Just Solutions to Climate Change

Just Solutions to Climate Change:

A Proposal for a Domestic Green Development Mechanism

Policy Summary

Professor Maxine Burkett

University of Colorado Law School

The United States is awakening to the urgency of the climate crisis; and by all indications, Congress will respond with the introduction of a cap-and-trade system meant to reduce greenhouse gas emissions through market mechanisms. But a pure cap-and-trade approach is, at best, indifferent to the needs of poor and of-color communities. At worst, it may well exacerbate the disproportionate burden of climate change that these communities stand to suffer.[i] International arrangements are unlikely to benefit domestic environmental justice communities, despite their adaptive capacities being comparable to those of some developing countries.[ii] Therefore, any forthcoming domestic cap-and-trade system should be supplemented by a green development mechanism (GDM), modeled on the Kyoto Protocol’s package of flexibility mechanisms.

The Kyoto Protocol’s Clean Development Mechanism (CDM) was designed as a means to effect just solutions to climate change by addressing uneven risks. Its exclusive purpose is to assist developing countries in achieving sustainable development through green and renewable energy projects in their countries, while simultaneously generating sellable emissions credits for companies participating in the international carbon trading regime. Its central feature thus is the generation of new Certified Emissions Reductions, which, most significantly, must be additional to reductions that might have happened absent CDM project activity.[iii] The program thus far has created carbon markets on both large and small scales.[iv]

By putting the Kyoto CDM’s laudable principles into effective practice in the United States, the GDM would encourage investment in green and renewable energy projects in poor and of-color communities. Those investment projects would generate emissions reduction credits that both investors and the communities themselves could sell in a domestic carbon-trading regime. As designed, the dCDM would help meet both the adaptive and economic needs of the poor. In the simplest terms, it would brace the most burdened communities against the impacts of climate change by providing them with the infrastructure to mitigate and adapt to those risks. It would likewise provide long-term financial relief by readying community members to participate in revitalized and sustainable local economies. In a variety of ways, then, the GDM would open the cap-and-trade system to crucial participation by poor and of-color communities, affording them access that otherwise would remain unavailable.

The Domestic CDM

a. Structure and Financing and the Adaptation Fund

The structure of the GDM would be similar to that of the Kyoto CDM.[v] Firms seeking to offset their carbon emissions under the statutory cap, for example, would invest in green projects in domestic environmental justice (EJ) communities, poor and of-color communities that are disproportionately impacted by environmental harms. These projects would create both certified credits for use in the market and sustainable economic opportunities within the EJ communities.

Importantly, the GDM would also include a domestic Adaptation Fund to help all EJ communities, irrespective of their ability to create or provide sites for local and profitable green projects. Kyoto’s Adaptation Fund is designed to support concrete projects that will bolster the adaptive capacity of developing countries with weaker economies. [vi] It is supported by, among other things, a small levy, the “adaptation fee,” placed on CDM projects.[vii] The Fund is a crucial supplement to the Kyoto CDM, as its sole purpose is to ensure, to the extent possible with available monies, that all global communities can adapt to the impacts of climate change. A domestic Adaptation Fund is equally critical for the fair distribution of adaptive capacity in the United States. It would be financed by a combination of a small project levy and earmarked monies from other legislation, such as the proposed Clean Energy Act.[viii]

b. Project Possibilities

The greatest promise of a GDM lies in the myriad projects that it can fund in EJ communities, projects that will play a significant role in climate change mitigation and adaptation, and that are possible only with the steady revenue stream that the program will provide. The Bronx Environmental Stewardship Training (BEST) program and the Oakland Apollo Alliance are examples of potential, and important, beneficiaries of the GDM. BEST has been on the cutting edge of green-collar jobs training. As a project of Majora Carter’s Sustainable South Bronx, BEST is an ecological-restoration job-training program that recruits exclusively neighborhood residents. Recruits, 95% of whom are on public assistance, range in age from 20-45 and are trained to do everything from landscaping and green-roof installation to brownfield remediation. Similarly, the Apollo Alliance in Oakland is committed to putting low-income and of-color community members to work in a green, sustainable economy that includes jobs such as construction work on green buildings, organic farming, solar panel manufacturing, and bicycle repair. Such promising programs cannot thrive in the absence of the financial and organizational support that the GDM will provide.

