UP IN SMOKEGas Flaring,

Communities andCarbon Trading in

Nigeria

UP IN SMOKEGAS FLARING,

COMMUNITIES ANDCARBON TRADING IN

NIGERIA

UP IN SMOKEGas Flaring,

Communities andCarbon Trading in

Nigeria

Isaac ‘Asume’ OsuokaGibson Ikanone

Vivian Bellonwu­OkaforOrike Didi

Copyright 2016 by Social Development Integrated Centre. All Rights Reserved.

ISBN: 978-36329-9-X

Published by Social Development Integrated Centre (Social Action):

Head Office:33, Oromineke Layout, D-LinePort Harcourt, Rivers State, Nigeriawww.saction.org

National Advocacy Centre:20 Yalinga Street (House 1)Wuse 2, Abuja, FCT

Warri Office:N0. 10, Major Dan Azubuike RoadOff Niger Cat, by Refinery Road,Ekpan, Effurun, Warri, Delta State

Community Advocacy Centers:

Bori (Ogoniland)6 Kaani Road (Top Floor)Bori, Rivers State

DiobuN0. 77 Uruala StreetMile 1 Diobu, Port Harcourt, Rivers State

Brass:JBA Villa, Twon Brass,Bayelsa State

www.saction.org

Cover photo:Eni-Agip’s Irri gas plant, Delta StatePhoto by Raphael Yimga Tatchi

The report is based on monitoring and advocacy activities carried out within theframework of Social Action’s Climate Justice programme, which is supported by theRosa Luxemburg Foundation and Development and Peace – Caritas Canada

Acknowledgment

v

AP Applicant EntityOB/OB Obiafu-ObrikomCDM Clean Development MechanismCERs Certified Emissions ReductionsCDM EB Clean Development Mechanism Executive BoardCCX Chicago Carbon ExchangeCMP CDM Conference of the Parties serving as the Meeting of the Parties to the Kyoto ProtocolCDC Community Development CouncilCOP Conference of PartiesCO2 Carbon-DioxideDCC Department of Climate ChangeDNA Designated National AuthorityDNV Det Norske Veritas ASDPR Department of Petroleum ResourcesDOE Designated Operational EntityERPA Emission Reduction Purchase Agreement (ERPA)EU European UnionGHG Green House GasesJV Joint VentureLoA Letter of ApprovalLPG Liquefied Processing GasLNG Liquefied Natural GasMOU Memorandum of UnderstandingNAOC Nigeria Agip Oil CompanyNIE National Implementation EntityNo2 Nitrogen OxidesNNPC Nigerian National Petroleum CorporationOGPP Oil Gas Processing PlantOML Oil Mining LeaseOTC Over the CounterPDD Project Design DocumentRINA RINA Services S.p.A.So2 Sulphur DioxideUNFCCC United Nations Framework Convention on Climate ChangeUSA United States of AmericaVM Voluntary MarketWAGP West African Gas Pipeline

List of Acronyms

vi

Acknowledgement.............................................................................................................................. v

List of Acronyms..................................................................................................................................vi

Summary................................................................................................................................................ 1

Recommendations...............................................................................................................................5

Introduction...........................................................................................................................................6

Crude oil and associated gas flaring ............................................................................................8

Gas Flaring and Communities..........................................................................................................12

Government and Gas Flaring............................................................................................................14

Carbon Trading: From the Kyoto Protocol to the Paris Agreement.....................................16

Gas flaring in Nigeria and the CDM.................................................................................................19

Eni-Agip: The Nigeria Agip Oil Company (NAOC)...................................................................... 20

Eni-Agip and Communities: Beneku, Okpai and Irri-Isoko.................................................... 23

Xenergi................................................................................................................................................... 26

Xenergi and Obodugwa Community............................................................................................. 27

CDM and Sustainable Development?........................................................................................... 28

Additionality of Emission Reduction?.......................................................................................... 29

Measurability of Gas Flare Reduction?........................................................................................ 30

Postscript: Where is the UN Adaptation Fund In Niger-Delta?.............................................31

Conclusion..............................................................................................................................................33

Table of Contents

viii

SummaryWhile the Paris Agreement has been hailed by some as ‘historic’ with ‘ambitious’targets for reducing greenhouse gas emissions, its actual implementation will notdepart substantially from the Kyoto Protocol of 1997 with respect to the internationaltrading of carbon credits. As with the old system, the Paris Agreement will renew“internationally transferred mitigation outcomes”. Even though the Paris Agreementindicates that a new framework would be introduced to replace the CleanDevelopment Mechanism (CDM), the infrastructure already established for the CDMby the UNFCCC will serve the implementation of the Paris Agreement.

The CDM is the existing prototype for carbon trading, which is harped on bypro-market proponents as offering the best option for reducing greenhouse gasemissions and providing sustainable development gains for developing countries.This positive projection is not backed by the realities. This report presents examplesfrom Nigeria to show that projects registered for CDM fall short of the sustainabilitycriteria. In particular, so-called gas flare reduction projects in Nigeria are enmeshedin the pollution, dislocations and false promises associated with the petroleumindustry. While the CDM offers options for business transactions that guaranteesprofits for the big polluters, the international market for carbon creditsdiscountenance the demands for environmental justice by the communities that haveborne the real cost of historical pollution.

Paris agreement and the fraud of carbon trading

Moreover, claims for emissions reductioncannot be reasonably verified. Even whenemissions reduction could be imagined, theycannot be considered additional as a result ofthe CDM. Such reductions could rather betraced to developments made towardscompliance with Nigerian regulations andsituations that predate the CDM. As an exampleof carbon trading, the CDM shows that carbontrading does not hold if our concern is toactually reduce greenhouse gas emissions.

As with the old system,

the Paris Agreement will

renew “internationally

transferred mitigation

outcomes”

Through an examination of the impactsof two so-called gas flaring reductionprojects registered in the CleanDevelopment Mechanism (CDM) by oilcompanies operating in the Niger Deltaregion of Nigeria, this report shows thatthe CDM, as an example of the globalcarbon trading system, is flawed. Ourexamples show that CDM projects are

Paying the polluter: The Clean Development Mechanism(CDM)

Gas Flaring in Nigeria, Climate Change and Carbon Trading

Oil companies operating in the NigerDelta routinely flare most of the gasassociated with crude oil production.Indeed, Nigeria accounts for moreassociated gas flaring than any othercountry in the world. The flaring(open burning) of associated gasresults in serious local pollution ofair, land and waters. Acid rain as aresult of gas flaring destroys cropsand properties. Health of localpopulations has been severelycompromised since the practicecommenced in 1956. Gas flaring isalso a major source of methane andcarbon dioxide (CO2), which aregreenhouse gasses responsible forclimate change.

