The Sky is Not the Limit: - Carbon Trade Watch

Carbon Trade WatchBriefing No.1The Sky is Not the Limit:TNI BRIEFING SERIESNo 2003/1By Carbon Trade Watchctw@tni.org

Introduction31 What is emissions trading?41.1 Environmental injustice in theUSA1.2 Dumping on South Africa1.3 Greenwashing privatisation inUganda5792 The origins of emissionstrading2.1 The Rio Earth summit & climatechange2.2 The UN and corporate-ledsolutions2.3 Corporations at the Earth Summit2.4 Corporate ‘good guys’?2.5 NGO co-optation2.6 Sinking the protocol1213141617183 Trading rules3.1 The Kyoto trading regime3.2 Conflicts of interest3.3 Renewables under siege2021224 Kyoto in context4.1 Trade and investment4.2 The World Bank23275 Snapshot of key players5.1 International financial institutions5.2 Corporations5.3 Corporate lobby groups5.4 Think tanks5.5 Consultancies5.6 Private sector trading initiatives5.7 Environmental NGOsConclusion: can emissions tradingwork?29303134343636392

1. What is emissions trading?Pollution trading can include air, waterand land pollution. Emissions tradingis one aspect of the wider use ofpollution trading, a market-basedsolution to environmental problems,and refers specifically to air pollution.Polluters are assigned targets forreducing their emissions of gases in apre-defined time period. The pollutersare then given a number of ‘emissionscredits’ for the amount they areallowed to pollute, which is the level oftheir emissions minus their agreedtarget. There are several things thatcan happen:Scenario 1: The polluter uses up the wholeallowance in the allotted time period, butstill pollutes more. In order to do remain incompliance, spare credits must be boughtfrom another polluter, which has not usedup the whole allotment.Scenario 2: The polluter does not use thewhole allowance and can either save theremaining credits for the next time period(bank them), or sell the credits to anotherpolluter on the open market.Scenario 3: The polluter can invest innumerous pollution reduction schemes inother countries or regions and ‘earn’credits from these projects, which can thenbe sold, banked or used to make upshortfalls in the original allowance.Credit generating projects come undertwo categories in the Kyoto Protocol.Projects which take place in a countrywith no target (mostly in the‘developing’ world) come under theClean Development Mechanism.Projects which take place in countrieswith a target come under JointImplementation. Joint Implementationprojects are mostly intended forEastern Europe and Russia, howeverin theory they can take place in anycountry with a reduction commitment,such as in North America or WesternEurope.absorb carbon from the atmosphere(carbon sinks), renewable energyprojects such as solar or wind projects,improvements to existing energygeneration, etc. The amount of creditsearned is calculated as the differencebetween the level of emissions withthe project and the level of emissionsin an imagined alternative future of‘what would have happened otherwise’without the project. An addedcomplexity with these scenarios is thatpollutants can be interchangeable,meaning you can use your reduction inone gas (i.e. CO2) to claim reductionsfor another gas (i.e. CH4). Thefinancial term for this is ‘fungibility’.The ‘polluters’ in the Kyoto Protocolare individual countries that haveagreed to a specific reduction targetwhich are currently set at an averageof 5.2 per cent below 1990 levels ofemissions. Each country will thendecide internally how to distribute itsallotted credits to polluters at home. Inthe Kyoto Protocol, this is likely to beonly the big industrial polluters such astransnational corporations. In mostrespects, emissions markets are nodifferent from current financialmarkets. They are subject to the samepressures of capital markets, such asprice volatility, boom and bust cycles,speculative bubbles, etc.There have been many types ofemissions trading schemes, somemore regulated than others. Despiterejecting the Kyoto Protocol, the USAhas the most developed emissionstrading markets, including trade insmog and acid rain-causing gases.However, the Kyoto market, set tostart trading in 2008, will be the mostambitious undertaking, covering sixgreenhouse gases, variable reductiontargets, and numerous mechanismson a global scale.These projects can be monoculturaltree plantations, which theoretically4

1.1 Environmental Injustice in theUSAPollution trading in the USA has savedindustry a lot of time, money andtrouble. However, pollution trading hasalso created ‘toxic hotspots’ in poorareas and in communities of colour,reinforcing existing environmentalinjustices.When a polluter buys credits in atrading scheme, this enables them tocontinue, or even increase, their ownpollution. On a global scale creditsgenerated in the trade in greenhousegases will come from dubious projectsin countries far away from the sourceof the original pollution. Not only arecredits enabling pollution to continueat home, but the generation of thosecredits is highly suspect as well.Communities living with factories ontheir doorstep will continue to sufferthe effects of pollution indefinitely.In the USA, the main traded pollutantsin the schemes are sulphur dioxide(SO2) and nitrogen oxides (NOx).These pollutants are the main sourcesof smog, acid rain and have adverseimpacts on human health. Particulatepollution (NOx and SO2 in the air) cutsshort the lives of an estimated 30,000Americans each year. 1 The USEnvironmental Protection Agency(EPA) claims that its pollution tradingschemes are a success and haveachieved low cost reductions farbeyond its expectations. 2 The modelfor the national acid rain schemes isoften cited as a smaller local program -the Regional Clean Air IncentivesMarket (RECLAIM), which is centred inthe Los Angeles area. 3Sulphur trading in Los AngelesThe RECLAIM program “includes 370facilities from various industrialsectors, including oil refineries, powerplants, aerospace companies, asphaltbatch plants, chemical plants, cementplants, and many more.” The EPAstate that “the major benefit ofRECLAIM is that air quality goalsnecessary to protect public health andthe environment are met in a morecost-effective manner.” 4 It wasintroduced in 1993 and trading beganone year later. However prior to itsintroduction, there was a lengthydismantlement of the previous‘command and control’ programme.This all added up to a loss of up to 10years in pollution control legislation inthe LA area. LA is one of the mostpolluted regions in the USA and witheach year of inaction during the slowimplementation of RECLAIM,thousands of people died. 5Trading programmes in effect privatisethe problem of air pollution.Government and communities losecontrol over environmental protection,placing it in the hands of the polluters.When the incentive to reduceemissions is profit and costeffectiveness,there is an incrediblepressure to cheat by overestimatingreductions, while underestimatingemissions. This can lead to fraudulentclaims of reductions, inaccuratereporting of emissions and generalgaming of the system as demonstratedby the citations issued in March 2002to Anne Scholtz. Scholtz, prominentarchitect of RECLAIM and CEO of theemissions broker ACE, was caughtfiling false trading reports. 6 If fraud isprevalent in a small local scheme suchas RECLAIM, it will almost certainly berife in the international trade ingreenhouse gases where it isimpossible to properly monitor andenforce accurate reporting ofemissions reductions and honest filingof trades.Toxic HotspotsOne variant of the RECLAIM scheme -Rule 1610 - involved polluting factoriesbuying credits that were generatedfrom a four county car-scrappingscheme. Polluters were to removeabandoned roadside vehicles andhave them scrapped. However,vehicles were being counted as part of5

the scheme that were not abandonedand had been brought in by theirowners. Therefore credits were beinggenerated but no reductions werebeing made. These fraudulent creditsallowed polluters to continue emittingfrom their local factories. Pollution wasthen concentrated around thesefactories, creating toxic hotspots. Aspolluting industries in the USA aredisproportionately located in lowincomeareas and communities ofcolour 7 , the trade in pollution createdan uneven benefit in air qualitybetween peoples. In this case Rule1610 allowed the continued pollutionof the local Hispanic communitiesaround factories involved in thescheme.factories whose owners are busybuying and selling carbon credits,instead of simply reducing theiremissions where it is produced. Withthe introduction of emissions tradingglobally, environmental injustices willbe exacerbated on an unprecedentedscale.Weak pollution zoning restrictions andother cheap production costs such asland and labour are all reasons whyfactories locate in communities withlow incomes and/or of colour. Thistrend is seen in other rich northerncountries as well as the USA. In theUK, low-income communities are twiceas likely to have a polluting factorylocated nearby. 8 It is likely that thisphenomenon will be seen ingreenhouse gas trading, as credits canbe generated from FlexibleMechanisms. Reductions will notneed to take place at their source,allowing factories to continue pollutinglocally. If the credits had beengenerated legitimately, the entireregion would have benefited from thecar-scrapping scheme. Howeverlocalised air pollution in the Hispanicareas around the factories would nothave been reduced, thereby causinguneven improvements in air quality. 9One defence of greenhouse gastrading is that the gases involved areglobal pollutants and therefore do nothave a localised toxic effect. Howevergreenhouse gases are not produced inisolation. The industrial processes thatproduce them also produce toxic copollutants.These toxic co-pollutantswill continue to flow into the air, waterand land of communities living around6

1.2 Dumping on South AfricaSajida Khan was diagnosed withcancer in 1996. Sajida’s nephew, wholived with her, died of leukaemia agedeleven. Seven out of ten of the housesin her block on the Clare Estate inDurban, have tumour cases in thefamily. 1 However another block ofhouses nearby has no equivalent ratesof death and cancer. What couldaccount for such high levels in oneplace and not the other? One of thedifferences between the two is thatSajida’s block is downwind of thewaste dump, Bisasar Road landfill,that borders her house, and the otherblock is upwind.In May 2002, the Prototype CarbonFund (PCF), a pool of moneymanaged by the World Bank,described the Bisasar Road as “aworld-class site” and an“environmentally progressive” model tobe applauded internationally. 2 In factthe PCF is so enthusiastic about thesite that it is funding a landfill gasextraction project there. The project isplanned to commence in March 2003and will extract methane generated bywaste decomposition and use it togenerate up to 45 MW of electricity forsupply to the national grid. Howeverelectricity is not all that the project willgenerate. Methane (CH4) is the mostpowerful of all the greenhouse gasesthat are to be reduced under the KyotoProtocol. The reduced methane fromthe dump will be turned into emissionsreductions (ER) credits that the PCFwill sell onto foreign countries andcompanies, which they can then use tocount towards their reductioncommitments in Kyoto. The managersof the site, Durban Solid Waste(DSW), also claim that the resultingelectricity from the methane willreplace energy which would havebeen generated by coal-fired plantsand therefore represents additionalreduction in greenhouse gases. 3 Thisreduction in coal use is also cited as a‘local benefit’ by the PCF who statethat the results will be an“improvement in air quality and theoverall quality of the environment.” 4According to DSW’s permit, theBisasar Road site is only licensed fordomestic waste. However due to alack of adequate monitoring, medicalwaste has been found on the site andresidents report observing privatecorporations dumping there. 5 As aresult locals are now taking DSW tocourt for violations of its permit. It isunclear if PCF is aware of this courtcase.Income LevelHigher IncomeWaste generation(kg/person/year)540Middle Income 150Low Income, Formal 48* waste generation statistics for DurbanThe PCF state that local people willalso benefit from the project because itwill “improve the financial position of[Durban Solid Waste] DSW…” andthat the project will “send a clear signalto the local population that theenvironment is a number 1 concern inSouth Africa and is being dealt with inthe best way possible.” 6Durban Solid Waste is part of the localcity council structures. The councilpromised residents of Clare Estatethat the dumpsite would be closed in1996 and turned into “soccerfields…tennis courts…picnic andplaylot for children.” 7 When 1996came, a report commissioned by DSWfound that cadmium levels were 2-3times the guideline limit and lead was10-40 times the limit. 8 Both cadmiumand lead are recognised carcinogens. 9However in face of all this damningevidence, the city council betrayed itspromises of closure to the residentsand renewed the DSW’s permit,allowing continued dumping foranother 20 years. In light of the past7

ehaviour of DSW, it is difficult to seehow their financial position relates to abenefit for Sajida and other localresidents as PCF claim. DSW is notsimply short of the money that theyneed to make the dump safe, theyhave wilfully denied the problem.By removing the threat of methanemigration the PCF project is potentiallybeneficial for the community. The netresult though, would sustain the life ofthe dump by making it more financiallyviable and renewing DSW’s argumentagainst calls for closure from localresidents. As methane continues to beproduced from dumpsites for up to 20years afterdumping hasceased, theproject would bemore beneficialfor the communityif it were carriedout as part of aclosure plan.Doing it in thisway would still fitin with the aims ofthe PCF. DSWstates that thedump will remain open until 2012-15. 10However it is in the financial interestsof PCF that the dump stay open aslong as possible to recoup itsinvestment and be able to generatethe maximum amount of emissionsreductions credits, from which itprofits, by selling to countries overtheir quota.The suffering of residents next to thelandfill site is continued in the name of‘sustainable’ development. The creditsgenerated from their misfortune areused to make it possible for richcountries with unsustainableconsumption patterns to continue asbefore instead of reducing theirconsumption in order to truly bringdown greenhouse gas emissions.The Bisasar landfill gas extractionproject exposes the underlyingproblems with defining ‘renewable’“To gain the ER credits they willkeep this site open as long aspossible. To them how muchmoney they can get out of this ismore important than what effect ithas on our lives.”— Sajida Khan, Local residentaffected by emissions credit project,Clare Estate, Durban, South Africaenergy in such broad terms. What thismeans on the ground is thatunsustainable practices that negativelyimpact on local people’s lives canbecome ‘sustainable’, therebyundermining people’s struggles.Ironically, climate change mitigation,using emissions trading as a tool, hasmerely reinforced an environmentallydestructive practice, which is harmingpeople. The Bisasar Road project ispowerful evidence that profit-drivenemissions trading schemes and theprotection of people and planet areirreconcilable.8

1.2 Greenwashing privatisationin UgandaThe Prototype Carbon Fund (see “Keyplayers” and “Kyoto and the WorldBank”) has initiated a hydropowerproject in the area of the Uganda WestNile. This project consists of:• Construction of two medium-sizedrun-of-river hydropower plants anddiesel backup generators;• Development of an isolated minigridfor regional electricitytransmission and distribution; and• Replacement of Uganda ElectricityBoard’s (UEB) diesel capacity andprivately owned small diesel enginesand generator sets.These run-of-river plants will be a 5.1MW hydropower plant at the Nyagaksite in Nebbi District. Two years later,a 1.5 MW plant will be constructed inOlewa, Arua District. 1 These are notlarge hydropower projects, such as thecontroversial Bujugali 250 MW dam.Deflecting criticismHowever, the International RiversNetwork, an NGO supporting localcommunities working to protect theirrivers and watersheds, has roundlycriticised the project. They questionthe absence of an EnvironmentalImpact Assessment (EIA) and inparticular the effects of the project onfish and other aquatic life, land usechange and sediment transport. 2According to World Bank OperationalDirectives every project has tocomplete an EIA. However, the PCFinformed IRN that compliance withnormal World Bank rules andprocedures is not required of CleanDevelopment Mechanism projects.Besides that, CDM requires only thehost country to confirm that an EIA hasbeen undertaken in accordance withits own requirements. Furthermore, theEIA is not subject to stakeholdercomments and the validation process. 3Even though PCF claims not to besubject to World Bank rules in itsresponse to IRN, on its website itstates that: “The [World] Bank Grouphas a body of well-developed,mandatory safeguard policies whichapply to all World Bank operations.These are applied to PCF operationsto ensure that they areenvironmentally and socially sound…” 4There seems to be a fundamentalcontradiction in what the PCF says tocritical groups and the rules it has setitself and then fails to put into practice.However one of the basic criteria ofClean Development Mechanism ruleshas already been violated by theproject. Under CDM rules, plannershave to prove that the project wouldnot have taken place anyway. Thetechnical word for this is ‘additionality’.However, the PCF says that it isimpossible to say that the projectwould have happened without theCDM/carbon finance. 5The Uganda Electricity Board (UEB),has been reformed and is slowly beingprivatised. It has been “unbundled”into four units:a. The Uganda Electricity GenerationCompany Limited (UEGCL)b. The Uganda ElectricityTransmissionCompany Limited (UETCL)c. The Uganda Electricity DistributionCompany Limited (UEDCL)d. The Uganda Electricity Board(remnant).On the 22th of July 2002, “Eskomemerged the sole bidder for thegeneration concession (UEGC) andthen teamed up with the UK-basedCDC Globoleq to form a consortium tobid for the distribution company(UEDC). Eskom’s takeover of UgandaElectricity Generation Company(UEGC) is now almost certain afterMinistry of Finance officials describedits bid for the 20-year concession as‘competitive enough’.” 6 [see box Page9]9

