Climate change campaign creates carbon crimes

Customs agents this week arrested nine people in the London area suspected of a multimillion dollar fraud in trading carbon permits, bringing attention to a rich new field for crime sprung from the fight against climate change.

The arrest confirmed fears among law enforcement officers that swindlers — operating from the trading floors of Europe to the tropical forests of the Pacific — are being attracted to a market that has grown to more than $100 billion.

A few years ago, carbon dioxide, for most people, was just the breath you exhaled. Today it's more likely to be seen as a pollutant derived from fossil fuels that needs regulation, making permission to produce it a commodity that can be traded like gold, oil or hog futures.

Trade in CO2 permits has expanded exponentially since the European Union required thousands of industries to limit carbon emissions to specified targets. Industries exceeding their ceiling can buy credits from companies that have held their emissions below target, acting through commodities exchanges. The average price this year for a ton of carbon is about $15.

That carbon market will get a lot bigger if the U.S. Congress passes its own cap-and-trade bill, the central component of President Barack Obama's climate and energy policies.

And it will grow bigger still if a new international climate change agreement will include financial incentives for countries to protect their forests. Negotiators from 192 countries hope to conclude a global warming accord at a major U.N. conference in Copenhagen in December.

On Wednesday, 130 British customs agents raided 27 properties in and around London for evidence of a "carousel fraud" believed to have robbed the treasury of 38 million pounds ($63 million) in unpaid value-added tax. Seven men and two women were arrested and released on bail.

Customs spokeswoman Sara Gaines said it was the first time the scam has been uncovered in the carbon market, expanding from the more established trade in mobile phones and computer chips.

The carousel fraud, also known as a missing trader scheme, exploits VAT-free commerce between countries. Conspirators import goods free of tax, sell it domestically with VAT to another company, which exports the products to third country. Rather than pay the VAT owed to the government, the merchants pocket the tax and disappear.

In July, France, the Netherlands and Britain initiated action to pre-empt the swindlers. France and Britain set a zero VAT rate for carbon trading, while Holland transferred the obligation to pay VAT from the seller to the buyer.

"We saw big possibilities of fraud," with a potential loss of hundreds of thousands of euros, said Marcel Holman, a spokesman for the Dutch tax authorities. He declined to say whether the Finance Ministry's financial intelligence unit had actually uncovered a carousel fraud in operation.

The British Treasury also warned last month that Britain would become a major target of tax theft in carbon emissions permits in the next few months.

The London office of global accounting firm KPMG said suspicions of VAT fraud surfaced last May when the volume of carbon trade rose on the Paris BlueNext exchange from 27.2 million tons in October, spiking six months later at 186 million tons.

Andrei Marcu, a former head of BlueNext and former president of the Geneva-based International Emissions Trading Association, said the risk of fraud can be high in any new commodities market, and CO2 is no different in the need for high regulatory standards.

When the carbon market was getting started, big companies were involved and the traders knew each other, he said. But it has grown so fast that small unknown operators are now doing big business, making self-policing more difficult.

Marcu, now a consultant for a Canadian law firm, declined to comment on the specific activity at BlueNext.

A different set of problems threaten the trade in credits derived from halting deforestation.

Forests store vast amounts of carbon, and release it when trees are cut or burned. Scientists say deforestation contributes about 20 percent of all the carbon leeching into the atmosphere.

By measuring the amount of carbon held in a forested area, a value can be placed on that carbon and owners can be compensated for preserving them. Carbon offsets, purchased by airline passengers or concert-goers who voluntarily want to cut their carbon footprint or big corporations that need to meet emissions targets, buy the credits from the forest owner.

But shady brokers already are moving into this field. They persuade landowners, especially forest dwellers with little understanding of modern commerce, to sell a share of the rights to the carbon stored in their trees, counting on a hefty profits later.

"These carbon cowboys should be rounded up," says Kevin Conrad, the chief climate change negotiator for Papua New Guinea, a Pacific Ocean nation with hundreds of indigenous tribes living in its deep forests.

In July, the head of Papua New Guinea's Office of Climate Change and Environmental Sustainability, Theo Yasause, was suspended pending an investigation for allegedly issuing some 40 tons of carbon credits for preventing deforestation. Such credits do not yet exist for governments to sell since there is no mechanism in place to measure and verify that forests are being preserved.

