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Greenhouse Market Mania: UN Climate Talks Corrupted by Corporate 'Solutions'

by Belén Balanyá, Ann Doherty, Olivier Hoedeman, Adam Ma'anit, and Erik WesseliusCorporate Europe Observatory
November 1st, 2000

Corporate Eyes on The Hague

The Kyoto Protocol on global warming is in danger of becoming the most corporate-friendly environmental treaty in history. From November 13th through 24th, the Dutch city of The Hague will host the UN Climate Summit, officially titled the Sixth Conference of the Parties to the Climate Convention, or COP-6. Final decisions on the implementation of the treaty will be taken at the Hague meeting. Critics say proposed market-based mechanisms, promoted by an alliance of Northern governments and corporate lobby groups, are being used to weaken and distort the Protocol from within.

A gradual shift has taken place. After years of unapologetic obstruction, most transnational corporations have now adopted what they deem a more 'constructive' approach. Business, they argue, will not block the negotiations nor prevent the implementation of the Kyoto Protocol at COP-6. Instead, they will focus on ensuring an unlimited use of the Protocol's market-based policies.

The attraction is clear- the market in global greenhouse gases could grow to trillions of US dollars over the next decades. Most corporations have discovered that huge profits lie ahead if they manage to shape the Kyoto mechanisms in their interest. The key challenge at COP-6 will be to bring the climate debate's corporate driven agenda to a halt. The alternatives are climate policies that pursue real emissions reductions and equity, and a withdrawal from fossil fuel dependency.

Reflecting the huge interests at stake, over 12,000 people will attend COP-6, a minority of them government delegates. In addition to over 4,000 journalists, there will be a similar number of 'observers', including a record number of corporate lobbyists.[1] Over 1,000 industry lobbyists attended the last climate summit of similar importance, COP-3 in Kyoto. Representatives of corporate lobby groups from the US, the EU and Japan will clearly outnumber environmentalists - an unusual situation for negotiations on what is without doubt today's most serious environmental problem.

Despite broad public, scientific and political consensus on the need for urgent action to combat climate change, greenhouse gas emissions continue to be spewed into the atmosphere at an ever-increasing rate. Years of negotiations have resulted in a mere 39 industrialised countries agreeing to a pitifully low collective reduction of 5.2 % by 2008-2012.[2] In fact, a global reduction of at least 60 - 70% percent is needed in the first half of the 21st century in order to avoid the devastating impacts of global warming, according to UN Intergovernmental Panel on Climate Change.

License to Pollute?

The 1997 Kyoto Protocol was celebrated as the first legally-binding treaty to set limits to greenhouse gas emissions. The climate debate entered quieter waters after Kyoto, and the negotiations have since circled around the three market-based 'solutions' enshrined in the Protocol- emissions trading, joint implementation and the Clean Development Mechanism. Emissions trading allows the 39 governments signed on to the Protocol to trade the right to pollute among themselves. Under this scheme, due to start in 2008, a country might choose to buy emission credits from another country that managed to reduce its emissions below its Kyoto targets. Joint implementation (JI) and the Clean Development Mechanism (CDM) grant Northern governments and corporations emission credits through special projects aimed at reducing greenhouse gas emissions abroad.

These projects can be carried out among industrialised countries and corporations (JI) or between one industrialised government or company and one Southern country (CDM). Although the rules and procedures have not yet been agreed upon, hundreds of projects are already planned and many are even being implemented. For example, a CDM project might allow the Dutch government to finance a factory producing energy-efficient light bulbs in Russia, but not doing the same at home; or BP Amoco could install solar panels in Zimbabwe while continuing to increase its oil production in the US. The logic behind these schemes is that it is less expensive for Northern countries to invest in reduction projects abroad than it is for them to reduce emissions domestically.

A disturbing reality lurks behind these benign-sounding mechanisms- they enable industrialised countries and their corporations to buy the right to pollute and to escape even the minimal commitments laid down in the Kyoto Protocol. Not only will these market-based mechanisms fail to achieve the agreed reduction targets for greenhouse gas emissions, they could wind up contributing to serious environmental and social catastrophe on a scale unimaginable. These policies would effectively turn greenhouse gases into commodities, locking-in existing North-South inequities in the use of natural resources and opening-up many new and harmful profit-making opportunities for transnational corporations- essentially creating a new market out of thin air.

