The Sky is Not the Limit: - Carbon Trade Watch

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“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
Page 1 and 2: Carbon Trade WatchBriefing No.1The
Page 4 and 5: 1. What is emissions trading?Pollut
Page 6 and 7: the scheme that were not abandoneda
Page 8 and 9: ehaviour of DSW, it is difficult to
Page 10 and 11: PCF promoting privatisationThe PCF
Page 12 and 13: 2. The Origins of Emissions Trading
Page 14 and 15: 2.3 Corporations at the EarthSummit
Page 16 and 17: 2.4 Corporate ‘good guys’?The t
Page 18 and 19: 2.6 Sinking the ProtocolBonn 2001:
Page 20 and 21: 3. Trading Rules3.1 The Kyoto Tradi
Page 22 and 23: 3.2 Renewables under SiegeEmissions
Page 24 and 25: The solution, as proposed by indust
Page 28 and 29: ‘renewable’ projects.7 Although
Page 30 and 31: ased on the “successful” PCF mo
Page 32 and 33: • internal transfers of credits b
Page 34 and 35: 5.4 Think TanksPoint Carbon: Set up
Page 36 and 37: 5.6 Private Sector TradingInitiativ
Page 38 and 39: However, over the years,Greenpeace
Page 40 and 41: market rhetoric begins to clear.Emi
Page 42 and 43: Notes & ReferencesIntroduction:1. S
Page 44 and 45: 6. http://www.ich.no/kurs/he2002/ug
Page 46 and 47: 2. “Bush energy plan - policy or
Page 48 and 49: 4. The Dutch Government’s CDM pro
Page 50 and 51: 3. Competitive Enterprise Institute
Page 52 and 53: http://partners.wri.org/contrib_fin

The Sky is Not the Limit: - Carbon Trade Watch

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