The concept that underpins the whole system of carbon trading and offsetting is that a ton of carbon here is exactly the same as a ton of carbon there. That is, if it’s cheaper to reduce emissions in India than it is in Australia, you can achieve the same climate benefit in a more cost-effective manner by making the reduction in India.
The seductive simplicity of this concept is based on collapsing a whole series of important considerations – such as land rights, global inequalities, local struggles, corporate power and colonial history – into the single question of cost-effectiveness.
Any offsetting in countries of the global South to justify emissions in the North completely bypasses the issue of the extreme disparity in the levels of per capita carbon consumption and assumes that emissions reductions can be treated like another colonial commodity to be extracted and traded. When the Dutch FACE Foundation plants trees in Kibale national park in Uganda to offset consumer flights, it ignores the fact that the land has been the site of violent evictions in the recent past and is still hotly contested by the people who once lived there.
Even within the cost-obsessed logic of the market, the use of carbon trading and offsetting goes against common sense. The point of the system is to provide opportunities for companies in the North to delay making the costly transition to low-carbon technologies. This is indeed, ‘cost effective’ in the short term, as it’s easier and cheaper to buy carbon credits than to go about the complicated business of making those changes, but studies have shown time and again that the longer we delay making those changes, the more expensive and difficult they will be.
There has already been some documentation of how offsetting can be used by countries to avoid taking responsibility for meeting their Kyoto targets, and how fundamentally unsustainable companies like Land Rover, BP and British Airways can use offsets to garner undeserved environmental legitimacy.
But what is more disturbing are the new ways in which the offset logic is being creatively applied by the corporate sector.
Coca Cola has been the subject of sustained campaigns by social justice groups all over the world, but its business practices in India have received particular attention. In 2003, the Delhi-based Centre for Science and the Environment issued a report on laboratory tests that showed pesticide and insecticide levels of between 11 and 70 times the maximum set by the European Union for drinking water in a number of soft drinks being sold by Coca Cola in India. The US-based India Resource Centre has made numerous allegations against the company, saying that it causes severe water shortages for local communities, and that its bottling facilities pollute the surrounding soil and groundwater. In March 2004, officials in Kerala, a state in Southern India, shut down one of Coca Cola’s bottling plants over claims by local communities and activists that it had drained and polluted local water supplies.
In August 2007, while he sipped a can of Diet Coke in front of the distinctive World Wildlife Fund (WWF) panda logo, the CEO of Coca Cola, Neville Isdell announced a US$20 million dollar partnership with WWF that would aim to "replace every drop of water we use in our beverages and their production." Aside from plans to reduce and recycle the water being used, the third component of the package was to "replenish". This replenishment wouldn’t be taking place at the sites of the water depletion, but through a series of projects taking place in other parts of the world – effectively water offsets.
This US$20 million sum (less than 1 per cent of Coca Cola’s US$2.4 billion annual advertising budget) is being used to counteract the huge amount of negative publicity that Coca Cola has received through its practices of water depletion and pollution in countries like India. The company has maintained a vigorous campaign of denial of responsibility for any of the devastating impacts that such communities have suffered. By using water offsets, it can play the corporate good guy in other parts of the world without having to even acknowledge the damage it has caused elsewhere.
The potential for water offsets isn’t limited to just individual acts of corporate greenwash. Some commentators, like John Regan, a carbon credit-supplier on the Chicago Climate Exchange, sees Coca Cola’s water offset scheme as "an encouraging sign of the nascent need for a water-credit trading scheme". The idea is that if one company can’t control its water pollution sufficiently, it would have to purchase credits from another company that can.
Like carbon trading, such a scheme would provide ample opportunity for obscure accountancy procedures and a flurry of market activity to mask the fact that very little is actually being done to address fundamental issues of environmental degradation and social injustice.
Many other schemes to commodify and trade away environmental problems have been proposed or are in development, including landfill trading, endangered species trading and wetlands banking. The irony is that it is the perpetual expansion of market economies that has created such pressure on natural resources. Now, those same market forces are being put forward as the panacea to our multiple environmental ills.
This commodification agenda has little to do with public interest, it’s more about opportunities for businesses to capitalise on the transactions of these new markets. It has transformed what should be a political and social issue into a market issue – thus offsetting democracy.