U.N. talks aimed at a new global warming agreement in Copenhagen are seeking ways to scale up efforts to avoid deforestation to make it worthwhile for governments like Brazil or Papua New Guinea to save their rapidly depleting rain forests.

Negotiators are working on ways to verify that logging trends have been reversed, largely through satellite imagery, and on raising billions of dollars to compensate rain forest countries — with the carbon market as one possibility.

Conrad said the climate negotiators are trying to build safeguards into the Copenhagen climate agreement to limit the opportunity for criminals. Chief among them is postponing any payment for avoiding deforestation until inspectors verify that tree-cutting trends had been reversed.

Peter Younger, the Interpol officer who deals with environmental crime and wildlife smuggling, says illegal logging and tax fraud is bound to grow as the market expands.

"Given the interest already by criminal groups in illegal logging as a business in itself, if there is money to be made in carbon credits or tax evasion ... then somebody is going to get on board with this stuff," he said.

FEATURE-Carbon traders bet on California redwoods

A stand of young redwoods, survivors in what was once a magnificent forest of towering giants, could play a small part of the battle to slow global warming -- and forms part of an emerging market.The trees, which trap quantities of the carbon dioxide that is warming the planet, are sold as living carbon traps or "sinks" rather than cut for timber, a model that could go global. But the prospect of a worldwide market could also attract hustlers eager to make a quick buck without making a difference to the planet."It's easy to game it," said forest owner Chris Kelly of the developing forest carbon market. "We just have to figure out how to do it right."Deforestation accounts for a fifth of greenhouse gas emissions that are heating up the earth so slowing its pace is a relatively cheap way to limit global warming. That's why preserving forests is a top agenda item of international climate change talks scheduled for December.But devising a fair way to reward those who own and control forests for their true contribution to the atmosphere has proved difficult and complicated.The United States, which has lagged in addressing global warming, leads the world in developing a market for forests that soak up carbon dioxide emissions. The Garcia forest presents a test case of how the system could work -- or fail."When we talk about deforestation, we've already done it here," said Louis Blumberg of the Nature Conservancy, which helped plan carbon sales at the Garcia project. Some 95 percent of old-growth redwoods are already gone in California, and the state must better manage what has grown back."We moved carbon out of the ground and the trees into the air. We need to hit the reset button," said Blumberg, who directs the environmental group's California Climate Change project.With its towering redwoods and gurgling streams, the Garcia forest looks wild and healthy -- but it's a shadow of what it once was. Six-foot-(2-meter) wide stumps hint at its former grandeur a century or two ago.Ninety percent of the wood it once held is already gone. If managed like most commercial forests, it would probably stay at roughly its current size. However, the non-profit owners have sharply reduced timber harvesting and are making some of their profits by selling carbon credits, so the forest may recover, at least partially.Climate change can be slowed in two ways:-- cutting emissions from industry, automobiles, airplanes and other tools of industrial society, or-- soaking up more emissions once they are in the air.For forest projects to succeed, the world must find a way to stop emerging economies like Brazil and Indonesia from cutting down tropical jungles. U.S.-based projects, which focus on growing bigger trees and holding more carbon, could help a little but cannot in themselves solve the problem.But the U.S. plan could offer a direction and an example for others to follow.VOLUNTARY MARKET IS THE STARTUnder a cap-and-trade system, the main global mechanism for addressing climate change, polluters face limits on how much they can emit. To meet those limits, they can manage their own emissions, buy credits from companies who emit less than their cap, or buy offsets.Forests are not part of the biggest regulated carbon market, in Europe, but California's law to open a regulated market for carbon pollution in 2012 includes them, and so does a federal plan being debated in the U.S. Congress.A voluntary market has sprung up in the meantime."These projects take time. It's not the kind of thing that you can turn a switch and you've got millions of acres of forests sequestering CO2," said Eron Bloomgarden, president of environmental markets at Equator LLC, a for-profit venture creating forest carbon projects.California forest projects fetch $5 to $12 a CO2 ton, more than in other parts of the world and other types of sequestration, because they meet California's developing rules, the closest thing yet to regulations for an official forest market, said Lenny Hochschild, a managing director at environmental brokerage Evolution Markets.For-profit forest owners increasingly are being tempted to sell carbon, joining non-profits pioneers, he said."If you incentivize folks to clean up the environment, they'll clean up the environment," he said.Voluntary deals and trade on platforms like the Chicago Climate Exchange doubled last year to more than $700 million, according to Ecosystem Marketplace and New Carbon Finance.Forest credits were a fraction of that. But a U.S. Environmental Protection Agency analysis of a draft national plan projects more than 100 million tons of forest offsets in 2015, rising to well over 400 million in 2050.Nations gathering in December in Copenhagen to negotiate a follow-up to the Kyoto climate change treaty could introduce forest credit trade to cut developing nation deforestation.THE GARCIA EXAMPLETimber and carbon prices both have plummeted since the Conservation Fund bought Garcia with grant money and a low interest loan, but the carbon credit sales have been enough to pay interest on the loan.The largest tree in the world by volume, a California redwood, is nearly 275 feet (84 meters) high with a diameter of more than 17 feet (5 meters), testimony to what might grow on Garcia -- in 1,000 years. But the danger to the Garcia project, and investors, is vivid: charred trunks of trees destroyed in a fire last year. Very little wood was lost because redwoods are flame resistant and ridges acted as fire breaks. The experience was enough to make Kelly wary of projects in regions with less hearty trees.The Conservation Fund keeps a reserve of credits in case of disaster, and the state is debating whether to create a pool of credits that could be doled out in emergencies. Something like that will be needed for a fool-proof, disaster-proof system.At some point coal plants may be buying forest offsets by the millions of tons, Kelly said. "You want to make sure that if they lose half that forest, there is some makeup of the balance," he said