As at 2005, gas flaring from crude oil extraction activities of transnational companiesin the Niger Delta was generating more greenhouse gasses than the combinedemissions of the rest of sub-Saharan Africa. Gas flared in Nigeria by oil companieswas estimated to be about a quarter or 30 percent of annual US and EU gasconsumption respectively.

Picture by Kadir van Lohuizen

manipulated by the same companiesthat are responsible for most of thepollution in the global south. Thesecompanies exploit the CDM mechanismto make unjustified extra profit whilenot accounting for real emissionsreductions. The communities that arevictims of their historical pollution getno succor.

2

Carbon trading has failed impoverished communities

The Kwale (Beneku, Okpai, and Obodugwa) and Isoko (Irri) communities in Delta State,Nigeria are among the many in the Niger Delta area that have borne the cost ofpollution from crude oil production and flaring of associated gas for decades.However, unknown to them and without seeing any benefits, the very companies thatare responsible for the pollution of their land and destruction of livelihoods stand tomake extra profit by selling carbon credits via the CDM. Italian company, ENI- Agipwhich has drilled for crude oil and flared associated gas in these communities fordecades has been joined by Nigerian upstart, Xenergi to design so-called gas flaringreduction projects that promise sustainable development for the people. However, asthis report demonstrates, the claims for carbon credits by these companies are notjustifiable. Gas flaring is a criminal activity based on Nigerian law. Culprits should notprofit from the practice through the CDM or any other international carbon offsetscheme. Those that deserve compensation are the community victims.

3

Shell’s horizontal gas flare, Rumuekpe, Rivers State

Violations of the CDM

Though the CDM has developed systems toprevent fraudulent carbon credit claims,this report presents examples of how theinstrumentality of the CDM has beenseriously violated by powerfulstakeholders. Entities of the CDM itselfsuch as the CDM Executive Board,Designated Operational Entities (DOEs) andthe Applicant Entities have all pushed theirmarket-obsessed project economics to thedetriment of, and in exclusion ofcommunities that are victims of gas flaringand other historical pollution associatedwith crude oil production in the Niger Deltaof Nigeria.

The extent of the implementation of theCDM in Kwale and Isoko by ENI-Agip andXenergi has exposed credibility gaps in themanagement of the CDM process. The CDMExecutive Board and the DesignatedOperational Entities (DNV and RINA) andthe Department of Climate Change inNigeria (which is the Designated NationalAuthority) all fail to secure the adherenceof Applicant Entities (ENI-Agip and Xenergi)to regulations and their own codes ofconduct. These failures increase thehaplessness of the people of Kwale andIsoko as powerful entities seek to obtainunconscionable profit from the sale ofCertified Emissions Reduction. The buildingof CDM projects like those promoted byENI-Agip and Xenergi in the Niger Delta ofNigeria do not necessarily express anattempt at social and environmentalsustainability. Local concerns have been atleast marginalized and at worstdiscounted.

Across the areas of the ENI-Agip and Xenergiprojects, land has been forcefully grabbedfrom the local owners, forests mowed downand people’s access to and sustainable useof environmental resources undermined.The ENI-Agip and Xenergi projects whichhave been presented as CDM projects fail toaccount for the social costs of human rightsabuses and the distortion of socio-economiclife of the host communities arising from oiland gas extraction activities around theareas where projects are sited. The historyand socio-cultural dynamics of the people isrooted in subsistence on land and waterresources in the area. While the projectspromise to create jobs, the reality is thatjobs are being destroyed in the process ofdeveloping these projects. The timelinebetween the destruction of livelihoods andthe creation of “new jobs” creates scrambleand social conflict among the indigenouspeople and between the indigenous and theproject vendors on the other hand. This goesto show that a CDM project can be used toundermine the life and socio-economicexistence of host community people and inthe process discount social sustainability.

UNFCCC Adaptation Fund

The 2% levy on CERs issued by the CDM is themain source of income for the UNFCCCAdaptation Fund, which was established tofinance adaptation projects and programmesin developing countries parties to the KyotoProtocol that are particularly vulnerable tothe adverse effects of climate change.However, the host communities of ENI-Agipand Xenergi in Kwale and Isoko have notbenefitted from the UN Adaptation Fund.

CDM AND GASFLARING

1

SHUTTING DOWNOIL FIELDS

CANCELLATION OFPROJECT APPROVAL

2 4

The Executive Board of theCDM should cancel theapproval of the Project DesignDocuments (PDDs) issued tothe ENI-Agip and Xenergiprojects in Kwale and Isoko,respectively, to salvagewhatever is left of thereputation of the CDM and as amark of remorse on its part insupporting the environmentalabuse of the people of Kwaleand Isoko in the Niger Delta.

All oil fields that continueto flare associated gasshould be shut down toencourage developmentof associated gas........

All oil fields that continue toflare associated gas should beshut down to encouragedevelopment of associated gasgathering infrastructure, whichslowed down following theintroduction of the CDM. We areconvinced that it is only bytaking concrete steps at thenational level that the twin goalof gas flare elimination andelectricity generation to improvelocal energy access can beattained. International carbonmarkets distract attention fromnational goals and governmentresponsibility to hold companiesto account for their pollution. .

Considering that gas flaring isillegal in Nigeria, it amounts tobad faith to consider flarereduction projects in Nigeria asCDM projects. Gas flaringreduction projects in Nigeriashould not qualify for any globalcarbon credit scheme. Suchprojects fail on the additionalityand sustainable developmentcriteria. The only reason why gasis flared in Nigeria is because theNigerian government fails to abideby its own laws and nationalcommitments to its own people.Oil companies in Nigeria can endgas flaring profitably withoutrecourse to an internationalcarbon market. This can be donethrough a clear commitment bythe Nigerian government to abideby its own laws and commitmentsto improving local access toelectricity which can be enhancedby utilizing associated gas.

Recommendations

3

5

UN ADAPTATIONFUND

NIGERIAN REGULATORSSHOULD SIT UP

The Department of ClimateChange (DCC), Nigeria should situp to its responsibility as thestatutory regulatory body ofissues bordering on climatechange in Nigeria and as theDesignated National Authority asopposed to being a mererubber-stamp to the fraudulentcertification activities of the CDM.

The benefits of the UNAdaptation fund should beextended to the people ofKwale and Isoko whereENI-Agip and Xenergi operate.

