COP28: UPSETTING ARTICLE 6 AND CARBON MARKETS

• Bolivia calls for a moratorium on the operation of carbon market mechanisms.
• What are carbon markets, in summary.
• Why they are a controversial solution for many countries.

The second week of COP28 began on Friday, and so did the related negotiations. Among the points still under discussion is, inevitably, the Article 6 of the Paris Agreement, which concerns the so-called carbon market mechanisms. In particular, attention revolves around the very complicated and technical texts, even for the most expert, of Article 6.2 and Article 6.4.

Within these negotiations (in particular, of Article 6.4), indigenous populations welcomed with great outcry the news that Bolivia has put forward the request for a moratorium and the cessation of the functions of carbon markets of the Articles 6.2 and 6.4, coming up with options to put an end to them (Option 2, Annex II of the text). In particular, they call for more progress on Article 6.8 regarding non-market approaches.

But why make such a drastic request? Let’s try to answer.

I give a good to you and you give one to me, of equal value, and we are both happy.

This is approximately the short story we all know about the exchange of goods in the market, which inspired the carbon market mechanism. Article 6 of the Paris Agreement provides that carbon emissions can be ‘voluntarily traded’ on the market. Behind the promise of investments in green and development projects in the most vulnerable countries, developed countries have the possibility to count the emissions reduction obtained elsewhere in their NDCs, the national climate objectives.

Since the ratification of the Paris Agreement, there has been a growing interest in the sector, a real carbon market fever. The United Kingdom, at point 10 of the plan for its Green Industrial Revolution, states that it wants to establish itself as a leader in the carbon market sector in order to generate green finance and achieve the goal of Net Zero, the elimination of net emissions. With the proliferation of Emission Trading Schemes (ETS), even financial giants such as BlackRock have started to become interested in this type of investment, often in the form of Environmental, Social and Governance (ESG) Investments. These mechanisms, requested by developed countries in the name of ‘flexibility’ of climate actions, can however lead to practices of dubious ethics.

First of all, with the transformation of carbon into a commodity to be exchanged on the market like any good, these mechanisms have ‘financialized nature’ by applying logic to it that is not its own.

The planting of a few hectares of forest or the restoration of some habitat cannot be considered comparable to the possibility of continuing to pollute, and do not take into account the fact that nature does not function according to market mechanisms. The current climate and ecological crisis reminds us that nature is based on fragile balances, and that it is not able to regenerate itself with the rhythms and logic we would like, much less those of the market.

Secondly, these mechanisms can be ineffective and distracting.

An investigation by The Guardian revealed that approximately 94% of the credits accrued by big corporations in developed countries for reforestation projects in developing countries (REDD+ projects) were not accompanied by a reduction of CO2 in the atmosphere. Despite this evidence, investments in the sector continue to shout about the achievability of the Net Zero objective, which however distracts from what should be the main objective of the Paris Agreement: mitigation accompanied by the complete phase out of fossil fuels.

Thirdly, the studies – which start from very far away and from which this article drew inspiration in the formulation of the title (Upsetting the offset by Böhm & Dabhi 2009) – show that these mechanisms can have negative socio-economic impacts and be accompanied by possible violations of human rights whereas the intentions should instead lead to development, sustainability and emancipation.

Known in the news is the report by Survival International, the NGO for the rights of indigenous peoples, which denounced the illegal evictions of the indigenous Ogiek populations of Kenya from the Mau forest to make way for reforestation projects in exchange for the transfer of the related carbon credits.

Similar practices have been confirmed by The Guardian in relation to some projects in Peru, which have seen the forced eviction of indigenous populations without them being consulted or included in decision-making processes regarding their lands. Maria Hengeveld, researcher and journalist, also denounced how the Kasigau Corridor REDD project, created by the American company Wildlife Works and aimed at the development and emancipation of local women and girls, has instead resulted in sexual abuse and violence against indigenous women.

These practices are guaranteed by auditing and certification systems that are effectively unregulated, as well as not very transparent and inclusive, entrusted to private bodies that tend to accommodate the requests of their customers, says Maria Hengeveld. But above all these activities replicate neo-colonialist and neo-liberal dynamics of expropriation and exploitation of vulnerable countries which effectively prevent their fair and sustainable development¹, as it has also emerged in this side event organized by ActionAid at COP28.

Bolivia’s proposal will likely fall through the cracks and carbon markets will continue to be developed under the Paris Agreement. For this reason, as Ghazali Ohorella, Team Leader of the Indigenous Peoples’ Forum and Member of the relevant caucus at the UNFCCC says, it is better to continue participating in the process to rescue the situation and prevent things from getting worse: “if you are not at the table you are on the menu”!

This implies, both speakers of the mentioned side event say, continuing to pressure delegates during COP28 so that the text of Article 6 includes clear and binding references to the protection of human rights, food sovereignty and the central role of participation in decision-making processes, especially of indigenous people, so that they become the parameters of work and judgment of carbon market mechanisms. At the moment human rights are only mentioned in the preamble of texts that are not binding, while the text of Article 6.4 does not include explicit references to the fact that the implementation of carbon market projects is started only after the implementation of the relevant mechanisms of compliance and grievance.

What is certain, however, is that the proposal of Bolivia, one of the countries where communities of indigenous populations reside, brings us back to reality and puts us face to face with necessary self-criticism and re-evaluation of these mechanisms and the market logic that underlie them, and which pervade every conversation about climate action. The time has come to radically rethink our vision of the world, from a de-colonized perspective, and to embrace a more equitable, inclusive and sustainable model of development. A real paradigm shift that places the planet and people at the center and not business, as proposed by Deva Surya, the UN Special Rapporteur on the human right to development.

Source: extract from the Report of the Special Rapporteur Deva Surya.

It seems that we are taking some steps, as the recognition of the prominent role of nature in this COP28 (we talked about it here) or the initiative for a Treaty on the Non-proliferation of Fossil Fuels, but we are only at the beginning and it is already way too late.

Article by Erika Moranduzzo, Human Rights expert and Coordinator of the ‘Rights and Climate’ Section at Italian Climate Network

Cover image: photo by Matthias Heyde on Unsplash.

1. Steffen Böhm and Sian Sullivan (eds), Negotiating Climate Change in Crisis (Open Book Publishers 2021) introductory chapter, section ‘Three Decades of Carbon Fetishism’.