Carbon Markets and indigenous communities The real world impacts of carbon markets Gilles Dufrasne Policy Researcher, Carbon Market Watch 10/07/2018 Gilles.dufrasne@carbonmarketwatch.org

Part 1: Carbon markets: architecture and state of negotiations Part 2: Local impacts and indigenous people

Before we start… Emissions Trading System: Capped system where entities (companies) receive allowances which give them the right to pollute  allowances are delivered prior to the polluting activity e.g. European Union ETS Carbon (credit) market: System under which achieved emission reductions are traded Credits are delivered after the mitigation activity e.g. Clean Development Mechanism

Why does it matter? Main carbon markets are project based  serious local impacts on people and environment Similarities with green bonds (financing mitigation projects through markets) But: Carbon credits = purchase of emission reductions Green bonds = loans Bonds can be ineffective, but Carbon Markets can reduce overall mitigation!

CDM: Clean Development Mechanism JI: Joint Implementation IET: International Emissions Trading SDM: Sustainable Development Mechanism CORSIA: Carbon offsetting and Reduction Scheme for International Aviation

From CDM to SDM CDM SDM Most emission reductions would have happened anyway (73% of credits unlikely to be additional) Some Human Rights infringements and severe negative impacts on people and the environment “Deliver overall mitigation in global emissions” “Promote sustainable development”  Starts with better safeguards Local stakeholder consultation rules and grievance mechanism Practitioner’s guide for local stakeholder consultations  CMW, May 2018

What is CORSIA? Carbon Offsetting and Reduction Scheme for International Aviation Voluntary start in 2023 (All ICAO members in 2027) Offsetting aviation’s growth in emissions above 2020 levels Offsett criteria being negotiated Increasing tensions: EU, China and others threatening to leave This system will not reduce (much) the aviation sector’s environmental impact!

Brazil’s role Seller of carbon credits (around 7% of CDM credits, 4th largest supplier) Position on UNFCCC market negotiations: Wants to keep things as they are: CDM methodologies, credits, projects to be accepted in new markets Wants to double count credits (!!) Need to raise awareness about the dangers of these positions

Part 2: Local impacts and indigenous people

Barro Blanco hydrodam CDM project

Climate Benefits, tenure costs: The Economic Case for Securing Indigenous Land Rights in the Amazon, World Resources Institute (2016)

From: Climate Benefits, tenure costs: The Economic Case for Securing Indigenous Land Rights in the Amazon, World Resources Institute (2016)

From: Climate Benefits, tenure costs: The Economic Case for Securing Indigenous Land Rights in the Amazon, World Resources Institute (2016)

From: Climate Benefits, tenure costs: The Economic Case for Securing Indigenous Land Rights in the Amazon, World Resources Institute (2016)

From: Climate Benefits, tenure costs: The Economic Case for Securing Indigenous Land Rights in the Amazon, World Resources Institute (2016)

Carbon credits for protecting the Amazon? No! Difficult to measure exact emission reductions (baseline?) Impermanence of CO2 storage in trees What then? Climate finance for forest projects (with social safeguadrs) No more offsetting!

Some food for thoughts… Social safeguards in UNFCCC markets are key  Local stakeholder consultations and grievance mechanism Need to end the CDM and improve next generation Buyers will be the airlines (not countries!) Double counting of credits is a massive danger (and Brazil is a key stakeholder to engage with) Similarities between carbon credits and green bonds markets? (different performances?)