IntroductionAs at the end of May 2016, 177 countries hadsigned the Paris Agreement, which emergedfrom the twenty-first session of theConference of the Parties (COP 21) of theUnited Nations Framework Convention onClimate Change (UNFCCC) of December 2015.However, while the Paris Agreement has beenhailed as ‘historic’ with ‘ambitious’ targets forreducing greenhouse gas emissions, itsactual implementation will not departsubstantially from the Kyoto Protocol of 1997.The earlier agreement had introduced theClean Development Mechanism (CDM) andother measures through which a globalmarket for greenhouse gases (GHG) wasestablished with the aim of providingflexibility to developed countries foremissions reduction. With the CDM,registered emission-reduction projects indeveloping countries could earn CertifiedEmission Reduction (CER) credits for onwardtrading in carbon markets. By buying suchCER credits, developed countries and theircorporations can take credit for meeting partof their emission reduction targets, ratherthan actually reducing emissions at home. Aswith the old system, the Paris Agreement willrenew “internationally transferred mitigationoutcomes” even though this will be donethrough a new “mechanism to contribute tothe mitigation of greenhouse gas emissions”.This new mechanism will replace the CDM of

the Kyoto Protocol. While the CDM wasintroduced to enable developedcountries and their corporations topurchase carbon credits fromdeveloping countries, the newarrangement would open up the marketplace for “voluntary cooperation” basedon countries’ needs in meetingnationally determined contributiontargets.

Through the examination of theimplementation of the CDM in Nigeria,this report questions the claims ofcarbon trading, which is harped on bypro-market proponents as offering thebest option for reducing greenhouse gasemissions and providing sustainabledevelopment gains for developingcountries.While the Paris Agreementwould result in the eventualreplacement of the CDM, theinfrastructure for international tradingof carbon credits already established forthe CDM by the UNFCCC would mostlikely serve the implementation of theParis Agreement.The goal of this reportis to show that the positive projection ofinternational carbon trading is notbacked by the realities.

This report presents examples from Nigeriato show that projects registered for CDM fallshort of the sustainability criteria. Inparticular, so-called gas flare reductionprojects in the country are enmeshed in thepollution, dislocations and false promisesassociated with the petroleum industry. TheCDM offers options for business transactionsthat guarantees profits for the big polluters.As such, the international market for carboncredits discountenance the demands forenvironmental justice by the communitiesthat have borne the real cost of historicalpollution. Moreover, claims for emissionsreduction cannot be reasonably verified. Evenwhen emissions reduction could be imagined,such reductions can be traced todevelopments made towards compliancewith Nigerian regulations and situations thatpredate the CDM, and cannot be consideredadditional as a result of the CDM. As anexample of carbon trading, the CDM showsthat carbon trading does not hold if ourconcern is to actually reduce greenhouse gasemissions.

From 2005 and 2012, ENI-Agip and Xenergihave respectively promoted the projects thatpromise to recover and sell gas associatedwith crude oil production:

(a) Recovery of Associated Gas that wouldotherwise be flared at Kwale Oil GasProcessing Plant (OGPP), a Joint Venture (JV)project involving the Nigeria NationalPetroleum Corporation (NNPC) and NigeriaAgip Oil Company (NAOC).

(b) Recovery and Utilisation ofAssociated Gas from the Obodugwa andthe Neighbouring Oil Fields by XenergiOilfields Services Limited.

This report examines the compliance ofENI-Agip and Xenergi with CDM criteriaof sustainable development, emissionreduction, additionality, andmeasurability in implementing CDMprojects in Niger Delta communities. It isour finding that while these projects areregistered under the CDM to sell carboncredits in the international market, theyfail to meet even the requirements of theCDM Accreditation Procedure. Theseprojects which have twenty-year cyclesoperate under an environment ofhistorically opaque production figures ofassociated and non-associated gas,making it impossible to measure actualflare reduction, if any.

7

Crude Oil andAssociated GasFlaringNigeria has the worst record for routine gas flaring globally. All associated gas flaringin Nigeria is carried out by petroleum companies onshore and offshore of the NigerDelta. From the beginning, the flaring of associated natural gas has remained a mainfeature of the crude oil business in Nigeria. The practice has continued despiteprotests of members of host communities that are forced to live with thecontamination of their environment.

Rather than take serious action to stop the environmentally destructive gas flaring, theNigerian government and oil companies opted to increase crude oil production. Asproduction increased, so has the flaring of gas. Since 1956, Nigeria’s Niger Delta hasbecome the hub of oil and gas exploitation in the country. Communities in the regionhost petroleum production externalities like environmental pollution and violentconflicts, which have not been adequately mitigated by the government andcompanies. Crude oil reserves in the Niger Delta area contain a mixture of almost equalamount of crude and (associated) natural gas. During drilling, the oil wells pump outthese hydrocarbons mixed with water.

The whole mixtures are transported via flowlines which are small pipelines that areconnected to flow stations. These flow stations are major installations where theproduced water is discharged into the surrounding environment and the associated gasfrom the wells are separated from the crude oil and burnt off. This process is referredto as gas flaring. The discharge of produced water and gas flaring are both damaging tothe environment with local and global consequences.

1 Some data suggest that Nigeria and Russia record highest flaring volumes at different periods

1

Shell flow station at Rumuekpe, Rivers State shows gas flaring and crude oil pollution

While continuous discharge of produced waterleads to increased soil and water salinity ofimpacted areas, gas flaring has proven to leadto increased acidity of the soil in theneighborhood of the flare sites. Gas flaring alsocauses acid rain which affects soil quality andthreatens food security in oil and gas bearingcommunities. In addition to the more localizedimpacts, gas flaring also aggravates climatechange attributes like global warming throughthe discharge of greenhouse gases likemethane and carbon dioxide.

From about 5,100 barrels per day in 1958,Nigeria’s oil production rose to 2 million barrelsper day in 1972. As at 2015, the Nigeriangovernment was claiming a maximum crude oilproduction capacity of 2.5 million barrels perday. Ranking as Africa’s biggest oil producerand the sixth largest exporter in the world,Nigeria’s Niger Delta is presently estimated tohave a greater potential for gas than crude oil.In the first place, all the crude oil reservoirs inthe region also contain ‘associated gas’.However, apart from the associated gas, theregion also has abundant non-associated gasreserves, estimated at 4,500 billion standardcubic meters.

2 Didi, Orike., 2010. How Oil and gas extraction affects communities in Citizens Rights in Oil and Gas Sites in Nigeria: A Handbook for Community Organisers and ParalegaCentres.Ibadan: Lighthouse Publishers/Social Development Integrated Centre (Social Action).

3 Fubara, B. A. (1986). Targeting strategy for technological acquisition in the Sub-Saharan oil exporting states of Africa: The Nigerian experience. Journal of Business Ethics, 5(5),351-363.

4 Nigeria still aims at boosting crude oil production from current levels to 3 million barrels per day. This would correspond to increase in flaring of associated gas.

