Upsetting the Offset

March 6, 2010
Note by David Levy, Climate Inc. editor: I’m posting this introduction to a new book, Upsetting the Offset by my academic colleagues Steffen Böhm and Sidhartha Dabhi because it presents an insightful and well-argued series of critiques of the carbon markets. Some readers might find that they disagree with the analysis in the book, but it’s important to engage in these debates if we are to trust governance of the climate system to market mechanisms.

An introduction to the new book ‘Upsetting the Offset: The Political Economy of Carbon Markets’, edited by Steffen Böhm and Sidhartha Dabhi (MayFlyBooks, December 2009), by the authors. The book can be ordered or downloaded free here.

Dr. Steffen Böhm is Reader in Management at Essex Business School, UK. Siddhartha Dabhi is a researcher at Essex Business School, University of Essex, UK.

boehm offset coverDecember 2009 saw world leaders come together in Copenhagen to try to agree on a post-Kyoto deal to save the planet from global warming. But the attempts to hammer out a new deal met with an apparent failure. But was it a failure? Many commentators would argue that the apparent failure can be seen as a welcome breathing space to question the underlying mechanisms that are supposed to help us fight climate change. In this way, Upsetting the Offset is a very timely book, as it critically engages with the political economy of carbon markets, which have emerged as the dominant instrument to mitigate climate change.

This book argues that carbon markets are one of the most ambitious projects of neo-liberal capitalism, in its attempt to create a business opportunity out of what many would label as the most important issue mankind is currently facing: climate change. The underlying ideology of carbon markets is to internalize and reduce the risk of climate change by putting a price tag on carbon emissions. The core assumption is that the power of a self-regulating market will achieve maximum possible reductions of carbon emissions at the lowest possible cost. The book, which comprises 30 chapters written by some of the world’s most renowned critics of carbon markets, shows that this efficient market is a myth. All the evidence collected so far about the actual workings of carbon markets points to the alarming conclusion that carbon markets, instead of reducing carbon emissions, provide perverse incentives for the increase of carbon emissions, while also having detrimental social and environmental impacts on local communities in many so-called developing countries of the Global South.

Part I of the book introduces carbon markets, focusing specifically on the logic of the Clean Development Mechanism (CDM), one of the most prominent carbon markets administered and controlled by the United Nations. The first introductory chapter by Steffen Böhm and Siddhartha Dabhi gives a broad overview of the most recent climate change science and the political steps taken so far towards its mitigation. The main aim of this chapter is to form a premise for why the authors of this book might want to ‘Upset the Offset’ and engage in a critique of carbon markets. The second introductory chapter by Larry Lohmann talks about the formation of carbon markets through the commodification of the atmosphere. In this chapter Lohmann illustrates in detail how carbon emissions are converted into an abstract, quantifiable commodity, thus opening up endless avenues for creative accounting, a huge trading market, and leading to financialization and securitization of a “fictitious commodity”, to use Polanyi’s term.

Part II of the book comprises a range of case studies from Thailand to Chile, from Uruguay to India, presenting rich details of the often negative effects of CDM and voluntary offset projects on local communities in the Global South. The CDM has been packaged as a ‘win-win’ strategy where technology transfer takes place bringing emissions reductions and sustainable development to the South. But on the ground, it turns out that what the rich North pays the poorer South for is continued pollution and fostering inequalities between the masses and the elites. With its rich empirical detail, this section of the book shatters the false  illusions created by carbon market proponents, who have been promising a green capitalism where profit maximization is possible in an environmentally sustainable and socially just way. While tree planting, biomass electricity generation and wind power may sound green and ethical, it turns out that they often are too good to be true.    Part II begins with papers by Melissa Checker, Tamra Gilbertson, Cristián Alarcón and Isaac ‘Asume’ Osuoka, showing how ‘developed’ and ‘developing’ countries and their respective governments, corporations and local communities are interlocked in a complex web of carbon market relations, which, rather than promoting sustainable development, help to increase inequalities between North and South. The next set of chapters – written by Ricardo Carrere, Raquel Nuñez, Rafael Kurter Flores et al. and Steffen Böhm – are aimed at breaking our illusion of considering industrial tree plantations to be real forests that would help us fight climate change. The last set of cases – written by Soumitra Ghosh, Hadida Yasmin, Siddhartha Dabhi, Nishant Mate and Soumya Dutta – come from India, which is one of the largest hosts of CDM and voluntary offset projects. These cases expose the greenwash created through the usual rhetoric of technology transfer, employment generation, emissions reduction and sustainable development.

Having presented the case studies, Part III offers a broader critique of carbon markets. What these seven chapters show is that carbon markets are not merely mechanisms to combat climate change. Instead, they must be seen in relation to the historical development of capitalism. In fact, carbon markets can be seen as the expansion of the market system to new spheres which so far have escaped commodification. This is where a crucial question needs to be asked: can we trust capitalist markets to deal with such a grave and global problem as climate change, given that capitalist production and consumption regimes have created the problem in the first place? The authors of Part III argue that there is now overwhelming evidence that carbon markets will not help us mitigate climate change by commodifying the atmosphere, which should be seen as a common good shared by humanity. Instead, carbon markets will lead to more exploitation, inequalities and perverse speculations and financial bubbles of the kind the world has seen explode in 2008. Therefore, carbon markets should be seen as a dangerous diversion from the need to drastically change lifestyles and economic, social and political structures that will help to free ourselves from the world’s addiction to fossil fuels.

Part IV of the book is a step towards hope. Each paper in this section points to real alternatives to carbon markets, many of which already exist in local communities around the world. If indeed carbon markets often deliver quite perverse outcomes – as many contributions to this book have shown – then what are the alternatives? What can be practically done to mitigate climate change and create a real sustainable, low carbon future? These authors stress that a sustainable future is in our hands. The first two papers by Patrick Bond and Philippe Cullet offer a more ‘political’ answer to carbon markets, suggesting that, rather than managing complex carbon markets, governments in the North need to think about the ‘ecological debt’ they have created and consider climate change from a point of view of justice. The remaining papers  offer a range of very practical insights into how communities already live in sustainable ways. What these contributions seem to be saying is that communities around the world cannot depend on governments or markets to save them from climate change. If something has to be done, then it has to be done by each and every person.

Overall, the book alerts us to the realization that climate change is not just a problem of global warming and rising sea-levels. It is a wider problem of politics, economy, society and culture. It is a problem of a system that believes in relentless economic growth without paying much attention to the ‘externalities’, as the economists call all those social and environmental costs that cannot, or rather must not, be accounted for. One of the key issues that arise from Upsetting the Offset is that governments, corporations and citizens at large need to stop thinking that climate change can be stopped by simply introducing markets and putting a price tag on carbon. There is no evidence that has emerged so far showing that carbon markets actually work in terms of reducing carbon emissions. On the contrary, this book provides plenty of credible evidence that carbon markets are, in fact, a smokescreen and a dangerous diversion, preventing us from focusing on the real issues at hand.

One Response to “Upsetting the Offset”

  1. Interesting introduction, and well laid out. I am very intrigued to read what the critiques are about a carbon market. It seems as though, with any market, there would be a lot of room to fudge numbers and make back-door deals that would ultimately undermine the overarching purpose for creating the carbon market in the first place. Not to mention the extensive degree of regulation that would be needed.