avoid runaway climate change.

Jenkins writes that,

we need to unlock the full potential of carbon markets in order to quickly and significantly combat dangerous climate change. As countries shift from debating climate change to implementing their proposed solutions, voluntary offsetting can help tackle climate change now and explore new avenues of emissions reductions that may be included in compliance programs in the future.

This is cloud cuckoo land. At best, carbon trading means that emissions are reduced in one place, but continue in another. Carbon trading does not reduce emissions. It does not keep fossil fuels in the ground. It is a way for industry and governments to continue business as usual, while giving the impression that they are addressing climate change.

Every year since 2006, Ecosystem Marketplace has sent out surveys about voluntary carbon markets to project developers, investors, retailers and brokers. In 2016, Ecosystem Marketplace reports that the average price of voluntary carbon offsets in 2016 reached an all time low of US$3.0.

2016 saw a total of 63.4 million transactions of carbon offsets at a value of US$191 million. In 2015, US$287 million changed hands with 84 million transactions of carbon credits taking place. The average price in 2015 was US$3.3, another record low.

Most transactions on secondary markets

But these figures mask the fact that well over twice as many transactions of carbon offsets took place on secondary markets (44.8 million) as on primary markets (18.5 million):

Ecosystem Marketplace defines primary and secondary markets as follows:

Primary market: The primary market for carbon offsets is defined as the initial transaction of offsets from the project developer to the first buyer in line – this can be an offset retailer or broker (i.e., the “secondary market”) or a buyer of offsets for “end use” (i.e., end user or end buyer) in the voluntary or compliance carbon offset markets.

Secondary market: The secondary market for offsets is comprised of sales among market intermediaries or between market intermediaries and end buyers or end users.

A carbon offset can be transacted several times before it is retired. The person or corporation that retires the carbon offset can claim to have “offset” their emissions.

Nevertheless, in its press release about the report, Ecosystem Marketplace states that,

voluntary buyers in 2016 paid $191.3 million (M) to offset 63.4 million metric tonnes of CO2 (MtCO2e) – about as much greenhouse gases as Massachusetts emits in a year.

That is a completely misleading representation of the data in Ecosystem Marketplace’s report since offsets and transactions are not equivalent.

REDD and voluntary markets

In 2016, more carbon offsets were transacted from REDD projects (9.7 million) than any other project type. Wind came second (8.2 million), followed by landfill methane (4.6 million) and large hydro (3.8 million). REDD offsets changed hands for an average of US$4.2, wind offsets for US$1.5, landfill methane offsets for US$2.1, and large hydro offsets for US$0.2.

In its survey, Ecosystem Marketplace asked about the “potential risks and opportunities for voluntary offsetting post-2020”. Most of the responses noted that countries might decide to count all its emissions reductions towards its own emissions reductions target. This would prevent the sale of carbon offsets internationally.

Brazil, for example, stated in its Nationally Determined Contribution that,

Brazil will not recognize the use by other Parties of any units resulting from mitigation outcomes achieved in the Brazilian territory that have been acquired through any mechanism, instrument or arrangement established outside the Convention, its Kyoto Protocol or its Paris agreement.

Meanwhile, Ecosystem Marketplace is eagerly anticipating the aviation industry’s plans to fry the planet by offsetting rather than reducing its emissions:

All eyes are looking to the skies, as the International Civil Aviation Organization (ICAO) decides how airlines can reduce their emissions to meet an industry-wide target. Since renewable jet fuel is not yet widespread or economical, the industry association has turned to offsets as a way for airlines to meet emissions reductions goals, and ICAO is starting to craft its own offsetting scheme, known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

REDD Early Movers Programme excluded

Ecosystem Marketplace’s 2015 report on the state of the voluntary carbon markets included the German government started its REDD Early Movers Programme, even though as Ecosystem Marketplace noted these were not “market-based” payments.

REDD-Monitor noted that this was fudging the numbers.

The 2017 report states that,

Ecosystem Marketplace previously included two REDD Early Movers agreements in this series of reports, a 10 MtCO2e government-to-government agreement between Germany, Norway, and Ecuador in 2014 and another 8 MtCO2e bilateral deal between Germany and Acre, Brazil, in 2013. However, following a restructuring of our methodology which first began in Ecosystem Marketplace’s State of Forest Carbon Finance 2015, such results-based payments among governments are now classified as “non-market” finance.

It’s a buyer’s market – without many buyers

Even Ecosystem Marketplace cannot maintain its enthusiasm for carbon trading throughout the report. The first “key finding” in the report is that “Despite affordable prices, market volume decreased this past year”. Another key finding is that “It’s a buyers’ market – almost as many offsets remain unsold as sold”.

But buyers are few and far between. “It’s not easy for many organizations to sell an offset”, the authors write. Respondents to Ecosystem Marketplace’s survey reported 56.2 million unsold offsets in their portfolios, “some of which were still languishing from years past”.