5 Eni, World Oil and Gas Review, 2005.

6 NLNG. NLNG and Gas Reserves. http://www.nlng.com/PageEngine.aspx?&id=87

7 Social Action (2009).Flames of Hell: Gas flaring in the Niger Delta.http://www.saction.org/home/saction_image/flames_of_hell.pdf

8 AsumeOsuoka&Peter Roderick (2005).Gas Flaring in Nigeria. A Human Rights, Environmental and Economic Monstrosity. Environmental Rights Action/Friends of the Earth, Nigeria &Climate Justice Programme.https://www.foe.co.uk/sites/default/files/downloads/gas_flaring_nigeria.pdf

9 Hector Igbikiowubo, "Nigeria accounts for 36% of global gas flaring", Vanguard, 7 January 2008.http://www.vanguardngr.com/index.php?option=com_content&task=view&id=4137&Itemid=43

While oil industry data are often unreliable,Nigeria is generally thought to have eitherthe ninth or tenth largest proven naturalgas reserves in the world. Generally, theNigerian government and internationalagencies use data provided by the oilcompanies. Concerning gas flaring, one ofthe most referred estimates is that the oilcompanies in Nigeria flared an average of2.5 billion standard cubic feet (scf) (70million standard cubic meters) ofassociated gas daily, or about 912.5 billionscf(25 billion standard cubic meters) a yearas at 2004. As at 2005, gas flaring from theNiger Delta was generating moregreenhouse gasses than the combinedemissions of the rest of sub-SaharanAfrica. The volume of associated gas flaredin the Niger Delta in 2008 was 24 billioncubic meters (847.5 billion cubic feet),according to some estimates. Thosefigures were equivalent of over a quarteror over 30 percent of annual US and EU gasconsumption respectively. The NigerianNational Petroleum Corporation (NNPC)claimed that in 2010 Nigeria flared 536

10

2

3

4

6

5

7

8

9

billion scf (15 billion cubic meters) of associated gas. Thiswould suggest a reduction of gas flaring compared to 2004figures. However, those reduced figures merely reflectmajor disruptions of oil production as a result of localarmed insurgency in the Niger Delta which cut productionby up to 50 percent in 2009. As crude oil productiondropped, so did the flaring of associated gas. Flaringvolumes increased again when crude oil productionrecovered following the Amnesty Programme, which was asettlement between militants and the federal government.According to the NNPC, gas flaring figure for the month ofFebruary 2014 was about 50 billion scf of gas,approximating financial losses of $198.775 million. If thatmonth’s flaring figure is used to show annual flaring, thenthe country flared over 600 billion scf of gas in 2014,showing an increase on 2010 figures. Part of the reasons for continued flaring of associated gasin Nigeria is the abundant reserves of non-associated gas,which significantly reduces the incentive for recovering andutilising gas produced in association with crude oil. Theutilisation of associated gas for energy generation andother commercial purposes requires additionalinvestments, which companies and the Nigeriangovernment failed to make for decades. Rather than utilisethe associated gas that is being flared, oil companies andthe government have opted to drill for non-associated gasfor commercial purposes such as the export-orientedLiquefied Natural Gas (LNG) projects. Since non-associatedgas is not flared, its production and sale would not affectflaring of associated gas.

10 Newswatch Times (2013) Oil firms defy FG’s policy on gas flaring. Newswatch Times.18 September 2013. http://www.mynewswatchtimesng.com/oil-firms-defy-fgs-policy-gas-flaring/

11 Eboh, M. (2014).Nigeria loses N32bn to Gas-Flaring. Vanguard Newspapers, 12th August 2014.http://www.vanguardngr.com/2014/08/nigeria-loses-n32bn-gas-flaring/

Apart from thecontinuous noise andperpetual light at night,the routine flaring ofassociated gascontaminates the air andcauses acid rain whichpollutes the land andwetlands. The result isthat fragile wetlands,farmlands and othervegetation arecompromised

11

10

11

GAS FLARING AND COMMUNITIES

12 Ajugwo, Anslem O. (2013). "Negative Effects of Gas Flaring: The Nigerian Experience."Journal of Environment Pollution and Human Health 1.1: 6-8.

13 Edino, M. O., Nsofor, G. N., &Bombom, L. S. (2010). Perceptions and attitudes towards gas flaring in the Niger Delta, Nigeria. The Environmentalist, 30(1), 67-75.

14 Ekpoh, I. J., &Obia, A. E. (2010). The role of gas flaring in the rapid corrosion of zinc roofs in the Niger Delta Region of Nigeria. The Environmentalist, 30(4), 347-352.

13

14

Many of the petroleum bearing communities in the Niger Delta area of Nigeria have bornethe negative economic and health consequences of the routine flaring of associated gasfor over fifty years. Apart from the continuous noise and perpetual light at night, theroutine flaring of associated gas contaminates the air and causes acid rain whichpollutes the land and wetlands. The result is that fragile wetlands, farmlands and othervegetation are compromised. Studies have shown that crop yield in areas closer toflaring is lower. Nutritional value of crops from such places is also limited compared tocrops from other locations. Indeed, many of the contents of flared gas are carcinogens.Flared gas contains sulphur dioxide (SO2) and nitrogen oxides (NO, N2O and NO2). Thesecombine with moisture in the atmosphere to produce sulfuric acid and nitric acidrespectively. These substances impact on health with rampant complaints of respiratorydiseases. Asthma, headaches, dizziness are symptoms associated with continuedmethane exposure, which is also emitted from gas flaring. Community members believethat gas flaring is related to the increasing death rate. Community members havecomplained for decades that gas flare related acid rain is resulting in corroding ofcorrugated iron roofing of homes has been confirmed by scientific studies. However, noone apart from the community members bears the economic burden of frequentreplacement of roofing of homes.

12

Gas flare over Batan community, Delta State

Complaints bycommunity members fordecades that gas flarerelated acid rain isresulting in corroding ofcorrugated iron roofingof homes has beenconfirmed by scientificstudies. However, no oneapart from thecommunity membersbears the economicburden of frequentreplacement of roofingof homes. documents.

Government's efforts to curb gas flaring has been tame, inconsistent andcomplicit. From the early days, British colonial authorities that supervisedinitial oil exploration and production allowed the practice of gas flaring. Therewas no immediate export market and the option of using associated gas as asource of domestic energy was not under consideration as local needs did notmatter. Following independence, Nigerian governments inherited colonialarrangements. While effort was made to phase out gas flaring from otherparts of the world, Nigeria and Russia remained the main gas flaring countries.In 1969, the Nigerian government asked oil companies to put in placeinfrastructure for using associated gas from crude oil operations within thefirst five years of commencement of production. The oil companies did notcomply. The government later bowed to oil industry pressure, and in 1979 themilitary government promulgated the Associated Gas Re-Injection Decree (nowcalled Act) which introduced payment of fines for the flaring of associated gasfrom 1980. Again, the government failed to enforce the legislation. Withcompanies preferring to pay the very meagre fines, the Nigerian governmentprohibited the gas flaring in 1985 through the Associated Gas Re-Injection(Continued Flaring of Gas) Regulations. The new regulation was renderedredundant by provision for exemptions to be granted by the government, whichwould continue to collect the fines. In 2005 the oil companies operating inNigeria paid a total amount of $19.8 million as penalties for gas flaring. Thispaltry amount, as against estimated loss of $5 billion as a result of flaring,meant that companies preferred to continue paying the fines rather than makethe investments needed to stop indiscriminate gas flaring.

