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PICAN Submission on the Fiji National Carbon Market Strategy Roadmap


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March 29th 2024


We acknowledge the efforts made in the Draft Fiji National Carbon Market Strategy Roadmap to address the urgent issue of climate change and to promote sustainable development in Fiji. The initiative reflects a commitment to environmental responsibility and economic progress. However, we, the Pacific Island Climate Action Network (PICAN), have substantial reservations regarding the roadmap’s approach, particularly in its potential to enable the continued use of fossil fuels, thereby contradicting global climate goals.


Detailed Concerns


Inadequacy of Carbon Markets in Achieving Climate Goals

Contradiction to Fiji’s Climate Aspirations: The roadmap’s allowance for continued fossil fuel usage through carbon offset mechanisms fundamentally contradicts Fiji’s aspirations to uphold the 1.5°C goal set by the Paris Agreement. The reliance on carbon markets could undermine Fiji’s Nationally Determined Contributions (NDCs) by prioritising offsetting over direct emission reductions.


Global Failure of Carbon Markets: Historically, carbon markets have not successfully delivered on environmental outcomes or community benefits. The Clean Development Mechanism (CDM) under the Kyoto Protocol, for instance, failed to facilitate meaningful technology transfer or generate significant social benefits, with most financial gains accruing to project intermediaries and traders.

Economic and Environmental Risks


Displacement of Government Assistance and Climate Finance: The strategy risks prioritising market-based mechanisms over direct government support and climate finance, potentially sidelining essential funding and resources for renewable energy projects and sustainable development.


Societal and Health Impacts: The incentivization of continued fossil fuel extraction could lead to further environmental degradation and exacerbate health and societal risks, particularly affecting local and indigenous communities.


Influence of External Interests

Dominance of Australian Government and Industry Interests: There is a noticeable influence of the Australian Government and associated industry players, such as the Carbon Market Institute, on the development of Fiji’s carbon market strategy. This raises concerns about the impartiality of the roadmap and the potential for it to serve external commercial interests over Fiji’s environmental and social needs.


Regulatory and Compliance Uncertainties

Complexities Around Article 6 of the Paris Agreement: The ongoing negotiations and lack of clarity around Article 6, concerning Internationally Traded Mitigation Outcomes (ITMOs) and offsets, introduce significant uncertainty. The existing regulatory framework is insufficiently robust, risking continued support for fossil fuel industries through mechanisms like double counting, lack of additionality, and unverifiable emission reductions.


Recommendations


Redefining the Strategy to Exclude Fossil Fuel Support:

  • Prohibit fossil fuel companies from funding or purchasing carbon credit projects in Fiji.

  • Exclude fossil fuel-intensive countries from using Fijian carbon credits to offset their emissions or expand fossil fuel usage.


Prioritisation of Renewable Energy and Sustainable Practices:

  • Allocate more resources and funding to renewable energy projects and sustainable practices, aligning with Fiji’s long-term climate objectives and contributing to a fossil-fuel-free future.


Ensuring Transparent Governance and Local Benefit:

  • Implement mechanisms to guarantee legitimate Free Prior and Informed Consent (FPIC) in communities affected by carbon projects.

  • Ensure that carbon market strategies lead to tangible decarbonization and emissions reduction, with strong, independent economic justification for their benefits to Fiji.


Protecting Against External Influence and Ensuring Independence:

  • Ensure the carbon market strategy is developed with input from independent experts, including scientists and community representatives, rather than being led by foreign governments or industries with vested interests.


Maintaining Government Support and Climate Finance:

  • Ensure that the establishment of a carbon market does not reduce government assistance or grant based climate finance, preserving these vital supports for Fiji’s sustainable development.


While acknowledging the potential of carbon markets in climate change mitigation, their design and implementation in Fiji must be approached with caution. The strategy should not enable the continuation of fossil fuel usage or compromise Fiji’s environmental integrity and social responsibilities. Our recommendations aim to steer the Fiji National Carbon Market Strategy Roadmap towards a path that genuinely supports sustainable development, environmental preservation, and climate justice, in line with global climate goals and Fiji’s national interests.



