Upsetting the Offset - Transnational Institute

Critiques
as collateralized debt obligations is in some ways matched by that of carbon
trading, with its reams of additionality calculations, diversity of carbon credits,
daunting monitoring and legal requirements and crowd of acronyms.’ 16
Several of the same people who were involved in creating financial
derivatives markets are also involved in creating carbon markets. The founder
and chairman of the Chicago Climate Exchange is Richard Sandor, who in the
1970s was one of the leading developers of derivatives and futures markets. 17
The Chicago Climate Exchange offers a futures contract based on emissions
allowances under a US cap and trade scheme – before such a scheme even
exists.
Richard Sandor is, predictably, in favour of trading forest carbon. ‘The clock
is moving. They are slashing and burning and cutting the forests of the world. It
may be a quarter of global warming and we can get the rate to two per cent
simply by inventing a preservation credit and making that forest have value in
other ways. Who loses when we do that?’ he said in an interview with The New
Yorker last year. 18
Sandor appears to have little sympathy for local communities and even less
knowledge of the complexities of tropical forest politics. The obvious answer to
Sandor’s question is that indigenous peoples and forest dependent communities
are likely lose when someone in the USA makes their forests more valuable to
outsiders. Land grabs are the almost inevitable consequence of increasing the
value of forests. Of the many attempts to stop or slow deforestation, the few
successful projects have been those that work closely with local communities
and actively support Indigenous Peoples’ and local communities’ rights.
‘Fleecing Landowners and Indigenous People’
Recent events in Papua New Guinea illustrate some of the problems with
Sandor’s simplistic approach to forests. The Office of Climate Change appears
to have issued at least 40 REDD ‘credits’, each denoting one million tons of
carbon, according to investigations carried out by a journalist with The Economist
magazine. 19 One of the REDD carbon ‘credits’ relates to the Kamula Doso
REDD project. As the Eco-Forestry Forum, a PNG NGO, points out ‘In
November 2008, the Office of Climate change issued a certificate granting the
rights to 1 million tons of carbon from Kamula Doso to a company called
Nupan Trading limited. This certificate was issued despite PNG having no laws
that allow trading in carbon rights and the Office of Climate Change not having
obtained the informed consent of landowners.’ The head of the Office of
Climate Change, Theo Yasause, denies any wrongdoing and says that the sample
credits were created merely ‘to see what it looked like’. 20 In June 2009, Yasause
was suspended while an internal investigation of the Office of Climate Change
is carried out. 21
Meanwhile, conmen are travelling from village to village offering fake carbon
trading deals and promising huge returns. Villagers hand over about US$500, for
‘registration as a shareholder’ in a carbon trading company. They receive a
218