With the return of Nigerian government to civilian administration in 1999,officials indicated that government was expecting oil companies to end gasflaring by 2003. The Obasanjo government later changed the target to 2004.The major transnational oil companies operating in Nigeria rejected the targetdate as unrealistic. Shell announced that it would rather eliminate gas flaringfrom its facilities in 2008. The Nigerian government vacillated and lateraccepted the target date suggested by the oil companies. However, thesetarget dates were neither backed by new legislation nor solid policydocuments.

GOVERNMENT AND GASFLARING

15 Aniche, E. T. (2015). An Assessment of the Role of Nigerian State in EnforcingZero-Gas Flare Regime, 1979-2012: The Imperatives of Environmental Diplomacy.Civil and Environmental Research www.iiste.org, ISSN 2224-5790 (Paper) ISSN 2225-0514 (Online)Vol.7, No.12, 2015.

16 Okere, R. (2015). Nigeria burns off $5 billion resources yearly from gas flaring. Guardian Newspapers, 6th November 2015.http://guardian.ng/features/weekend/nigeria-burns-off-5-billion-resources-yearly-from-gas-flaring/

14

15

16

One of the communities impacted by gas flaring, Iwhrekan, in Ughelli-SouthLocal Government Area, Delta State took the matter to the Nigerian courts.Responding to their plea, the Federal High Court, Benin-City, Nigeria presidedover by Justice V. C. Nwokorie ruled on November 14, 2005 that gas flaringconstituted an abuse of the rights of citizens. The High Court asked Shell todiscontinue gas flaring. Shell objected to the judgment and approached theCourt of Appeal, which agreed with the company and stayed the ruling of theHigh Court. Nevertheless, an examination of current practice in Nigeria hasshown that existing laws prohibiting gas flaring are not being enforced. Whenthe state regulator, Department of Petroleum Resources increased the penaltyon gas flaring from the paltry ten Naira to $3.50 for every 1,000 scf of gasflared, the oil companies simply refused to pay. The government did nothing.Cabinet officials of government simply changed their tone, referring to gasflare reduction goals as a shifting target.

17 Friends of the Earth. (2005). Court orders oil companies to stop gas flaring in Nigeria.Media Advisory, Friends of the Earth International on behalf of climate justiceprogramme, 2005. http://www.foei.org/press/archive-by-subject/climate-justice-energy-press/court-orders-oil-companies-to-stop-gas-flaring-in-nigeria

18 Awogbemi, A. (2014). Gas Flaring: Another Economic Drain-pipe.Newswatch Times, 23rd August 2014.http://www.mynewswatchtimesng.com/gas-flaring-another-economic-drain-pipe/

19 Newswatch Times (2013) Oil firms defy FG’s policy on gas flaring. http://www.mynewswatchtimesng.com/oil-firms-defy-fgs-policy-gas-flaring/

15

17

18

19

Carbon Trading:From the KyotoProtocol to theParis AgreementDeveloped countries which make up 15% of the world population areresponsible for 70% of the greenhouse gas emissions while emissions from thedeveloping world are easily traceable to the activities of corporate entities withroots in the developed world. It was at the UNFCCC meeting in Kyoto, Japan in1997 that the Kyoto Protocol was established with the CDM as the primaryinternational offset program. Through the CDM and other measures, a globalmarket for greenhouse gases (GHG) was established with the aim of providingflexibility to developed countries for emissions reduction. In essence, the CDMis basically a generator of carbon credits, which can be traded in the globalcarbon market. The offsets are generated through investments in GHGreduction, avoidance, and sequestration projects in developing countries. Withthis arrangement, registered emission-reduction projects in developingcountries could earn Certified Emission Reduction (CER) credits for onwardtrading in carbon markets. By buying such CER credits, developed countriescould take credit for meeting part of their emission reduction targets.

Apart from the CDM, other “flexible mechanisms” created through the KyotoProtocol include the Joint Implementation and the ETS, which together becamegrouped as part of a compliance market. These so-called compliancemechanisms exist alongside a voluntary market where corporate bodies tradein GHG emission offsets. Voluntary Market (VM) operators include the ChicagoCarbon Exchange (CCX) and the Voluntary “Over-the-Counter” (OTC) schemes.In 2008, the market value of VM transactions was estimated to be aboutUS$ 705 million.

20 Environmental Rights Action/Friends of the Earth Nigeria. (2011). Mired in a fossil trap – the Nigerian CDM report page 24, 2011.

21 Lang, C. (2013). Clean development mechanism: zombie projects, zero emissions reductions and almost worthless carbon credits. Redd Monitor.org, 12July 2013.

22 Gillenwater, M. and Seres, S. (2011). The Clean Development Mechanism - A Review of the First International Offset Program. Pew Center on Climate Change.23 Diaz, D. D. (2009). Engaging Western Landowners in Climate Change Mitigation: A Guide to Carbon-Oriented Forest and Range Management and Carbon MarketOpportunities. General Technical Report PNW-GTR-801, December 2009.

20

21

22

23

The Paris Agreement 2015 promises a new“mechanism to contribute to themitigation of greenhouse gas emissions”.This new mechanism is expected toreplace the existing mechanisms thatwere introduced in the framework of theKyoto Protocol of 1997, such as the CDM.But the new mechanism will not depart inany substantial way from the old. Byhinging on “internationally transferredmitigation outcomes”, the Paris Agreementwill promote a new era of carbon offsetmarket via internationally traded carboncredits. From the hazy wordings of theParis Agreement, what shows is that amajor departure from the CDM would bethe removal of the compliance market inthe spirit of the voluntarism of the ParisAgreement, which neither has bindingtargets nor a requirement for compliance. While the CDM was introduced to enabledeveloped countries and theircorporations to purchase carbon creditsfrom developing countries, the newarrangement would open up the marketplace for “voluntary cooperation” based oncountries’ needs in meeting nationallydetermined contribution targets.

However, the infrastructure alreadyestablished for the CDM by the UNFCCCwill serve the implementation of the ParisAgreement. In particular, its proponentsharp the “CDM’s usefulness formonitoring, reporting and verifyingemission reductions; as a tool forresults-based financing; and as a meansto provide transparency and predictabilityto financial instruments funding climateaction”.

24 Milman, O. (2015). James Hansen, father of climate change awareness, calls Paris talks 'a fraud.' The UK Guardian, 12December 2015.