Through these schemes, corporations and Northern governments will be entitled to buy countless cheap emission credits from the South, through projects of an often exploitative nature, thereby imposing on the South what the India-based Centre for Science and Environment refers to as 'carbon colonialism'.[3] Furthermore, all of the 'low-hanging fruit', or cheap credits, will have been harvested by the North when it comes time for Southern countries to reduce their own emissions, saddling them with only the most expensive options for any future reduction commitments they might make.

A recent study by the German Federal Environment Agency stated that current Kyoto Protocol emission reduction targets are hopelessly insufficient for the goals of climate stabilization.[4] The report estimates that if industrialised countries do not go beyond the 5.2 % reduction by 2008-2012, as outlined in the Kyoto Protocol, average global temperatures will increase by 2.7 degrees Celsius by 2100. This would not only cause a dramatic 15 and a half inch rise in sea levels, but would also threaten agricultural production and as much as 40% of natural vegetation around the globe. The report prescribes an emissions cut by industrialised countries to far less than half of 1990 levels by 2030 in order to avoid this nightmare scenario.[5]

But there is no need to look far into the future to see the horrendous impacts of climate change. The number of catastrophes caused by rainstorms, tropical cyclones, droughts, and other climate disruptions is increasing every year, resulting in terrible damage and human suffering. Recent examples include enormous mudslides in Venezuela, a devastating cyclone in the Indian state of Orissa, and massive floods in Mozambique.[6] A team of scientists from the Vrije Universiteit in Amsterdam recently confirmed that climate change is clearly having an impact on the frequency and intensity of natural disasters.[7] The authors conclude that "at least part of the damage caused by weather extremes is due to human-induced climate change."

What's at Stake in The Hague

COP-6 in The Hague is intended to wrap up three years of negotiations on the implementation of the Kyoto Protocol. Final decisions will be taken on the so-called Kyoto rulebook, which includes accounting methods for emissions, rules for the three market-based mechanisms, and compliance issues. Also on the agenda is 'capacity-building' to allow Southern countries to participate in the Kyoto mechanisms.

The chilling reality is that the climate summit in The Hague raises the very real possibility of an agreement that will not only enable Northern governments and corporations to escape their promised CO2 reductions, but will allow them to significantly increase their emissions. This calamitous scenario will unfold if the wide range of so-called 'solutions' promoted by some Northern governments and the unified corporate climate lobby are written into the Kyoto rulebook. Powerful forces are demanding that COP-6 end with a mandate for the Kyoto commitments to be fulfilled through emissions trading, the use of 'carbon sinks' (carbon absorption via forests, wood products, soil and industrial agriculture) and nuclear energy. The Clean Development Mechanism, ostensibly set up to transfer funding and technology for energy efficiency measures to Southern countries, could become a tool for subsidising nuclear energy projects, as well as industrial agriculture and tree plantations (including genetically manipulated crops)--options with dire social and environmental consequences.

The Way Forward: Climate Justice

The main challenge in The Hague is to stop the Kyoto Protocol from being further distorted by market-obsessed governments and corporate lobby groups. Calling a halt to the market-mania that has colonised the UN climate talks is a prerequisite to moving toward effective and socially just solutions to the climate crisis. The North must first acknowledge its ecological debt to the South (80% of all CO2 emitted since 1850 has come from the North).[8] A fair solution also implies the full recognition of equity between and within nations, with equal rights to the atmosphere for all human beings. However, real equity cannot be achieved in any regime which opens-up the potential for the selling off of the atmosphere.

Meanwhile, most environmental NGOs have failed to challenge the steadily growing dominance of market-based mechanisms in the UN climate negotiations. A number of mainstream NGOs have even actively endorsed emissions trading and entered into partnerships with corporations including some of the biggest contributors to climate change. These alliances have given corporate strategies undeserved legitimacy and made it even more difficult to promote real alternatives.