PCF promoting privatisationThe PCF project in Uganda isemblematic of wider World Bankstrategies to force private sectordevelopment in poor countries. TheWorld Bank’s new buzzword, “PrivateSector Development” (PSD) is actuallythe reinvention of the old policy ofprivatising state-run utilities. The PCFproject is the new face of this familiarstrategy. In this way, renewableenergy, a potential force for positivechange, is being used as another wayto impose existing top-down structuraladjustment to ‘developing’ countrieseconomies.Poverty Reduction Strategy Papers(PRSPs) describe the economic plansof a country and are developed withthe World Bank and IMF. TheGovernment of Uganda says in itsPRSP that “In the long runprivatisation will transfer the need formajor investment expenditures on tothe private sector.” 7 Peter Kasenene,the minister in charge of privatisationin Uganda states that the,“government is convinced thatsustained economic growth can onlybe achieved with vivid private sectorparticipation.” 8 The influence of theWorld Bank’s promotion ofprivatisation is clear and wasevidenced in 1999 when thegovernment of Uganda signed theElectricity Act which allows the entry ofthe private sector into the Ugandanenergy market and the establishmentof the Energy for Rural Transformationprogramme (ERT).The ERT was developed with theassistance of the World Bank’s AfricaRural and Renewable Energy Initiative(AFRREI), currently operating inUganda, Mozambique, South Africa,Nigeria and Zimbabwe. The ERT getsfinancial support via bilateral donorsand the World Bank as part ofAFRREI, which is designed to promoteprivate sector-led rural development.The Global Environment Facility(GEF), a joint project of the WorldBank, United Nations EnvironmentProgramme and the United NationsDevelopment Programme, is a cofunderof the ERT. The PCF project ispart of the ERT programme. The GEFreveals the links between PCFprojects and the World Bank’s widerpolicies of promoting privatisationthrough AFFREI; “Working with theWorld Bank on the Africa Rural andRenewable Energy Initiative (AFFREI),the GoU [Government of Uganda] hasmade significant progress in laying thegroundwork for private sector led ruralelectrification…” 9 Through this maze ofacronyms lies the true purpose of PCFprojects: to support the privatisation ofenergy in Uganda.Privatisation & UnemploymentIn South Africa more than 100,000 jobs havebeen lost due to privatisation. 11 Eskom hasalready “shed” more than 30,000 workersover the past 15 years. 12 Leslie Maasdorp, incharge of restructuring state-ownedenterprises, at the department of publicenterprises predicts that future sell-offs ofEskom shares would boost job creation. 13However the International LabourOrganisation contends that there has beenlittle evidence of post-privatisation expansionin employment in water, gas and electricityand the process of restructuring that goesalong with privatisation has led to reductionsin employment levels that affect up to 50% ofthe workforce. 14Sowetans have responded to this situationcreatively, by resisting privatisation trends inSouth Africa and forming residents groupssuch as the Soweto Electricity CrisisCommittee (SECC). This particular group hassuccessfully challenged Eskom byreconnecting cut-off residents and protestingagainst the trend of privatisation in otherareas of South African life such as water andland-use.10

Privatisation & price increases: SouthAfricaIn South Africa, the main energy provider isEskom, a registered company with the SouthAfrican government as its main shareholder.However, thirty percent of the company willbe sold by 2006, pushing this former staterunutility further along the road to privatesector control. 15 Eskom has been successfulat connecting many more people to thenational grid. However it has come at a highprice, with up to as many 20,000 electricitycut-offs per month in Soweto alone, as aresult of inability to pay the high rates thatcame with the new electricity supply. Sowetoresidents pay 30 per cent more for electricitythan nearby white suburbanites and overalldomestic consumers pay 700% more at24.59 cents per kilowatthour than some largecorporations who pay 3.5 cents perkilowatthour. 16 Eskom plans to furtherincrease its tariffs for 2003 by an aboveinflationrate of 8.4 per cent. 17 This at thesame time as profits of Eskom Enterprises,the non-regulated businesses division of thepower utility, rose 400 per cent to almostR200 million over 2001. 18 It does, of course,make business sense for a private businessto behave in this way. However, the poorresidents of Soweto, who already live in direcircumstances, cannot afford the extraburden that a profit-driven privatisedelectricity company places upon them. Norcan they afford to subsidise the energy use oflarge corporations and more affluent whitesuburbanites.United KingdomThe energy sector in the UK is completelyprivatised and as a result, since 1999 theprice paid by large consumers fallen by 20per cent. However, the price paid by smallconsumers has actually increased by 5 percent.” The introduction of retail competitionfor large consumers allowed them tonegotiate better prices, but it seems thatmuch if not all of the price reduction was paidfor by small consumers.” 19The PCF justifies the disbanding of thestate-run UEB by stating that “there isa need for an experiencedinternational partner who is financially,technically and managerially strong, asthe development of mini-hydroresources is new in Uganda and thereis no experience in operating a powersystem independent of UEB. Third, thedisposition of UEB’s existing assets inthis region should be in accordancewith the overall power sector reformstrategy in general.” 10 From onesentence to the next, they link togetherthe inability of UEB to run a renewableenergy project with its generaldismantling in the region. Under theguise of providing expertise onrenewable energy, the PCF is puttinginto practice the general policies of theWorld Bank to privatise rural energy inUganda.A Trojan horseThis is particularly worrying as thePCF is a wing of the World Bank,which receives very little scrutiny. Asthe PCF does not have the samepublic scrutiny as the World Bank hasenjoyed, World Bank policies slipthrough this blind spot unnoticed andin the name of ‘sustainabledevelopment’. This is in part a result ofits relative newness but also due to theambiguous nature of promoting itselfas a more positive force for change.However the net result is that the PCFis not as carefully monitored by civilsociety as well as internally not beingsubject to the same imposedtransparency and guidelines as theWorld Bank has had imposed upon it.The Prototype Carbon Fund’s primaryfunction is as a vehicle of privatisation,a vehicle that is blazing a trail throughthe countryside, with the World Bankinfluencing which direction is takenand how the road will be paved.However the PCF phenomena goesbeyond Kyoto and is part of a widertrend in international processes awayfrom government legislation, andtowards Public-Private partnership(PPP). The buzzwords of PPPs and‘private sector development’ are newexpressions for old policies ofincreasing market access in poorcountries for foreign corporations,privatising state-run industries andsupporting corporate control.Emissions trading has provided thevital link that was needed toincorporate renewable energy intowider World Bank strategies.11

2. The Origins of Emissions Trading2.1 The Rio Earth Summit & ClimateChangeThe United Nations FrameworkConvention on Climate Change(UNFCCC) was one of the majoragreements to come out of the EarthSummit in 1992. The text of theUNFCCC was prepared in the yearsbefore the actual Earth Summit andwent through final negotiations in Rio,where it was adopted. 1Despite some obvious good qualities(see box), the UNFCCC did notinclude any commitment to legallybinding emission reductions. Nor did itrecognise the role of industry, overconsumptionand free trade policies inexacerbating climate change. Whydidn’t the UNFCCC, and the other Rioagreements for that matter, have anyteeth? The answer lies in the complexinteraction between government selfinterest,corporate influence and therise in popularity of “multi-stakeholder”processes.From the beginning of internationaldiscussions about climate changeNorthern governments have beenopposed to the structural changesneeded to truly combat the problem.Before the Earth Summit, theInternational Negotiating Committee(INC) was set-up to formulate aproposal text for Rio. Within the INC,both the US and the EU arguedagainst binding reductions ingreenhouse gases. 2Key Principles of the UNFCCCIn summary, the UNFCCC is arecognition of key principles regardingclimate change. These principlesformed the framework for negotiationsthat eventually produced the KyotoProtocol in 1997. The UNFCCC;• Set an “ultimate objective” ofstabilising “greenhouse gasconcentrations”;• Established a framework and aprocess for agreeing to specificactions - later;• Encouraged scientific research onclimate change;• Placed greater responsibility forbattling climate change on the richcountries;• Recognised that poorer nations havea right to economic development;• Acknowledged the vulnerability ofpoorer countries to the effects ofclimate change;• Called for the sharing ofenvironmentally sound technologiesand know-how; and• Emphasised the need to educatepeople about climate change. 4“Ten years ago at the RioSummit, 50 business leaderspledged a commitment tosustainable development.That was the start of theWBCSD. Since then, wehave trebled in size andhugely amplified the voice ofbusiness in widespreaddialogue.”— Philip Watts, WBCSDchairperson 3• Recognised that climate change is aproblem;12

2.2 The UN and Corporate-ledSolutionsA case in point is the first appearanceof emissions trading on the climatechange scene at the third session ofthe INC in Nairobi in September 1991.The UN Conference on Trade &Development (UNCTAD) set-up adepartment on greenhouse gas (GHG)emissions trading as early as 1991.UNCTAD also set up the InternationalEmissions Trading Association (IETA),a corporate lobby group dedicated topromoting emissions trading. TheGHG emissions trading projectproduced a report in May 1992 entitled“Combating Global Warming: Study ona global system of tradable carbonemission entitlements,” with thefinancial support of the governments ofthe Netherlands and Norway. 1Key successes of corporate lobbyingon the UN climate negotiations:• Lack of strong legally-binding emissionsreductions adopted at Earth Summit andlower, less binding targets later in Kyoto.• US withdrawal.• Inclusion of the ‘flexible mechanisms’ inthe Kyoto Protocol.• Inclusion of ‘sinks’ in the CDM anddomestic reduction strategies.• Deference to WTO rules.• Dominance of the ‘public-privatepartnership’ approach.• Focus on technocratic fixes rather thanstructural change.• Changed the discourse fromenvironmental to technical.• Marginalised and isolated radicalpositions.• Governance transformed into a ‘multistakeholder’dialogue with industry as a‘partner’.• Changed character and role of the UN,particularly its leadership, to be moresupportive of corporate and neo-liberalagendas.• Influenced governments to removeIPCC staff that were more radical andpolitical in their views.The Economics of QWERTYThe top left hand row of letters on anEnglish language computer keyboardreads Q,W,E,R,T,Y. The reason whythis letter order exists is that whentypewriters were first invented, thekeys would often jam,and so it wasadvantageous to slow down the speedof typing. However, jamming keys arenot a problem on modern computers. 3Despite the fact that this letter orderslows down typing, society is locked into using the QWERTY system. Thestructures that evolve around a designmakes it near impossible to changethe design, although alternatives mightbe much better.Emissions trading is a relatively newphenomena, but if emissions tradingbecomes the QWERTY of the climatickeyboard, the ‘jamming keys’ could bepost-cold war neo-liberal fatalism andthe intervention of the corporate sectorin making any alternatives impossible.UNCTAD, an agency charged with themandate to assist developingcountries, admits that its “research islimited to the emerging carbonmarket.” 2 Formal proposals for tradingemissions however were not madeuntil the mid-1990s. UNCTAD werealready well developed in theirresearch on greenhouse gas tradingby then, having never pursuedresearch on other alternatives or evenother market-based solutions such astaxation. The neo-liberal bias of theUN in this instance is perhaps not soeasily characterised as a matter ofthem succumbing to corporatepressure, but is perhaps morereflective of a culture withininternational institutions to developcorporate-friendly solutions as amatter of course. In the face ofdamning evidence against these kindsof ‘one-size-fits-all’ solutions from thepast, UNCTAD has remainedcommitted to emissions trading.13

2.3 Corporations at the EarthSummitCorporate lobby activity before theEarth Summit is unclear, but it isperhaps telling that much of industry’sgoals for the Earth Summit (i.e.promoting “cost-effective policies” and“self-regulation”) were achieved. 1Considering the connections togovernment delegations thatcorporations had, it is unsurprisingthey were so successful. For example,the chair of the Working Party onSustainable Development in one of themost powerful corporate lobby groupsin the world, the International Chamberof Commerce (ICC), was also amember of the UK official delegation inRio. 2 The ICC has continued to haveprivileged access to policymakers andregularly makes statements to theInternational Negotiating Committee(INC) on climate change, representingthe “voice of business.” 3Corporations have played a major rolein the climate talks, increasinginfluence and dominance from theEarth Summit to the present day. Thecorporate lobby employs three tacticsfor its strategy in the climate arena.The most public of these is to denyclimate change exists using expensivepublic relations campaigns, supportingor employing climate sceptic scientistsand setting-up fake grassroots groupsto carry out anti-action campaigning. 4The second is to influence the processwithin the UN talks by direct lobbyingof delegations. And thirdly, to promotebusiness friendly solutions through‘partnerships’ with NGOs,governments and the UN.From Threat to OpportunityThe first two of these corporate tacticsare old and familiar. The GlobalClimate Coalition (GCC) was the mostvocal and influential lobby groupduring the climate process. The GCCsuccessfully lobbied governments inthe Earth Summit to avoid bindingemissions reductions 5 and in the leadup to Kyoto in 1997 ran a hugeadvertising campaign aimed atundermining the science of climatechange. 6 In 2002 the GCC disbandedsaying that it had achieved all itwanted to in the climate process,namely that: the US is not part ofKyoto, there are no tough sanctions onfailure to achieve reductions, andcorporate-led ‘solutions’ areunregulated and unrestricted in use.When the United States withdrew fromthe Kyoto Protocol, US administrationofficials cited a Global ClimateCoalition (GCC) figure that the treaty,without international emissions trading,would cost the US economy US $400billion 7 , aiming to show that it wouldnot be cost-effective to join. Theinsurance industry is one sector, whichdoes not share the same perspective.According to their forecasts, insurancelosses due to extreme weather eventswill grow more than three times fasterthan the global economy. 8 Theinteraction between insurance lossesand growth leads to a prediction thatby 2065, “the world economy cannotsustain the losses, and collapse willfollow.” 9 Whilst the insurance industryis hardly the poorest sector of society,its losses give an indication of some ofthe losses faced by ordinary people.Thousands of UK homeowners livingin flood plains cannot insure theirhomes, making their houses nowvirtually worthless, despite the fact thatthey must continue paying theirmortgages. Clearly the impacts ofclimate change on those who wouldnever have access to services likeinsurance will be even moredevastating.‘Cost-effectiveness’ and ‘efficiency’ areoften used by corporations toundermine effective climate changesolutions. However they are notneutral terms which can simply becalculated and universally applied tosupport a policy or model, withoutquestioning which groups are affectedand how. What is relatively ‘cheap’and ‘cost-effective’ for one sector like14

fossil fuel industries, can be moreexpensive and ineffective for anothersector of society, and even for societyitself. This can also apply over time,where actions can be good for onesector of society today, but disastrousfor future generations. Undercommonly used discount rates,benefits and costs that occur about 50years from now are virtually irrelevantto present day decision-making.Corporations saw the possible threatsfrom climate change policy andworked to transformthem into marketopportunities by makingthemselvesindispensable,diversifying risk,evading responsibilityand by so doingensuring institutionalsurvival. Throughcleverly engineering theparameters by which agiven social or environmental problemis framed, corporations and neo-liberalinstitutions assert control over keysocial and environmental debates inthe public sphere. Issues of humanrights, public participation, communitysurvival and ecological integritybecome subordinated to a technocraticand corporatist agenda. What mayhave started off as a broad andcontentious public debate on a host ofissues resulting from climate change,has succumbed to intellectual andpolitical apathy as the machinery for anew carbon economy is broughtonline. Corporate influence hasensured that any potential climatechange legislation will be marketbasedand ‘flexible’, allowing it thegreatest freedoms to continuebusiness-as-usual with relativeimpunity.As soon as climate change isdescribed as a problem of a scarceresource being used irrationally, muchthe way food and water are discussedin many international fora, twoavenues of problem solvingThe Global ClimateCoalition estimates thatthe cost of the KyotoProtocol to the USeconomy withinternational emissionstrading would be cut tobetween US $120 billionand US $210 billion. 11immediately appear in the prevailingneo-liberal politics of our times. First,the response to scarcity is to defineproperty rights and protections forinvestors. This analysis can berecognised in statements like ‘water isnot unlimited and people will onlyvalue water if they have to pay for it.’When translated into everyday life thismeans replacing shared street freewater taps with individual pre-paidwater meters for every house, as hasbeen seen in the South Africantownship Orange Farm in 2002. 10Second, to rationalise useof resources, the corporateethic of the ‘market’ isconsidered the onlypossible and final way to‘efficiently’ allocateresources. This is mosteasily achieved whenresources are neatlyparcelled into commodities.Following-on from thisapproach, the only logical solution forclimate change is to commodify thepublic good into tradable permits toaccess the global atmospheric dumpfor greenhouse gases. Enter the KyotoProtocol.The Global Climate Coalitioneffectively employed the twin trackapproach of denying climate changeexisted whilst positioning itself withinthe process and steering agreementsin a corporate-friendly directionthrough the aggressive promotion ofemissions trading. The GCC estimatesthat the cost of the Kyoto Protocol tothe US economy with internationalemissions trading would be cut tobetween US $120 billion and US $210billion. 11 This financial lifeline for thefossil-fuel dependent economy is nowenshrined in international law. Tradingdecelerates the transition away fromfossil fuels and buys time for industryto protect investments in fossil fuelproduction and consumption.15