25 UNFCCC.http://newsroom.unfccc.int/climate-action/lessons-clean-development-mechanism-implementation-paris-agreement/

There are supposed positives from theworkings of the CDM, which is led by theExecutive Board (CDM EB) thatsupervises and serves as the ultimatepoint of contact for CDM ProjectParticipants. They register projects andissue CERs under the authority andguidance of the Conference of the Partiesserving as the Meeting of the Parties tothe Kyoto Protocol (CMP).

For any project to be classified a CDMproject it must have the followingfeatures and go through the followingsteps:

a. Identification of the CDM projectidea(s);

b. Decision on the CDM baseline andmonitoring methodology that will beapplied;

c. Preparation of the CDM Project DesignDocument (PDD);

d. Approval from the host party countryi.e. Designated National Authority (DNA);

e. Validation of the PDD and registrationof the CDM project with the UNFCCC;

f. Monitoring of the CDM projectactivities using the monitoring protocolsincluded in the validated PDD;

g. Verification of the monitoredparameters using the services of aDesignated Operating Entity (DOE) tocertify the credits from the CDM project;

h. UNFCCC then issues the certifiedemission reductions (CER).

17

24

25

ofofAn important set of activities implicit in the whole process is the discussion andnegotiation leading to the Emission Reduction Purchase Agreement (ERPA) with theeventual buyer of the CER. This important step determines the monetary value of the CER.

To maximize the environmental and economic benefits of a CDM project as an offsetprogram, it must be:

a. Additional – projects should result in emission reductions relative to a credible baselinethat would not have occurred were it not for the existence of the incentive provided by theoffset program.

b. Measurable—monitoring of emissions and calculation of emission reductions must beverifiable and based on credible data.

c. Independently audited—the eligibility of projects and accuracy of emission reductioncalculations should be reviewed by expert auditors with no conflicts of interest.

d. Unambiguously owned—rights to the credits should be clearly based on domestic andinternational law and emission reductions must not be double counted.

e. Able to address/account for leakage—all emission sources impacted by the projectshould be accounted for, including those outside a project’s boundary.

f. Permanent—credits should represent a permanent removal of GHGs from theatmosphere, and in project types where a reduction could be reversed (e.g., afforestation),there must be a way to account for non-permanence.

The CDM EB has advertised its commitment to productively engage, collaborate, andconsult with stakeholders to identify and improve upon existing standards, procedures andguidelines. However, members of communities hosting CDM listed carbon offset projects inDelta State, Nigeria have no contact with the CDM authorities. Therefore, their concernshave never been considered. In all, both the CDM itself and gas flare reduction projects failto meet the conditions outlined by the CDM. The underlying expectations for emissionsreduction and the associated benefits of sustainable development have been grosslyundermined by the government, oil companies, Designated Operational Entities (DNV andRINA), and CDM Executive Board and other powerful players responsible for driving theprojects. What we find is that the lure of profits and quest to demonstrate theeffectiveness of the CDM mean that these entities ignore the historical pollution ofcommunities by oil companies and other petroleum industry related deprivations that havebeen exacerbated by the CDM projects.

18

Gas Flaring inNigeria and theCDM

Notwithstanding the incentives for continued flaring in the Niger Deltaunderscored in the sections above, the introduction of the CDM was welcomedby oil companies and their home governments as an opportunity to makeprofits and offset continuing emissions at home. Following the Kyoto Protocol,every petroleum sector development that could potentially claim to result inthe reduction of gas flaring in Nigeria was promoted as a CDM project.Commercial gas developments such as the West African Gas Pipeline (WAGP)promoted by Chevron, Shell and other companies were then presented as notbeing financially viable except for there was the added possibility of earningcarbon credits. This was even when many of the projects had been conceivedas commercially viable before the Kyoto Protocol. While campaigns byNigerian civil society activists forced Chevron to abandon carbon creditarguments with respect to the WAGP, other projects claiming to reduce gasflaring escaped the scrutiny of civic voices and achieved registration with theCDM for the sale of CERs. Specifically, the ENI-Agip and Xenergi CDM projectsin Kwale and Isoko, both in Delta State of Nigeria, are associated gas capturingprojects with 10-year crediting period and 20-year life-cycle each and anannual estimated GHG emissions reduction of 1,513,764 and 288,147, respectively.

What we see is that with the collaboration of shrewd consultants in the togaof Designated Operational Entities (DOEs), companies are positioned to reapgains through transactions on CERs even when claims of emissions reductioncannot be verified, and while the abuses against local communities continue.The argument pushed by these groups is that there is no ‘market’ for gas inNigeria. What this means is that price of gas was low in Nigeria. So oilcompanies could not have a good enough profit motive to invest in stoppinggas flares. So they should be awarded carbon credits to make suchinvestments profitable.

26 CDM Executive Board, Validation Report on Kwale OGPP, 9th May 2006.

27 CDM Executive Board, Validation Report on Obodugwa and Neigbouring Oil Fields, 24th December 2012.

28 Osuoka, A. I. (2009). “Paying the Polluter? The Relegation of Local Community Concerns in ‘Carbon Credit’ Proposal of Oil Corporations in Nigeria” in Upsetting theOffset-The Political Economy of Carbon Markets.Edited by Steffen Bohm & Siddhartha Dabhi.Mayfly Books, 2009.

2726 28

ENI-Agip: The Nigeria Agip OilCompany (NAOC)

Nigerian Agip Oil Company Ltd.(NAOC) was incorporated in Nigeria in1962 by Italian oil company, Eni whichis the operator of its joint venturepartnership with the NigerianNational Petroleum Corporation(NNPC) and Philips Oil. Eni-Agip isestablished as one of the major oilproducing companies in the NigerDelta of Nigeria. Like other oilcompanies in the area, its crude oiland natural gas exploitation hasresulted in severe pollution,destruction of livelihoods, humanrights abuses, conflicts and killings ofmembers of communities where theyoperate. Eni-Agip operates crude oilwells, flow stations, gas plants and acrude oil export terminal. Many oilwells and one major flow station andgas plant is located within Kwalecommunities in Delta State. TheKwale flow station receives crude oilmixed with ‘large portion’ ofassociated gas produced from thewells located in five oil fields(Ahaka, Beniku, Okpai, Kwale,Irri-Isoko) in its Oil Mining Lease 60(OML60). The associated gas isroutinely flared upon separation fromthe oil at the Kwale flow station.While the crude is transported toexport terminals on the Atlanticcoast,

29 These oil wells and facilities are located at Okpai, Beneku, Kwale, Umusadege, Umuseti, Amorji, Aboh, Emu Obodeti, Matsogo, Okuibome, Ashaka, Abalagada, Inyi,Egue, Ase River, Igbuku, Onyia, Anieze, Umutu, Ebedei, Asuakpu, Adofio River, Obianyima, Nemomai, Ogbogone and Umuoru (Adia).

