The Sky is Not the Limit: - Carbon Trade Watch

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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
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