Monday, November 9, 2009
Carbon Trading 101
A Hardwood Forest in Mozambique in danger of being cut down by loggers.
Its important to understand the very basic basics of Carbon Trading. It is not complicated. Lets say I am a big stinky polluting utility company. I throw out thousands of tons of carbon and other noxious greenhouse gasses like methane every day. You are a forest, and you suck up carbon emissions like mine. Essentially I pay you to suck. The emissions. That I produce. This is the essesnce of the system.
That makes me carbon neutral, I pay your forest to stand and suck the carbon I produce in excess of a proscribed amount (like the proposed United States' Cap and Trade system). That makes me carbon neutral, but it also stops you from cutting down your carbon sucking forest. I think its pretty strait-forward. But sadly the Kyoto Protocol was not made to support standing forests. The Kyoto protocol was made to prevent a nasty polluting company from doing more damage.
So its relatively easy to get carbon credits for say, stopping pollution by putting on scrubbers to my smokestack (then I can sell Carbon too!) but very very hard to get credits by keeping or planting a standing forest. So Carbon Trading as most people see it today is not working. The rules are so convoluted that it is impossible (or almost) for a forestry project to get certified.
The Kyoto protocol allows for polluters to get carbon credits for cleaning up their act, it does not make much allowance for forests that actually remove the carbon from the air to get Carbon Credits. The numbers say everything. Only two….yes that’s right, only two whole forestry projects in all of Africa have gotten certified to sell carbon credits. More than two hundred have attempted or applied. One of them is the Green Resources project in Tanzania.
Before launching into what is essentially the gist of my documentary, and showering my poor readers with lots of acronyms and carbon-science related gobbledy-gook, I would like to de-mystify one very important term. The Clean Development Mechanism, or CDM. Learn it, know that term by heart. Repeat it three times in your head. Without this term you will be forever lost in acronym hell. Whenever you hear or read the term CDM, just think THE RULES. Within this mechanism are all the rules and jargon and simply everything to do with the current carbon-trading system. CDM is the bible of Carbon Trading. If your project is not CDM certified, then according the Kyoto Protocol, you have a limited ability to sell your carbon, no matter how good your science is, no matter that you planted five million trees this year and want people to buy your carbon, which you clearly have, if your project is not CDM certified, then you cannot sell it freely on the open market. If you have CDM certification, you have carbon to trade, if you don’t have CDM certification, you may trade in carbon but just not on the open market. I am banging on about this because it is important. It is the crux of the biscuit, as Frank Zappa famously quoted.
According to Eco-securities, one of the biggest carbon trading companies in the world, the amount of money and total carbon credits earned from CDM-certified carbon trades in Africa is a paltry 3% of the world-wide total.
So much for Carbon Trading uplifting developing countries. That number represents a total failure of the system, since that was one of it’s founding edicts, to uplift developing countries. So how did this system fail so spectacularly? How can success be hornswoggled from the jaws of defeat?