30 CDM Executive Board, Monitoring Report for CDM Project No. 0553 “Recovery of associated gas that would otherwise be flared at Kwale oil-gas processing plant,Nigeria”, 10 September 2010. http://cdm.unfccc.int/filestorage/5/B/4/5B4VENXRU6ZPK1HS9CIDJ0YLMGA8QT/New%20MR%20CDM%20Kwale%20R01.pdf?t=NEt8bzdyYXdpfDCbZogF9jM438t_T8wBVoHo

the water is usually emptied ontoopen pits, which pollute the area.But the associated gas that is flaredis not the only gas produced by thecompany. The company also producesnon-associated gas which is primarilysold in the export market via theNigeria Liquefied Natural Gas (NLNG)plant in Bonny, Rivers State, whichhas been exporting LNG since 1999.Non-associated gas produced byEni-Agip in the Kwale area istransported via a ‘small’ gas exportline which is linked to its Obiafu-Obrikom (OB/OB) gas processingplant for onward transfer to the LNGplant. The ‘small’ “export line takes afraction of the gas produced at KwaleOGPP”. The Kwale gas processingplant was built by Eni-Agip in 1975, tobe fed with purely non-associatedgas. In 1987, the company expandedthe plant to include units that processassociated gas. From that pointonward, a fraction of the associatedgas produced by Eni-Agip from theOML60 area was utilised through theKwale gas plant. The initialinvestments for processing a fractionof the associated gas were made byEni-Agip before the CDM, indeedbefore the Kyoto Protocol.

20

29

30

With local protest and international environmental campaigns, the major oilcompanies have all announced the construction of some associated gasgathering plants which process a proportion of the associated gas from theoil fields. When associated gas is so processed, rather than flared, they aretransported through pipelines to the same gas plants that processnon-associated gas. By mixing previously flared gas and non-flared gas,companies could make theoretical and, sometimes, clearly false claims foremission reductions. The claims made by Eni-Agip to the CDM would verywell fall under those categories.

According to the CDM Executive Board, Eni-Agip’s CDM project proposes torecover “large portion” of associated gas that would otherwise be flared atthe Kwale Oil-Gas Processing Plant (OGPP). In the project scenario, thecaptured gas will be marketed for use by end-consumers of gas via Eni-Agipowned independent gas-fired Power Plant at Okpai (480MW - Okpai IPP),consisting of a high-efficiency combined cycle gas turbine electricitygenerating plant. The main goal of the power plant is therefore to absorbpart of the associated gas produced at Kwale OGPP. The reality, however, isthat the Okpai power plant utilises large quantities of unflarednon-associated gas. This makes it difficult to determine actual GHGemissions reduction, which can only come about by the use of associatedgas. In this case, even the CDM Executive Board cannot say for sure theactual mix of associated and non-associated gas that ends up in the Okpaiplan, referring only to “a certain percentage of Non-Associated Gas (NAG)” inofficial project monitoring documentation. Despite that, the CDM stillacknowledged that Eni-Agip achieved a total emission reduction of 1,747,226tCO2 between 9 November 2006 and 31 December 2009.

The initial investments for processing a fraction ofthe associated gas were made by Eni-Agip beforethe CDM, indeed before the Kyoto Protocol.

21

By producing non-associated gas (which is not flared) along with gasassociated with crude oil, Eni-Agip and other oil companies in Nigeria veryeasily obfuscate actual flaring volumes. This is because flaring figurespresented to the public and government agencies are often in percentages ofthe total mix of associated and non-associated gas. What this means is thatwhen non-associated gas production increases to meet demands of theinternational market, the result could be a reduction in the percentage ofassociated gas flared. Such figures could be sustained even when actualvolume of associated gas flaring is increasing.

Eni­Agip’s gas flare at night

22

Between 2013 and 2016, Social Actionheld discussions with the people ofBenekwu, Okpai and Irri-Isoko, whichare among the communities that hostoperations of Eni-Agip in Delta State.Some of the discussions were held atthe palace of the Okpara-Uku ofBeneku, Chief Okwudibe Anene, andwith representatives of theCommunity Development Council (CDC)along with a cross-section of thewomenfolk of Okpai. At Irri-Isoko,Social Action interacted with thetraditional leadership and members ofIrri-Isoko communities during sessionsat the palace of the Odio-Ologbo of Irrikingdom, HRM Oviese Eba Ojenuvwe II.In the different communities, thepeople shared the collective opinionthat ENI-Agip has ruined their past, thepresent, and the future:

ENI-Agip and Communities:Beneku, Okpai and Irri-Isoko

ENI-Agip has been operating in Beneku and Okpai since 1965, and in Irri-Isokosince 2003. The company has been flaring gas since it commenced operations inthe area. The effect of the gas flared by ENI-Agip in Okpai includes light pollution,noise, acid rain, polluted air, respiratory diseases etc. Despite the CDM projects,gas flare sites have increased in Irri-Isoko, leading to dramatic increase inillnesses.

• The people do not have reliable public electricity despite being the host ofmajor oil and gas investments.

• The source of livelihood of the people is fishing and farming however thepredatory exploration and production activities of ENI-Agip has left thefarmlands barren and the fishing rivers polluted. Over the years, the pumping ofindustrial wastes and sludge into the farmlands and fishing rivers of Okpai hasresulted in soil erosion and river encroachment.

Eni­Agip’s Irri gas plant, Delta State

23

• ENI-Agip built one health centre each in Beneku and Irri-Isoko, which are nowdilapidated and without a single medical doctor.

• ENI-Agip has neither built a school nor health centre in Okpai, and the peopleof Okpai travel all the way to Kwale and other neighbouring towns to getprimary and secondary education as well as to seek for medical treatment.

• ENI-Agip has not provided any form of empowerment for the womenfolk of thecommunities, leading to protests by the women. In one example, Beneku womenembarked on peaceful protests in the year 2000. The women were teargassedand many were arrested and taken to Asaba by the Nigerian Police on thestrength of the complaint of ENI-Agip. Beneku community paid money to securethe release of their women.

• Youths in the communities are disenchanted and disgruntled as a result of theruination of their hope and aspirations by ENI-Agip through repeated breach ofMemoranda of Understanding (MOU) signed with the people of Beneku andOkpai. The absence of scholarship and lack of employment is worsened by thefact that fishing and farming have been greatly undermined by oil productionactivity.

• ENI-Agip built one primary school in Beneku. But as is the case with the healthcentre, the school is not being properly funded.

• The asset integrity (pipelines, flow stations, gas gathering facilities, etc) ofENI-Agip are obsolete, corroded, leaky. These facilities would not pass anyproper certification to meet internationally accepted standards.

