---

WRM and Carbon Trading

From its beginnings in 1986, the World Rainforest Movement has been concerned about how forests, land and rural peoples’ lives are affected by industrial production of a whole range of commodities – soya, paper pulp, petroleum, timber, palm oil, maize, bananas, coffee and many more.

So it was only fitting that, in the mid-1990s, WRM began sounding alarms about another, brand-new export market that could also come to have severe effects on forests and the people who depend on them: the trade in biological carbon-cycling capacity.

How did this particular “environmental service” become a new Third World export product?

Much of the responsibility rests with the 1997 Kyoto Protocol. On the surface, the main point of this UN climate treaty was to require over 30 Northern countries to reduce their industrial emissions of carbon dioxide and other greenhouse gases – now generally acknowledged to be the major cause of global warming – by about five per cent by 2012.

But in fact the agreement encourages Northern countries to avoid some of these reductions by planting trees – either on their own territory or on that of other countries – or engaging in other “compensatory” projects.

By taking carbon dioxide out of the air and depositing carbon in tree trunks, the argument goes, plantations produce a climatically-valuable commodity that can be sold to the world’s heaviest fossil fuel users.

Economists and businesses had been laying plans for this trade for years. Beginning as early as 1989, far-sighted consultants had been fanning out across the globe to promote experimental carbon dioxide-absorbing forestry projects in countries like Guatemala, Malaysia and Bolivia.

After 1997, when attempts to create the new commodity market shifted into high gear worldwide, WRM began to take more serious action. Producing a series of publications and WRM bulletin articles pointing to the probable deleterious environmental and social effects of a new global carbon plantation economy, WRM and its network helped form an alliance of many non-governmental organizations, large and small, opposing international plans to press Southern land into service as cheap “carbon sinks” for the industrialized North.

As with many other such campaigns, success was only partial. In 2001, in the face of considerable European scepticism, the parties to the Kyoto Protocol officially approved the use of plantations in the South as carbon sinks for the North.

But they held off from allowing carbon-sequestration rights in existing Southern forests to be sold to the North. The EU decided, moreover, not to allow credits from forestry projects to be swapped for emissions in its EU Emissions Trading System.

In addition, as WRM had predicted as early as 1999, investors in specific carbon forestry projects began to suffer from bigger and bigger headaches when faced with grassroots and NGO resistance, as well as the scientific impossibility of proving how much carbon biomass projects actually “save” over their brief and uncertain lifetimes.

At a recent corporate conference on carbon trading, for example, one European private banker expressed regrets that his firm had ever got involved in a World Bank-backed proposal of the Plantar company, Brazil, to generate carbon credits from plantations and from not switching its industrial fuel for producing pig iron from plantation charcoal to coal (see WRM Bulletins Nº 60 and 92). “We ran into a big storm,” the banker lamented. “We had a lot of . . . rocks thrown at us. It was like stepping into a stream full of piranhas.”

For many, however, the idea of carbon forestry remains seductive. Many industrial plantation companies are still hoping to sell carbon credits to top up their finance. The World Bank continues to support biotic schemes through its carbon funds. Corporations and big, Washington-based conservation NGOs are pushing projects that would encourage local communities or national governments to sell rights to their native forests’ carbon to polluting corporations.

All this poses many strategic challenges for WRM and its allies.

For example, what advice might be shared with communities, particularly in Latin America, who are tempted by what looks like easy money for continuing to take care of their own forests? What are the best ways of encouraging discussion among communities and governments about the resulting:

- Invasions of lawyers, consultants, accountants and complicated contracts that communities will have to deal with?
- New rules that will give companies private property rights to the carbon in community forests and may restrict forest use?
- Low prices communities will get for their carbon?
- Political conflicts that may be provoked with other communities who are battling the fossil fuel extraction or pollution that the sale of forestry carbon credits encourages?
- Expanded local exchange economies?

Another question is what role WRM and like-minded networks should play in broader movements concerned with climate change and other social and environmental problems.

WRM’s pioneering role in challenging the carbon trade – played largely by the Sinks Watch initiative associated with its Northern office – was based largely on its concrete criticisms of carbon forestry and the institutions promoting it, ranging from the World Bank to plantation companies to intellectually corrupt technical consultancies, as well as the experience of specific local rural communities.

But over time, as is so often the case, this work has become inseparable from that of movements with broader or more diverse concerns.

For example, closer contacts have become inevitable with groups concerned with the carbon market as a whole, which includes the trade in emissions and in credits from non-forestry projects. These include organizations such as Carbon Trade Watch and Clean Development Mechanism Watch.

Closer ties have also resulted with groups concerned with fossil fuel exploitation and indigenous land rights (such as Oilwatch and Indigenous Environmental Network); with market approaches to other environmental problems; with industrial pollution; and with neoliberalism and antidemocratic trends more generally. Since 2003, WRM affiliates have participated in international network-building gatherings on carbon trading in the UK, South Africa, Argentina, Brazil and Montreal, in all of which “forest” issues have played only one part. Further meetings are planned for India and elsewhere in 2006.