In general, urban-based GDM projects will likely begin at the state and municipality level. Much can be done in conjunction with the “quiet explosion” of state and local policies aimed at building local self-reliance as well as green economies. These policies are focused on retaining jobs and increasing local economic “multipliers” that allow money to recirculate in a community, producing additional employment opportunities.[ix] Public contracts, for example, are being used to help neighborhood-anchored community development corporations while improving the delivery of government services.[x] Such locality-based efforts are a natural fit for the GDM.

Green policies are also proliferating in American cities. Cities like New York, which currently accounts for 2% of total US carbon emissions, seek to be leaders in the effort to go green.[xi] The U.S. mayors’ initiative has resulted in many of these cities changing building codes to encourage energy efficiency and “pushing nonautomobile transport, tree planting, rooftop gardens, and biodiesel in city vehicles.”[xii] At every point of these initiatives, EJ community-operated organizations can benefit within and as a result of GDM investments.

There are similar GDM possibilities in rural communities as well. [xiii] Native American wind projects, for example, are well-established cooperatives that are waiting for a formal market, which the GDM would provide. There is a movement for local control of energy as wind and solar projects proliferate throughout tribal lands. Specifically, there is a push for the creation of distributed energy systems, with which local households and businesses can produce power and sell excess energy into the grid.[xiv] Winona LaDuke has written of such projects, “The reality is that this region of North America has more wind power potential than almost anywhere in the world. . . . Those tribes live in some of the poorest counties in the country, yet the wind turbines they are putting up could power America—if they had more markets and access to power lines.”[xv] The very purpose and the primary value of the GDM would be to provide such market access to entrepreneurial EJ communities.

Finally, retail markets for climate change projects are already booming. Companies and individuals who wish to be “climate-neutral” increasingly participate in these markets.[xvi] At present, “[s]everal ‘retailers’ serve this small but growing market by implementing larger emissions reduction projects.”[xvii] The GDM can ready EJ communities for full participation in these markets, and provide steady revenue sources in the meantime.[xviii]

Conclusion

The urgency of the climate crisis requires prompt and substantive action, particularly with respect to the communities at greatest risk. The GDM is a remedy that not only has significant advantages for the nation’s effort to reduce carbon emissions, but is also consistent with the current trajectory of policy-makers. The program will create a powerful engine for green, sustainable economic development across both rural and urban EJ communities. It will also galvanize those communities that have yet to organize around green development, ensuring, at the very least, a significant transfer of adaptive capacity to those that will suffer disproportionate harm. Finally, the GDM will provide abundant, cost-efficient opportunities for industries across the American business spectrum to invest in EJ communities—and thus in society as a whole—while meeting the emissions-reduction requirements of a cap-and-trade system.

[i] For a fuller discussion of this idea, and of the emerging field of “climate justice,” see Maxine Burkett Just Solutions to Climate Change: A Proposal for a Domestic Clean Development Mechanism (forthcoming spring, 2008) (on file with author).

[ii] See Robin Leichenko and Karen O’Brien, Is it Appropriate to Identify Winners and Losers?, in Fairness in Adaptation to Climate Change 111(W. Neil Adger et al. eds., 2006).

[iii] See Kyoto Protocol, Art. 12, section 5 (requiring real, measurable and long-term benefits related to mitigation of climate change).

[iv] See Emma Duncan, Selling Hot Air: Kyoto’s Main Achievement Was To Create a Market in Carbon. It’s Flawed, but Better than Nothing, The Economist, Sept. 9, 2006, at 17 (describing the carbon market fair in operation at Koelnmesse, Cologne Conference Center); Mindy G. Nigoff, The Clean Development Mechanism: Does the Current Structure Facilitate Kyoto Protocol Compliance?, 18 Geo. Int’l Envtl. L. Rev. 249, 260 (Winter 2006). The small-scale projects are fast-tracked, bypassing the more cumbersome procedural steps to which larger projects are subject. Id. at 261.

