Will Carbon Trading Work?

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On India's Bhilangana river, local farmers run a finely-tuned terraced irrigation system that provides them with rice, wheat, mustard, fruits and vegetables. This ingenious, extremely low-carbon system of agriculture is threatened by a new hydroelectric project designed to help power India's heavy industry. Villagers may have to leave the valley, losing not only their livelihoods but also their knowledge of a uniquely sustainable modern technology.

Is carbon trading stepping in to support the villagers' piece of the solution to global warming? On the contrary. It's supporting the hydropower company, which has hired consultants to argue that their dam will result in fewer carbon emissions than would have been the case if it had not been built. The firm plans to sell the resulting carbon emission rights to polluting companies in Europe.

The example is typical of the way carbon markets are undermining positive approaches to climate change everywhere. The bulk of carbon credit sales under the Kyoto Protocol benefit chemical, iron and steel, oil and gas, electricity and other companies committed to a fossil fuel-intensive future, not communities, organizations or firms working to overcome fossil addiction.

In California, the environmental justice movement opposes carbon trading as a "charade to continue business as usual". One reason: carbon trading would help facilitate the construction of 21 new fossil fuel-fired power plants there. Local activists want the money to be spent instead on building a green economy that would provide new jobs for the poorer communities of color that now suffer the most from fossil fuel pollution.

Carbon trading obscures the real solutions to global warming. Chicago derivatives trader and economics professor Richard Sandor – one of carbon trading's architects – claims, for instance, that forests in less industrialized countries can be saved from "slash and burn" agriculture by turning them into production zones for carbon credits.

More experienced observers of the plantation, dam, logging and oil industries know, however, that such forests are threatened not principally by poor farmers, but by precisely the type of land grab that Sandor advocates. Saving forests – and their moderating effects on climate – means respecting local people's needs, not trying to evict them or turn them into workers on a carbon production line.