Both governments announced several carbon offsetting deals at Cop28 in Dubai under the umbrella of the Paris Agreement’s bilateral carbon trading principles.

But the rules for how to implement them have yet to be agreed, as negotiations at Cop28 collapsed over discussions on how to ensure the integrity of carbon credits. Still, that hasn’t stopped deals such as Paraguay’s moving forward without clear guidelines.

Climate experts and organisations fear the lax rules approved by the Paraguayan government – as well as its proximity to industry players – risk the new UN mechanism repeating problems that have beset the voluntary carbon market, where companies have frequently ended up buying junk offsets.

Fossil fuel firms seek UN carbon market cash for old gas plants

Despite such concerns, Paraguay has made carbon markets a top priority, even rushing to pass a new law in less than one month – between September and October 2023. The law created a national registry and a set of rules for every carbon project in the country.

It “will contribute enormously to the growth and development of the country”, said Minister of Environment Rolando de Barros Barreto, in an official statement the day the law was signed by President Peña.

De Barros Barreto was heavily involved in lobbying for the legislation to pass through Congress without modifications. “We are one of the few countries that have a tool like this,” he added in the statement.

A man fishes near chimneys giving off emissions in an industrial area of Singapore, January 5, 2016. (Photo/Reuters/Tim Wimborne

Carbon shopping

Pressed by a hike in Singapore’s domestic carbon tax – which will rise from about $3 per tonne to $18 in 2024 – its government went shopping for carbon offsets at Cop28 to offer big emitters back home. It held talks with Bhutan, Papua New Guinea and Paraguay as potential suppliers.

Paraguay – which, according to industry minister Javier Giménez García de Zúñiga, was seeking to position itself as the “lung market” of the world – landed an ideal customer.

Both countries agreed to create a bilateral commission to pick carbon-cutting projects in Paraguay. Companies based in Singapore could purchase credits from these projects in exchange for a discount on the new carbon tax rates. No official document on the deal has yet been disclosed.

“What was agreed is to create a road connecting the two countries to manage the transfer of carbon credits,” Giménez García de Zúñiga said in a statement published jointly by the two countries to mark the deal.

On the same day, President Peña also signed a memorandum of understanding with Cop28 host United Arab Emirates, which had embarked on its own controversial spending spree for carbon offsets, mainly in the form of agreements with African countries.

At COP28 in Dubai, Paraguay’s Minister Rolando de Barros Barreto and the UAE’s Mariam Almheiri sign a Memorandum of Understanding on carbon credits. (Photo: Paraguayan Presidency)

Rushed rules

In order to arrive at Cop28 as a reliable supplier of carbon offsets, the Paraguayan government rushed its law regulating carbon markets through both chambers of Congress in less than a month.

The initiative was marketed abroad by President Peña as “one of the most advanced laws in the world” and as a way to attract foreign investment. But it also has been heavily criticised by opposition lawmakers, academics, Indigenous peoples and environmental groups.

The new law passed without including safeguards to guarantee environmental and human rights based on an international standard that seeks “to mitigate the negative impacts of projects and, above all, to defend the rights of the people”, explained Mirta Pereira, a Paraguayan lawyer and advisor for the Federation for the Self-determination of Indigenous Peoples (FAPI).

Alberto Núñez, an activist from the Youth Network for Climate Action Paraguay, said in a public hearing prior to the bill’s approval that “without explicit human rights safeguards, this (law) will have a climate-friendly name but will be destructive”.

Opposition senators said it had been influenced by peddling to favour law firms that advise on carbon projects.

A proposal to create mechanisms for handling complaints, information requests and potential land conflicts was also rejected by Peña’s ruling bloc of lawmakers.

Protected forests

Another issue is that the new law allows for carbon projects to be set up within national parks and forest reserves, in an effort to finance the country’s protected areas, experts said.