Any sustainable solution certainly implies an end to all new oil exploration and a just phase-out of existing oil exploitation projects. A smooth and fair transition will be required for all communities and workers currently dependent on unsustainable industries. The burden must be overwhelmingly borne by the largest producers of greenhouse gases- the corporations themselves.

Real solutions imply a profound societal transformation- a sharp turn away from fossil fuel dependent economies. The addiction to ever-increasing energy consumption needs to be broken, as even renewable energy will have negative social and environmental impacts if current growth patterns are to be sustained.

The burden is now on grassroots movements all over the world to increase pressure on governments to adopt real solutions to the climate crisis rather than caving-in to corporate 'greenwash'. It is clear that increased synergy between various grassroots movements and groups, for instance those campaigning on global trade and investment issues and those working solely on climate change, could form the foundation of a new alliance based on movement-building and participatory democracy as a means to achieve climate justice.

This article was excerpted from a longer report by the Corporate Europe Observatory (


  1. 10,000 people attended COP-3 in Kyoto, including 1,500 delegates from 160 countries, 3,500 observers and 4,000 media representatives. Sharon Beder, "Climatic Confusion and Corporate Collusion: Hijacking the Greenhouse Debate".

  2. The Kyoto Conference in December 1997 was the Third Conference of the Parties (COP-3) to the UNFCCC, the UN Framework Convention on Climate Change (also known as the `Climate Convention'). The Convention, which aims to stabilise greenhouse gas concentrations in the atmosphere at a level which would prevent dangerous interference with the climate system, was signed by 154 countries at the 1992 Rio Earth Summit. 84 nations signed the 1997 Kyoto Protocol, which is a development of the Convention containing specific targets and timetables. 39 industrialised countries under the Protocol have agreed to reduce emissions of six greenhouse gas: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. The European Union agreed to an 8 percent overall reduction, the United States to 7 percent, Japan to 6 percent, while Australia was allowed to increase emissions by 8 percent. Still far from entering into force, the Kyoto Protocol requires ratification by 5 of the Parties accounting for at least 55 percent of total CO2 emissions (the United States accounts for 36.1% of carbon dioxide emissions, the European Union for 24.2%, and Russia for 17.4%). So far only 29 countries, all developing, have ratified the Protocol: Antigua and Barbuda, Bahamas, Barbados, Bolivia, Cyprus, Ecuador, El Salvador, Equatorial Guinea, Fiji, Georgia, Guatemala, Guinea, Honduras, Jamaica, Kiribati, Lesotho, Maldives, Mexico, Micronesia (Federated States of), Mongolia, Nicaragua, Niue, Palau, Panama, Paraguay, Trinidad and Tobago, Turkmenistan, Tuvalu, Uzbekistan.

  3. Centre for Science and Environment, Equity Watch, October 25, 2000.

  4. "Serious Global Warming Impacts Expected Even With Strict GHG Controls, Report Says," International Environment Reporter, 20 September 2000.

  5. Even if industrialised countries cut their emissions to half of 1990 levels by 2030, climate change will still seriously disrupt natural vegetation, agriculture and sea levels. Average global temperatures would rise 1.7 degrees by 2100, sea levels would rise 33 centimetres, wheat production would drop 20% globally, and 28% of natural vegetation would be threatened. "Serious Global Warming Impacts Expected Even With Strict GHG Controls, Report Says," International Environment Reporter, 20 September 2000.

  6. For an overview, see Christian Aid, "Global Warming, Unnatural Disasters and the World's Poor," May 2000.

  7. Even if the South was to industrialise at top speed, the North's contribution will remain far higher during the remainder of the 21st century. "A Dirty Solution", New Scientist, 6 November 1998.

  8. Examples of such NGOs include the Pew Center, the World Resources Institute and Environmental Defence (formerly Environmental Defence Fund - EDF) in the US, as well as the World Wide Fund for Nature (WWF). Since the late 1980s, EDF has actively promoted emissions trading as part of the solution to environmental problems like climate change. In Europe, both WWF and Climate Network Europe (CNE) have cooperated with corporate groupings such as UNICE and CEPS in ways that lend a layer of legitimacy to the corporate climate agenda.