27 January 2011

Carbon Capture and Storage in the Clean Development Mechanism

The inclusion of Carbon Capture and Storage (CCS) in the UN's Clean Development Mechanism (CDM) is a boon for the Middle East and North Sea oil industries, which would use the scheme to subsidise the extraction of even more oil from the ground.

What was agreed?

“Carbon dioxide capture and storage in geological formations” is now eligible as a basis for CDM projects, as a result of the UN Climate Change Conference (COP16) in Cancun. This is likely to be of greatest benefit to oil companies, which are hastily rebranding techniques known as Enhanced Oil Recovery (EOR) as a means to store carbon underground.

EOR was originally developed as a means to extract more oil from fields that were reaching the end of their lifespan. This is still its primary purpose, rather than reducing emissions. If included in the CDM, a calculation of “reductions” would be made in relation to the amount of CO2 pumped into old oil wells. The calculation would not consider the far larger volume of CO2 released into the atmosphere through the extraction and burning of more oil. As has been seen with other CDM methodologies, the “lock in” effect of subsidising a fossil-fuel based energy model is not considered relevant to how offset “reductions” are calculated.

Looking further ahead, CCS is being promoted as “clean coal” in the electricity sector, as well as attracting interest from a variety of industrial sectors (notably, steel) that are keen to claim emissions reductions without engaging in a fundamentally cleaner development path or technological overhaul. What all of these technologies have in common is an assumption that the capture, transport and storage of carbon can be viably achieved on a large scale. This has not yet been proven, and there are many reasons to believe that this will be neither technically feasible nor economically viable.

The Cancun decision is not the end of the story of CCS in CDM. Implementing the agreement requires that a series of issues are “resolved in a satisfactory manner.” The decision catalogues a series of pitfalls, including the risk that CO2 storage is not permanent and could leak from underground geological formations. Other environmental and public health risks, and legal liabilities in the case of leaks or “damage to the environment, property or public health” remain to be addressed. The text of the decision also claims that projects will need to make “adequate provision for restoration of damaged ecosystems and full compensation for affected communities in the event of a release of carbon dioxide.” The CDM contains no mechanism to enforce such provisions, and the nature of the scheme (which is primarily a means for subsidising polluting industries) makes it unlikely that such provisions will emerge.

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Two Pluses Don't Make a Positive: REDD and agriculture

It is one of the first laws of diplomacy: when it is hard to agree on an answer, change the question. Reducing Emissions from Deforestation and Degradation (REDD) schemes are the product of two of these diplomatic back-flips.

First, whereas the Kyoto Protocol included no forestry or land-use emissions targets or mechanisms, such measures are a central feature in negotiations for a continuation or successor climate treaty. The former caution resulted from the complexity and uncertainty of accounting for reductions in these sectors, but the fact that significant measurement challenges remain has not slowed the rush to develop REDD. This new enthusiasm is largely driven by economic calculations. According to cost-benefit analyses like the influential Stern Review on The Economics of Climate Change, reducing tropical deforestation would be far cheaper than curbing fossil fuel use in the industrialised world.

A second switch concerns the framing of the question of how best to tackle deforestation. REDD puts a cash value on forests on the assumption that this will result in their preservation and, in turn, a "carbon saving." In other words, these schemes do not ask "how best might forests be protected?" but presume that carbon pricing mechanisms are the leading solution. Negotiations on REDD are then narrowed to questions of whether it is better to make forest payments through direct financial transfers or to develop forest carbon offsets. These are more often presented as a sequence, rather than a set of alternatives: almost all potential funders view their initial outlay as a means to "kick start" what will eventually be an offset scheme. The eventual extension of REDD to encompass all forms of land use is also under consideration.

The reality of REDD is likely to be far messier, more expensive and damaging than the economists claim. It will also prove fundamentally unjust - a concept that is alien to cost-benefit modelling. Indeed, the very idea that REDD offsets could be used to allow continued greenhouse emissions from industrialised countries turns the ethical responsibility for climate change upside down: it outsources responsibilities that should rest with the very countries and corporations that have disproportionately caused climate change. Such concerns are not simply ethical but practical too. Deforestation cannot be reduced to a question of cost without losing sight of the complexity of social factors and power relations that underlie why it is happening. Agriculture is at the forefront of this debate because its encroachment into previously forested areas is generally presented as the major cause of tropical deforestation.

This article will show that REDD could favour large-scale farming and do considerable damage to the lives and livelihoods of small farmers, who play a vital role in food sovereignty. REDD "readiness plans" already include plantations and perverse incentives for the conversion of forested land for export-led agriculture. As such, REDD will not necessarily reduce deforestation, but can be characterised as a form of "structural adjustment" programme for land use.

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22 January 2011

World Bank Partnership for Market Readiness: a critical introduction

When the World Bank gets busy, it usually spells bad news for people and the planet. The UN Climate Change Conference (COP16) in CancĂșn was no exception, with the Bank launching a flurry of new climate-related initiatives. Chief amongst these was the Partnership for Market Readiness (PMR), a new Fund which encourages the “scaling up” of carbon trading in middle-income countries. The aim is to develop carbon offsets “beyond existing CDM.” This pre-empts international negotiations on controversial new carbon markets, which made little progress in CancĂșn. In launching the PMR, it is clear that the World Bank is prepared to push ahead with new carbon markets regardless of the outcome of multilateral negotiations, using bilateral agreements if necessary, and bankrolling its initiative with “fast-start” climate financing. A closer examination of the financial assumptions behind the new Fund reveals that the major costs of the initiative will have to be met by the countries listed as “beneficiaries,” whilst the Bank and industrialised country donors retain significant control over how “market readiness” is implemented.

Read the rest of my article about this here.