But the forests in the concession areas would have already been protected without funding from the offsetting projects, which means their credits lack “additionality” in terms of emissions reductions, according to the standards recommended by the Integrity Council for the Voluntary Carbon Market (ICVCM), an independent body that seeks to raise the quality of carbon credits for trading.

Junk offset sellers push to enter new UN carbon market

Inigo Wyburd, a researcher at non-profit organisation Carbon Market Watch, said “additionality is necessary” for Paraguay’s market to be credible. “It is important that it is reflected in the text of the law. Areas that are not at risk of being deforested should not be eligible to receive carbon credits,” he added.

Without such safeguards, carbon schemes – including the country’s bilateral offsetting deals – risk repeating the errors of the voluntary market, according to Carbon Market Watch policy analyst Jonathan Crook.

Forest projects whose offsets are traded in the voluntary market have been widely criticised for over-crediting emissions reductions, as well as struggling to monitor forest loss. In some cases, projects have also led to human rights violations, especially against Indigenous peoples.

Industry brokers in the room

In September, a few months before Singapore and Paraguay announced their deal, the two governments held a meeting in New York, attended by big carbon brokers likely to benefit from the agreement.

They included Singaporean commodities giant Trafigura Group, which is one of the world’s largest carbon traders and Paraguay’s biggest fossil fuel supplier.

Peña also met in New York with Per Olofsson, CEO of Paracel, a forestry company seeking to sell carbon credits from eucalyptus tree plantations in Paraguay, where Olofsson had joined meetings lobbying in favour of the new carbon markets bill.

Photograph of Paraguayan President Santiago Peña at a meeting in New York on September 20, 2023. The photograph shows Per Oloffson, CEO of Paracel, and Benjamin Chia, Singapore’s main carbon markets negotiator (second and second to last on the right, respectively). Chia’s attendance was not announced. (Photo: Paraguay Presidency)

Both Paracel and Trafigura have faced questions over the integrity of their carbon credits and had projects suspended by carbon credit verification agency Verra.

Trafigura faced problems in June 2023, when Verra launched an investigation into its Southern Cardamom project in Cambodia, after human rights groups raised concerns about land conflicts with Indigenous people.

Trafigura, which had already committed the credits to corporate buyers, had to suspend them. The results of the investigation have not yet been revealed.

Meanwhile, Paracel was also questioned last year by Verra, which suspended one of its projects aiming to generate carbon credits from a wood-pulp mill and eucalyptus plantations in Paraguay.

The project took a $200-million loan from the Inter-American Development Bank, which according to Verra, shows that the project had no additionality, since it would have accessed finance anyway and continued without selling carbon credits.

Excerpt from Verra’s letter denying registration of Paracel’s project

According to Verra, Paracel had until December 19, 2023, to present improvements and thus avoid a final rejection of the project. But as of March 1 this year, neither the company nor Verra had published updates regarding its status.

Paracel is also facing a dispute with a local community called Sargento José Félix López, in Paraguay’s northwest, which denounced the siting of some eucalyptus plantations on public land.

Asked about Verra’s concerns, a Paracel spokeperson said the company was gathering documentation to submit to Verra, noting that additionality was fundamental for its biggest international buyers.

Paraguay’s new carbon market law is a positive step towards regulating the local market, the spokesperson added.

Asked if that same law would be useful for international agreements, Rodrigo Maluff, vice minister of investment, said the door is still open to modify the legislation and adapt it to the standards demanded by Singapore.

The legal director of the Ministry of Environment, Víctor González, said much of the work could be done through the regulatory process under the law that will begin this year.

Transparency concerns

Experts told Climate Home that agreements like the Singapore-Paraguay deal could be negatively affected by the failure of governments at Cop28 to reach a consensus on rules for the new bilateral carbon markets being discussed under the Paris Agreement’s Article 6.2.

One key element of discord at Cop28 was how robust the process to verify the quality of the credits should be.

