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Climate Colonialism: How Carbon Credit Schemes Harm the Global South

Lucy Lönnqvist | Climate Fellow

The Sengwer Indigenous people of Peru. Image: Amnesty International

For almost 70 years, the Australian economy has been the furnace burning some of the most lethal fossil fuels of our planet – iron ore, coal and natural gas. The country’s top three mineral exports certainly don’t score highly on the scale of carbon neutrality.


Yet, when we look to some of Australia’s home-owned mineral resource companies dangling their ‘certified carbon neutral’ badge from the walls of high-rise offices, many Australians are left wondering how this could possibly add up. How can Australia’s greenhouse gas emissions rank so poorly on the world stage if the companies aggravating this crisis are proudly flaunting their green stamp?


The answer is a process known as off-setting. A nation or corporation that seeks to emit carbon beyond the standard cap can do so by offsetting its carbon emissions. For instance, a typical offset project involves companies planting vegetation in an allotted square of land to counterbalance the greenhouse gases emitted from mining ventures. Most offsets are purchased by firms to reduce their net emissions and demonstrate that they are heading toward net-zero.


The trouble with offsetting is that there is little accountability throughout the process. Although vegetation may be assigned to a plot of land, there is little oversight to prevent this territory from being sold twice and accredited to more than one company. Moreover, the quality of nature created within offsets is often sub-par, as companies will opt to monocrop, discouraging any hope for biodiversity to blossom into habitats for native wildlife.


However, the ramifications of offsetting emissions are not merely traced within the walls of the Australia’s mining industry. Instead, they fall back on a much greater political conflict between the Global North and Global South at large.


Offsetting processes are a loophole for companies to solicit greater market power. If looked upon through a larger-scale lens, the model of offsetting gives way for the Global North to continue charting upward GDP trajectories while the Global South becomes a sacrificial zone for the offsetting ventures of transnational corporations.


This phenomena is exemplified by the fact that carbon credit processors are organised so that credits are awarded to companies who offset their emissions (commonly those in the Global North), and simultaneously subtracted from countries in the Global South where the offset plantation occurred. Underdeveloped societies thus become an installation ground for low-carbon initiatives of the developed world. This intensifies the South’s exposure to Western intervention schemes on local communities.


This was the case in Kenya, where the Sengwer Indigenous people of Embobut Forest were violently dispossessed from their homes and ancestral land to make way for greater reforestation to create carbon offsets. A more recent example occurred in the Alto Mayo protection forest in Moyobamba, Peru, where the homes of local coffee farmers were destroyed and families left abandoned in the Peruvian Amazon. All the while, offsetting projects were acclaimed as an overwhelming success for the $2 billion Western market, granting transnational companies carbon credits for their net-zero claims.


Funny enough, such action is a recognisable pattern of the past. Indigenous disposition of homeland is something that has been brushed under the rug before. Is carbon offsetting just a modern wave of colonialism disguised under the umbrella of climate justice?


The Alto Mayo Protection Forest in Peru has been the site of carbon offset projects that have offset native populations. Image: JYB Devot via WikiMedia Commons

The Global North has profited from higher temperatures clearing space for agricultural practices. Meanwhile, the Global South is left to fend off intensifying natural disasters and to absorb the economic blows. Offsetting schemes are the underlying force in the tug of war between unequal emissions and unequal exposure to impacts, reinforcing the pre-existing double injustice between the Global North and South.


According to research published by the Harvard Business Review, most offset buyers have no direct legal relationship with the offset project. This means that companies cannot collect any concrete data on carbon capture to serve as feedback from their offset initiative. The absence of any accountability blueprint leaves no incentive for companies to replace damaged forestry or lost carbon if a project were to fall short. Instead, once a company has purchased an offset, they dust off their hands and assume themselves to be relieved of all ecological responsibilities.


However, a forest requires 10 years of growth before it begins to remove carbon from the atmosphere. Hence, we should not be allowing businesses to walk away from an offset after pocketing the unearned revenue from the sale of its future carbon capture. Unless offset contracts are thoroughly overviewed and audited, market-based approaches to reducing carbon emissions are vulnerable to fraudulent business misadventures.


In light of this, looking ahead to the future sustainability of our planet and shared livelihood, what options are available to viably profit from carbon offsetting, financially, ethically, and environmentally?


It begins with implementing accountability and auditing procedures in corporations offset portfolio management. Only then can we envision a transparent and predictable representation of a company’s carbon removal offsets. The introduction of an offset portfolio in the business model of heavy emitters would ensure offset providers such as Verra, can account for unearned revenue and be able to replenish their offsetting projects instead of abandoning them. This framework would mirror the portfolio of insurance companies whose commitments extend well into the future.

Further to this, in order to avoid carbon offsetting being branded as the up-and-coming colonial crusade, offset managers should ensure thorough research into the geographic grounds for potential offset projects. The prescription of a land right certificate could be legally required to prevent the unwanted imposition of offset projects on already-inhabited land.


Ultimately, the short-term goal in the market of carbon offsetting is for heavy-emitting corporations to begin by establishing measurable models of oversight and legality within their offset protocols. Australia and the rest of the Global North have a big responsibility to reduce our carbon footprint. With this in mind, let’s not allow history to repeat itself by sacrificing the land of Indigenous communities to the exposure of climate-combatant practices of the Western world.



Lucy Lönnqvist is the Climate Fellow for Young Australians in International Affairs. She studies Economics and Political Science at Sciences Po Paris.


Having worked for over a month at a refugee camp located in the former Calais jungle in France’s North, as well as regularly conducting migrant permanences at the Franco-Italian border, Lucy is well-versed in the study of refugee rights protection, and is particularly excited to publish her first hand knowledge on migration as a climate-adaptation strategy, delving into global affairs sitting at the intersection of international law, migration and climate change.

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