A carbon crisis would lead to ecosystemic meltdown, economist says

Carbon markets were created to trade carbon emissions, specifically carbon dioxide, in an effort to slow climate change, but amid corruption and lack of other supporting organizations, these carbon markets have become ineffective.

During the third presentation of the fall 2008 Global Environment Speaker Series on Tuesday evening in Jepson Hall, speaker Daphne Wysham made her case for cleaning up carbon markets locally, nationally and globally.

"If the economy fails that's one thing," she said, "However, if the carbon crisis unfolds without serious response we will have an eco-systemic meltdown."

Wysham is a fellow and board member of the Institute for Policy Studies in Washington, D.C. The IPS is an institute, founded in 1963, to serve as a policy research resource for social justice movements, according to the IPS Web site.

Wysham presented problems and solutions for effective change in carbon markets during her presentation, "Corruption in the carbon markets and what we can do to rein it in."

Carbon markets were initially put into place to be one of many vehicles of action on climate change, Wysham said. Instead, the markets have arguably become the only driver for climate change, she said. She offered numerous counts of corruption in these trading markets and Wysham particularly stressed the involvement of the World Bank.

The World Bank is a public bank located in Washington, D.C. and serves as a source of financial and technical assistance to developing countries around the world.

The World Bank has made a profitable business in the carbon market, but the impact of carbon is not seen on its balance sheet because the organization only records carbon credits and not the debits, she said.

"They prioritize debt repayment over developmental assistance," Wysham said.

In 2005, the World Bank was approached by the G-8 to take a leadership role in cleaning up the environment and was advised to end coal financing by 2008, Wysham said. The bank did not take this advice and still finances fossil fuels.

In 2002, the World Bank's primary beneficiary was Halliburton with Shell being its No. 2 beneficiary and Exxon the third, presentation slides showed. In addition, Wysham presented research that showed the World Bank had invested multiples in fossil fuels that it shouldn't have, and that the poorest third of the country receives less than one-tenth of the bank's energy investments.

"We are finally getting to a stage where people realize we have to pay attention," Wysham said.

The organization is not alleviating poverty and about 77 percent of its projects are not relevant to the bank's overall goals, she said. It has not created clean energy access and there has been no proof of emissions reductions.

The World Bank acts merely as a broker between buyers of aluminum, steel, cement, etc., in the global North and the sellers in the global South, Wysham said. Less than 20 percent of what the bank has invested in was for renewable energy, one of the slides showed.

The major players in the emissions conflict are government bodies, rule makers, banks, carbon brokers, carbon traders, logging companies, farmers, environmentalists, indigenous groups and average citizens, she said.

She said a system of checks and balances should be set into place to monitor the various layers of actors, all parties involved and conflicts of interest.

Wysham suggested local, national and international responses. Locally, people should not invest in World Bank bonds to fund the banks activity. On a national level, she said it would make sense to impose a carbon tax, figure out a system to localize the carbon markets and institute full carbon accounting.

On a global scale, the response should be to create an International Renewable Energy Agency because of the conflicts of interest at the World Bank. In addition, Wysham cited the need for an international agency to develop an area of expertise in climate change and carbon markets.

Wysham is also the founder and co-director of IPS's Sustainable Energy and Economy Network, which works with citizen groups both nationally and globally on environment, human rights and development issues. The network focuses particularly on energy, climate change, environmental justice, gender equity and economic issues, according to the Web site.

The Sustainable Energy and Economic Network conducted some of the preliminary research that drew attention to the uneven ratio of fossil fuel investments by international financial institutions.

Contact writer Jessica Murray at jessica.murray@richmond.edu