Kyoto Credits System Aids the Rich, Some Say

By Shankar Vedantam
Washington Post Staff Writer
Saturday, March 12, 2005; Page A12

Sajida Khan, who has fought for years to close an apartheid-era dumpsite that she says has sickened many people in her predominantly brown and black community outside Durban, South Africa, was dismayed to learn recently that she faces a surprising new obstacle: the Kyoto global warming treaty.

Under the protocol's highly touted plan to encourage rich countries to invest in eco-friendly projects in poor nations, the site now stands to become a cash cow that generates income for South Africa while helping a wealthy European nation meet its obligations under the pact.

The Kyoto protocol is meant to reduce greenhouse gases like those spewed by this New Delhi power plant but also creates a worldwide market in "emissions credits." (Kamal Kishore -- Reuters)

The project's sponsors at the World Bank call it a win-win situation; Khan calls it a disaster. She said her community's suffering is being prolonged so that a rich country will not have to make difficult cuts in greenhouse gas emissions at home.

"It is another form of colonialism," she said.

Such complaints are being increasingly heard from environmentalists and even some business leaders around the world, said Ben Pearson, director of Clean Development Mechanism Watch, an Australia-based environmental group that monitors Kyoto's impact -- and the criticism could be the unkindest cut of all for the treaty, which took effect on Feb 16.

In what advocates call an innovative market-based strategy, the treaty allows rich nations to avoid making some of their mandated reductions in greenhouse gas emissions by buying "credits" from nations that pollute less, or by investing in sustainable development projects, which is how the Durban dumpsite is classified. The theory is that such investments will allow rich countries to lower the global burden of emissions and simultaneously spur transfer of clean technology to poorer nations.

But activists such as Khan and Winfried Overbeek, who is fighting a Kyoto-inspired project in Brazil, say that the world cannot barter its way out of global warming, and that there is no way to achieve a stable climate unless people in wealthy countries use fewer resources and energy -- in other words, lower consumption.

The problem, said Pearson, is that the market system gravitates to such projects as the Durban dumpsite, which will generate electricity by burning methane, over environmentally superior projects such as wind farms: "The people buying credits want to know how reliable the stream [of credits] is and how much it costs -- whether it exploits local people or improves air quality doesn't make a difference to them."

Although such criticism seemingly places these activists in the same corner as the Bush administration and oil companies such as Exxon Mobil -- which have long fought Kyoto for very different reasons -- these environmentalists say they want to mend the treaty, not end it.

"There is a fear that if you are criticizing Kyoto, you want it to fail like the U.S. does, and that is not our goal," said Daphne Wysham, director of the sustainable energy and economy network at the Institute for Policy Studies, an advocacy group that is critical of the trading system. "But we are concerned that the poor are being asked to pay the highest price."

The United States strongly backed the concept of emissions trading under the Clinton administration, and environmental groups threw in their lot with the market-based approach partly because it was the only way to get the treaty approved. But the idea remained even after President Bush pulled out of the treaty, saying it would hurt the U.S. economy.

Europe "didn't want the emissions trading," said Robert Donkers, an environment counselor for the European Union. "We were quite cynical about it, but we have implemented it."

The treaty establishes a barter system where the currency is carbon -- global warming is linked to the buildup of carbon dioxide generated by burning coal, oil and other fossil fuels. Every developing-country project that reduces greenhouse emissions or taps a clean source of energy earns "carbon credits" that can be sold to European countries, Canada and Japan.

Those rich countries promised to reduce their greenhouse gas emissions below 1990 levels, targets they are unlikely to meet through domestic controls. Leaders have promised to make at least half the reductions at home, and the treaty allows them to make up the difference in two ways. The simplest involves buying credits from Eastern Europe and Russia, where an economic meltdown in the 1990s shut down many old industries, reducing emissions well below those nations' limits under the treaty and giving them a large "headroom" of carbon credits.

The Bush administration has ridiculed such trading because it will not result in any emissions reductions. Under pressure from their own environmental groups, Europe, Japan and Canada are therefore opting for the more difficult alternative: investing in clean-energy projects in poor countries. Developing countries have eagerly welcomed such investments, and some environmental advocates say the real concern is that Kyoto will have too few emissions trading projects.

"The supreme irony is that as Kyoto opens, the window of opportunity is closing," said Ken Newcombe, who manages the World Bank's carbon finance business. Sustainable development projects need to generate credits between 2008 and 2012, when the treaty calls for Europe, Canada and Japan to make emissions cuts, he said. There are no incentives for rich countries to buy credits after that, although environmentalists expect a new round of pledges after 2012.

Among the World Bank's projects are the Poechos hydropower facility in Peru, whose credits will be purchased by the Netherlands, and a $35 million wind turbine plant in the Philippines. Private brokers such as are also cutting deals -- one contract linked Japanese and Canadian electric utilities with a pork producer in Chile. The project captures methane, a greenhouse gas, produced by 100,000 pigs.

Jose Contardo, who helps manage a World Bank-supported Chacabuquito hydroelectricity project in Chile, said it generates 26 megawatts of clean power. "Anybody in the world will find it a good project," he said in a phone interview.

The Durban dumpsite was an attractive target under Kyoto because, like most dumps, it emits methane, one of six greenhouse gases the treaty seeks to limit. Methane is 21 times worse than carbon dioxide in trapping heat, Newcombe said, adding that the project was supported by South African authorities and had met safety protocols. He dismissed Wysham's charges as "technically naive," saying the project would generate clean power, and also collect toxic gases and filter them away.

But Sajida Khan said the World Bank and the treaty do not recognize the realities on the ground where she lives. The Bisasar landfill was established by the apartheid regime in 1980 to get rid of waste from predominantly white neighborhoods in a community largely populated by Indians and blacks. No buffer zone protects the community, she said in a phone interview, adding that hazardous chemicals at the dump have given her cancer and caused numerous health problems in the area. The African National Congress once promised to close the dump, she said, but has not, and now South Africa will gain by keeping it open.

"You are talking about gaining credits and making money, but the people on the ground will continue to suffer," she said. "My goal is to protect the community and close the site down and compensate people for their losses."

Steven Sawyer, a climate policy adviser at the environmental group Greenpeace, defended many Kyoto-inspired projects and said they would make poor countries more economically resilient and help them leapfrog over the dirty stage of industrial development. But he criticized one emerging source of carbon credits -- deals that have rich countries financing large plantations in poor countries to trap carbon biologically.

In Brazil, tracts of land are being converted to eucalyptus plantations to earn emissions credits under Kyoto, said Overbeek, a community activist at the social justice group FASE.

Overbeek said the plantations are depleting the water table and displacing poor people who depended on agriculture. Biodiversity, he added, is being replaced by "monocultures" of eucalyptus forests that he called "green deserts."

"In Germany, they use five to six times more tissue paper than in Brazil," he said. "Is it necessary? Is it sustainable? And because of that you are taking land away from people here who have to go to cities and can't find jobs."



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