Annex 1

Polly Hemming, Director - Climate and Energy Program, Australia Institute 

Response in collaboration with PICAN


We appreciate the efforts made in the Draft Fiji National Carbon Market Strategy Roadmap to address climate change and promote sustainable development. The Pacific Island Climate Action Network (PICAN) represents civil society organisations across the Pacific and welcomes the opportunity to respond to the Roadmap.


PICAN has strong reservations about the development and purpose of the Carbon Market Strategy Roadmap as a whole, and to specific elements within the strategy. It is concerning that no one has stopped to ask the question of whether a carbon market is indeed the best mechanism for the Fijian people, the environment and the climate. 


PICAN’s concerns are four-fold:

  1. The proposed carbon market undermines Fiji’s aspiration to keep 1.5°C alive, and Fiji’s ability to meet its NDCs under the Paris Agreement.

  2. Carbon markets have failed globally to produce environmental outcomes or tangible benefits to communities on the ground.

  3. The proposed Fiji carbon market risks displacing government development assistance and climate finance.  

  4. The Australian Government and associated industry interests appear to have strongly influenced the development of Fiji’s carbon market strategy.


The proposed carbon market undermines Fiji’s aspiration to keep 1.5°C alive and ability to meet its NDC under the Paris Agreement.


Demand for carbon credits is driven by the need for states or corporations to ‘offset’ their emissions. There is no compelling evidence that suggests that carbon credits are being purchased without being used as an offset. This means that any carbon credits generated in Fiji – regardless of their integrity – are likely to be used by wealthy countries or industry to prolong or expand fossil fuel use. For carbon credits to be a sustainable and reliable source of income for Fiji, emissions elsewhere must be maintained or grow.


At a time when fossil fuels must decrease rapidly, and natural carbon sinks must be protected and restored, we express strong reservations about any aspects of the roadmap that could facilitate the continued use of fossil fuels.


If carbon markets allow for continued fossil fuel use by enabling entities to offset their emissions instead of directly reducing them, this will undermine the broader collective objective of significant emission reductions to stay true to the temperature target of the Paris Agreement. While there may be some short-term financial benefit to some individuals in Fiji, the long-term cost is worsening climate impacts (which in turn will require increased adaptation finance). Carbon markets, in incentivising continued fossil fuel extraction, would lead to further environmental degradation and more health, and societal risks associated with fossil fuel extraction and have been shown to exacerbate local and indigenous community grievances. (1)


Furthermore, if Fiji sells its carbon reductions to other countries, or on the voluntary market, it risks not being able to meet its own Nationally Determined Contribution under the Paris Agreement as carbon reductions cannot be counted by both the buyer and seller of the carbon credit. Previously developing countries were not required to meet their own climate targets and so were able to sell their carbon reductions. This has changed under the Paris Agreement. If Fiji sells its carbon reductions, it may also impact the way Fijian exports are treated under other market-based instruments such as Carbon Border Adjustment Mechanisms (CBAMs) where Fiji is penalised.


Article 6.8 of the Paris Agreement provides the parties with ‘non-market’ based opportunities to implement mitigation and adaptation actions. This is a potential mechanism for Fiji to receive climate finance without facilitating the emissions of wealthy countries or fossil fuel companies. It is disappointing that the carbon market roadmap does not refer to this mechanism, nor does the Roadmap suggest alternative pathways to offsetting such as ‘climate contributions’ except in a passing reference to the voluntary carbon market.


Moreover we are concerned about uncertainty around Article 6 of the Paris Agreement which remains under negotiation. Specifically, there are significant questions around how Internationally Traded Mitigation Outcomes (ITMOs) under Article 6.2 and offsets in Article 6.4 will be tracked between the systems and how they might differ. This is particularly concerning as the regulatory environment of offset mechanisms are as yet not robust enough, and significant  issues like double counting, lack of additionality, and verifiable emission reductions will continue to support the fossil fuel industries longevity.


