Taking care of our planet can also mean being defrauded. Mainly in our time where fighting against climate change has turned into a lucrative business. By a credit card and a mouse, we all can allegedly fight against climate change. How? Surfing in a variety of web sites asking users for a contribution to help the poorest farmers of the world to replant their tropical forests able to absorb CO2.
As users, we also tried to get “green” by shopping in the eBay online store of the American company Clean Air Action Corporation (CAAC) managing a reforestation project in Tanzania.
By spending 10 dollars (almost 7.5 euro), we bought a CO2 credit to eliminate a ton of greenhouses gases from the atmosphere, the equivalent of our cars’ emissions every 100km. This is what stated on the certification in our inbox.
“How can we be sure about it?” This was the question we posed to CAAC as eBay users. “Trees must be at least 20 years old to absorb a CO2 ton” answered Charles Williams, the company’s vice president. Trees planters will have to work longtime to ensure our 10 dollars got the promised positive results on planet.
Surfing in Google we found out an old report issued by the Tanzanian government explaining how CAAC had not a good reputation. This news really amazed us and pushed us to book a 2 way flight to Tanzania. Goal: find out how CAAC spent the money of its donors.
Once landed in the capital Dar es Salaam, we met the journalist and friend of us Finnigan Simbeye. He put us in touch with Richard Muyungi, Director at the Environment Department of the Vice-president. He had the hot file about CAAC.
Muyungi was waiting for us in his office. When we told him we bought American CO2 credits to absorb one ton of dirty air, he seemed to be astonished behind his desk: “What? I cannot believe that CAAC is still operating” he said. “Why?” we wanted to know. “In 2005 the company asked us to endorse the project in the Kyoto Protocol framework” explains Muyungi, “We refused because the salaries given to villagers were not so proper. I thought they’d have withdrawn”
Aware of Muyungi’s statements, we traced the underpaid trees planters. One day trip on a local broken bus led us and our collegue Finnigan to Kongwa, the main town always in the dark in Dodoma region, one of the poorest African area. We spent the night there in the very heart of Tanzania, 300 km north-west far from Dar es Salaam.
The day after, a prompted taxi driver drove us for two hours there and almost ruined his car’s suspensions because he steered and even swerved on the muddy pavement. We stopped in the middle of a crowd of thatched huts, while villagers looked at us amazed as lost tourists.
The driver stuck out of the window, asked for information and told us: “Here we are, this is Chamkoroma”. The legendary anti CO2 village, as Muyungi suggested, really exists!
“Does anyone here plant trees?” asked Finnigan to villagers guiding us as an interpreter. Two youngsters got closer and led us to the forest up to a church crowd of believers on Sunday. They got in and out in few minutes, taking with them a middle aged man in grey.
“Hello! I am Raphael Chinolo, the leader of the local church” he introduced himself smiling, before telling us the unexpected background of his mission against the evils of the greenhouse gases.
For years Chamkoroma countryside has undergone deforestation because of wood selling and intensive corn farming. In 1998 the Anglican missionary Ben Jenneke left US to help local farmers -he made his followers- keeping the promise: “I’ll sell in the west CO2 credits produced by your trees and I’ll make you rich”.
In this way, Uncle Ben appointed Chinolo as chef-planter, giving him the holy task to organize villagers in “brotherhoods” aimed at giving the Earth plants back.
A few years before, Henneke thought to turn his religious calling to help needy people into a lucrative business. And in fact he founded CAAC in 1994 registering it in the free taxes US state of Delaware. Thanks to 1.7 million dollars funds by the US cooperation agency USAIS and petrochemical company Dow Chemicals, Henneke has started CAAC overseas by launching the International reforestation program TIST.
More than 80 villages involved in Tanzania were just the starting point of a wider commercial and philanthropic project, which was to be extended to Kenya, Uganda, India, Honduras and Nicaragua. Today, the US company has more than 50.000 planters. Until 2009 7 million trees were planted and until 2010 16.000 tons credits were sold via eBay and other sale channels, including the World Bank.
We followed Chinolo on the hill near to a ruined house in a eucalyptus forest. “I live here” he said “All around here there are the 35.000 trees I planted over the last decade with my group. We spent 3-6 hours per day planting, mainly in the dried season when we needed to pump water from a far source”.
Suddenly, he stoke ahead and touched the small plants in the courtyard where his children played with chickens. “What are they?” we asked. “The baby trees we still have to plant” he answered, “However, many planters complain being underpaid and late. I planted the first 5.000 hectares in 2000, but I was paid in 2007”
Then, the planter priest led us to his house and from a huge crowd of things he showed us a bank receipt as proof. “Take a look here: in 2009 my group was paid only on the basis of 1797 trees”.
We noticed, besides, that the salary per year for a single plant is just 16 dollar cents, almost a third less than 20 cents (about 15 euro cents) indicated by Henneke’s vice in his letter via eBay.