2.4 Corporate ‘good guys’?The third tactic of corporations is newand firmly splits the corporate worldneatly in two. There are theExxonMobils who are ‘old-school’, diehardobstructers and deniers.Campaigners have targeted Exxon,and it is well known now that they areagainst the Kyoto process, firmlybelieving that industry can solve theproblem if left to take voluntary action.A memo from Exxon to the Bushadministration in February 2001suggested that the US lobby get rid ofthe then head of the IPCC, BobWatson, who is an outspoken andradical scientist whose views Exxondislikes. 1 At the subsequent election inApril 2002 for the head of the IPCC,the US voted against Bob Watson andhe was ousted. A coincidence, or anexample of the kind of listening earthat a US $1,200,000 campaigncontribution can buy. 2And then there are BP, Shell andEnron who are at the forefront ofreinventing themselves as being ‘goodguys’. In 1998 Kenneth Lay, the CEOof Enron, sent a letter to Bill Clintonwhich requested that he do as muchas possible to harm the credibility ofthe climate sceptic scientists. Enronsaw that Kyoto, “would do more topromote Enron’s business than willalmost any other regulatory initiative,”and was one of the main proponentsof emissions trading. 3 Along withexpensive PR campaigns such asBP’s environmental ‘BeyondPetroleum’ make-over, these‘progressive’ corporations havesuccessfully advanced the concept ofthe Public-Private-Partnership (PPP).name ofcorporation$ spent onrenewables% of totalinvestmentsBPAmoco 50 million 5 3Shell 100 million 6 0.1ExxonMobil insignificant 7 insignificantChevronTexaco275 million 8 2.8Based on projections for the current and futureinvestments compared with total expenditure for2001. 9corporate engagement in internationalprocesses, best epitomised by whathappened at the WSSD inJohannesburg in 2002. There were nolegally binding agreements reached atthis second Earth Summit. Instead,over 280 PPPs were showcaseddemonstrating a lack of political will tomake strong decisions and theenthusiasm of corporations to takecontrol of solutions. 4By making low-cost investments inenvironmental projects, BP hasreshaped public perception of them,making it possible to continue‘business-as-usual’ having deflectedcriticism onto less sophisticatedcorporations such as ExxonMobil. Thisthird approach is a development of16

2.5 NGO Co-optationFurthermore, corporate culture ishypnotising environmental nongovernmentalorganisations (NGOs)with “multi-stakeholder” dialogues. Bigbusiness has shaped itself into humanform and become a ‘stakeholder’ insociety. Part of the illusion of the‘corporate citizen’ is to enlist the helpof friendly NGOs in corporateactivities, thus projecting theperception of credibility. Corporationshave advocated that environmentalNGOs should be the verifiers of theirreductions. AndrewErtel, president ofEvolution Markets,suggests that such anNGO could be NatureConservancy or theEnvironmental DefenseFund. 1 This is alucrative opportunity forNGOs. In 1997 NatureConservancy receivedUS $1,285,245 incorporate contributions making themthe 8th largest recipient of corporatefunding that year. 2 The conflict ofinterest over verifying the emissions ofthe companies who are both payingyou to do so, and providing generalfunding for your organisation isobvious.However it is not just conservativeenvironmental NGOs that have beenneutralised by corporate strategies. Atthe original Earth Summit, the NGOGlobal Forum produced an alternativetreaty, which was designed to guidethe official Rio Declarations. In it theystated strongly that the climatenegotiators should, “avoid anyemission trading schemes which onlysuperficially address climate changeproblems, perpetuate or worseninequities hidden behind the problem,or have negative a ecological impact.” 3However after Kyoto, the large NGOs,who had been part of the creation ofthis alternative treaty in Rio, began tocompromise their firm stand againstemissions trading. By COP-6 in 2000,“There are many reasonswhy environmental NGOs arecompromising theirpositions, but the mostdangerous is an acceptanceof the dominance ofcorporate culture and thesubsequent failure to provideany challenge to thisapproach.”even more politically critical groupslike Friends of the Earth had changedtheir position on trading to a requestthat a 20% limit be imposed upon itsuse. Eight months later, pressstatements from Friends of the EarthInternational heralded the Bonnagreement as a “new hope for thefuture”, with the mood in theconference centre described as“euphoric” 4 . This when no concretelimits were placed upon the use ofemissions trading and the deal theydescribed as “junk” in COP-6 was abetter deal than the one agreed to inBonn. 5Two years later inJohannesburg at theWorld Summit forSustainableDevelopment,Greenpeace and theWorld BusinessCouncil forSustainableDevelopment(WBCSD) made a joint declaration onclimate change urging governments tomove forward. This was despite thefact that the WBCSD still does notnecessarily endorse implementation ofthe 1997 Kyoto Protocol, in sharpcontrast to the stated aims ofGreenpeace. At the Earth Summit in1992, Greenpeace and the WBSCDwere ‘fighting like cats and dogs.” 6However ten years later they stood onthe same platform even without asubstantial common vision of wheregovernments should move forward to.There are many reasons whyenvironmental NGOs arecompromising their positions, but themost dangerous is an acceptance ofthe dominance of corporate cultureand the subsequent failure to provideany challenge to this approach. Thishas led to a situation wherecorporations no longer need to lobbyintensively as they have in the past.Big business’ interests have now beenplaced at the heart of politicalnegotiations.17

2.6 Sinking the ProtocolBonn 2001: After the climatenegotiations came to a standstill atCOP6 in Den Haag in 2000, dramaticpolitical events such as the USrejection of the Kyoto Protocol andsubsequent compromise dealsfundamentally undermined reductiontargets. The departure of the USpushed the Protocol to the edge. COP-6.5 in Bonn the following year wasintended to save the Kyoto Protocol.The overwhelming majority ofgovernments and NGOs rushed tocompromise, in the hope of keepingsceptical governments on board andtrying to win the US back. Weakenedrules in the Bonn agreement,combined with the departure of theUS, mean emissions reductions mayonly be 0.1 per cent of 1990 levels forthe rich industrialised countries. 1Negotiating positions developed overmany years were dropped in Bonn.One of the most important was theproposed cap on emissions trading, toprevent countries from achieving 100per cent of their targets abroad. TheKyoto Protocol stated that tradingshould be supplementary to reducingemissions directly at source. However,what ‘supplementary’ meant had notbeen quantified. A cap would definethat and the EU had been arguing fora 50 per cent limit on trading. TheBonn agreement only made arecommendation that “domestic actionshall thus constitute a significantelement of the effort.” This was despiteprotest against emissions trading andarguments that carbon trading wouldbe a new form of colonialism. 2 Theonly potential environmental ‘win’ wastext in the agreement that countriesshould ‘refrain from using nuclearpower’ in emissions trading projects.However long discussions on sinkscame to a bitter end and they are nowpresent in the CDM.Carbon SinksSinks refers to the use of trees, soilsand oceans to absorb carbon dioxidefrom the atmosphere. While thescience of sinks is still uncertain,there is a broad consensus that anypotential storage of carbon istemporary as trees naturally live outtheir life cycles or are felled and theresultant carbon is ultimatelyreturned to the atmosphere. Manyenvironmentalists and indigenouscommunities around the world fearthat use of sinks will have anegligible impact on reducing globalwarming while having an enormousimpact on people worldwide as poorcountries, desperate to earn moneyto pay back debts, look to sellingtheir lands and forests for the carbonmarkets.Projects in countries such as Ugandaand Ecuador have already led tothousands of local communitiesdependant on forest areas beingforced off their land as privateNorthern corporations backed bytheir governments, engage in aworldwide land-grab at wholesaleprices. The logic of these carbon‘offsets’ ensure that Northerncountries can continue to emitdisproportionate amounts ofgreenhouse gases. This corporateoffset culture magnifies inequalitiesbetween the haves and have-nots asthe South becomes the carbon dumpfor the over-consuming North. Thethreat to indigenous peoples andpeasant communities is especiallysevere, as destruction and/or loss ofaccess to forests for many peopleswould destroy their livelihood. TheFirst International Forum OfIndigenous Peoples on ClimateChange stated “sinks in the CDMwould constitute a worldwide strategyfor expropriating our lands.” 318

Marrakech 2001: Sticking points atprevious talks had been compliancerules to define how targets would beenforced and over-emitters punished.The Marrakech Accords, agreed atCOP-7 in November 2001, laid thefoundations for implementationassistance and judicial structures. Thedecision to make punishmentseffective and legally binding waspostponed.Delhi 2002: COP-8 in Delhi took placejust after the World Summit onSustainableDevelopment in 2002.Whilst it provided “littleguidance” on emissionstrading, “the mostsignificant events tookplace outside thenegotiation rooms”, thebehaviour of the US isworth noting. Despitethe fact the US is notpart of the Protocol, itstill has an influentialdelegation present atnegotiations as‘observers’. At COP-8, the USdelegation insisted that they beallowed to participate directly inmeetings of the CDM Executive board.At present they are only allowed towatch the proceedings via videoconferencing. 3aOn the point of reduction commitmentsfor developing countries, US strategytook a U-turn. Historically the US hasalways argued that it is unfair to askthe developed world to makereductions when the developing worldhas no reduction commitments andthis was one of the reasons given forthe US rejection of the protocol.However, the US argued at COP-8that it is unfair for the developing worldto take on reduction commitments. 5Point Carbon, a corporate think-tank,stated that the US “line of argumentbears a resemblance to the strategyemployed by the Global ClimateCoalition (GCC) in the Clinton era, andseveral observers commented that the“There is no realistic way toforce Parties who exceed theirtargets to remedy the problem.Trade sanctions havesometimes been used toattempt to compel action. Thisis not contemplated in theKyoto regime at this time.” 4GCC, while being officially dissolved,now seems to have moved into theWhite House.” 6Key decisions on Kyoto trading rulesstill need to be taken, particularly onestablishing the legal nature ofcompliance regime. Aside from thisbasic and essential requirement for aneffective compliance regime, the mostimportant political decisions have beentaken. Governments must developnational implementation policies withinwhich companies will operate. Nationalpolicy has becomeincreasingly thefocus of corporatelobby groups.Even the politiciansinvolved innegotiating theprotocol admit theagreement isinadequate.However for somethis is not aproblem. Witnessthe CanadianFinance Minister John Manleyencouraging Canada to ratify theKyoto Protocol by reassuringCanadians that they should not worryabout international penalties if thecountry falls short of the its targets,because the treaty is not binding. 7— Glenn Wiser, CIEL19

3. Trading Rules3.1 The Kyoto Trading RegimeWhile Kyoto is just one of the carbontrading regimes under development, itis the most advanced. It is also theplatform that legitimises the growth ofother trading schemes. For example,the emission targets in the KyotoProtocol create the scarcity inemissions that make a competitivemarket possible. The Kyoto tradingregime is a combined cap-and-tradeand cap-and-credit system. The capand-tradesystem is formed by settinga fixed quantity of permits (the cap),distributing them and allowing them tobe traded. The cap-and-trade systemis included in the Kyoto FlexibleMechanism “Emissions Trading”. Eachcountry that committed to a Kyotoreduction target has a quota ofpermits. The size of that quota comesfrom each country’s 1990 emissionslevel minus the amount they havecommitted to reduce.The credit-and-trade system is formedby allowing emission-reducing projectsto generate permits equivalent to theamount of emissions they save. Theproject based credit-and-tradesystems in the Kyoto Protocol are theClean Development Mechanism andJoint Implementation. Using Kyotogreenhouse gas emissions permits ismuch like using money in manyrespects. You can bank most permitsfor future use or sell them if you havean excess. If you run out of permitsyou can buy or borrow more.Governments trading improperly willgo to a court-like forum and couldeven be excluded from trading. If theybelieve they have been treatedunfairly, they also have the right toappeal. 1Money-like characteristics come fromthe rules set out in the Kyoto Protocol.An example is the interest rate forborrowing by governments, whichcomes from the penalty for overemittingin one emissions budgetperiod. The technical name for theemissions budget period is the‘compliance period’, the first of whichis 2008-2012. If at the end of 2012,you are missing 100 permits to makeyour emissions-budget balance, thenfor next compliance period you mustfind an extra 130 permits. That is, youpay an amount of 0.3 permits for everyton of greenhouse gas you fail toreduce. The interest rate of 30 percent for a five-year compliance periodtranslates into approximately a 5 percent yearly interest rate.If you are a corporation, you tradewithin legislation defined by thegovernment of the country you areactive in. It is however easy to form asubsidiary company, or if you are atransnational corporation to useinternal trading and take advantage ofbeneficial trading rules in the countryof your choice. There is no cap ontrading to promote domesticreductions at source and it is unclearhow governments could stop youtrading if they are in danger ofexceeding their emissions target. Ifyou are a multinational company youcan trade internally between differentnational arms of your corporation,taking advantage of schemes togenerate cheap permits in thedeveloping world.Combing through the myriad rulesgoverning this new system, the Kyotopermits can seem to be taking shapeas a credible new commodity.However, by comparison withcenturies of international trade, theKyoto commodity is young andmalleable. Rules attempting to protectthe commodity’s environmentalintegrity are fragile. It is questionablewhether these rules are robust enoughto survive the pressures ofinternational trade.20

3.2 Conflict of InterestsConsultancies are active at thecorporate, governmental andintergovernmental levels as well asacross different sectors such asauditing, lobbying and verifying. Topexecutives move betweencorporations and UN agencies.Maurice Strong, one of the principalarchitects of the Rio Earth Summit, isalso on the board of the ChicagoClimate Exchange, set to be one of themost influential trading exchangesworldwide.Frank Joshua, managing director atUS-based consultancy Natsource, wasformerly Global Director forGreenhouse Gas Emission TradingServices at Arthur Andersen. Prior tojoining Andersen, Joshua served asUnited Nations’ Head of GreenhouseGas Emissions Trading, leadingseveral expert groups including theUNCTAD Earth Council EmissionsTrading Policy Forum and theUNCTAD Expert Group on the CleanDevelopment Mechanism. He alsoserved as the First Executive Directorof the International Emissions TradingAssociation (IETA).A recent example of a conflict ofinterest can be found in thecontroversial PCF-backed Plantareucalyptus plantation project in Brazil. 1When the Plantar project wasassessed for the PCF by NorwegianbasedDet Norske Veritas (DNV) itwas recommended as a CDM project.However, DNV has significantconsultancy contracts with two of thePCF’s investors: Statoil andNorskHydro. 2 There is growingresistance to the Plantar project fromdiverse Brazilian groups. 3Other links between the private andpublic sectors can be seen in the UN’sIntergovernmental Panel on ClimateChange (IPCC). The IPCC report on‘Land Use and Land Use Change’ hada crucial legitimising effect on sinks,paving the way for their inclusion in theCDM. The authors of the reportincluded executives from SGS,Monsanto and Ecosecurities. TheWorld Rainforest Movement (WRM)identified that “some of the authors(and the companies they work for) willbenefit financially from having drawnthe conclusions they drew.” 4One of the authors of the report, PedroMoura Costa, was CEO and founder ofenvironmental finance consultancyEcosecurities. He worked on one ofthe first carbon sinks projects in theworld as part of the Netherlands-basedFACE Foundation. A FACE project inEcuador was criticised as a ‘lose-lose’situation - unsustainable for theclimate and unsustainable forEcuadorian people and environment. 5WRM argue that another IPCC reportshould be commissioned “free of thetaint of intellectual corruption.” 6“The corporations of this sector likePlantar S.A. installed themselves inour states in the 60s and 70s, inthe middle of military dictatorship,taking advantage of attractive taxincentives. Unfortunately, localcommunities, direct targets of theactions of the corporations, neverwere consulted if they wanted ornot this type of project for theirregion. The result was thatTupinikim and Guarani indigenouspeoples were expelled from theirlands, as well as traditionalafrobrazilian communities and tensof thousands of peasants,increasing unemployment and,consequently, the despair of thesepopulations who lost their landsand were left without theirbiodiversity and without theirwater.”— Excerpt of statement fromBrazilian citizens, movements,politicians and churches againstPlantar PCF project. 321