Carbon credits talks collapse at Cop28 over integrity concerns

“More and more countries [like Paraguay] and companies are negotiating bilateral agreements, in the absence of comprehensive regulation,” said Crook from Carbon Market Watch.

“This risks undermining transparency and may make negotiations [at Cop29] even more difficult, given the absence of clear direction,” he added.

A longer version of this story was first published in Spanish by El Surtidor as part of the Opaque Carbon project led by the Latin American Centre for Investigative Journalism (CLIP) and bringing together 14 media outlets from Latin America.

The post Paraguay’s carbon deal with Singapore beset by lobbying, lax rules appeared first on Climate Home News.

Bear in mind it’s mid-winter in this part of the world. And it’s far south enough that seasonal variations have a substantial impact on temperatures. Buenos Aires, for instance, is as far south as Japan, Tibet or Tennessee are north.

In terms of deviation from temperatures you might expect at a certain place and time of year, this heatwave is comparable to, if not greater than, the recent heatwaves in southern Europe, the US and China.

In Vicuña, one of the towns in the Chilean Andes that recently reached 38°C, a typical August day might be 18°C or so – just imagine it being a whole 20°C warmer than normal wherever you are now.

No wonder some climate scientists have already suggested this could be one of the most extreme heatwaves on record.

What’s causing the extreme heat?

Over the past six days, a persistent area of high pressure, or anticyclone, has lingered to the east of the Andes. Also known as a “blocking high”, this appears to be the key driver of the intense heat.

Blocking anticyclones can drive heatwaves in three main ways. Firstly, they pull warmer air from closer to the equator towards them. The system also compresses and traps the air, heating it up, as was the case for the 2021 heatwave in the Pacific Northwest, which shattered the Canadian temperature record by nearly 5°C. Finally, the high pressure means there is little ascending air and hence little cloud cover. This allows the sun to heat the land continuously during the day, building up heat.

However, scientists need to analyse the meteorology of this unprecedented event in more detail to gain a more complete understanding.

El Niño made this more likely

The Chile-Argentina heatwave may have been made more likely by the developing El Niño in the Pacific Ocean. El Niño events, which typically occur every four years or so, are characterised by warm sea surface temperatures in the central-to-eastern tropical Pacific. Temperatures in the central Pacific are currently about 1°C above average for the time of year.

These warmer ocean temperatures make air more buoyant over the central Pacific, causing the air to rise. This drives changes to atmospheric circulation patterns further afield. El Niño-induced changes to atmospheric circulation typically mean higher pressure and warmer winter temperatures for this part of South America.

Climate change made it worse

The blocking system driving the extreme heat would probably have led to warm temperatures even in the absence of anthropogenic climate change. However, the rapid warming of climate change allowed the heatwave to become truly unprecedented.

Climate scientists expect to see temperature records broken as our planet continues to heat up. This is because the distribution of possible temperatures is shifting higher and higher.

Chile has already experienced the effects of climate change recently through a severe heatwave in February – late summer – resulting in several deaths from wildfires, as well as a decade-long mega-drought. The country recently rejected a rewrite of the constitution which would have mandated its government to take action against the nature and climate crises.

The longer-term impact of a winter heatwave

The hottest temperatures now appear to have largely subsided in the Andes. However, temperatures are still well above average for northern Argentina, Bolivia and Paraguay, and will remain so for the next five days or so.

The impacts of winter heatwaves are less well understood than summer heatwaves. For Chile, the most likely impact is on snowpack in the mountains, which provides water for drinking, agriculture and power generation. Any melting of the snowpack will probably also affect the diverse flora and fauna found in the Andes.

Overall, this heatwave is a startling reminder of how humans are changing Earth’s climate. We will continue to see such unprecedented extremes until we stop burning fossil fuels and emitting greenhouse gases into the atmosphere.

Matthew Patterson is a postdoctoral research assistant in atmospheric physics at the University of Oxford in the UK.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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