Unpacking the hot air industry

Published on Pambazuka News, by Khadija Sharife, 2010-12-16.

The first priority for developing countries when it comes to climate change mitigation should be reducing poverty, but the market-based approach of carbon trading is … //


The UNFCCC system, in addition to that of other initiatives such as the Kyoto Protocol, legitimises “flexibility points” – mechanisms that include carbon trading as well as the CDM, promoting the offset strategy. Annex 1 countries (or developed countries that are leading polluters) pledged, via a ‘noted’ but not binding accord pushed through by an exclusive group of countries in Copenhagen, to reduce emission by 12-18% of 1990 levels by 2020.

China, an emerging country that could be classified as ‘developing’ – also rivalling the US for emissions, has committed to financing its own climate change requirements. Yet China, crucially, threw its weight behind the Group of 77 nations to demand that Annex 1 GDP countries spend 1.5% of GDP for climate finance, the equivalent of $600bn annually.

The World Bank has proposed, through the Climate Investment Funds unit, that the Bank levy a fee of $350,000 for each investment project, 40% more than standard development project fees. The Bank’s President Robert Zoellick has promoted the Bank to developing countries as the ideal vehicle to engage in climate financing, a strategy embedded in leaked World Bank documents.

But it is not only through the World Bank that the foreign policies of developed nations are implemented – aid represents another key vehicle. As WikiLeaks recently exposed, US under-secretary of state for democracy and global affairs Maria Otero urged the Ethiopian premier and head of the Africa Union climate change negotiation’s team, Meles Zenawi, to sign the Copenhagen accord, as it represented a point of departure for other discussions, or else.

As the UNFCCC noted, the first priority of developing countries concerning climate change mitigation should be poverty reduction, yet capital flight firmly prevents poverty reduction from being realised. Ironically, through similar developed-country policies, over 50% of small island jurisdictions – on the front line of climate change, are tax havens.


Even worse, the financing that developed countries persistently claim cannot be raised, could be easily generated through a small financial transaction tax – also known as a Robin Hood Tax – on cross-border financial flows. Campaigners say such a tax could generate $400bn, chiefly from developed countries. Not only would this require information sharing on a multilateral basis as implemented within international agreements, but it would also allow for developing and developed nations to track and recover stolen wealth.

The issue of climate must be broadened beyond ‘adaptation and mitigation’ to a systemic overhaul, beginning at the fault line: the lack of political will on the part of systemically powerful pollution nations to correct imbalances of power in the market and the unregulated nature of international trade and financial transactions.

For the UNFCCC to have more legitimacy, these issues – fundamental to political economies integrated within the global financial architecture – must be acknowledged and made legally binding.

The first priority for developing countries when it comes to climate change mitigation should be reducing poverty, but the market-based approach of carbon trading is doing little to alleviate imbalances in the system, writes Khadija Sharife. (full long text).

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