While we were having beans and manioc purée as our lunch, cooked by Chinolo’s wife, a bright colored dressed woman entered the house.
“Hello, I’m Verian, I plant trees as well” she said, while shaking a paper above his head wrapped in a veil. “The 11 members of my group and I started to plant trees in 2004, but we were paid only in 2009”.
She handed over her paper to us, which turned to be another bank receipt. Then, we calculated the overall amount for the group was 44 $, namely 4 dollars per person in 5 years.
Apart from the fresh shadows of trees, some sticks to burn and some baskets of acacia fruits, lemons and mango to be sold in the market, Henneke’s motto “ora, pianta et labora” didn’t make Chinolo and the other farmers rich.
And that was not enough. “Beyond the year salary for single plants, participants are entitled to have 70% of earnings coming from the credits sale” added the CAAC vice-president answering to our first information request.
According to the agreement signed with villagers –we read- the company shall redistribute profits after 20 years, namely when all trees stock their CO2 tons pre-sold in eBay.
Waiting for future and uncertain salaries, Chinolo’s fellows withdrawn the project. “Some planters have even started to cut trees to sell wood and smuggle the small trees, because this way is more profitable than grow trees” revealed our planters.
However, CAAC seemed not to be aware of it. And, as we have found out after, this was the lack that led the Commission of Kyoto Clean Mechanism in 2005 to suspend CAAC validation request in spite of the government opposition represented by Muyungi.
Interviewed via telephone at his oversees office, Henneke defended himself saying: “Planters are likely to be paid less than expected because of mistakes in counting trees. However, we have made salaries proper and the ways to calculate CO2 as well” stated the CAAC founder.
“Unfortunately, the credits sale decreased unexpectedly. This factor together with management high costs of and the impossibility to attract new investments through the Kyoto certification project don’t allow us to generate the profits we promised to participants”
CAAC cannot but sell suspicious value credits from Tanzania bought by particulars or businesses who want to convince themselves or their customers to have a green ethics. Even if in the end, the personal mind and marketing are more at stake, rather than environment or the exploited planters. We couldn’t but convince ourselves of the fact: CO2 credits were not the best purchase in Ebay at all.
From forests to CO2 credits: how the system works
Emissions credits are a tool set up in the Kyoto Protocol to allow governments and businesses to meet their greenhouse emissions reduction goals in the most flexible and economically efficient way. Those who reduce their own emissions acquire a number of credits equivalent to the number of CO2 tons not polluting the atmosphere.
Credits can be in turn resold to anyone whose emissions are higher than the maximum threshold and need these credits to compensate the extra emissions. Every credit is equivalent to eliminate one CO2 ton or a quantity of another gas with a similar greenhouse emissions impact. The actual CO2 reduction is verified by ad-hoc certification agencies. Once validated, credits can be sold at a given price on the basis of offer and demand.
By enacting Kyoto Protocol, the EU and the other signatory countries have set up their own ruled credit markets, whereas the so-called Clean Development Mechanism (CDM) has been created at international level under the aegis of the UN. Accordingly, investors reducing emissions in developing countries acquire special credits, called Certificated of Emissions’ Reductions (CERs).
The aim is to attract investment from the West helping developing areas of the world to opt sustainable economies. CERs can be bargained in industrialized countries’ markets, whose stakeholders can in turn purchase them to compensate their emissions. The CDM can issue CERs to project whose goal is reforest deforested or empty areas.
Because trees absorb CO2. In this way, forests can be preserved, contributing meanwhile to local planters’ community surviving and the fight against global warming. Green lungs of the planet are estimated to absorb about 5% of the overall emissions released in the atmosphere every year.
Up today, only 14 reforestation projects out of more than 2000 have been certified and have absorbed 1.242.500 CO2 tons per year. The poor number of projects approved is due to the complexity and the slow approbation procedures of the UN Commission managing the CDM.
Beyond international checks, we should take into account that the country hosting the project considers it able to meet its own sustainable development policies and allows its certification. But that’s not enough: CERs coming from reforestation projects are not recognized by EU, the main emission credits market worldwide.
In spite of these obstacles, the UN is trying to extend the certification to other projects consisting in the prevention of the already existing forests threatened by deforestation. Basically, we could buy CO2 credits and avoid to cut existing trees rather than plant new ones.
This initiative, whose name was REDD (Reducing Emissions From Deforestation and Forest Degradation) was later widened with the name of REDD+ and launched in 2005 by some governments beyond the Kyoto Protocol.
In 2008 it was handled by the UN, which has been helping developing countries to draft and implement national strategies aimed at overcoming financial, technologic and legislative barriers to protect forests durably. The long term goal is to set up standard mechanisms allowing REDD projects to be included in the CDM.