3.2 Renewables under SiegeEmissions trading threatens to reducesustainable renewable energy to adecorative by-product. The projectrequirements of CDM and JI containobstacles for small renewable projects.These include difficulties in measuringand determining ownership of energyproduction. 1 Large multi-nationalcorporations find it easier to overcomethese obstacles than smaller firms.Companies such as Shell orBPAmoco, which have both renewableand fossil-fuelled facilities can offsetwithin one corporate structure, haveclear ownership and can achieveemissions reductions which are easierto measure.The Dutch Government’s CDMprogramme will pay up to US$5.00 for permits fromrenewable projects. 4 However,permits from sinks projects inthe South could cost as littleas US $1.00. 5Renewable firms may find that thebest prices for permits will not comefrom demand to fulfil Kyoto reductiontargets, but from companies wanting tobuy permits to build anenvironmentally friendly image.Frank Van Der Vleuten of Free EnergyEurope, a manufacturer of solarpanels, believes that, “The Kyotomechanisms are far away frompractical application and relevance.Hardly anybody has a vision how theycan be put into practice for smallrenewable energy systems.” He adds“before establishing abstract marketbased mechanisms, the first and mostsignificant step is recognising the realand many values of renewable energywhich go beyond the cost of oneemission reduction permit.” 6When large companies have superioraccess to subsidies, smallercompanies find themselves at acompetitive disadvantage. Thisundermines diversity and innovation inthe renewable energy sector as awhole. In the Netherlands, subsidiesfor the solar industry in the 1990s wereconcentrated on Shell and ecoconsultantsEcofys. 2 This limited thenumber of solar panel firms to just afew main players and Shell gained avirtual monopoly in solar panelinstallation. In contrast, Germansubsidies were distributed more fairlyacross different sized firms. By 2002there were over 300 companiesinvolved in supplying solar panels. 3A coal-fired power plant would find itmore rational to introduce energyefficiency measures or switch to gas,than to replace the use of fossil fuelswith a wind farm.“Most of the running forthe CDM is, sadly, likelyto be made by bigcompanies offeringmarginally cleaner coalcombustion kits toChina.”— Professor David Elliot,Energy & EnvironmentResearch Unit, OpenUniversity, UK. 722

4. Kyoto in Context: Trade andInvestmentAs emissions trading emerges as aprinciple component of governmentclimate change policy, the rulesgoverning its use will have to cohabitwith rules governing trade andinvestment. Increasingly, these tradeand investment rules continue todevelop and expand in scope andpower affecting more and moreaspects of human activity. Any effortsto improve the rules of emissionstrading, or to curb its use, will beforced to contend with these forces ofliberalisation.As new international‘environmental markets’develop, in what way willthese markets be subjectto international rulesgoverning trade andinvestment? The KyotoProtocol, for example,includes three marketbasedmechanisms(CDM, JI, and EmissionsTrading), which intersectwith many existing rules in the WorldTrade Organisation (WTO). As such,speculation is rife over how therelationship between WTO rules andthe Kyoto Protocol will pan out.Free Trade in Greenhouse Gases?The WTO governs international tradingrelationships between countries byenforcing complex rules, which extendbeyond mere trade in goods to coverservices, intellectual property rights,trade-related aspects of investment,agriculture, government procurement,and more. The WTO also includes adispute settlement mechanism, whichenables it to enforce non-complianceof its rules with devastating tradesanctions and penalties. Variousministerial ‘rounds’ in the WTOcontinue to expand and refine theserules to cover ever more aspects ofglobal economic activity, with theultimate goal of securing global free“The Kyoto Protocol tothe UN FrameworkConvention on ClimateChange (FCCC) may bethe most importanteconomic agreementpenned in the 20thcentury.”— Aaron Cosbey, Royal Institute ofInternational Affairs (RIIA) 1trade, property protection, supranationalregulation of the economy,and dispute settlement for the globaleconomy.Since the rules for the Kyotomechanisms are still being developed,and the WTO’s Committee on Tradeand Environment (the principalcommittee responsible for evaluatingthe relationship between MultilateralEnvironmental Agreements (MEAs)such as the Kyoto Protocol, and theWTO), is still deliberating, muchremains speculation. Sinceinternational emissions trading,particularly with regard to the KyotoProtocol, will have alarge impact on globaleconomic activity, thereis already a broadconsensus among legalexperts and academicsthat there are somepoints of conflict, whichwill need to beaddressed. 2These include issuessuch as: subsidies forrenewable energy technologies,discrimination of products based onhow they are produced, labellingstandards, environmental and socialstandards included in CDM and JI, thenature of certain types of rules whichmay be imposed on emissionsmarkets to prevent fraud, ‘carbontaxes’ and cross-border adjustments.In all these areas and more, there areconcerns that WTO rules restrictcountries from fulfilling key parts of theKyoto Protocol. There has alreadybeen a glimpse of this, when in 1999,the US Clean Air Act provisionrestricting imports of low standardreformulated gasoline was struckdown by the WTO in a challenge. As aresult, the US EnvironmentalProtection Agency was forced torewrite the rules to be in compliancewith the WTO ruling. The measurewas aimed at meeting tougher airquality standards by preventing theuse of low-grade gasolines. 323

The solution, as proposed by industrylobby groups and neo-liberal thinktanks, is to encourage WTOcompliance across the board. Manycorporate lobby groups in particular,want unrestricted free trade ingreenhouse gases rather thangovernment regulation and taxation. 4The WTO’s supremacy over nationalgovernment’s ability to legislate makesit difficult to implement climate policies,including tough regulations onemissions trading markets, which donot conflict with free trade rules.Increasingly, regional tradeagreements such as NAFTA and theEU Single Market also contain suchmeasures. A recent NAFTA disputebetween the US and Canada over atoxic fuel additive, MMT, led to theCanadian government having to repealits ban of MMT, a substancemanufactured by US-based EthylCorp., and to pay compensation to thecompany for profit losses. 5Interestingly, the US government itselfbans the use of MMT in fuels, whereasCanada was instituting the ban after ithad signed NAFTA. Also of note, isthat in this particular dispute, EthylCorp. was able to sue the Canadiangovernment directly. 6 Such ‘investorstate’provisions are appearing in newtrade and investment treaties andthreaten to bring a whole raft of similarchallenges against countries’environmental and social standards bytransnational corporations.Investment Liberalisation: AnEmerging ThreatWhile global trade rules have anenormous impact on climate policy,global investment rules, as codified inthe WTO’s rules on services,intellectual property and trade-relatedinvestment measures, as well asthrough regional trade agreements,and through International InvestmentAgreements (IIAs) are also importantto consider.International investment can take twomain forms: foreign direct investment(FDI) and international portfolioinvestment (IPI). FDI can be definedas an investment by a corporationfrom one country in an asset (in wholeor in part) of a company (most often asubsidiary) in another country.Therefore a majority of FDI flows arein the form of mergers, acquisitionsand takeovers, which contributes tothe increase in size and concentrationof the economic power ofcorporations. 7Portfolio investments can be definedas the buying of stocks, bonds or otherparts of the financial markets that donot result in a ‘controlling stake’. Suchinvestment is often more short termthan FDI, and much more speculative.Emissions trading, broadly defined,involves both forms of internationalinvestment. Project-based trades suchas investment in a CDM or JI projectwould be considered FDI, while tradingin emissions permits would beclassified as portfolio investments.In the past, governments have tried tonegotiate special multilateralagreements on investment in the WTOand in the Organisation for EconomicCooperation and Development(comprising the 29 most industrialisedcountries).However intense public outrage andgovernment opposition ultimately ledto their demise. Corporate lobbygroups such as the InternationalChamber of Commerce (ICC) and the24

Sky for SaleThe Kyoto Protocol establishes threemarket-based trading mechanisms-Joint Implementation (Article 6), CleanDevelopment Mechanism (Article 12)and Emissions Trading (Article 17).The rules and procedures for thesemechanisms are still a work inprogress, but certain basic concepts oftheir function are already clear. Theyenable trading in greenhouse gasallocations between countries in theform of Assigned Amount Units (AAUs- Emissions Trading), CertifiedEmissions Reductions (CERs - CleanDevelopment Mechanism), andEmissions Reduction Units (ERUs -Joint Implementation). These ‘credits’will be the primary product traded inthe world markets as implementationof the Kyoto Protocol gets under way.It is these trading mechanisms andother policy questions related to theKyoto Protocol, which has raisedconcern over the WTO’s treatment ofthe climate agreement.World Business Council forSustainable Development (WBCSD)have been strong proponents of theseagreements, matching theirenthusiasm for international emissionstrading proposals. The EuropeanUnion continues to push for broaderliberalisation agreements andprovisions in the WTO, while the USand Canada have tabled ambitiousinvestment provisions in ongoingnegotiations around the Free TradeAgreement of the Americas. 8 But thebulk of international legislation oninvestment lies in the patchwork ofagreements between countries.There are currently over 2100 BilateralInvestment Treaties (BITs) now inforce worldwide. 9 These areagreements negotiated between twocountries, often containing veryextensive provisions affecting a wholerange of a country’s regulations -particularly environmental and socialrules. Regional free trade agreementssuch as the EU Single Market andNAFTA also contain such provisions.More than 80 per cent of all BITs nowin force have been negotiated since1990, and each year a higher numberare negotiated, amended orcompleted. 10 This trend is only set toincrease as countries in both Northand South compete with each other toattract investment.Playground RulesIn contrast, the UNFCCC andgovernments, caught up with the spiritof deregulation (or rather corporatefriendly re-regulation), have beenreluctant to develop strict rules andregulations for the use of marketbasedmechanisms in the KyotoProtocol. In the absence of tight rulesand strict enforcement mechanisms,business has been largely left to itsown devices and in many casesactively encouraged to develop therules of the market place as it sees fit.This laissez-faire approach makes iteasier for corporations to influence thepace and development of thesemarkets. Once certain norms andstandards are established, it will bemuch more difficult for governments tointervene in the markets. Through‘voluntary’ emissions trades, ‘pilotprograms’, and direct lobbying,corporations effectively inculcatecertain business practices intomainstream policy. Much of the morerecent US trading markets havedeveloped in this manner. The UnitedKingdom went a step further and setupits national emissions tradingregime to be entirely voluntary, withrelatively few guidelines. In general,where trading regimes havedeveloped, governments have beenwary of imposing stringent regulationsand accountability mechanisms oncorporations.On an international level, this is evenmore difficult to accomplish, asconsensus on sensitive economicpolicy decisions is often impossible to25

“In the context of the KyotoProtocol and other emissionstrading markets, any rulesaimed at improving their integrityand preventing fraud willcontinuously be threatened bythe emergence of newer andmore ambitious liberalisationinitiatives.”reach, due to much intransigence fromthe more neo-liberal economies, withthe help of intense industry pressure.The absence of any bindingcommitments and agreements comingout of the World Summit onSustainable Development (WSSD) is acase in point. Meanwhile in the WTO,negotiations are taking place toexpand the scope of its rules on tradein services, and the dispute settlementmechanism is flourishing.In the context of the Kyoto Protocoland other emissions trading markets,any rules aimed at improving theirintegrity and preventing fraud willcontinuously be threatened by theemergence of newer and moreambitious liberalisation initiatives.Wary of sparking high-profile disputesbetween trade and environmentinterests, governments have opted fora ‘complementary’ approach, wherebyKyoto rules are being designed to fitwithin the world trade system. 11 This‘chill effect’ will have enormousconsequences on the development ofrule-making in the climate realm, asfear of WTO and regional trade andinvestment retaliation will continue toinfluence legislators’ decision-making.The significant weight of corporatepower behind emissions trading is alsounlikely to be swayed, as revenuesfrom emissions markets begin to swell.WTO AGREEMENTS WHICHPOTENTIALLY AFFECT KYOTORULES‘Broad Principles’ - Majoragreements:General Agreement on Tariffsand Trade (GATT)General Agreement on Trade inServices (GATS)Trade Related Aspects ofIntellectual Property Rights(TRIPS)Trade Related InvestmentMeasures (TRIMs)General WTO Rules:Dispute SettlementUnderstanding (DSU)Most Favoured Nation (MFN)National TreatmentSpecial Agreements:Agreement on Subsidies andCountervailing Measures (SCM)Agreement on GovernmentProcurement (AGP)Financial Services Agreement(FSA)‘New Issues’ (Investment,Government Procurement,Competition Policy, etc.)26

4.2 Kyoto and the World BankThe World Bank has long been aheavy promoter of climate-damagingfossil fuel industries. Its lendingportfolio has favoured these industriesover renewable energy investments bya ratio of 22:1 in the last decade alone.Since the Earth Summit in Rio deJaneiro in 1992, the Bank has investedover US $22 billion in fossil fuelprojects such as oil, coal and gas, indeveloping countries and economiesin transition. In the last ten years, theBank financed 226 major fossil fuelprojects such as gas and coal-firedpower plants, refineries andprocessing plants. According to theSustainable Energy and EconomyNetwork (SEEN), these projects willrelease over 40 billion tons of CO2during their lifetime, equivalent toalmost twice global human-causedgreenhouse gas emissions in 1999. 1Toxic co-pollutants associated withthese projects will also havetremendous negative impact onhuman and environmental health fordecades to come. In contrast, theBank has only financed 35 renewableenergy or energy efficiency projects,with a total outlay of US $1 billion overthe same period. 2Much of the World Bank’s activitiesand lending decisions have been infavour of a broad privatisation agenda,particularly in the energy sector. TheBank, together with other regionaldevelopment banks and theInternational Monetary Fund, havelong pressured national governmentsin the South and economies intransition to open their markets in thename of poverty alleviation andefficiency. Over the years, theseinstitutions have successfully pusheddeveloping country governments toprivatise state-owned energy utilities,through loan conditionalities andstructural adjustment programmes.These privatisation programmes havebeen a boon to large transnationalcorporate interests from the donorcountries, often correlating in areciprocal relationship between aparticular loan and a subsequentcontract offered to a company from thesame donor country. According totestimony from then US TreasurySecretary Lawrence Summers at aCongressional hearing, for every dollarthe US government puts in to theWorld Bank, it receives US $1.30 incontracts for its corporations. 3 Nine outof ten beneficiaries of energy sectorlending from the World Bank went tobenefit TNCs from the North, includingcompanies like Enron, ExxonMobil,ChevronTexaco, General Electric andothers. 4Therefore, it is with a high degree ofsuspicion that the World Bank’smanagement of new programmesgeared towards promoting cleanenergy investment and greenhousegas offset projects, is viewed bycampaign groups. Three new fundshave been set up to promoteinvestment in CDM projects - thePrototype Carbon Fund, theCommunity Development CarbonFund, and the BioCarbon Fund, with atotal capitalisation of US $350 million.World Bank and Emissions TradingThe first fund, the Prototype CarbonFund (PCF), is a pool of moneymanaged by the World Bank anddescribes itself as “pioneering themarket for project-based greenhousegas emissions reductions and tocontribute to sustainabledevelopment.” 5 The money in the Fundis contributed by its ‘partners’ andthese are seventeen corporationsincluding oil transnationals BP-Amocoand Statoil, as well as six rich northerncountries including The Netherlands,Canada and Norway. 6As the name implies, the PCF is aprototype for other fledgling funds ofthe World Bank such as theCommunity Clean Development Fundand the BioCarbon Fund (see “KeyPlayers”). By the end of 2002, it hadcharged ahead with twenty-six27