As alliances have broadened, so has common analysis of environmental markets and new trends in international investment. Increasingly clearly, WRM’s work on carbon trading, while remaining rooted in local struggles, has become – like its other work – part of a wider search for social and political alternatives that ranges far beyond forest and land issues.

And at the same time that WRM builds new alliances with social justice movements and groups not specifically concerned with forests, it is being forced to evolve new strategies for tackling “forest-oriented” NGOs who do not share its overall social experience and vision. These include not only backers of corporate or colonialist carbon “offset” projects such as Conservation International and The Nature Conservancy, but also carbon-trading enthusiasts such as WWF and Greenpeace.

By Larry Lohmann, The Corner House, E-mail: larrylohmann@gn.apc.org

---

top

The United Nations Food and Agriculture Organization (FAO) reports outdoor field trials of GM trees worldwide in 16 countries. While the majority are located in the United States, there are also GE tree test plots in France, Germany, Britain, Spain, Portugal, Finland, Sweden, Canada, Australia, India, South Africa, Indonesia, Chile and Brazil. China is the only country known to have developed commercial plantations of GM trees, with well over one million trees planted throughout ten provinces.

Most of the research is being focused on Poplars (47%), Pines (19%) and Eucalyptus (7%). The main traits being studied are herbicide tolerance, insect resistance, wood chemistry (including reduction of lignin content), and fertility.

The projected social and environmental impacts from the release of GE trees commercially include the increased native forest conversion to plantations; the increased use of toxic herbicides and pesticides; and the loss of wildlife and water sources. Additionally, the contamination of native forests with engineered pollen from GE trees is predicted to lead to impacts such as the increased susceptibility of native forests to disease, insects and environmental stresses like wind and cold; disruption of forest ecosystems which depend on insects; the exacerbation of global warming due to increased forest mortality; and the loss of forest-based foods, medicines, fuel and traditional cultures. Scientists at Duke University in North Carolina in the US have created pollen models that demonstrate tree pollen traveling for over 1,000 km. Because scientists admit that 100% guaranteed sterility in GE trees is impossible, if GE trees are released into the environment, the widespread contamination of native forests cannot be prevented.

With the exception of China, the most rapid advancement toward GE tree commercialization seems to be taking place in the Americas: in the US, Chile and Brazil.

In Chile, research is being carried out on radiata pine to engineer it for insect resistance by inserting the gene for Bt production. Pine plantations currently comprise 80% of Chile’s plantations and the area of land covered by plantations in Chile continues to grow. Industry in Chile has projected a release of Bt radiata pine by 2008. Monsanto Corporation predicted that Chile would be the first country to commercialize GE trees, although China has won that race. Because many of the plantations in Chile are concentrated on the traditional lands of the Mapuche indigenous people, there are widespread health problems in Mapuche communities due to the chemicals used on the plantations and also due to the very heavy pollination from the pine plantations, which completely encircle some Mapuche villages. The introduction of Bt pines into these plantations will greatly exacerbate these health problems.

In Brazil, Aracruz Cellulose and Suzano are involved in research into GE trees. Suzano, which manages over 3,000 square km of timberland in Brazil is partnered with Israel-based CBD Technologies on a project to increase the growth rate of eucalyptus trees. “Regular eucalyptus trees are usually cut down after seven years, during which they grow to a height of 20 meters. Trees treated with CBD can reach that height in 3 years or less,” stated Dr. Seymour Hirsch, CEO of CBD Technologies. CBD and Suzano plan to set up a joint company to market their GE eucalyptus following the completion of their field trials. CBD also insists its fast-growing GE trees will help stop global warming. “A one hectare forest consumes 10 tons of carbon annually from the CO2 that the trees breathe. Clearly a forest that grows twice as fast consumes twice as much and contributes to the shrinking of the hole in the ozone.” [sic]

International Paper, which has 200,000 hectares of land in Brazil is also involved in GE tree experimentation there. In addition, IP is a partner in Arborgen, the world’s leading GE tree corporation. The other two partners are Rubicon, based in New Zealand, and US-based MeadWestvaco. Arborgen recently announced that it was shifting its focus from research and development to the marketplace. Specifically, Spokesperson Dawn Parks said Arborgen will be looking to hire a handful of engineers and production workers to design and run machinery capable of turning out larger quantities of the lab-altered seedlings the firm has developed.

Arborgen, headquartered in Summerville, North Carolina in the southeast US, is focusing much of its attention to eucalyptus in Brazil, which Arborgen considers to be its “most important geography.” Arborgen has established a Brazilian office and previously projected that they would have full field-testing in place in Brazil by 2005 on customer land.

In 2002 Arborgen hired former Monsanto executive Barbara H. Wells as their new chief executive. She had previously been the vice president for Latin America for Emergent Genetics and prior to that had been commercial biotechnology manager in Brazil, which may explain why Arborgen moved its field trials from New Zealand to Brazil after Wells came on board.

