The International Carbon Casino: Putting the Biosphere Up as Collateral

roulette wheel

Halfway through COP17 and one critical point of contention has yet to be resolved: the role of market mechanisms in financing and facilitating climate solutions.  This factor is absolutely essential in determining the future of the Earth’s biosphere.  What I am arguing is that possibly a worse outcome than the entire UNFCCC process collapsing, would be an outcome based on market mechanisms.  Canada, already a global climate pariah seems determined bring about both outcomes.

Business and Industry Nongovernmental Organizations (BINGOs), have been calling for “low carbon prosperity”.  The idea behind this is that somehow the prosperity of private enterprise can be reconciled with a global reduction of greenhouse gas emissions.  Part of me would like to give the benefit of the doubt to the international business community about such intentions and just call it a misinformed bad idea; but as a longtime anti/alter-globalization researcher and activist, I have experienced how such ideas are patently false, they are also dangerous and violent.

The false assumption that the private creation of wealth can be made combined with greenhouse gas emissions is particularly evident in the creation of carbon markets.  At COP17 there has been a lot of discussion about clean development mechanisms, carbon trade and private sector in the Green Climate Fund.  The reason why such programmes predicated upon market mechanisms are so dangerous is because it seeks to take what is originally open common resources and lands and turn them into commodities to be owned by polluters.  The basic logic behind carbon markets is that the Earth’s atmosphere and forests can be divided up into discrete and consistent units that can be bought and sold by polluters in order to offset their emissions.  Beyond the absurd assumption that carbon can be consistently quantified, it is particularly dubious that international political and industrial elites want to fix the problem of environmental destruction – founded in the drive to colonize, develop and industrialize the world, by further colonizing and trading the few remaining common resources left on Earth.  Rationalized this way, market-based mechanisms reveal that for the richest countries advocating such institutions the UNFCCC is simply a carbon casino.

It is especially a casino when one considers how carbon markets work.  First, there is the dilemma of determining what counts as carbon for trading.  This means that the international community needs to come to a consensus on what is in fact human-cause emissions, what is already accounted for by carbon sinks, and what reduction are actually caused by market intervention.  Second, there needs to be certainty about what projects count as fixing carbon.  Finally, in order to be effective emission reduction targets need to be ratified by party states, then certified emission reductions (CERs) need to be securitized as financial commodities for trade.

All of these points present a tremendous amount of risk.  If soils are counted as a carbon sink, or agriculture as a source of emission to be offset – which some parties are advocating for – it would flood the market for offsets possibilities crashing the value of CERs.  If party states fail to set effective emission targets, which is not something that seems likely, then the carbon market will do nothing to lower emissions. Riskiest of all factors is how emission offsets will perform in the deregulated torrent of international financial institutions.  In fact the political and economic similarities between the creation of the subprime mortgage system and the emergence of international carbon markets is quite frightening.

We cannot afford to gamble with our biosphere.  If forests, such as through REDD become commodified and sold internationally, a bubble collapse of carbon markets (which is inevitable with any new financial innovation) would flood global markets with cheep forests that could be bought by multinational corporations seeking lumber, minerals and property to develop.  This would threaten the sovereignty and capacity of communities (especially of Indigenous peoples) to withstand the already devastating effects of climate change and neoliberalism.  Furthermore it would allow polluters to continue to increase their emissions and concentrate wealth.  Hell, they’ll probably make a profit off of it through hedge funds also.

We cannot afford to let global elites use climate negotiations as their own personal casinos.  We need to put a stop to carbon markets and all market mechanisms.

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