In light of these concerns, we urge the Fiji government and stakeholders involved in the carbon market strategy to unequivocally reject any provisions or implications within the roadmap that could support the continued use of fossil fuels. Any carbon market strategy should explicitly state that a) fossil fuel companies are prohibited from funding or purchasing carbon credit projects in Fiji and b) fossil fuel intensive-countries that are pursuing expansion of their fossil fuel use or production are prohibited from using Fijian carbon credits to meet their climate targets or ‘offset’ their fossil fuel production. This would ensure that Fiji is not being used to facilitate an increase in global emissions and that carbon market finance is not in fact ‘fossil fuel expansion finance’.


The investment in and support for fossil fuel industries hinder climate justice and the transition to renewable energy. Resources allocated to fossil fuels overseas can delay or reduce funding for renewable energy projects, essential for achieving Fiji's ambitious renewable energy targets and long-term net-zero emissions goal.


Instead, we advocate for a stronger emphasis on clean, renewable energy projects and sustainable practices that align with Fiji's long-term climate objectives and the global commitment for a fossil-fuel free future.


Recommendations: 

Any carbon market strategy should explicitly state that a) fossil fuel companies are prohibited from funding or purchasing carbon credit projects in Fiji and b) fossil fuel intensive-countries that are pursuing expansion of their fossil fuel use or production are prohibited from using Fijian carbon credits to meet their climate targets or ‘offset’ their fossil fuel production.

Fiji’s carbon market should be secondary to policies that emphasise clean, renewable energy projects and sustainable practices that align with Fiji's long-term climate objectives and the global commitment for a fossil-fuel free future. There may be a role for a carbon market in Fiji, but it should not be relied upon as a major emissions reduction policy.


Carbon markets have failed globally to produce environmental outcomes or tangible benefits to communities on the ground.


The Roadmap suggests that carbon markets “offer significant additional advantages by delivering carbon abatement outcomes while also contributing to the sustainable development priorities of developing countries”.  However, the document also claims that carbon markets are “evolving quickly”, implying that they are a nascent policy tool. Carbon markets have been in existence for several decades and there is no evidence to support the claim that they deliver carbon abatement outcomes or contribute to sustainable development priorities of developing countries. In fact, the available evidence suggests the opposite. (2)(3)(4)(5)(6)

 

The last global carbon market, the Clean Development Mechanism (CDM - established under the Kyoto Protocol) was intended to provide finance and technology transfer to developing nations as a means of assisting these economies to decarbonise and flourish. The claimed technology transfer never manifested with many developing economies still reliant on gas and coal. The claimed social benefits of the CDM are also absent, with most of the profits going to project intermediaries and traders.


Similarly, there is significant evidence that the Voluntary Carbon Market and land-based carbon offset projects (many of which may be absorbed into Article 6 of the Paris Agreement) have not only failed to produce the promised climate benefits, instances of fraud and exploitation of local communities has been high. (7)(8)


The Roadmap lists a number of previous and current offset projects in Fiji but does not clarify whether an independent analysis of the projects has been carried out that would give an indication of their success.


While it is clear that the Roadmap has given consideration to the rights of landholders and local communities, and emphasises benefit sharing, what is not clear is how Fiji will avoid the same issues that have been present in carbon markets for thirty years. How can the government and project developers guarantee that ‘Free Prior and Informed Consent’ (FPIC) is legitimate in communities that may not understand the complexities of climate science, the biological carbon cycle, global carbon markets, economic theory and carbon offsetting? 


Carbon markets run on the premise of lowest-cost abatement. That is, carbon offsets must be cheaper than what it would cost to a firm to carry out internal decarbonisation activities. Carbon projects must therefore be run in a way that keeps the price low enough for buyers but still maximises the profit margin for the sellers. The Roadmap fails to demonstrate how it is possible to deliver high quality carbon outcomes and provide adequate financial and social benefits to communities while producing offsets that are ‘cheap’ enough for buyers.


