ITMOs: A double edged sword for the Global South

This article was originally published in the Calculus Carbon blog (https://calculuscarbon.com/blog) on July 31st, 2022

The Paris Agreement signed back in COP21, came into effect in 2020. Among multiple other measures, it allowed for the cooperative approaches among the countries participating in this agreement including the use of International Transfer of Mitigation Outcomes (ITMOs).

ITMOs enable a host country undertaking a project for greenhouse emission reductions, to monetise its efforts by selling off its corresponding offsets towards meeting another country's NDCs (Nationally Determined Contributions). Obviously, the host country then needs to undertake a Corresponding Adjustment (CA) thereby attesting that it no longer would use these transferred offsets towards tracking its own progress to its own NDCs.

Giving globalisation a negative spin

Source: Royal Geographical Society

ITMOs in effect enable a globalisation of climate efforts, enabling a new set of exports for the developing countries. But let's just take a moment here to appreciate the lovely irony and acknowledge how things have come a full circle. A lot of projects being undertaken today in the Global South (or developing countries) and proposed to be funded by the Global North under ITMOs, are working to undo the effect of the same polluting sectors that, since the heel of globalisation, have existed to cater to the latter's very own demand! (slow claps..)

The purpose of this article is to however highlight how like every other industry that the Global North has ever worked to shift to its Southern counterpart (including China, India, Mexico, Brazil) in the name of funding latter's development, the ITMO mechanism too is rife with ulterior losses for the Global South.

ITMOs are efficient (Economically for the Global North), not Ecologically for the Globe

By allowing the nations in the Global North to invest in ITMOs, credits generated using projects being currently undertaken in the countries in the Global South are used towards the former's NDCs. So in a way the Global North is satisfying its own share of responsibility towards the global emissions reduction, by investing in lower cost efforts in the Global South.

That doesn't make sense to a layman for 2 distinct reasons:

1. Global South isn't the source of emissions:

To be precise, the landmark research published in 2020 by Jason Hickel of the University of London reveals that Global North is responsible for 92%+ of excess emissions, with United States contributing to 40%, followed by European Union at 29%.

Source: The Lancet Planetary Health

So it really beats me, that Switzerland proudly enters into bilateral agreements with the governments of Peru, Ghana, Senegal, Georgia, Vanuatu and Dominica to satisfy its own NDCs. Shouldn't this Swiss capital targeted at creating the most positive ecological impact, be invested in R&D or at least to undertake removal/avoidance projects in its own neighbourhood i.e. the EU.

So, this clearly isn't about creating the most ecologically positive impact with this capital.

2. Global South is in effect (again) subsidising the North

An inference then is that the Global North is eyeing to create the most economically positive impact for themselves in the process.

Let's see what happens as the countries in the Global North pile up projects in Global South today through their lure of FII funding. As countries in the Global South undertake a CA to let go of these projects from fulfilling their own NDCs, they need to invest in lower feasibility projects and higher cost technologies towards fulfilling their own NDCs.

Ironically, the apparent future ill-effects of this arrangement isn't all too lost on the Global North. A German non-profit Atmosfair is currently working with 20 host countries to develop projects and secure the correspondingly adjusted credits for the voluntary market. According to Florian Eickhold, 

In Nepal and Rwanda, atmosfair engaged in an extensive process of research and country engagement to ensure that atmosfair activities go beyond the actions the host country needs to take to meet its NDC. This is to ensure that the host country has an interest in making corresponding adjustments in return for financing of low-carbon development, without jeopardizing its ability to meet its NDC. The research includes an analysis of the GHG inventory, NDC, and long-term strategy of the host country, 

Conclusion

In effect, ITMOs are a seemingly dangerous proposition for the countries in Global South prioritising their short term funding needs (can't blame them), to forego offsets from high feasibility projects in their local territory from being used for their own NDCs. It is a matter of time before such ill designed incentives would create adverse scenarios leading to host countries pulling out of their authorisation or corresponding adjustment among others, insurances for which are already under design.

A better way forward in that case, is to create policies that require the investing countries to undertake more sophisticated, lower feasibility projects in these host countries in the Global South (if they really have to).

Else this time, it wouldn't just be the Global South which would suffer the amazing repercussions of the parochial policies from the Global North.