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  1. Carbon Market’s REDD+(REDD) offset credits are not only bad for the climate but also often endanger forest peoples & Indigenous people. REDD increases market interest, land speculation & land grabbing of remote forests but without REDD requiring the recognition & enforcement of forest people’s resource & human rights. The world’s unprotected forests and their peoples primarily remain because the lumbering of these forests were not able to produce net profits or because in rare instances the inhabitants had sufficient land tenure (LT) and human rights (HR) to protect their forests and themselves. REDD is creating economic incentives to now make these forests and their peoples more profitable to exploit, but without requiring the enforcement of the rights that will protect all forest peoples, their forests & create well regulated markets. REDD projects without requiring these rights will be more prone to carbon sequestration reversals, deforestation leakage to other Jurisdiction, social and political damage and risk, and will be less transferable. Nevertheless carbon credit entrepreneurs, Government entities and NGOs are promoting REDD without first requiring the enforcement of these rights in the world’s last remote forests.

    The current REDD agreement & its social safeguards do not require the recognition and enforcement of customary and statutory resource and land tenure, and human rights for forest peoples prior to REDD funding or payment, they should. All the social standards cited by REDD are ultimately qualified by nonbinding terms such as respect, promote, support, address or recognize, none require resource and land tenure and human rights prior to the program’s involvement.
    Given the history of land tenure and conflict in most Tropical countries with large remaining forests, it is implausible and inefficient to believe that rights being “requested” at the country level, per the current REDD agreement and standards, will ensure social safeguards and prevent political risk. After remote forests & their peoples are targeted by REDD without requiring these rights, it will be a rearguard nightmare to try to stem their suffering, dislocation & acculturation.

    One of the most cost effective methods of ethically sequestering carbon, REDD’s main goal, is by recognizing and enforcing the land & resource tenure of forest people. A. Agrawal’s study “shows that the larger the forest area under community ownership the higher the probability for better biodiversity maintenance, community livelihoods and carbon sequestration.” “The growing evidence that communities and households with secure tenure rights protect, maintain and conserve forests is an important consideration for the world’s climate if REDD schemes go forward, and even if they do not.” according to Agrawal, A. (2008) ‘Livelihoods, carbon and diversity of community forests: trade offs and win wins?’

    World Bank SOCIAL DEVELOPMENT WORKING PAPERS Paper No. 120/December 2009 stated, “…the cost range of recognizing community tenure rights (average $3.31/ha) is several times lower than the yearly costs estimates for …. an international REDD scheme ($400/ha/year to $20,000/ha/year).” “…a relatively insignificant investment in recognizing tenure rights has the potential to significantly improve the world’s carbon sequestration and management capacity…, prioritizing policies and actions aimed at recognizing forest community tenure rights can be a cost-effective step to improve the likelihood that REDD programs meet their goals.”

    The promotion of REDD without requiring LT & HR prior to funding or payments makes the vast majority of forest people & their forests much more endangered. This is noted by Jorge Furagaro Kuetgaje, climate coordinator for COICA, the Indigenous People of the Amazon Basin, “For us to continue to conserve the tropical forests … we need to have strong rights to those forests. Death should not be the price we pay for playing our part in preventing the emissions that fuel climate change.”

    Tropical forested countries also have very poor land tenure rights enforcement records for forest people. “Living on Earth” radio reported, that, “governments own about 75 percent of the world’s forests, less than ten percent legally belong to communities. In Indonesia, 65 million people live off forests, most of them have no official rights to the land they consider theirs. In the eyes of the Forest Ministries, they’re squatters occupying a national resource”.

    The human rights and land tenure enforcement record of tropical forested countries is alarming. Global Witness’s Nov. 30, 2015 Press release stated, “At least 640 land and environmental activists have been killed since the 2009 climate negotiations in Copenhagen – some shot by police during protests, others gunned down by hired assassins.” Global Witness also stated, “Most murders occurred in Latin America and Asia with far fewer reported in Africa, however this may be (due) to a lack of information…justice is rarely given to murder victims. Killers are rarely brought to trial and often acquitted when they are. In Brazil, fewer than 10 percent of such murders go to trial, and only 1 percent see convictions.” Last year, 61 land rights campaigners were killed in Brazil, the highest level of violence since 2003, according to the Pastoral Land Commission, an advocacy group linked to the Catholic Church. Therefore REDD should be amended to stipulate the recognition and enforcement of forest people’s resource, land tenure and human rights prior certifying or funding of REDD offsets. If REDD is not amended to require these rights it should be abandoned rather than endanger forests & their people.

    The preceding comments and recommendations focused narrowly on the need for binding social standard prerequisites, and not on the efficacy of carbon offsets which is also problematic & well presented in the article above. (See also “Methodological and Ideological Options, Comprehensive carbon stock and flow accounting: A national framework to support climate change mitigation” by I. Ajani et al., Ecological Economics 89 (2013) p61–72. Untangling the confusion
around land carbon science and climate change mitigation policy by Brendan Mackey et al., NATURE CLIMATE CHANGE | VOL 3 | JUNE 2013 |

  2. As I have said many times, carbon “markets” and carbon pricing schemes will never accomplish anything. To get serious, we need oxygen pricing, see my article at
    People steal 2/3 of their “fuels” (the oxygen) from the commons (atmosphere) meanwhile continue to destroy the planet’s capability to produce more oxygen (coral reefs, phytoplankton, deforestation, etc.).

  3. @Forest Keeper – I didn’t send you the link to the Conservation Watch post so that you could post the same comment there!