This would be an incentive to investors who could take advantage of the great opportunities linked to forests protection. A step forward like this was strongly envisaged at Doha climate Summit last November, where they ruled to postpone decisions at the next conference in 2013. The main point was the gap between poor and rich countries.
The first claimed immediate international funds to embark projects, while the latter asked for efficient rules to check CO2 emissions reduction and the credits commercialization in their own markets before using public funds to attract private investments.
In this stalemate, economic interests risked to darken the climate impact of deforestation, meaning 20% of global emissions and up to 21 billion euro to be halved.
However, business is business, as Americans say. And in fact, they conceived and diffused the method to get around diplomatic polemics and the strict rules of the CDM. Goal: playing in advance and turning tropical countries forests into money by certifying and exchanging REDD projects credits –together with other emissions reduction projects- beyond the Kyoto system.
In this way, at the beginning of 2000, a wide range of alternative markets was created thanks to particulars. In this system, credits are exchanged according to the rules not made by public authorities as the EU or national governments but by the founder of each “club” admitting those businesses willing to pay a participation share.
In this case, credits are called VERs, acronym for voluntary certifications of emissions reduction. All clubs have set up their own standards to check CO2 reductions, which are often measured by the same certification agencies validating CERs.
VERs are actually voluntary because those who purchase them don’t need to meet any emission compensation liability, but rather because they want to cultivate their business image. On the contrary, CERs are purchased by shareholders legally bound to reduce greenhouse gases.
Most of those investing in reforestation projects choose VERs because they are easier to obtain than CERs and often wait for these latter. Although VERs can be resold at a lower price, they are more subject to speculative transactions due to less strict transparency liabilities compared to CERs and can be duplicated.
Forest credits market: figures increase
The rush to the new forest Eldorado passed from 8 million hectares in 2010 to 18 million hectares worldwide, provided that 14 projects are REDD projects paid through voluntary credits’ (VERs) sale. As the matter of fact, while reforestation projects are just 1% of all registered projects in the framework of the CDM, VERs are more than 50% of all validated projects.
Most of forest areas involved lie in Africa, which had more than 30 projects in 2011 and sold 97% of credits to EU voluntary buyers. These are the estimates included in the report provided by the US observatory Ecosystem Marketplace at the end f 2012.
Until 2010, negotiations reached 75 million CO2 tons on the whole. Equivalent value: 325 million euro. In 2011, while the transaction volume decreased by 22%, their value increased by 33%, reaching the record 178 million euro. It was the highest annual value never reached before.
This amount includes checked credits only, CERs or VERs, namely credits meaning a verified CO2 reduction. As the matter of fact, it doesn’t take into account figures -we are not able neither to check nor to calculate- about unofficial and non-professional sale channels.
For instance, the channels opened to the broader public as eBay are used by investors as CAAC, brokers or famous goods and services brands which can boast of being environment-friendly, selling or buying credits with different dates of expiry: offsets is their name for experts.
Offsets are introduced in the market by projects investors to collect funds to pay those who take care of forests, while they are waiting for VERs and/or CERs to be sold.
Offsets will be probably checked if and when trees grow enough to absorb the equivalent amount of CO2, supposing that investors are subject to the checks of a certification agency in order to get VERs or CERs. On the contrary, investors can sell offsets endlessly, making their customers unaware of the CO2 reduction.
The floor to experts: forest credits cheat
We phoned Jol Hodgson, one of the experts who rejected CAAC reforestation project in Tanzania at the Commission of the CDM. “CAAC method to calculate CO2 is completely wrong, because it doesn’t take into account the fact that trees cut before and during the project release CO2 which neutralizes the absorption of CO2 of other trees” explained Hodgson.
This means that even after 20 years, CAAC couldn’t eliminate a CO2 amount equivalent to all credits sold and being sold via unofficial sale channels as Ebay.
If the Commission of the CDM had approved CAAC project, CAAC would have pre-sold official Kyoto Protocols credits (CERs). However, CAAC got the recognition for its project in India and is currently trying to get it for other countries too.
“To be sure that their money actually help reduce emissions and palliate poverty in developing countries, buyers shoud ask sellers if their projects were validated by accredited agencies” added McMahon, manager of the famous environment certification US Company Environmental Services, “However, the education level of the public about these topics is still too low”.
We should also underline that Environmental Services validated CAAC project in Kenya in May 2011 and certified it in the framework of the Voluntary Carbon Standard (VCS), one of the biggest voluntary credits markets (VERs), namely the credits exchanged beyond the compulsory Kyoto system.
“OK, you said CO2 credits in Kenia were validated, but how can you be sure that CAAC didn’t count the same trees twice: first to calculate credits with different dates of expiry (offsets) sold in eBay and second the credits sold via VCS platform?” asked we to David Antonioli, AD of the same platform. “Well, there’s no way to prove it”, the Italian-American said.