Upsetting the Offset: The Political Economy of Carbon Markets

Steffen Böhm (SB): Larry, you and your colleagues have been at the forefront of the critique of carbon markets for almost a decade now. You have published a great number of books, pamphlets, newspaper articles, blog entries as well as academic articles, all of which you have made available on the Corner House website. 1 Many people from around the world, North and South, have downloaded these contributions, making it one of the key resource centres presenting critical thought on carbon markets. Let me congratulate you for making all of your work available free of charge; it's been invaluable for researchers like myself. Do you have any ideas about the number of people who have downloaded your papers as well as the other material you have made available over the years? Larry Lohmann (LL): It's hard to say because of the unreliability of the devices that count 'hits' on websites, but wherever I go I'm amazed at the number of people who have made good use of our website and the websites of our colleague organizations. SB: Do you find, when talking to people about carbon markets, that they know by now the basics about how they work, or do you think there is still a lot of ignorance and lack of information and knowledge about what carbon markets actually are? I'm asking because I must have formally presented and talked about the book I co-edited, Upsetting the Offset: The Political Economy of Carbon Markets (Böhm and Dabhi, 2009), more than 20 times over the course of the last two years. This has involved audiences ranging from undergraduate to PhD students, policy makers to business people, and a wide variety of academics, of course. But I'm still getting a sense that most people simply have no clue about what carbon markets are, how they function, who makes money and how, and what their implications and impacts are for people, politics and the environment. Do you think this is still a bit of a niche subject, or do you feel that there is now a broad understanding of carbon markets also amongst non-specialist audiences? LL: You could almost say that carbon markets are designed not to be understood by ordinary people. One of the functions they have come to assume – partly by intention, partly not – is to conceal a lack of effective action about climate change. What is even more striking is the extent to which carbon markets are misunderstood by people that....

The Politics of Carbon Markets (edited by Benjamin Stephan and Richard Lane, London: Routledge)

2011

Climate change mitigation necessitates substantial alterations to patterns of worldwide economic activity, be that reduction in demand, switches to new technology or 'end-of-pipe' abatement of greenhouse gases. There are profound political, economic and ethical questions surrounding the governance of the means, rate and location of change. Within advanced capitalist economies and internationally through the auspices of the United Nations Framework Convention on Climate Change emissions trading systems have been introduced as part of the broader neoliberal attempts to 'correct market failure' through the definition of new property rights.This thesis investigates the development, constitution and consequences of institutions for the production, exchange and consumption of credits for emissions reductions. Such credits are financial instruments awarded to organisations for putative reductions in emissions from 'business as usual'. In consumption, credits are equ...

Sustainable Development Law Policy, 2008

2013

This article offers a critique of global carbon markets and trading, with a special focus on the Clean Development Mechanism of the Kyoto Protocol. It explores problems with the use of tradable permits to address climate change revolving around four areas: homogeneity, justice, gaming, and information. Homogeneity problems arise from the non-linear nature of climate change and sensitivity of emissions, which complicate attempts to calculate carbon offsets. Justice problems involve issues of dependency and the concentration of wealth among the rich, meaning carbon trading often counteracts attempts to reduce poverty. Gaming problems include pressures to promote high-volume, least-cost projects and the consequences of emissions leakage. Information problems encompass transaction costs related to carbon trading and market participation and the comparatively weak institutional capacity of project evaluators.

Critical Currents no. 7, 2009

2006

The volume of private finance flowing through the voluntary carbon market has increased significantly over recent years, with an eight-fold rise from around five million to 43 million dollars between 2004 and 2005 alone (Capoor and Ambrosi 2006). A significant proportion of these funds ...

In this article, we explore the world’s response to the increasing impact of carbon emissions on the sobering threat posed by global warming: the carbon offset market. Though the market is a relatively new one, numerous offset providers have quickly emerged under both regulated and voluntary regimes. Owing to the lack of technical literacy of some stakeholders who participate in the market, no common quality or certification structure has yet emerged for providers. To the contrary, the media warns that a relative ‘‘cowboy’’ atmosphere prevails in the current environment, and that there are ‘‘widespread instances of people and organizations buying worthless credits that do not yield any reductions in carbon emissions’’ (Harvey and Fidler, Financial Times, 2007). At this point in the evolution of the market, only a handful of offset provider-rating schemes exist; and, even these systems leave consumers with few answers when they seek to find a means by which to ensure that the said systems are having their intended impact. The purpose of this article is, first, to provide a grounded understanding of the nature of the offset market, a tendency toward carbon neutrality as a possible point of equilibrium, and the ethical tensions that surround it from the perspective of the consuming public. Second, we outline the stan- dards environment for offset providers to illustrate most effectively the need for a single set of criteria among providers that is readily understandable by the common consumer stakeholder. We then explore the differences among the providers and articulate the specific criteria upon which providers may be evaluated by this particular stakeholder constituency, by bringing together best practices based on currently available analyses. Finally, we share the results of preliminary data collection in con- nection with 117 offset providers and highlight early findings. These findings allow us comparing providers effectively and efficiently on a common scale that services both providers, who thereby have greater guidance for self-assessment purposes, as well as consumer stakeholders, who then have the ability to make useful and more in- formed choices about carbon emission reduction in the future.

2011

We undertook an evidence-based study of 117 carbon offset providers from eight countries. From this study we contribute a conceptualization of venture performance and an agenda for research in this important domain. Our findings show how additionality (ie, project feasibility without external funding), certification, standards, prices, and transparency distinguish the best carbon offset providers.