‘renewable’ projects.7 Although, withinthat definition of ‘renewable’ a greatvariety of projects can qualify. As aresult, the PCF counts energyefficiency in the Czech Republic,waste management in Latvia,aforestation in Romania, wasteincineration in Mauritius, landfill gasextraction in South Africa and soilconservation in Moldou as ‘renewable’.While environmental groups such asGreenpeace define ‘renewable’ energystrictly in terms of solar and windpower, the PCF and its source, theKyoto Protocol, include energy thatstretches this definition to the limit. 8Another prototype fund that came outof this formula, the CommunityDevelopment Carbon Fund (CDCF),whose slogan is “carbon with a humanface,” was launched at the WorldSummit on Sustainable Development(WSSD) in Johannesburg 2002, with acapitalisation of US $100 million. It isintended to fund small-scalerenewable energy and energyefficiency projects and is a joint projectwith the industry lobby group, theInternational Emissions TradingAssociation (IETA). 10The Bio Carbon Fund, launched in thebeginning of 2002, is intended tosupport carbon sequestration projectssuch as forest sinks and reduceemissions from agricultural practices. 11Environmentalists are concerned thatthe Bank is pushing controversialforest sinks projects despite a lack ofscientific consensus on their ability toabsorb carbon, and mass oppositionfrom community groups andindigenous peoples worldwide.wind power 5geothermal 1afforestation 2biomass 2hydropower 3Meanwhile, the corporate sector istaking heart. A World Bank studyfound that after the launch of the BioCarbon Fund carbon trades in the firstsix months of 2002 by companiesdoubled in volume from the previousyear. 12 The Bank estimates thatcarbon trades increased by 400 percent in 2002 as a result of its highprofile financial backing of thesystem. 13 By creating these funds, theBank together with the partnercorporations and governments areestablishing norms and standardswhich will have an enormous influenceon the rules governing theseprojects. 14Type of projectNumberwaste management 3energy efficiency 528

5. Key PlayersA survey of current activity shows acombination of governmental andprivate sector initiatives, inside andoutside of the Kyoto Protocol tradingregime. A complex network ofconsultancies and individuals underpina significant element of market designin governmental committees, businessassociations and theIntergovernmental Panel on ClimateChange (IPCC). Corporations havebeen active in the national schemes inthe UK and Denmark, and the projectbasedmechanisms facilitated by theDutch government and the WorldBank’s Prototype Carbon Fund. Therehas also been a great deal of privatesector activity independent of theKyoto regime. North Americancorporations have been the mostprolific actors in trading so far,especially Canadian contractors whohave been involved in more than 50per cent of trades. 1There has been an explosion innumerous types of carbon marketfinancial services in brokerage, projectdevelopment, consultancy,procurement, online trading, financialjournalism, event planning, projectfinancing and so on. The branding is asmooth mix of cyber-environmentaland financial language, forming nameslike: CO2e.com, Eyeforenergy,Natsource and Ecosecurities. Thereare also more proactive and advancedconstellations of expertise forminginternational trading associations,stakeholder dialogue fora andconsortia to conceptualise the wayexchanges may work in the future. Thenext few pages provide a glimpse ofthe inhabitants of the world ofemissions trading. It is notcomprehensive as there are manymore brokers, consultants,corporations, NGOs and financialinstitutions currently crowding into themarket.5.1 International FinancialInstitutionsEBRD: The European Bank forReconstruction and Development hasestablished a programme for theproject-based Kyoto mechanism,primarily intended for Central andEastern Europe countries, known asJoint Implementation (JI). However,this is less significant than the workdone by the World Bank’s PrototypeCarbon Fund. The Dutch governmenthas made numerous agreements withdevelopment banks to establishfacilities to purchase GHG emissionreduction credits. These developmentbanks include the EBRD, as well asthe International Finance Corporation(IFC), the Andean DevelopmentCorporation (CAF) and theInternational Bank for Reconstructionand Development (IBRD). 2Community Development CarbonFund: In September 2002, theCommunity Development CarbonFund was launched, a project initiatedtogether with the InternationalEmissions Trading Association (IETA).The World Bank and IETA have joinedforces to collaborate on the US $100million fund, saying: “Five years after itstarted, the global carbon financebusiness...is approaching the halfbilliondollar level in cumulative tradevalue. It is expected that the carbonmarket will exceed one billion dollars ayear by 2008. Yet right now mostdeveloping countries are missing outon the benefits of carbon financedollars. The Bank’s responsibility is tomake sure that an equitable share ofthis money, much of it private sector,ends up in the hands of the poorest, inthe poorest areas of developingcountries.” 3BioCarbon Fund: Launched inNovember 2002, the BioCarbon Fund,will again, be administered by theWorld Bank, with a target size of US$100 million. The BioCarbon Fund is29

ased on the “successful” PCF modeland describes itself as “an opportunityto attract private capital to biodiversityprotection, soil conservation andsustainable community development.” 4The Fund works on the same principleas the PCF by managing a pool ofinvestment money, which iscontributed by partners. Thesepartners so far include commitmentsfrom fourteen private companies fromthe banking, energy, and consultingsectors. 5The Prototype Carbon Fund (PCF):The Prototype Carbon Fund has beenoperating since 1999 and aims tostimulate the carbon markets,specifically the project-basedmechanisms CDM and JI. It acts asany other project-based investmentfund would and provides returns to its‘partners’ from profits generated inprojects. It is based in the World Bankheadquarters in Washington and hastwenty staff. 6 The PCF is intended forlarger renewable energy and efficiencyprojects with a particular emphasis on‘public-private partnerships’. Alongwith the Dutch government’s JI andCDM programmes (CERUPT andERUPT), PCF is considered the mostsignificant influence on marketexpectations of price and verificationrules. The PCF states ratherdefensively on its website that theWorld Bank ”does not intend to remainas a player in this market”, “neitherseeks a favoured nor monopolisticposition under the UNFCCC” and“does not wish to position itself as theinstitution which will implement theCDM.” 7 Sources report there iscriticism from outside and within thebank that brokerage and marketdevelopment do not fit within the WorldBank’s mandate of poverty alleviation.5.2 CorporationsBP-Amoco: The BP pilot scheme,designed in collaboration with USNGO Environmental Defense in 1999,was the beginning of the first majorcorporate ‘cap-and-trade’ greenhousegas trading scheme. BP-Amoco’soverall target is a 10 per centreduction below 1990 levels by 2010(tougher than the average 5.2 per centKyoto target). They claim to alreadyhave achieved 5 per cent of thattarget, mostly through reducing gasflaring in offshore activities. 1Enron: The bruised, battered andbankrupt corporate giant is not downfor the count yet. Despite a disastrousyear for energy trader, Enron stillranks number five on the Fortune 500list for 2002, 2 and intends to re-openfor business. Despite being widelyknown as one of the largestbankruptcies in corporate history, ithas also been an early player in theemissions trading markets, particularlyin the USA where it offered brokerageand consultancy services to powerutilities and industrial consumers.Its subsidiary, Enron Global Markets,specialised in SO2 and NOX trading inNorth America. The companypioneered the use of many financialinstruments in the emissions markets.It also promoted the concept of crosscommodityswaps, whereby emissionspermits could be traded for quantitiesof gas and coal. It lobbied aggressivelyto expand emissions trading markets,particularly in greenhouse gases. 3Breaking ranks with other energycorporations, Enron came out insupport of the Kyoto Protocol, excitedmore by the opportunity to expand itsemissions trading services to cover aglobal market, than the more limitedsingle gas markets in North America.Shell: Internal cap-and-trade systemlaunched in 1998, which developedinto the Shell Tradable Emission30

Permit System (STEPs) programme in2000. Shell aims to reduce GHGemissions 10 per cent below 1990levels by 2002 and exceed Kyototargets through 2010. The tradingsystem includes Shell business unitsin Southern countries, which will hostemission-reduction projects. Thesepermit-generating projects and theway the permits can be sold on intothe system are modelled on the CDM. 45.3 Corporate Lobby GroupsJust as the business community oncelobbied for ‘more evidence on climatechange’ and then ‘the inclusion ofmarket-based mechanisms to achievegreenhouse gas reductions’, they arenow lobbying for as many marketopportunities as possible within theKyoto trading regime. The manydifferent trading schemes create a riskthat the market will developincompatibilities at the internationaland national levels.A fragmented market raises businesscosts, since bridging mechanismsbetween schemes will have to becreated and it generally becomesmore difficult for companies to managerisk. Business also repeatedly lobbiesfor rule standardisation betweendifferent trading schemes. Thecorporate argument is that the legaland administrative costs of completinga trade need to be as low as possiblefor the markets to be “cost-effective” -thus equating cheapness with costeffectiveness.International Chamber ofCommerce (ICC): The mostprominent and powerful of corporatelobby groups is the ICC and theirposition reflects most accurately thespectrum of corporate lobbyingstrategies. At the last subsidiarybodies meeting of the UNFCCC beforethe WSSD in 2002, ExxonMobilpresented the ICC discussion paperon the role of companies in the KyotoMechanisms. The discussion paperstates that the ICC believes:• countries should recognise all validgreenhouse gas emission permitsregardless of the national source orfinal owner of the permits;• nations should not impose importor export controls on exchanges ofgreenhouse gas emissions permits;31

• internal transfers of credits betweenaffiliated companies of multinationalcorporations should not be restricted;• transparent procedures should beestablished for national allocations ofcredits and for project approval sothat companies can undertaketransactions confidently based onreadily available information;• and nations should not establisheligibility, compliance orliability procedures that retroactivelyaffect transfers undertaken in “goodfaith” by companies.ExxonMobil stressed that both“national companies and affiliates ofmultinational corporations doingbusiness [outside of countries with aKyoto emissions target] should beequally eligible to develop CleanDevelopment Mechanism projectsunder national procedures.” 1Emissions Market DevelopmentGroup: EMDG was launched byArthur Anderson, Credit Lyonnais,Swiss Re and Natsource at COP-6 in2000. It aims to bring together majorenergy companies committed to thedevelopment of internationalemissions trading, in order to exploreways to build “effective and efficienttrading infrastructure.” 2 The centralproposal is a ‘carbon repository’,where firms could deposit reductions.The repository would facilitate trade ofthe reductions in advance of theemergence of fully developed nationalsystems. EMDG plans to develop a“carbon rating engine” which wouldassess carbon value in a systematicand automated way. 3International Emissions TradingAssociation: The IETA was set up in1999 by the UN Conference on Tradeand Development (UNCTAD). It firstserved as a body to develop ideasaround emissions trading in the KyotoProtocol process and later became afully-fledged corporate lobby group,moving from the control of the UN tothat of industry.There are 50 members of the IETAincluding; BP, CO2e.com, AtomicEnergy of Canada Ltd., Eskom,Evolution Markets, KPMG,PricewaterhouseCoopers, Shell,Statoil and TotalFinaElf. 4 Theycommissioned Point Carbon toconstruct a database of all tradingschemes accessible through theirwebsite. IETA describe themselves as“the premier voice for the businesscommunity on emissions trading”, yetthey were initially set up by the UnitedNations. The evolution of the IETAseems symbolic of the direction takenby the UN process itself, away fromobjective research and further intorepresentation of the needs of alreadypowerful interest groups. IETA metwith PERT in 2001 with a plan tocoordinate with them and the UKscheme designers in future and toreach out to recruit more members intothe association. 5Emissions Marketing Association:Working with the slogan “Serving theInternational Emissions TradingCommunity,” EMA brings togetherover 140 consultancies andcorporations from around the world,including Mitsubishi, Cargill, Enron andDow. EMA, which publishes themonthly newsletter ‘The EmissionsTrader’, lobbies against any kind ofrestrictions or limitations on the use ofthe emissions trading mechanisms. 6They also provide intellectual supportthrough awareness-raising efforts inthe business community around theemerging emissions trading markets.World Business Council forSustainable Development (WBCSD):By far one of the most sophisticatedcorporate lobby groups, the WBCSD isessentially a coalition of some 140CEOs of the world’s largest32

transnational corporations such asDow, Shell, Eskom, and BP. 7 Thegroup has been a pioneer of corporateenvironmentalism, and has been oneof the most dominant business voicesin international deliberations onenvironment and development. TheWBCSD favours a global treaty onclimate change, though notnecessarily outright calling forratification of the Kyoto Protocol,mostly due to reluctance by its USmembers.It has lobbied aggressively toundermine many of its provisions,preferring voluntarism versusregulation. 8 The WBCSD has been sosuccessful in promoting itself as agreen business coalition that manyNGOs have succumbed to theirrhetoric and formed alliances with thecorporate lobby group. Even campaigngroups such as Greenpeace, whoyears before used to directly campaignagainst the WBCSD, have recentlyforged partnerships with them. 9The group has used its carefullycrafted green image and the power ofits corporate leaders to influence UNagencies and government institutionsto accept WBCSD recommendationsof market-based corporatistapproaches to environmental andsocial policy. It has championed theflexible mechanisms of the KyotoProtocol, and has been heavilyinvolved in influencing thedevelopment of rules on emissionstrading, such as accounting standardsthrough a ‘Greenhouse Gas Protocol’,which is envisioned to be a global setof accounting standards andguidelines for emissions reporting.It cooperates with other businessgroups such as the ICC and the IETAto coordinate business ‘input’ into mostclimate policy negotiations on theinternational, national, and local level.Its central demand for emissionstrading is for nothing less than globalfree trade in greenhouse gases with aslittle government and regulatoryintervention as possible.33

5.4 Think TanksPoint Carbon: Set up in May 2000,this group of researchers based inNorway, produce market analysis inthe form of a monthly magazine andin-depth quarterly reports. Theiranalysis is firmly rooted in the proemissionstrading camp, and theyprovide intellectual support for themarket. Their mandate is to provide“decision-support services, marketanalysis and intelligence” and theymonitor political and economic news toascertain the effects upon the value ofcarbon permits. 1 However, they arenot purely a think tank and lobby theUN process as members of IETA.Pew Center: There is a great deal ofintegration between the corporate,research and public sector in theUNFCCC, perhaps because climatechange has become such aspecialised and technocratic subjectthat only a small number of peoplehave developed the necessaryexpertise on the issues. It cansometimes be difficult to determinewhether a group is a corporate lobbygroup or not. For example, the PewCenter on Climate Change presentsitself as an independent researchorganisation and they will criticise USpolicy in a way that the Global ClimateCoalition would never have done.However, it has been described as anindustry front group and it works withthirty-seven companies - most on theFortune 500 list - on emissionsreductions. 2 It is funded by the PewCharitable Trust, which derives itswealth from Sun Oil Company(Sunoco), Oryx Energy andinvestments in forestry, mining and oilfirms. 35.5 ConsultanciesCO2e.com: Set up by CantorFitzgerald andPricewaterhouseCoopers, CO2e.comwas launched at COP-6 in The Haguein November 2000. As its namesuggests it is an on-line tradingwebsite for emissions trading but alsoprovides consultancy, brokerage andother services through its ‘associates’.The associates ensure that CO2e.comis a one-stop shop for all emissionstrading services.PricewaterhouseCoopers isrecommended by CO2e.com for:consultancy, verification andmonitoring services, project eligibilityas well as ‘other financial advice’. 1 Inthe wake of the scandals involvingrival Arthur Andersen, these types ofcombined service units have comeunder great scrutiny. The samecorporation that is giving financialadvice should not be involved inaccounting, or in this case, verifyingcredits.Evolution Markets LLC: Riding onthe coat-tails of Enron, EvolutionMarkets LLC has positioned itself totake on much of the business thatEnron has lost. The company, offeringbrokerage and consultancy services,has staked more of its corporatereputation on the emissions tradingmarkets than Enron, which couldalways rely on its core business ofenergy trading, generation, andtransport. The New York-basedcompany’s services cover the fullrange of emissions trading markets inthe USA, including specialisedregional markets in Texas, LosAngeles, and the Northeast. LikeEnron and other competitors, thecompany also offers services in coalprovision and weather derivatives(financial instruments to protectagainst risk related to weather, suchas heating oil companies losing moneyif a winter is too warm and consumersuse less oil). Unlike Enron, thecompany has branched out into offset34

trading, such as a major sinks projectin the Mountain Pine Ridge nationforest reserve in Belize, in which it isbrokering the resultant CertifiedEmissions Reduction (CERs) units theBelize governments expects togenerate from the project through theClean Development Mechanism. 2Ecosecurities Ltd: One of the longeststanding financial service providers inthe carbon markets and declared the“best environmental advisory body” byEnvironmental Finance magazine. 3They work in sixty countries and havea large market share - up to 20 percent of the yearly demand foremissions permits. They seek outpotential sites for offset projects andhold them ready for when the demandfor offset projects increases. 4Future Forests: Having trademarkedthe term “carbon neutral” 5 , FutureForests sell the right to use the term toanyone who will pay enough moneyinto carbon offset projects. FutureForests was established by a formermarketing executive and the firm hasbeen very successful in recruiting highprofile and fashionable sectors suchas music award events, into theirscheme. International summits areincreasingly using Future Forests toimprove their environmental image.controversial RECLAIM programme(see “Sulphur trading: model orwarning”).Like Enron, the New York-basedNatsource is better known for itsservices in electricity, gas and coalmarkets. Nonetheless the company isa market leader in emissions tradingmarkets, and has been particularlyactive in promoting international tradesin greenhouse gases. It has asignificant presence in Europe where ithas brokered the first trades in boththe UK and Danish emissions tradingmarkets.It also boasts having played a key rolein, “designing domestic andinternational climate change policies.” 8A recent addition to their staff hasbeen Frank Joshua formerly of thenow reviled consultancy giantAndersen. Joshua is widelyrecognised as one of the principalarchitects of the market-basedmechanisms in the Kyoto Protocolhaving formerly led the UNConference on Trade andDevelopment (UNCTAD) GreenhouseGas Emissions Trading Department,known as the UNCTAD/Earth CouncilCarbon Market Programme.The World Summit on SustainableDevelopment also used Future Foreststo set up a Johannesburg ClimateLegacy project which awardedparticipants Bronze, Silver and Goldlevels of sponsorship and a signedcommemorative certificate, based on asponsorship of US $10 per tonne ofCO2, emitted by the Summit. Thescheme failed to reach its targets. 6Natsource: This transnational energybrokerage firm has offices in the USA,Japan, UK, Canada and Norway andclaims to have brokered US $1.5billion in emissions transactions. 7 Twothirdsof that figure was purely in thesulphur trading markets in the USA inwhich they have been active in the35