Election likely to reset Japan climate target

When Japan elects its next government this month, climate change campaigners will be watching closely to see which party takes the levers of power in the world's second-largest economy.

Japan drew scorn from environmentalists when Prime Minister Taro Aso in June announced a greenhouse gas reduction target of eight percent from 1990 levels by 2020 -- far below the European Union pledge of a 20 percent cut.

Activists mocked Japan's conservative premier as "George W. Aso" and charged that the Asian industrial powerhouse would worsen global warming and speed the pace of melting ice caps, rising sea levels and changing weather patterns.

Environmental group Greenpeace accused Aso of kowtowing to Japan Inc's heavy industry, calculating that Aso's goal could help doom the earth to catastrophic warming of three degrees Celsius (5.4 degrees Fahrenheit).

The man who is now seen likely to replace Aso in the top job after the August 30 vote, Democratic Party of Japan (DPJ) leader Yukio Hatoyama, has promised a more ambitious target -- a 25 percent cut by 2020.

Hatoyama's centre-left DPJ has enjoyed a strong poll lead over Aso's business-friendly Liberal Democratic Party (LDP) which has ruled Japan for more than 50 years except for one 10-month stint in opposition.

Japanese environmentalists have cheered the DPJ target, which Japan would present at international talks in Copenhagen in December aimed at agreeing a follow-up treaty to the Kyoto Protocol which expires in 2012.

"I hope for a change of government," said Yurika Ayukawa, a green activist and professor at the Osaka University Research Institute for Sustainability Science. "If the LDP stays in office, nothing will change."

"Japan needs a drastic change in its policy on climate change," she told AFP, suggesting the next government introduce environmental taxes and compulsory emission cut targets for Japan's massive corporate sector.

Conservation group WWF has argued that the issue of climate change could help swing the election, especially among the large number of undecided voters, estimated in some surveys at up to a third of the electorate.

The WWF said that a recent survey, commissioned by global campaign network Avaaz, found that 50 percent of respondents supported the DPJ's 25 percent target against 29 percent for Aso's eight percent target.

But the numbers can be misleading, experts warn.

While the DPJ's target -- like those of the United States and EU -- includes gains from carbon-trading schemes and reforestation, the LDP's figure does not.

Shuzo Nishioka, a senior researcher at the National Institute for Environmental Studies, said if carbon trading and tree-planting were excluded, the DPJ's goal would drop to a 15 percent cut.

LDP-ruled Japan has long argued that the country, the world's fifth largest emitter of greenhouse gases, has already achieved a highly energy-efficient lifestyle and industrial infrastructure.