The draft Roadmap lists some risks of carbon markets but overall appears to brightside the potential of carbon markets, with no acknowledgement of the significant documented failures that have occurred both in the Pacific and further afield. 


 Recommendations:

Any carbon market strategy for Fiji must clearly demonstrate exactly how ‘Free Prior and Informed Consent’ will be obtained for carbon projects and how evidence of FPIC will be provided. 

Any carbon market strategy for Fiji must provide evidence of how a carbon market will lead to decarbonisation/emissions reduction at a system and project level.

Any carbon market strategy for Fiji must provide strong, independent economic justification - not just speculation - on the tangible benefits of carbon markets to Fiji.


The proposed Fiji carbon market risks displacing government development assistance and climate finance


Carbon markets are being promoted by governments and industry as a win-win for developing countries. They are promoted as a means to reduce emissions and a source of finance and development benefits. 


While the rhetoric of private-public partnerships to deliver finance is not new, increasingly markets are taking the place of traditional government assistance to developing economies.


Increasingly governments use rhetoric such as ‘unlocking private finance’ as a way of implying they are helping to deliver money to developing economies without having to spend any themselves. 


This is problematic for three reasons:

  1. PICAN is concerned that this story, while appealing, may mean that wealthy countries are ‘let off the hook’ for their climate finance and development commitments. Markets are precarious and risky and prone to fluctuations in price. In addition, if carbon offset projects fail or are destroyed, local landholders and communities may be liable for the cost of the lost carbon. 

  2. The promised private sector finance has never materialised in developing economies. There are a number of studies that show that private finance for climate, nature and development has not been forthcoming. This is because there are limited (or no) returns on investment for environmental or development projects. The private sector has little interest in investing in projects that will not bring a profitable return. (9)

  3. Once communities accept a reduction in government assistance from wealthy countries in lieu of promises of private finance, it will be almost impossible to restore the funding if the private finance or income from markets fails to eventuate. The Australian Government, for example, is already warning that if it were to give too much in development assistance it would ‘crowd out’ private sector investment.(10) To be clear, this is not the case. Private sector investment often requires the opposite - significant state de-risking and investment before it becomes an appealing investment prospect.

Recommendation:

The Fiji Government should ensure that a carbon market in Fiji does not lead to any reduction in government assistance or grant-based climate finance. 


The Australian Government and associated industry interests appear to have strongly influenced the development of Fiji’s carbon market strategy


PICAN is concerned that the Australian Government has had disproportionate influence on Fiji’s carbon market strategy and has funded an offset industry association to lead the work. The Carbon Market Institute (CMI) is a carbon offset industry group representing participants in the carbon market, including heavy emitters (such as the fossil fuel industry), carbon traders and carbon offset developers. The Carbon Market Institute previously included Woodside among its members, with Woodside claiming to have been involved in the development of the Australian Government’s Indo-Pacific Carbon Offset Scheme. (11)


While Woodside is no longer a member of CMI, other fossil fuel and mining companies are represented by CMI including Ampol, AngloAmerican, BHP, BP, Inpex, Jera, Mitsui E&P, Origin and Shell. (12)


There are over 100 new gas and coal projects listed as under development in Australia. The Australian Government is subsidising and endorsing fossil fuel expansion in Australia while claiming it will meet its climate targets. The Australian Government is also encouraging trading partners such as Japan, Korea, India and Vietnam to continue buying Australian fossil fuels. The only way these countries can continue to produce and use fossil fuels and reach ‘net zero’ is through the use of offsets. 


While the Australian Government has, to date, indicated that Australia will not use international carbon offsets to meet its climate targets, we are concerned that Australia will encourage development of offsets in the Pacific region as a means to create a supply of offsets available to its fossil fuel customers.


Recommendation:

Fiji's carbon market should be informed by independent experts, including scientists. It should not be led by a foreign government or industries with vested interests in carbon markets. 



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(5) Calel, R. et al. (2021). Do Carbon Offsets Offset Carbon? 



20241903_FijiCarbonMarketsRoadmap
.pdf
Download PDF • 128KB



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