Forest Carbon Scam

How Coal and Oil companies are trying to cheat the climate through forest offsets

Feature story - 15 October, 2009
Coal and oil companies are using forest offset projects to try and cheat the climate. Our new report Carbon Scam investigates how American Electric Power, BP and Pacificorp - all investors in the Noel Kempff Climate Action Project in Bolivia - are using the forest protection project to try and avoid reducing their own greenhouse gas emissions.

Forests shouldn't be a way for "cheaters" to meet their targets.

'Carbon Scam' shows how projected carbon savings are close to 90 per cent lower than originally claimed; how overall deforestation rates in Bolivia have actually increased since the project started; and how the promised benefits to local communities have come to nothing.

What is Noel Kempff?

In 1997, the three energy giants made an agreement with the Bolivian government  to invest millions of dollars to expand and protect the forest in  Noel Kempff national park. In return they would receive carbon credits, to buy and sell on voluntary carbon markets to offset their own CO2 emissions.

Noel Kempff is being used by the industry as the poster child for future sub-national forest offset schemes under REDD (Reduced Emissions from Deforestation and Degradation). REDD is the means by which forest protection will be included in the global climate deal to be negotiated at the UN Copenhagen Climate Summit in December.

What is a Sub-National REDD project?

Tropical forest destruction accounts for around 20 per cent of global greenhouse gas emissions. Protection of these forests must be a crucial part of any deal to save the climate. A debate is raging over what form this protection will take. The Greenpeace Forests for Climate solution shows the way to achieve both forest and climate protection.

But, other forms of REDD being proposed could actually threaten climate protection. "Sub-national" offsets (covering a specific area in a country) are a particular problem - these allow companies, including big coal and oil, to "buy" bits of forest to protect, in exchange for rights to future carbon credits from it.

There are real problems with this approach. For starters, misreporting is common as it is much harder to accurately measure the carbon in forests than from industrial sources like smokestacks, particularly if you only measure a small area. Another serious risk, increased through bad reporting, is "leakage", where deforestation stops in the area being protected, only to start up in new unprotected areas. What's more, without a more comprehensive plan for making emissions cuts, it's difficult to know how long a project will last (permanence) or whether it actually represents additional carbon savings (additionality) - as in many cases it's possible the forests would have stayed standing anyway.

Noel Kempff - widely touted by industry as a success story for sub-national forest offsets - fails on all of the above counts.

What's the scam?

Since the project started in 1997 the estimated CO2 emission reductions have plummeted by more than 90 per cent, from about 55 million tonnes to "up to" 5.8 million tonnes. Had the original false estimates been used on carbon markets there could have been an INCREASE in greenhouse gas emissions.  Companies could have claimed non-existent emission reductions while continuing to emit the amount supposedly offset.

These serious errors in counting emissions are reason enough to avoid sub-national offsetting altogther - but as if we didn't have proof enough, here's more. The project has failed to protect against:

1. "Leakage" - the companies promised that they were effectively monitoring leakagage but in percentage terms overall deforestation rates have actually increased in Bolivia. In fact, leakage from the project could be as high as 42-60 per cent.

2. ""Additionality" -  Changes in Bolivian law mean that Noel Kempff may have been protected anyway, without company involvement, and therefore any C02 savings may not be additional.

 3. "Permanence" - The project is at risk from forest fires, pests, disease and political changes, all of which can undermine forest protection. This could mean that the carbon stored, and used to offset the company emissions, could still be released.

4. "Community benefits" - Industry claims the project has benefited local communities in many ways, but testimonies we captured tell a different story. "Well, the reality is that the Noel Kempff project has not delivered any benefits," says local Pastor Solís Pérez.

World leaders must listen to the science not companies

Sub-national offsetting is bad for forests and bad for the climate. As world leaders gear up for Copenhagen, they must learn the lessons from Noel Kempff. Unsurprisingly, given that it is far cheaper for heavy CO2 polluting companies to pay for forest protection than reduce their own emissions, they are lobbying hard for sub-national offsets. These companies may be able to confuse politicians, but the climate isn't going to be fooled.

The world needs to see a Copenhagen deal that will save the climate. This must include serious measures to protect our forests, but not under sub-national schemes that benefit nobody other than the companies trying to cheat the climate.

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