5.6 Private Sector TradingInitiativesChicago Climate Exchange: CCXhas been developed by 28 largecompanies, including Ford, DuPontand BPAmoco, with the cities ofChicago and Mexico city, a group thatemits 700m tonnes of carbon dioxideeach year, more than United Kingdomdoes. 1 It intends to build up to ascheme between Canada, the USAand Mexico in 2003 and then open tointernational participants in 2004. 2 Inthe words of CCX chairman, RichardSandor, “there have been years ofdiscussion about the potential fortrading carbon emissions, but theChicago Climate Exchange will offerthe first test of the concept on a scalewith global potential.” 3Partnership for Climate Action: PCAwas launched just before COP-6 bythe US NGO Environmental Defense,Alcan, BP, Dupont, Ontario PowerGeneration, Pechiney, Shell andSuncor. Their aggregate emissionsexceeded 360 million metric tons ofCO2 in 1990, which means this groupwould be the 15th largest emitter in theworld if it were a country. 4Pilot Emissions Reduction TradingProject (PERT - now known asCleanAir Canada): “In 1995 a groupof companies in Canada, (includingDuPont), recognised emissions tradingwould be a reality and that we wouldlike to participate in it.” 5 The groupdecided to launch PERT and obtainedapproval from the Ontario Ministry ofthe Environment. “PERT has becomea learning forum in which more than102 entities, including companies,NGOs, academia and governmentagencies could come together. Wewere no longer just talking aboutemissions trading but had a systemwhich allowed for real trading toexist.” 6 PERT recently evolved intoCleanAir Canada. 75.7 Environmental NGOsEnvironmental Defense:Environmental Defense (formerlyEnvironmental Defense Fund - EDF) iswidely credited with developing andwriting much of the Title IV section ofthe US Clean Air Act whichestablished a nationwide tradeablepermit scheme for sulphur dioxide(SO2). 1 The group has been a longtimestaunch advocate of marketbasedcorporatist approaches toenvironmental problem-solving. Theirown research on the effects of the USsulphur trading system has largelyignored the concerns of communitygroups.Exposure to increased levels of SO2downstream from power utilities andindustries were now emboldened bythe market to increase emissions solong as they could buy relatively cheapcredits in the EDF-backed scheme.While it is indeed true that aggregatelevels of SO2 have decreased in theUS, academic studies and The NewYork Times attributed thisphenomenon more to the use ofrelatively inexpensive technologiesdeployed onsite and processinnovations rather than from trading. 2Some locations, a large majority ofwhich are poor and predominatelycommunities of colour, have beenreporting increased emissions of SO2and resultant toxic co-pollutants suchas Particulate Matter and VolatileOrganic Compounds lethal to humanhealth and the environment. 3 Thisprompted the National EnvironmentalJustice Advisory Council, agovernment appointed body, tooppose any expansion of pollutiontrading schemes in the US and calledon the US government to address theenvironmental justice impacts ofemissions trading. While EDF hassince paid more heed to issues ofenvironmental justice, it has notdeviated from its insistence onexpanding pollution trading initiativesboth domestically and on a globallevel. The group has lobbied36

intensively for emissions trading to beincluded and given more prominencein the Kyoto Protocol, despite thesignificant differences betweenregulating more localised pollutantgases such as SO2 and greenhousegases which are more difficult tomonitor, measure and verify. Asenvironmental justice campaigner andprominent critic of the EDF approach,Mike Belliveau comments, “theinternational arena and globalecological stability now become theexpanded testing ground for the freemarket theory of pollution trading…Blind faith in market forces and neoliberalpassion for regulatory reformhave overshadowed the fact thatemissions trading does not in factreduce pollution.” 4World Resources Institute: LikeEnvironment Defense, the WorldResources Institute has been a longtimeadvocate of free marketenvironmentalism and corporatistapproaches. The Washington DCbased think-tank has been a majorpartner of corporate lobby groups suchas the World Business Council forSustainable Development, andreceives substantial support fromgovernment and UN agencies,international financial institutions suchas the World Bank and AsianDevelopment Bank, and individualcorporations such as Monsanto,TotalFinaElf, Shell, BP, Cargill Dow,and many others. 5 WRI has longadvocated an international emisssiontrading system and the Protocol’smarket-based mechanisms as themost “politically acceptableinternational rules that secure costeffectivenessand environmentalintegrity.” 6WWF: With an annual budget 3.5times that of the WTO, dwarfing evensome Pacific and African countries’Gross National Product, the WorldWildlife Fund resembles more of acorporation than anything else. 7 Theconservation group receivessubstantial corporate funding and aswith other NGO’s mentioned, has longfavoured market-based approaches toenvironmental problem-solvingparticularly with regard to climatepolicy. Recently the group has calledon EU Environment Ministers tosupport and adopt the EU EmissionsTrading Directive, which will establishan ambitious EU-wide emissionstrading programme, includinggreenhouse gases, by 2005. 8Interestingly, the group concedes that,“if some of the proposals being putforward at the moment are accepted,the cap-and-trade system will actuallyharm the environment and theclimate.” 9 WWF is also developing aneco-label for the CDM, which it argues,will be a ‘gold standard’ certificationprogramme, which would help provide“certainty for investors and real climatebenefit.” 10Greenpeace: The world’s mostfamous environmental brand,Greenpeace has developed itsreputation by taking anuncompromising attitude towardsstopping threats to the environmentand through high-profile actions. In thepast, Greenpeace has been highlycritical of the inclusion of the marketbasedmechanisms in the KyotoProtocol, and has campaigned directlyagainst the destructive role ofcorporate lobby groups and their proemissionstrading stance. 11Not long ago, the group issued brilliantreports on the role of corporate lobbygroups and the obsessive “dash forcash” corporations were pursuing, andhow such emphasis would ultimatelyundermine the climate treaty. 12Greenpeace Climate Policy DirectorBill Hare, commenting at COP-5 of theclimate negotiations in Buenos Aires,said: “This is turning into a trade andeconomic negotiation - climate isgetting pushed further and furtherdown the agenda. Science is beingreplaced by carbon trading markets asthe driver for the talks.” 1337

However, over the years,Greenpeace’s critique of emissionstrading and the role of industry hasfaded into the background, as it hassince focused almost exclusively onKyoto ratification and campaignsagainst corporations still opposed tothe treaty such as ExxonMobil. 14 At itsrecent launch of the Choose PositiveEnergy campaign, the headlinespeaker was none other than formerShell boss and head of the corporatelobby group Business Action forSustainable Development (BASD),Mark Moody Stuart. 15Greenpeace also controversially allieditself publicly with the World BusinessCouncil for Sustainable Developmentat the Johannesburg Rio +10summit. 16 The two former adversariesannounced that they were “shelvingtheir differences” and called uponleaders to take action on climatechange. Soon after, the WBCSDclarified to the press that it did notnecessarily mean that the businessgroup was calling for Kyoto ratification,contradicting Greenpeace’s assertionsthat it was. 17Greenpeace’s increasingly mutedopposition to emissions trading and itstacit and active endorsement ofcompanies that support the KyotoProtocol has been a major ideologicalvictory for sophisticated corporatelobby groups such as the WBCSD,and has paved the way for furtherexpansion and development of themarket-based mechanisms.Many image conscious corporationsseek to show off their environmentalcredentials and thereby allay publicconcern by teaming up with a trustedmajor environmnental brand such asWWF or Greenpeace. In turn thesegroups feel they can exercise greaterleverage over a company’s behaviour.However at what cost?38

Conclusion: can emissions tradingwork?The answer to this questionnecessarily lies in the deconstructionof what it means to say ‘work’. Ifsuccess is measured by financialindices and the continuation of theeconomic and social order as it standstoday, then emissions trading will behailed as a victorious solution. Evenwith all the inherent problems ofaccounting, verification andmonitoring, those constructing theemissions markets will make them‘work’. As can be seen with othercurrent financial markets, even theongoing scandals of fraud andcheating and regular occurrences ofcurrency crises, capital flight andrecession never stopped them in theirtracks. The corporate scandals in theUS, sparked by theEnron saga, had thepower to exposefundamental flaws inthe current economicsystem. However itwas a missedopportunity. Themarkets may havesuffered slightly butthe ‘crisis’ wasmomentary and faithwas soon restored inthe system. Evenwhile further scandalswere erupting, other political newssuch as the ‘War On Terror’ sooneclipsed them in the news headlines.These same problems encountered byother financial markets will apply toemissions trading and will beexacerbated by the absence of acredible and independent monitoringand verification body. At the same timeas hundreds of millions of dollars areinvested in setting up trading schemesall over the world, virtually no financialsupport is channelled into vitalregulatory infrastructure. The UK alonehas spent UK £215 million on their trialtrading scheme. 1 As brokers,consultants, accountants, speculators,“The safeguards that youneed in place are ascomplex, or even morecomplex, as the regulationsthat industry complainedabout in the first place.” 2— Mike Belliveau, NaturalResources Council of Maineenergy corporations and politicians allscramble for a piece of the emissionstrading pie, no equivalent level ofactivity is seen from credible verifiersor monitors. This imbalance can onlylead to an emissions marketdangerously reliant upon the integrityof corporations to file accurate reportsof emissions levels as well asemissions reductions from projects.More worryingly, this inactivity from theregulatory side, means thatcorporations such asPricewaterhouseCoopers and CantorFitzgerald are playing multiple roles ofaccountants for polluting firms,verifiers of emission reduction projectsas well as consultants. This can onlylead to a severe conflict of interests,resulting in fraud and ultimately littleguarantee of actual emissionsreductions.However all theseproblems will not stop themarkets from ‘working’.The markets will befunctional, in much thesame way that otherfinancial markets are ableto distract attention fromtheir own fundamentalflaws and isolate Enronand others by labellingthem ‘bad apples’. Thevery survival of a marketdepends on its ability toappear stable with minimal regulatory‘interference’. A well-financed publicrelations industry as well as a lack ofawareness and education on theseissues in the world’s generalpopulation will help maintain asemblance of stability andfunctionality. Emissions markets arenot an exception and will benefit fromthe same illusion-building process.The gap between theory andpracticeHowever, once the meaning ofwhether or not trading will ‘work’ isexpanded to include other values, thenthe fog created by impenetrable free-39

market rhetoric begins to clear.Emissions trading is bad for peopleand the planet. It is the child of aneconomic system that has wreakedhavoc on ecosystems andcommunities across the globe. Butinstead of learning the lessons from adisastrous history of imposing onesize-fits-all,top-down policies,emissions trading exemplifies thatapproach, closing off the space fromwhich grassroots bottom-up solutionscould emerge.The only instance where an emissionstrading scheme could work, for morethan the free-market economicsystem, is if it were small, highlyregulated, tightly defined, had no copollutantsside effects, had rigorousindependent monitoring andverification and vibrant communityconsultation, participation andassessment. However these are notfeatures of any emissions tradingsystem currently functioning orplanned for the future. Anotherinescapable reality of emissionstrading is that toxic co-pollutants areinherent in the production of mostemissions of local and globalpollutants. Therefore in no imaginablereality, could emissions trading ‘work’for people and the planet.In answer to those criticisms,greenhouse gas emissions tradingproponents, and moderate critics,claim that the market is a transitionalsolution to give governments andcorporations time to make the realchanges that are needed. Howevermajor oil corporations such as BP andShell, both enthusiastic initiators ofinternal trading schemes, have nevervoiced any serious intention to curbtheir main activities of oil exploration orproduction in the future. In fact, at thesame time as the company claimreductions in emissions internally, BPpredicts that it will increase future oiland gas output by 3 per centannually. 3 This will take their totalemissions over that of the UK.Furthermore, BP’s investment inrenewable energy is a mere 1 per centof the US $8 billion it spends on fossilfuel exploration and production everyyear. 4Corporations, motivated by profit, willnot voluntarily cease damaging theplanet and destabilising the climate ifthat practice provides the main sourceof their income. Emissions tradingallows big corporations to dodge theirresponsibilities, by gaming a systemthey helped design and makingsuperficial changes in their behaviourwhile continuing harmful ‘business asusual’ practices. Resistance tocorporate power is in danger of beingdistracted by engagement withemissions markets. Many NGOs willtake up their role as verifiers andmonitors, ultimately resulting indivisions between those for andagainst emissions trading. Thewoefully inadequate regulation ofemissions markets ensures that it willbe difficult and time-consuming tocheck the veracity of corporations’claims that they have reduced theirpollution levels. Meanwhile it will betragically clear how much theiremissions have increased throughcontinuing to invest in fossil-fuelprojects, which often result in grossabuse of human rights, such as theBaku-Ceyhan pipeline project, and thefurther destruction of pristineecosystems like the soon-to-beexploited Arctic.A first giant step backwardsThe market in greenhouse gasesunder the Kyoto Protocol signals ahistoric proliferation of the free-marketprinciple into the environmentalsphere. It will be the first global tradein emissions and sets a disturbingprecedent. The stage has now beenset for the further encroachment offree-market environmentalism intointernational decision-makingprocesses.Environmental agreements are nowbeing transformed into economic40

treaties and emissions trading isevidence of the might that tradeinstitutions have over environmentalvalues. For example, the much-citedinspiration for the Kyoto emissionsmarket - the sulphur trading market inthe USA - has already spawned awhole generation of US-basedpollution trading schemes. Theseplans include establishing tradingschemes in mercury and waterpollution permits. Emissions trading isalso part of a wider trend towardsprivatisation and deregulation. Health,education, transport, energy andgenetic information are all beingprivatised in ongoing processes in theWTO and the multitude of economicagreements currently beingnegotiated. Emissions trading is onemore aspect of that trend and theinterconnectedness of theseprocesses is important to take intoaccount when evaluating whether thisnew market will ‘work’ or not.The challenge aheadTo truly challenge climate change is tochallenge corporate power, freemarketpolicies and economic, socialand environmental inequality.Empowered communities must be atthe centre of decision-making aboutenvironmental problem. Otherwise,over-consumption, erosion ofdemocracy and underlying patterns ofdomination are doomed to bereplicated. Emissions trading transfersownership of sustainable developmentto the private sector. It might oncehave seemed unimaginable that thedrivers of a system that createdclimate change would be steering thesolutions. Sadly it appears that the skyis, after all, not the limit.Further reading:“Pollution Trading and Environmental Injustice: Los Angeles’ Failed Experiment in Air QualityPolicy”. Richard Toshiyuki Drury, Michael E. Belliveau, J. Scott Kuhn and Shipra Bansal(1999) Duke Environmental Law & Policy Forum. http://www.law.duke.edu/journals/delpf“Democracy or Carbocracy?” Lohmann, Larry, The Corner House. Briefing #24.“Greenhouse Market Mania: UN climate talks corrupted by corporate psuedo-solutions.”Corporate Europe Observatory (CEO), CEO Issue Briefing, November 2000.“Privatising Nature: Political struggles for the global commons” Goldman, Michael. TNI/PlutoPress, April 1998.“Marketing the Earth: The World Bank and Sustainable Development.” Friends of theEarth/Halifax Initiative. 2002. http://www.foe.orgWeblinks:http://www.tni.orghttp://www.seen.orghttp://www.corporateeurope.orghttp://www.climate.indymedia.orghttp://www.risingtide.org.ukhttp://www.corpwatch.orghttp://www.wrm.org.uyhttp://www.cdmwatch.orghttp://www.ejrc.cau.edu/climatechgpoc.htmlhttp://www.twnside.org.sg/climate.htmImages: Zoe Young, Dylan Howitt, Heidi Bachram, Adam Ma’anit, Cheekystreak Productions,Christina Hotz, Comunidad del Limay.Thank-you to: all in TNI, Dudu Mphenyeke, Sajida Khan, Mike Belliveau, Larry Lohmann,Markb, Ben Pearson, Robin, Giorgos Kallis, Ell Southern, Kevin Smith, Tammy Gilbertson,Tom Goldtooth, Patrick Bond, CEO, Marijke Torfs, Peer de Rijk, Susan George, eyfa, RobBradley, Pedro, Nuno, Suraje and Goncalo, all at Khanya College, all at The Graduate Schoolof Public and Development Management (University of the Witwatersrand), Sean, families &friends who put up with us during this time.41