Aso's government has this year promoted hybrid car technology through incentive schemes, which have helped make Toyota's Prius the top-selling passenger car on the Japanese market in recent months.

It has also pledged to increase solar power generation in Japan 20-fold by 2020 and 40-fold a decade later.

On the other side, the DPJ, despite its tougher mid-term greenhouse gas reduction target, has also made campaign promises likely to raise some pollutant loads in the atmosphere.

One of its key pledges is to abolish expressway tolls and special car taxes.

A group called the Coalition of Local Government for the Environment Initiative estimates that scrapping road tolls and cutting car taxes will result in an annual increase of at least 9.8 million tonnes of carbon dioxide.

Nishioka, who sat on the expert panel that calculated Japan's target announced in June, said "there is some ambivalence in the DPJ's policies on climate change, such as the free expressways."

"As a scientist I want the new government, whether it is led by the LDP or the DPJ, to do more to cut emissions," he said.

"Our scientific studies show Japan can technically cut emissions by 25 percent by 2020 even if it excludes carbon trading and planting forests

Green power safer for workers than fossil fuels

As if helping to save the world from the worst effects of climate change were not enough, renewable energy may also curb workplace injuries and deaths.
That's because fossil fuels – as the term suggests – have to be dug or drained from underground, and mining is one of the deadliest of industries. Oil and gas extraction account for 100 deaths each year in the US alone, coal another 30, not to mention many more non-fatal injuries.
Carbon-sparing energy sources such as solar panels and windmills, on the other hand, are unlikely to take such a toll on the workers who build and maintain them, argues Steven Sumner, a physician at Duke University Medical Center in Durham, North Carolina. "Extracting the fuel, generating the power and distributing the power are more dangerous in fossil fuel energy than renewable energy."
That sounds like common sense, but there's little hard data on the health costs of producing green energy compared with extracting fossil fuels. One study, a 2005 European Union assessment of the external costs of different energies, found working with wind power was safer than working with coal or oil. And US Department of Energy researchers put solar's occupational health costs in the same ballpark as nuclear, though they ignored the potential for long-term harm from nuclear radiation and catastrophes such as meltdowns.
"We don't know very much," Sumner admits. But as green energy make up a ever-larger chunk of global power supplies, firmer data on workers' health should follow.
Beware biofuels
Vasilis Fthenakis, a photovoltaic researcher at Brookhaven National Laboratory in Upton, New York, agrees that greener energies are generally safer to produce than fossil fuels. Increased demand should make that difference even starker, as renewable energy manufacturing become more efficient and automated. "The picture keeps improving because the technology keeps improving," he says.
Not all green energies are inherently safer for workers than fossil fuels, though. "Rates of injury in agriculture are high, therefore we suspect that biomass energy that comes from crop production is likely to have high risks," Sumner says.

Chinese emissions could peak in 20 years

A THINK tank with links to the Chinese government has predicted that the nation's carbon emissions could peak in 2030. This conclusion, in the 2050 China Energy and CO2 Emissions Report released by the Energy Research Institute, is at odds with the government's insistence that the country's rapid economic growth will mean that emissions cannot decline before 2050.
If China adopts an "enhanced low carbon scenario" with very stringent policies, emissions could peak in 2030 and fall to 1.4 billion tonnes in 2050, equivalent to their 2005 level, the report says. This would be "difficult but doable", says lead author Jiang Kejun.
Pan Jiahua, director of the Chinese Academy of Social Sciences' Research Centre for Sustainable Development and the nation's leading climate economist, says that rapid progress in developing clean technologies means China could reduce emissions earlier than 2050. "But I would think it would be safer to set the peak time at 2035," he says.
Pan says the report could put pressure on the government to compromise on its refusal to adopt emissions cuts in the run-up to the UN climate negotiations in December.

