The most dangerous climate finance "solution"

Carbon Credits: a.k.a. Pollution Permits

Greetings from Tunis!

It’s almost the end of November but it feels like summer. I was tempted to go to the beach, but I was too busy, unfortunately. The drought is still in full effect. No rain yet. Water levels in the major dams are below 30% of capacity. Water cuts are not uncommon in the evening in major coastal cities, and unfortunately, the interior towns often experience water shortages for weeks at a time, not to mention farmers who struggles to get any access to irrigation in recent years. And yet, Tunisia has major plans to produce water-intensive green hydrogen to export to Europe!

I’ve been getting a lot of requests lately to comment on climate finance and what to expect from the upcoming COP28 meeting in Dubai. I will share some thoughts here and link to some sources and recent interviews/comments I have made.

Net wealth extraction & empty promises

First let’s see sum up what the global financial system does relative to climate finance commitments. According to the latest Global Financial Integrity date, if we divide the world into Global North and Global South countries, and net out all global financial flows (trade, investment, remittances, interest payments, grants, etc…), the net amount is $2 trillion moving from the Global South to the Global North! That is money moving in the wrong direction, and accelerating! That’s the green line below.

Now, let’s put this side by side with the climate finances pledges and empty promises and you’ll clearly see the insulting hypocrisy of what we’re dealing with. We have $2 trillion of net wealth extraction from the Global South, next to $100 billion of annual climate finance that was promised almost 15 years ago and not fully delivered (and most of what was delivered was loans not grants). Then we have a Green Climate Fund that remains in the low billions, and the empty bucket of the Loss and Damage Fund that was created at COP27 last year.

So now we are told that most climate finance will come from multilateral development banks (in the form of loans), profit-seeking private finance (more loans and profiteering), foreign direct investment (more extractive profit-repatriation schemes), charity (yes thank you very much, now we’re saved!), and drum roll for market solutions….. Carbon Markets! No climate reparations from historic polluter who have more than exceeded their carbon budget. And more neocolonial greenwashing for Global South countries who were not responsible for climate change and yet suffer the most devastating impacts from climate-induced disasters.

Pollution permits!

Carbon credits are pollution permits that allow Global North polluters to continue polluting while offering financial crumbs to the Global South. They displace vulnerable communities from their ancestral territory and pastoral land. They enrich middlemen and speculators. And through the dominant market power of the corporations that buy these pollution permits, they pass the cost of the carbon credits on to their customers, many of whom are actually in the Global South, so we end up paying for it indirectly.

A recent investigation by The Guardian found that the majority of carbon offset projects essentially amount to greenwashing fraud that does nothing to reduce greenhouse gas emissions. This is one of the most disturbing climate finance false solutions and dangerous distractions. African countries who have not contributed to climate change, and who are in fact the victims of climate-induced shocks, are now being forced to give up territorial sovereignty over large swaths of land to foreign corporations to issue pollution permits. If this is not a new form of colonialism, then I don't know what is. I highly recommend reading this recent report, The Africa Carbon Market Initiative: A Wolf in Sheep’s Clothing (2023). And a great analysis is available in this IPS News piece as well.

The eviction of the Indigenous Ogiek from their ancestral land in the Maasai Mau Forest (Kenya) is a tragic form of enclosure and dispossession despite the fact that the Ogiek people have the legal right to the land and the forest. If the Kenyan Forest Services really wanted to protect the forest, they would have provided eco-housing units and a microgrid powered by renewable energy, along with the clean cooking infrastructure to support the real custodians of the land to live with dignity and in harmony with the ecosystem they have inherited from their ancestors.

Despite the lack of transparency about the real reasons behind these new waves of evictions, it would not surprise me to find out that this is an attempt to clear the Maasai Mau Forest to be designated a carbon offsets territory. We already know that Kenya has conceded millions of hectares of forest land to the UAE-based company Blue Carbon, which will collect hefty commissions and fees for selling pollution permits (aka carbon credits) to large industrial polluters in the Global North who will continue spewing CO2 emissions and displacing indigenous people like the Ogiek for their ancestral land without fair compensation. The revenue from these pollution permits go to the Kenyan government, which will promptly use these financial crumbs to service some of its external debt. And in the end, it is the communities that are on the frontlines of climate change who end up paying the price, while the historic polluters keep fueling climate change with their emissions. And, of course, Kenya is not the only African country walking into this dangerous trap. Liberia has conceded 10% of its territory to Blue Carbon, in addition to a similar deal with Zimbabwe totaling about $1.5 billion, among other African countries. This is the “new scramble for Africa”. This is a blatant form of neocolonial greenwashing that should not be allowed on this continent.

Enough of the false solutions, dangerous distractions, greenwashing neocolonial traps. We need real, transformative, just and equitable solutions.

More on this in the next few days before we head to Dubai for COP28.