Notes & ReferencesIntroduction:1. See Page 10 for more on the UNFCCC.2. According to Annie Petsonk of US NGO Environmental Defense, the WSSD ‘revealed’ that“While political leadership for broad environment and development issues is sorely lacking,the world’s best hope for tackling climate change, improving water management, andprotecting forests, remains legally binding treaties like the Kyoto Protocol, whose marketmechanisms will engage countries, companies and communities in the search for better,cheaper, faster ways of meeting environmental targets.” Palazzolo, Rose. ‘Back Down toEarth: Wrap-Up on Johannesburg Summit’. Environmental Defense, September 6, 2002,http://www.environmentaldefense.org/article.cfm?ContentID=22893. CorpWatch.’Massive Rally Against Climate Injustice’. Press Release, October 28, 2002.http://www.corpwatch.org/press/PPD.jsp?articleid=4649]4. “Bangkok to reject all carbon-credit deals.” Pradit Ruangdit. The Bangkok Post.http://scoop.bangkokpost.co.th/bkkpost/2002/sep2002/bp20020911/news/11Sep2002_news06.html5. AFP. ‘Activists Hail Climate Accord as “First Step” But Rue Concessions’. Agence FrancePresse, July 23, 20011.1 Environmental injustice in the USA:1. Clean the Air campaign fact sheets & reports. “Power Plants, Your Health and theEnvironment.”http://cta.policy.net/proactive/newsroom/release.vtml?id=173202. US Environment Protection Agency. “Progress report on the EPA Acid Rain program.”1999,Page4. http://www.epa.gov/airmarkt/progress/arpreport/acidrainprogress.pdf3. RECLAIM program website http://www.aqmd.gov/reclaim/reclaim.html4. EPAwebsite: http://www.epa.gov/region09/cross_pr/innovations/reclaim.html5. Interview with author of Mike Belliveau from Natural Resources Council of Maine in July2002.6. AQMD ISSUES VIOLATION FOR ALLEGED FALSE REPORTS IN RECLAIM. Aug. 2,2002.website: http://www.aqmd.gov/news1/acenov.htm7. See Environmental Justice Resource Centre for more information: http://www.ejrc.cau.edu/8. The Geographic Relation Between Household Income and Polluting Factories. Friends ofthe Earth UK. 1999. http://www.foe.co.uk/resource/reports/income_pollution.html9. “Pollution Trading and Environmental Injustice: Los Angeles’ Failed Experiment in AirQuality Policy”. Richard Toshiyuki Drury, Michael E. Belliveau, J. Scott Kuhn and ShipraBansal (1999) Duke Environmental Law & Policy Forum. >http://www.law.duke.edu/journals/delpf/42

1.2 Dumping on South Africa:1. Survey carried out by local resident, Sajida Khan. Contact details available on request fromCarbon Trade Watch team.2. Letter from PCF manager, Ken Newcombe to the Mayor of Durban. May 2002. Copyavailable on request from Carbon Trade Watch team.3. Stated by DSW manager, Dave Turner, in an interview recorded by the writer in November2002.4. PCFProject note for “Durban - landfill gas to electricity project”. 10/06/02. Available fromPCF website:http://prototypecarbonfund.org/router.cfm?Page=DocLib&Dtype=15. Recorded interview with local resident, Sajida Khan. August 2002.6. PCFProject note for “Durban - landfill gas to electricity project”. 10/06/02. Available fromPCF website:http://prototypecarbonfund.org/router.cfm?Page=DocLib&Dtype=17. Letter from the assistant town clerk of the City of Durban to local resident Mr V.P. Vallabh.6/10/87. Copy available on request from Carbon Trade Watch team.8. Ecoserv report commissioned by DSW. 1996. Copy available on request from CarbonTrade Watch team.9. Environmental Defense Scorecard results for Cadmium:http://www.scorecard.org/chemical-profiles/summary.tcl?edf_substance_id=+7440-43-9&lead: http://www.scorecard.org/chemicalprofiles/summary.tcl?edf_substance_id=7439%2d92%2d110. Stated by DSW manager, Dave Turner, in an interview recorded by the writer inNovember 2002.1.3 Greenwashing privatisation in Uganda:1. PCF website under “Uganda Project Public Topic Area”, at the Validated Project DesignDocuments in the Project Design Document, 4th of December 2001,http://prototypecarbonfund.org/router.cfm?Page=Topics&ActionPage=/pcf/List/postings.cfm&CONFID=27&ShowArchives=Yes The PCF calls the hydropower plants small, ESD, leadingthe design of the project calls them medium-sized, http://www.esd.co.uk/eec/2. PCF website under “Uganda Project Public Topic Area” at the Comments from theInternational Rivers Network (IRN), 10th of May 2002http://prototypecarbonfund.org/router.cfm?Page=Topics&ECONFID=273. PCF website under “Uganda Project Public Topic Area” at Re:Comments from theInternational Rivers Network (IRN), 23th of July 2002,http://prototypecarbonfund.org/router.cfm?Page=Topics&ECONFID=274. PCF website under “Safeguard Policies”.http://prototypecarbonfund.org/router.cfm?Page=Projects5. PCF website under “Uganda Project Public Topic Area” at the Comments from theInternational Rivers Network (IRN), 10th of May 2002http://prototypecarbonfund.org/router.cfm?Page=Topics&ECONFID=2743

6. http://www.ich.no/kurs/he2002/uganda_fact.htm &http://allafrica.com/stories/200207220277.html7. Privatisation and poverty: the distributional impact of utility privatisation. Kate Bayliss.Centre on Regulation and Competition, Manchester University, Working Paper No. 16,ISBN:1-904056-15-6, January 2002.8. Business Report, South Africa. “Eskom Enterprises will light up Uganda.” Khulu Phasiwe.November 28, 2002 at 08:46AM. http://www.busrep.co.za/html/busrep/br_search_frame.php9. Global Environment FacilityProposal for a PDF Block B Grant.http://www.gefweb.org/operport/uganda.doc p.5,610. PCF website, in Project Idea Notes, ‘Energy for Rural Transformation PIN’11. Business Report, South Africa. “Privatisation’s toll: 100 000 jobs so far.” Mokgadi Pelaand Khulu Phasiwe. October 03 2002 at 08:26AM.http://www.busrep.co.za/html/busrep/br_search_frame.php12. Business Report, South Africa. “Eskom seeks connection between big finance and powerto the people.” Quentin Wray. October 12, 2001 at 07:37AM.http://www.busrep.co.za/html/busrep/br_search_frame.php13. Ibid.14. “Privatisation and poverty: the distributional impact of utility privatisation.” Kate Bayliss.Centre on Regulation and Competition, Manchester University, Working Paper No. 16,ISBN:1-904056-15-6, January 2002.15. Business Report, South Africa. “Eskom seeks connection between big finance and powerto the people.” Quentin Wray. October 12, 2001 at 07:37AM.http://www.busrep.co.za/html/busrep/br_search_frame.php16. “The Electricity Crisis in Soweto.” Municipal Services Project Occasional Papers 4. By MajFiil-Flynn with the Soweto Electricity Crisis Committee. Editors Davis A McDonald & PatrickBond. August 2001.17. Business Report, South Africa. “Eskom gets green light for 8.4% rate hike.” Nathi Sukazi.October 29, 2002 at 08:16AM. http://www.busrep.co.za/html/busrep/br_search_frame.php18. Business Report, South Africa. “Eskom Enterprises is set to show 400% profit rise.” NathiSukazi. November 08 2001 at 09:39AM.http://www.busrep.co.za/html/busrep/br_search_frame.php19. The Impact of Privatisation on Electricity Prices in Britain. IDEC National Seminar onPublic Utilities. Sao Paulo, August 6-8, 2002. Steve Thomas.http://www.psiru.org/reports/2002-08-E-UKImpactPriv.doc20. PCF website, in Project Idea Notes, ‘Energy for Rural Transformation PIN’2.1 The Rio Earth Summit & Climate Change:1. Halpern, S. 1992. United Nations Conference on Environment and Development: Processand documentation. Providence, RI: Academic Council for the United Nations System(ACUNS).http://www.ciesin.org/docs/008-585/unced-home.html44

2. Halpern, S. 1992. United Nations Conference on Environment and Development: Processand documentation. Providence, RI: Academic Council for the United Nations System(ACUNS). http://www.ciesin.org/docs/008-585/unced-ch1.html#PC-climate3. Here’s what Kofi Annan and Philip Watts had to say.” 2002. WBCSD news.http://www.sustainonline.org/news/fullstory.php/aid/322/Here%92s_what_Kofi_Annan_and_Philip_Watts_had_to_say.html4. A Beginner’s Guide to the UN Framework Convention. UNFCCC website:http://unfccc.int/resource/beginner.html2.2 The UN and corporate-led solutions:1. See “Project History” for the UNCTAD Carbon Market programme on the website:http://r0.unctad.org/ghg/sitecurrent/about_u/project_h.html2. Paul Krugman, 1994, “Peddling Prosperity”, chapter “The Economics of QWERTY”, p2222.3 Corporations at the Earth Summit:1. Welford, Richard. “Hijacking Environmentalism” (1997) page 73. Earthscan PublicationsLtd, London.2. Ibid. page 72.3. Ibid.4. Corporate Europe Observatory, “Greenhouse Market Mania” (2000). Paulus Potterstraat20, 1071DA Netherlands, tel/fax:+31-20-612-7023 www.corporateeurope.org5. Beder, Sharon. “Global Spin” (1997). Page 29. Green Book Ltd, Devon.6. Corporate Europe Observatory (1997) The Weather Gods.7. The Economic Committee of the Global Climate Coalition, cited in: Moor APG de, BerkMM, Elzen MGJ den, Vuuren DP van, Evaluating the Bush Climate Change Initiative (2002),The National Institute of Public Health and the Environment (RIVM), page 6.8. Dr Andrew Dlugolecki, Climate Change specialist with CGNU (sixth largest insurancecompany in the world), The Guardian, 24 November 2000.9. Ibid.10. Is This What Efficiency Looks Like? Prepayment Water Meters, Public Citizen, (8/27/02)http://www.citizen.org/cmep/Water/cmep_Water/wssd/articles.cfm?ID=821011. The Economic Committee of the Global Climate Coalition, cited in: Moor APG de, BerkMM, Elzen MGJ den, Vuuren DP van, Evaluating the Bush Climate Change Initiative (2002),The National Institute of Public Health and the Environment (RIVM), page 6, footnote 3.2.4 Corporate ‘good guys’?1. Confidential Papers Show Exxon Hand in White House Move to Oust Top Scientist fromInternational Global Warming Panel.” NRDC press release. 3/04/02. For original memo see:http://www.nrdc.org/media/docs/020403.pdf45

2. “Bush energy plan - policy or payback?” BBC transcript, BBC Newsnight. Thursday, May17, 2001. http://www.gregpalast.com/detail.cfm?artid=80&row=3. Controlling Hypocritical Authority: Gore’s Expertise . Horner Op-Ed in National ReviewOnline by Christopher C. Horner April 23, 2002. http://www.cei.org/gencon/019,02972.cfm4. Key Outcomes of the Summit. Official website of the WSSD:http://www.johannesburgsummit.org/html/documents/summit_docs/2009_keyoutcomes_commitments.doc5. Based on BP plans to spend $250 million over the following 5 years. “BP bows to solarpower pressure.” Terry Macalister. The Guardian. May 10, 2000.http://www.guardian.co.uk/business/story/0,3604,219174,00.html6. Based on average per year predicted epxenditure of $500 million. Shell annual report.Page 12:http://www.shell.com/html/investor-en/shellreport01/reports2001/frameset.html7. Shareholder Action Network resolution to ExxonMobil. 2002.http://www.shareholderaction.org/exmob_res.cfm8. ChevronTexaco’s stated investments in 2002 in “emerging technologies and in a state-ofthe-artupgrade of information technology systems.” Annual report 2001:http://www.chevrontexaco.com/investor/annual/2001/narr_investing_story02.asp#cleaner9.Oil & Gas Journal: http://downloads.pennnet.com/pnet/surveys/ogj/ogj_00377883.pdfNGO Co-optation:1. Interview with author. February 2002 at Eyeforenergy conference in Okura hotel,Amsterdam.2. Patterns of Corporate Philanthropy by Christopher Yablonski. Capital Research (1997).http://www.capitalresearch.org/misc/pcpXIII.pdf3. NGO Alternative Treaties, Global Forum at Rio. June 1-15, 1992.http://www.igc.org/habitat/treaties/4. Friends of the Earth International press release on website:http://www.foei.org/media/2001/23_july_bonn.html5. Friends of the Earth International press release on website:http://www.foei.org/media/2000/24_nov_6_reasons.html6. Rio + 10 Series: The Johannesburg Summit Differs from its Predecessor,http://www.ran.org/news/newsitem.php?id=571Sinking the protocol:1. “Evaluating the Bonn Agreement and some key issues”, The National Institute of PublicHealth and the Environment (RIVM) p 22. The Netherlands, 2001.2. Centre for Science and Environment, Equity Watch , October 25, 2000.http://www.cseindia.org/html/cmp/climate/ew/index.htm3. Declaration of the First International Forum Of Indigenous People On Climate Change,Lyon, France September 4-6, 2000.46