Kyoto’s CDM has been the subject of substantial and well-warranted criticism. The global project, however, has underperformed for reasons that the domestic project need not replicate. Kyoto’s defects derive from weaknesses in implementation of the program, not from the mechanism’s foundational philosophies. Current imperfections in the international arena would be addressed at the domestic GDM’s conception. See generally Burkett, supra note i. For example, current inefficiencies in the Kyoto CDM’s certification process would be examined, then planned against by excising unnecessary steps to certification. Most importantly, the projects that qualified for credits would be rigorously vetted for both environmental quality and community benefit and support. Equally important, the GDM would include significant and sufficient capital at start-up. Additionally, GDM participants could help finance administrative expenses for operating the dCDM by making contributions to an established Trust Fund. This would mirror the voluntary contributions Kyoto parties are invited to make to the UNFCCC Trust Fund for Supplementary Activities. See Nigoff, supra note iv, at 253.

[v] For a detailed description of the GDM’s (or ‘dCDM’), administration, and project possibilities, see Burkett, supra note i.

[vi] Nigoff, supra note iv, at 253. Developing countries also receive assistance from the CDM registry, into which 2% of Certified Emissions Reductions (“CERs”) from projects are deposited. Id. The CDM’s Executive Board sells these CERs and forwards revenues to host CDM countries and countries facing adverse effects of climate change.

[vii] Kyoto’s Adaptation Fund has been significantly hampered by the low number of certified projects, which have generated only a small amount of revenue. As of November, 2007, the levy had provided only $3 million. The GDM would address this problem through its streamlined project pipeline. See Burkett, supra note i.

[viii] For an example of how monies could be earmarked through energy legislation, see Burkett, supra note i.

[ix] Gar Alperovitz, You Say You Want a Revolution, World Watch, November/December 2005 at 19.

[x] Id.

[xi] Commentary, Cooling the Planet at the Gas Roots, Christian Sci. Monitor, Nov. 1, 2006, available at http://www.csmonitor.com/2006/1101/p08s01-comv.html.

[xii] Id.

[xiii] See e.g., Alan Scher Zagier, Strapped Mo. Farmers Turn to Wind Farms, FindLaw, Nov. 2, 2006, <http://news.findlaw.com> (last visited 11/2/06). Rural projects are introducing great possibilities. In this article, Zaiger describes wind energy projects that are meeting the needs of northwest Missouri hog and soybean farmers. Id.

[xiv] Id. See also Robert Gough, Indigenous Peoples and Renewable Energy: Thinking Locally, Acting Globally, at 7, available at http://www.ejrc.cau.edu/summit2/IndigenousClimateJustice.pdf. (describing the development and marketing of wind power dependent on integrated transmission grid operated through the Western Area Power Administration).

[xv] Id.

[xvi] Frank Lecocq and Karan Capoor, State and Trends of the Carbon Market: 2005, International Emissions Trading Associations and the Carbon Finance Product of the World Bank, Washington D.C., May 2005.

[xvii] Id. The full quotation reads as follows: “Several ‘retailers’ serve this small but growing market, by implementing larger emissions reduction projects, and then retiring slices of the emission reductions for their customers.” Id. at 13. Participation in this retail market can also have decidedly positive impacts on reducing greenhouse gas emissions, with the retiring of credits by EJ co-ops paid for by individuals and companies.

[xviii] The GDM might also leverage independent private investment. For the Protocol’s CDM, Morgan Stanley has made plans to invest almost $3 billion in projects that will generate credits for emissions reduction over the next five years. See $3 Billion Investment to Cut Greenhouse Gas Emissions Announced by Morgan Stanley, Daily Env’t Rep., Oct. 30, 2006, <http://pubs.bna.com> (last visited 10/30/06). Project beneficiaries include projects certified under the CDM.