Kenya's lions could vanish within 10 years

Kenya has been losing 100 lions a year for the past seven years, leaving the country with just 2000 of its famous big cats, says the Kenya Wildlife Service (KWS) – which concludes the country could have no wild lions at all in 20 years. Conservationists have blamed habitat destruction, disease and conflict with humans for the population collapse.
But Laurence Frank, a wildlife biologist at cat conservation group Panthera, thinks the KWS estimate is optimistic. "Lions are disappearing so fast from Kenya, as well as the rest of Africa, that I think they will disappear [from Kenya] in less than 10 years if action is not taken very quickly," says Frank, who runs several lion conservation projects in the country.
The IUCN suggests that large lion populations of 50 to 100 prides are necessary to conserve genetic diversity and avoid inbreeding.
Leo horror scope
Frank says that the decline of the big cats is due to the inexorable growth in human population and consequent conflict with people over livestock, rather than disease.
"Vast areas of Kenyan rangelands that held lions 20 years ago are now devoid of nearly all wildlife," Frank says. "Predators have been poisoned and speared, herbivores have been snared for meat, and the rangelands themselves have been destroyed by massive overgrazing by domestic stock."
According to Nicholas Oguge, who works for environmental charity Earthwatch Institute in northern Kenya, people lace cattle corpses with insecticide in order to poison entire prides. This ends up killing hyenas and birds of prey too.
"In Kenya, the biggest threat to lion conservation lies outside protected areas," says Oguge. "This is because of increasing cases of poisoning by communities due to livestock loss through carnivore depredation. Typically, the communities use the insecticide Furadan by applying it on livestock carcasses."
Bribes and trophies
Those who kill lions illegally are rarely punished, says Frank. Killing tends to occur far from the influence of authorities and conservationists. In the rare cases of arrest for lion killing, Frank says that the accused may secure their release by the payment of small bribes.
Even the animal-welfare groups that seek to protect lions from trophy hunters may be unintentionally placing them at risk. Sport hunting is banned in Kenya, which has allowed lions to fare better there than in most other parts of Africa, but the prohibition could also contribute to their eventual demise.
"Under current policy, there is no way for rural people to benefit from wildlife," says Frank. "They get essentially no income from tourism, and the only other potential source of wildlife income – carefully regulated, high-paying trophy hunting – is prevented by the financial influence of American and British animal-rights lobbies."
Research by the University of Chicago's Field Museum of Natural History and KWS suggests that on average each lion eats livestock worth around $270 a year. "On the other hand, given the size of Kenya's tourist industry and the central importance of lions to tourist satisfaction, each of Kenya's 2000 surviving lions may be worth upwards of $17,000 per year in tourist revenues," says Bruce Patterson, curator of mammals at the museum.
The fact that Kenya is suffering a devastating drought isn't helping matters, says Zeke Davidson of the University of Oxford. "Kenya is experiencing a very severe drought at the moment and this is driving ever-increasing numbers of pastoralist communities into wildlife areas in search of grazing and water supplies for their herds of livestock," he says.
"Large herds of unattended cattle have been reported forming in northern Kenya, moving toward Ethiopia," Davidson adds. He says they have been abandoned by their owners, who have gone in search of refuge from the drought further south.
Across the continent, the future looks bleak for lions. "Only drastic action on many fronts – policy change, effective law enforcement, giving rural people an economic stake in their natural heritage, and a great deal of investment – will prevent the loss of wildlife in Africa," concludes Frank

Rat-eating plant discovered in Philippines

The plant is among the largest of all pitchers and is believed to be the largest meat-eating shrub, dissolving rats with acid-like enzymes.
The team of botanists, led by British experts Stewart McPherson and Alastair Robinson, found the plant on Mount Victoria in the Philippines.
They were inspired to search for the plant after word that it is existed came from two Christian missionaries who described seeing a large carnivorous pitcher in 2000 after they climbed the mountain.
Mr McPherson, of Poole Dorset, said: "The plant produces spectacular traps which catch not only insects, but also rodents. It is remarkable that it remained undiscovered until the 21st century."
The team, which found the plant in 2007 following a two-month expedition, published details of their discovery in the Botanical Journal of Linnean Society earlier this year following a three-year study of all 120 species of pitcher plant.
They decided to name the plant Nepenthes attenboroughii, after the wildlife broadcaster Sir David.
"My team and I named it in honour of Sir David whose work has inspired generations toward a better understanding of the beauty and diversity of the natural world," added Mr McPherson.
Sir David, 83, said: "I was contacted by the team shortly after the discovery and they asked if they could name it after me. I was delighted and told them, 'Thank you very much'.
"I'm absolutely flattered. This is a remarkable species the largest of its kind. I'm told it can catch rats then eat them with its digestive enzymes. It's certainly capable of that."