Arborgen is working to develop “improved pulping” [i.e. low-lignin] eucalyptus as well as cold-tolerant eucalyptus. Development of cold-tolerant eucalyptus is of interest for plantations in both Chile and the Southeast US.

Rubicon CEO Luke Moriarity in his July 2005 address to shareholders emphasized the critical role Brazil plays in Arborgen’s commercialization of GE trees. He emphasized the potential of GE low-lignin eucalyptus plantations in Brazil. “…by reducing the amount of lignin actually produced by the tree itself, a huge reduction in the total cost of wood-pulping can be achieved. Pulp operators can be expected to pay a significant premium for successful low-lignin treestocks.”

He went on to calculate the potential profit that could be made, “the value accruing annually to the treestock provider is [projected to be] some 38 million US dollars post tax. Repeating this level of sales year after year, without any assumed growth in market share, or penetration into other markets, translates into a value for this one product of some 475 million US dollars post tax.”

He continued in this vein, “however when you begin to look at the possibilities more closely you can see that the value potential is actually huge. Rather like human health, although much lower profile, the annual unit sales of forestry seedlings are well into the billions, recur every year, and span the globe. And unlike human health, where competition is intense, there are no global competitors to ArborGen in this space. Of course, ArborGen is still some years away from selling commercial product, so naturally the equity market discounts this prospective value fairly aggressively at present. However, as the chart behind me illustrates, as ArborGen continues successfully along the commercialisation path - as it has done to date - we can expect this "time to market" discount to decrease, and the value of ArborGen to ramp up accordingly.”

In conclusion he stated, “So I hope that illustrates the nature of this undertaking, and gives you some insight into its huge potential. As the saying goes - "it is only a matter of time."

Researchers working on genetic modification of trees surveyed for their opinions about risks associated with GM trees raise two concerns most often: environmental threat of escape of GM pollen or plants into native ecosystems and forests and their impacts on non-target species; and negative public perceptions of GM trees. This well-founded concern about public reaction to GE trees provides an important strategic opening for the campaign to stop GE trees.

In the US and Canada, thirteen national, regional and local organizations have come together as the STOP GE Trees Campaign, whose goal is to ban genetically engineered trees. To accomplish this goal, the group builds economic disincentives, social pressures and legal barriers against GE trees. Their activities include public education, community organizing, media outreach and distribution of a new documentary video on GE trees (“A Silent Forest: The Growing Threat, Genetically Engineered Trees”), narrated by Dr. David Suzuki.

Global Justice Ecology Project is also reaching out to organizations and movements around the globe who are fighting plantations in regions where GE research and development is occurring, in order to provide information about this looming threat and offer support for efforts to prevent the introduction of GE trees into plantations. GJEP has established its first pilot program in Chile with the Mapuche group Konapewman that coordinates efforts to reclaim traditional Mapuche lands and oppose threats such as industrial timber plantations and GE trees. GJEP plans to use the experiences from this pilot program in their effort to reach out to additional communities and groups in other regions threatened by GE trees.

Internationally GM tree and forest protection groups have spoken at United Nations meetings around the world about the threat from GM trees. Groups such as the Peoples Forest Forum of Finland, Global Justice Ecology Project of the United States, World Rainforest Movement and Friends of the Earth International have spoken at the UN Forum on Forests in both Geneva and New York City to inform delegates of the dangers GM trees pose to native forests around the world.

With little to no indication of help, however, from either the UN Forum on Forests or the U.N Convention on Climate Change, the international GE trees campaign is now turning to the United Nations Convention on Biological Diversity (CBD) to see what kind of international regulations on GM trees might be achieved through the CBD.

Even the UN Food and Agriculture Organization seems to be in favor of such international regulations. Their July, 2005 report on GM trees concludes,

“new biotechnologies, in particular genetic modification, raise concerns. Admittedly, many questions remain unanswered for both agricultural crops and trees, and in particular those related to the impact of GM crops on the environment. Given that genetic modification in trees is already entering the commercial phase with GM populus in China, it is very important that environmental risk assessment studies are conducted with protocols and methodologies agreed upon at a national level and an international level. It is also important that the results of such studies are made widely available.”

Internationally renowned geneticist Dr. David Suzuki points out that

“We have no control over the movement of insects, birds and mammals, wind and rain that carry pollen. GM trees, with the potential to transfer pollen for hundreds of miles carrying genes for traits including insect resistance, herbicide resistance, sterility and reduced lignin, thus have the potential to wreak havoc throughout the world’s native forests. GM trees could also impact wildlife as well as rural and indigenous communities that depend on intact native forests for their food, shelter, water, livelihood and cultural practices.

“As a geneticist, I believe there are far too many unknowns and unanswered questions to be growing genetically engineered plants—food crops or trees—in open fields. GM trees should not be released into the environment in commercial plantations and any outdoor test plots or existing plantations should be removed.”

By Orin Langelle and Anne Petermann, Global Justice Ecology Project, e-mail: globalecology@gmavt.net