3a. Point Carbon website:http://www.pointcarbon.com/article_view.php?id=20024. Wiser, Glenn, “Report to CAN on Compliance Section of Marrakech Accords to the KyotoProtocol”, p3-4. CIEL, 2001.5. http://www.pewclimate.org/cop8/summary.cfm6. http://www.pointcarbon.com/article_view.php?id=20027. ”Kyoto not binding”, The Globe & Mail, 14.11.02,http://www.globeandmail.com/servlet/ArticleNews/PEstory/TGAM/20021114/UKYOTM/national/national/nationalTheNationHeadline_temp/7/7/27/Trading rules:1. Wiser, Glenn, “Report to CAN on Compliance Section of Marrakech Accords to the KyotoProtocol”, pages 2-3. CIEL, 2001.2. Ibid p3. CIEL, 2001.Conflict of interests:1. For more on Plantar see “The Plantar CDM project, Why it must be rejected by the CDMboard and the PCF investors”, Ben Pearson, July 2002, http://www.cdmwatch.org2. “New Frame Agreements with Statoil and Norsk Hydro”,http://www.dnv.com/dnvnews/published_articles/2002-06-19_frame_agreement.htm3. Excerpt of letter to those responsible for and investing in the Prototype Carbon Fund, fromBrazilian organisations, movements, politicians, churches and citizens from different stateslike Minas Gerais, Espirito Santo, Bahia and Rio de Janeiro. The Brazilian Movimento RedeDeserto Verde (Alert against the Green Desert Movement) is the source of this campaign.See http://www.wrm.org.uy/bulletin/56/Brazil.html4. Sinks that stink , World Rainforest Movement Bulletin June, 2000,http://www.wrm.org.uy/actors/CCC/sinks2.html5. Verónica Vidal i Oltra, Universidad Autónoma de Barcelona, “Impactos de la Aplicación dePolíticas sobre Cambio Climático en la Forestación del Páramo del Ecuador”, Páramos yBosques de Niebla, Censat Agua Viva (FoE Amigos de la Terra), March 2000.6. Sinks that stink , World Rainforest Movement Bulletin June, 2000,http://www.wrm.org.uy/actors/CCC/sinks2.htmlRenewables under siege:1. The Emerging International Greenhouse Gas Market, p14, Pew Center on Global ClimateChange, 2002. Authors: Richard Rosenzweig, Matthew Varilek, Ben Feldman, RadhaKuppalli, Josef Janssen.http://www.pewclimate.org/projects/trading.cfm2. Interview with Frank van der Vleuten, Free Energy Europe, Netherlands office, December20023. Ibid.47

4. The Dutch Government’s CDM programme (CERUPT) will pay between US $3.00 and US$5.00 per ton of CO2 for permits, with the higher prices reserved for projects from renewableprojects. Renewable is categorised by CERUPT as wind, geothermal, hydropower and solar.www.carboncredits.nl5. “Evaluating the Bonn Agreement and some key issues”, The National Institute of PublicHealth and the Environment (RIVM) p12. The Netherlands, 2001. Price in tons of CO2.6. Interview with Frank van der Vleuten, Free Energy Europe, Netherlands office, December20027. Interview with Professor David Elliot, December 2002.4. Kyoto in Context: Kyoto and Trade and Investment1. Cosbey, Aaron. ‘The Kyoto Protocol and the WTO’ The Royal Institute of InternationalAffairs (RIIA), and the International Institute for Sustainable Development (IISD), December1999.2. Cosbey, Aaron. ‘The Kyoto Protocol and the WTO’ The Royal Institute of InternationalAffairs (RIIA), and the International Institute for Sustainable Development (IISD), December1999. Brewer, Tom. ‘The trade and climate regimes - compatibilities and conflicts in WTO-Kyoto Protocol relationships’ Policy Brief, McDonough School of Business, GeorgetownUniversity, Washington, D.C., Published by: The Transatlantic dialogue on climate change,CEPS, 19 March 2002. IISD-UNEP. ‘Environment and Trade: A Handbook’. Published by theInternational Institute for Sustainable Development and the UN Environment Program, 2000.United Nations University-Global Environment Information Centre. ‘Global ClimateGovernance: Inter-Linkages between the Kyoto Protocol and Multilateral Regimes’ 1998.Zhang, Z.X. and L. Assunção. ‘Domestic Climate Policy and the WTO’, 2001, Nota di Lavoro91., Fondazione Eni Enrico Mattei, Milan, Italy; ‘The World Economy’. Zhang, Z.X.,‘Greenhouse Gas Emissions Trading and the World Trading System’, Published in the‘Journal of World Trade’. 1998, Vol. 32, No. 5, pp. 219-239; Reprinted in W. BradneeChambers (editor), Inter-linkages: The Kyoto Protocol and the International Trade andInvestment Regimes, United Nations University Press, Tokyo, 2001, pp. 119-151.3. US Trade Representative Press Release: ‘WTO Dispute Settlement Panel Issues Reporton EPA Rules for Imported Gasoline’ USTR, Wednesday, January 17, 1996. Paulette S.‘World Trade Organization Finds That Clean Air Act Rules Create an Unfair Trade Barrier’.May 1996, Curtis, Mallet-Prevost, Colt & Mosle LLP Newsletter. Paulson, Michael. ‘WTOCASE FILE: the Venezuelan Oil Case’ . Seattle Post-Intelligencer. Monday, November 22,1999. Trade Observatory website: http://www.tradeobservatory.org/FAQ/faq.cfm?faq_id=6.Raghavan, Chakravarthi. ‘WTO Panel RulesAgainst US in Gasoline Dispute’ SUNS, 6:55 AM Jan 18, 1996.http://www.sunsonline.org/trade/areas/commodit/01180096.htm4. Corporate Europe Observatory. ‘Greenhouse Market Mania: UN climate talks corrupted bycorporate psuedo-solutions’. CEO, November 2000.5. US State Dept. Website: http://www.state.gov/s/l/c3745.htm for official documents. Seealso: Benson, Robert W. ‘Constitution? Forget It! NAFTA Rules’ Los Angeles Times,Thursday, June 24, 1999.6. Sforza, Michelle and Vallianatos, Mark. ‘NAFTA & Environmental Laws: Ethyl Corp. v.Government of Canada’ April, 1997. http://www.globalpolicy.org/socecon/envronmt/ethyl.htm7. UNCTAD. ‘World Investment Report’, UNCTAD, Geneva, 2002.8. FTAA draft chapter on investment available at: http://www.ftaaalca.org/ftaadraft/eng/ngine_1.asp48

9. UNCTAD. ‘World Investment Report’, UNCTAD, Geneva, 2002.10. Ibid.11. IISD-UNEP. ‘Environment and Trade: A Handbook’. Published by the InternationalInstitute for Sustainable Development and the UN Environment Program, 2000.Kyoto and the World Bank:1. Sustainable Energy and Economy Network database online at: http://www.seen.org/db2. Ibid.3. Testimony of Lawrence Summers to the US Congress, March 27, 1995.4. SEEN, “The World Bank and the G-7: Changing the Earth’s Climate for Business.”SEEN/IPS, 1997.5. PCF Website, http://www.prototypecarbonfund.org6. Ibid.7. PCF Annual report 2002 available online http://www.prototypecarbonfund.org8. Officially, the Kyoto Protocol is quite vague about what technologies and energy sourcescan truly be considered to be ‘renewable’. For example, in the Bonn agreement, the text onwhether nuclear power was permissable or not, read that governments should ‘refrain’ fromusing nuclear power, leaving the door slightly ajar for the nuclear sector to keep a foot in. Thedefinition of ‘renewable’ has been one of the key battlegrounds in the climate negotiations.9. PCF Website, http://www.prototypecarbonfund.org10. CDCF Website, http://www.communitycarbonfund.org11. BCF Website, http://www.biocarbonfund.org12. Johnson, Ian. “A Green Answer to Global Warming and Poverty.” International HeraldTribune (IHT), Friday, November 29, 2002.13. Ibid.Key Players Introduction & IFIs:1. Point Carbon, Carbon Market in 20022. IETA’s Trading Scheme Database developed by Point Carbon:http://pointcarbon.com/schemes.php3. CDCF Website, http://www.communitycarbonfund.org4. BCF Website, http://www.biocarbonfund.org5. Ibid.6. Telephone conversation with PCF secretariat officials. December 11, 2002.7. Frequently Asked Questions, Prototype Carbon Fund website:http://prototypecarbonfund.org/router.cfm?Page=FAQ#10Corporations:1. Information gained from a presentation given by Mark Akhurst, Head of Climate Change,BP at ‘eyeforenergy’ conference. Febnraury 2002. Okura Hotel. Amsterdam.2. Fortune Magazine. ‘Fortune 500 List’ From the April 15, 2002 Issue.49

3. Competitive Enterprise Institute (CEI). ‘Enron’s Lobbying Goals Would Kill More Jobs ThanIts Collapse: Bankrupt Global Warming Policies Still Alive’. January 16, 2002.4. The Emerging International Greenhouse Gas Market, p52, Pew Center on Global ClimateChange, 2002. Authors: Richard Rosenzweig, Matthew Varilek, Ben Feldman, RadhaKuppalli, Josef Janssen.http://www.pewclimate.org/projects/trading.cfmPewCorporate lobby groups:1.The role of companies in the Kyoto mechanisms, Presented by the International Chamberof Commerce (ICC), Earth Negotiations Bulletin on the side, 12 June 2002,http://www.iisd.ca/linkages/climate/sb16/enbots/pdf/enbots0903e.pdf2. “Arthur Anderson: Meeting Challenges with Solutions in the new GHG Emissions Market”,The Carbon Challenge, supplement to Environmental Finance, p11, October 2000. EditorMark Nicholls, Fulton Publishing Limited.3. The Emerging International Greenhouse Gas Market, p37-38, Pew Center on GlobalClimate Change, 2002. Authors: Richard Rosenzweig, Matthew Varilek, Ben Feldman,Radha Kuppalli, Josef Janssen.http://www.pewclimate.org/projects/trading.cfmPew4. IETA members as of July 2002. IETA website:http://www.ieta.org/About_IETA/Members/Members_July.pdf5. IETA Annual General Meeting. December 4, 2001. Park Hyatt Hotel. Washington D.C.,United Stateshttp://www.ieta.org/Library_Links/AGM/Minutes_AGM_2001.doc6. For more info, see: Corporate Europe Observatory, “Greenhouse Market Mania: UNclimate talks corrupted by corporate psuedo-solutions.” CEO, November 2000.s7. WBCSD Website, http://www.wbcsd.ch8. For more info, see: Corporate Europe Observatory, “Greenhouse Market Mania: UNclimate talks corrupted by corporate psuedo-solutions.” CEO, November 2000.9. Greenpeace/WBCSD Joint Statement released at the World Summit on SustainableDevelopment (WSSD) 28 August, 2002. See:http://archive.greenpeace.org/earthsummit/wbcsd/ for the full text.Think-tanks:1. Point Carbon website “About Us”: http://www.pointcarbon.com/about.php2. Dunne, Nancy, “North America ponders Kyoto Alternative: The US, Canada and Mexicomay set up a carbon emissions trading scheme under the auspices of Nafta”, FinancialTimes, Dec 14, 2001.3. Lohmann citing Cockburn, A. and Silverstein, K., Washington Babylon, Verso, London,1996, pp.210-214. Democracy or Carbocracy? The Corner House, Briefing #24, footnote 88,p. 46.Consultancies:50

1. CO2e.com website “CO2e Associate Listings and Service Offerrings”:http://www.co2e.com/strategies/viewaffiliates.asp2. Evolution Markets website, http://www.evomarkets.com/belize3. Ecosecurities website, http://www.ecosecurities.com/200about_us/223press_releases/223press_release 9_apr_2002.html4. Market share and offset strategy quoted in: “Markt emissierechten broeikasgas zit tespringen om kopers”. Het Financieele Dagblad. Robin van Stokrom, 31 July 2002.5. http://www.futureforests.com6. Ibid.7. Natsource website, http://www.natsource.com8. Ibid. http://www.natsource.com/about/Private sector initiatives:1. Trading hot air, The Economist Oct 17th, 20022. http://www.chicagoclimatex.com3. http://www.chicagoclimatex.com/html/dowjones110402.htm4. The Emerging International Greenhouse Gas Market, p37, Pew Center on Global ClimateChange, 2002. Authors: Richard Rosenzweig, Matthew Varilek, Ben Feldman, RadhaKuppalli, Josef Janssen.http://www.pewclimate.org/projects/trading.cfmPew5. Richard Hill, Head DuPont Canada’s Emissions Reduction Credits Management andTrading Initiatives, and Manager of Firm’s nylon polymers business, “Credits for Sale”, TheCarbon Challenge, supplement to Environmental Finance, 2000, p9.6. Ibid.7. http://www.cleanaircanada.orgEnvironmental NGOs:1. Bradley, Jim. ‘Buying High, Selling Low: Emissions Trading is a Flop on Wall Street, but isit Reducing Pollution?’ E Magazine, Volume VII, Number IV, July-August 1996. Kinsman,John. ‘Emissions Trading, The Economy and The Environment’ Environmental Finance,October 2002. Page 26-27.2. Wald, Matthew L. ‘Acid-Rain Pollution Credits Are Not Enticing Utilities’. New York Times,June 5, 1995.3. Turrentine, Haywood. Chair, National Environmental Justice Advisory Committee (NEJAC).‘Letter to Carol Browner, Administrator, U.S. Environmental Protection Agency’. March 11,1998; NEJAC. ‘Resolutions Concerning Disproportionate Impacts of Pollution TradingPrograms’. Adopted December 12, 1996, May 15, 1997 and May 3, 1998.4. Belliveau, Michael. ‘Smoke and Mirrors: Will Global Pollution Trading Save the Climate orPromote Injustice and Fraud?’. Corpwatch, October 1, 1998.http://www.corpwatch.org/campaigns/PCD.jsp?articleid=10685.World Resources Institute. ‘Annual Report 2001’. For a complete list, see:51

http://partners.wri.org/contrib_financial.cfm6. WRI International Emissions Trading ‘Project Description’http://business.wri.org/project_description2.cfm?ProjectID=677. WWF. ‘Annual Report 2001’8. WWF. ‘The EU Emissions Trading Directive: A vital EU policy initiative on climate change’.4/12/02http://www.panda.org/downloads/climate_change/emissionstradingdirectivebackgrounddec2002.pdf9. Ibid.10. WWF. ‘The Gold Standard: Quality Standards for CDM and JI Projects’. WWF, October2002.http://www.panda.org/downloads/climate_change/COP8_standards.pdf] It plays a dominantrole in the Climate Action Network (CAN), the main NGO platform on climate changecomprising some 287 NGOs worldwide. [http://www.climnet.org]11. Greenpeace. ‘Economics Take Over Climate Talks’ Greenpeace Press Release, BuenosAires, November 14, 1998.12. Hamilton, Kirsty. ‘Dash for Cash: Industry Lobbyists at the Climate Talks’ Greenpeace,October 1999.13. Greenpeace. ‘Economics Take Over Climate Talks’ Greenpeace Press Release, BuenosAires, November 14, 1998.14. Greenpeace ‘Campaign Overview’http://www.greenpeace.org/campaigns/intro?campaign_id=393715. Greenpeace-Body Shop Press Release. ‘Governments Challenged to Back GreenEnergy’. London, Friday January 18, 2002. “Former Shell boss, Sir Mark Moody Stuart todaychallenged Western Governments to increase their renewable energy targets, at the launch ofThe Body Shop and Greenpeace International campaign, Choose Positive Energy.”16. Brown, Paul. ‘Big business and Greenpeace urge action on climate change’ Guardian,Thursday 29/08/02.17. Pomeroy, Robin. ‘Industry joins Greenpeace to demand climate action’.Reuters NewsService, August 30, 2002. From the Reuters story: “But Stigson added later that the WBCSD,which has many members based in the United States - which has rejected the 1997 Kyotopact on cutting emissions - was not necessarily calling on world leaders to ratify that pact.‘The Kyoto Protocol contains seeds that are important for the international global framework,’Stigson told Reuters. ‘It is a rather difficult thing just to say you have to just implement theKyoto Protocol as some people are saying, because that will not happen in a number ofcountries...but that doesn’t mean you should not have an international framework.’Conclusion:1. Frequently asked questions on DEFRA website:http://www.defra.gov.uk/environment/climatechange/trading/auctionfaq.htm2. Recorded interview with Mike Belliveau in July 2002. Transcript available from CarbonTrade Watch.3. The Star online, source Reuters:http://thestar.com.my/services/printerfriendly.asp?file=/2002/10/31/business/bp30b.asp52

4. Greenhouse Market Mania. Corporate Europe Observatory. 2000. “The ClimateGreenwash Vanguard: Shell and BPAmoco”:http://www.corporateeurope.org/greenhouse/greenwash.html53