A youth at Okpai iswashing cooking wareat the polluted riverwhich is also source ofdrinking water for manyin the community

24

• ENI-Agip provided one borehole for drinking water since the Beneku river thatused to be the source of drinking water for the people of Beneku has beenpolluted by the company. But the project has been abandoned. Communitymembers are investing in the drilling individual boreholes for drinking water,which only a few can afford. However, as shown by the United NationsEnvironemntalProgramme (UNEP) Report on Ogoniland, water from suchboreholes are often polluted.

• Okpai does not have a single borehole of drinking-water constructed byENI-Agip despite the Okpai River being polluted. Still, the people of Okpai carryout their domestic chores including washing of dishes, clothes etc. in the river.

• Okpai and Irri-Isoko communities have been riddled with violent communalstrife. These conflicts, linked to competition for company patronage, haveresulted in the death of many residents.

• That the road leading to Okpai is unpaved and jagged whereas roads leading toENI-Agip’s facilities are in relatively good condition.

Abondoned community health centre built by Eni­Agip atIrri, Delta State

Abandoned water borehole atBeneku, Delta State was built byEni­Agip

25

The major transnational oil companies held concession of oil fields in the Kwalearea, which for various technical and commercial reasons, they did not develop.With the introduction of the Local Content Policy in the Nigerian petroleumsector, new companies set up by Nigerians were encouraged to buy such‘marginal fields’. It was with this policy environment that Xenergi bought theObodugwa/Ebendo oilfields. Associated gas produced from this oilfield wasflared. Xenergi, therefore considered the possibility of earning more profit viathe CDM through the development of a project for utilising the associated gasfrom the Obodugwa/Ebendo and Umusadege oil fields (within oil mining leaseOML 56). The project would involve the building of a compressor facility withinthe Obodugwa oil field. From the compressor facility, associated gas would betransported through Eni-Agip’s existing gas pipeline system in the Kwale areaplus an additional 25km pipeline system for onward processing at theObodugwa Liquefied Processing Gas (LPG). The Project Design Document (PDD)deemed the project activity as economically unfeasible without the CDM.

Also, the PDD specified that the project activity would generate jobs during theconstruction and throughout the operational life of the project and improve thelives and cultural heritage of the people of Obodugwa-Ogume in accordancewith the principles of sustainable development. This sustainable developmentclaim was supported by the Letter of Approval (LoA) issued by the DesignatedNational Authority (DNA) of Nigeria i.e. the Department of Climate Change(DCC).

Xenergi had its Project Designated Document (PDD)signed by the ExecutiveBoard of the CDM on 28 November 2012 with its Validation Report approved bythe Designated Operational Entity (DOE) RINA on 24 December 2012 for the“Recovery and Utilization of Associated Gas from the Obodugwa andNeighbouring Oil Fields in Nigeria”.

Xenergi

31 While the culprit for the majority of gas flaring is the transnational oil companies, oil companies established by Nigerian nationals such as Xenergi have beenencouraged by the Local Content Policy of the Nigerian government to enter the oil production sector. As they drill for crude oil, they are also flaring significantamounts of associated gas.

32 CDM Project Design Document on Xenergi, 28th November 2012.

26

31

32

Social Action has interacted with the traditional leadership and members ofObodugwa community since 2013. Meetings have been held at locationsincluding the palace of the Okpara-Uku of Obodugwa, Chief James AkpatiOmolu. Community members recounted the following narrative since theirencounter with Xenergi in 2008 when the company started operations in thecommunity:

• Obodugwa entered into a Memorandum of Understanding (MOU) with Xenergi,which specified that a certain percentage of the Xenergi production would bepaid to Obodugwa periodically, but that since January 2013 the agreement hasnot been honoured because Xenergi habitually delays in fulfilling agreementsstated in MOUs. The CDC Chairman, Chief Obi Gold referred to Xenergi as a curseto Obodugwa and that Obodugwa would appreciate if gas flaring can bereduced in their community to protect their collective health.

• The people of Obodugwa suffer from serious illnesses as a result of the gasflared by Xenergi.

• That the people of Obodugwa are predominantly corn farmers but thatharvest yields have been very poor over the years due to soil infertility whichcould be attributable to the effects of gas flare.

• Xenergi invited experts to Obodugwa to conduct tests on the people and theenvironment. However, the results of the tests were hoarded by Xenergi andnever made available to the people of Obodugwa.

• There is no health centre in Obodugwa. The people of Obodugwa travel toneighbouring towns such as Kwale, Oleh etc. for medical treatment.

• That the source of drinking water for the people of Obodugwa has beenrain-water, which is being polluted by gas flaring. Xenergi did not deem itnecessary to provide a source of potable drinking-water for the people ofObodugwa. Rather, the company renovated the dilapidated borehole that DeltaState government had constructed. Community members do not use theborehole.

Xenergi and ObodugwaCommunity

27

The CDM has a dual mandate to deliverclimate mitigation and the benefits ofsustainable development. However,sustainable development claims wouldbe hard to make with respect to theso-called gas flare reduction projects inDelta State. In the first place, theseprojects cannot be extricated from thecrude oil complex of the Niger Deltaarea, which continues to pollute theenvironment at fantastical levels,leading to loss of local livelihoods andconflicts. Rather than ameliorate thelocal environmental disaster, theseprojects exacerbate land grabbing forpipelines and other infrastructure.Conflicts have increased as a result ofthese projects. Incidentally, even theCDM Executive Board acknowledgesthat local conflicts involving the oilcompanies and communities resulted indisruptions to Eni-Agip and Xenergioperations.

As we find in the Niger Delta of Nigeria,the CDM projects fail to deliversustainability benefits as the Nigeriangovernment, which is in joint venturepartnership with Eni-Agip, does notprioritise issues of community rights.With undefined sustainability criteria,the government agency that acts as theDesignated National Authorities (DNAs)appear to be keener to promotecommercial claims of the companies.

CDM and SustainableDevelopment?

33 Lang, C. (2013). Clean development mechanism: zombie projects, zero emissions reductions and almost worthless carbon credits. Redd Monitor.org, 12th July 2013.

28

33

However, even the few countries ofthe global south such as Brazil thathave well-developed sustainabilityrequirements are nonethelessundermined by the lack of follow-upor verification on the extent of theeffectiveness of the sustainabledevelopment criterion of the projectgiven that sustainability benefits haveno financial value in the CDM. Thus,many projects including that ofENI-Agip and Xenergi in Delta State,Nigeria have caused significant harmsuch as increased pollution,destruction of sources of livelihoodand cultural heritage. It isobjectionable that the CDM, whichwas created by the internationalcommunity to enhance sustainabledevelopment is on the contrarygenerating negative consequences forlocal populations and theenvironment. CDM projects in Nigeriaare frequently in direct violations ofthe obligations of the country withrespect to international treaties suchas the International Covenant onEconomic, Social and Cultural Rights.

Additionality of EmissionReduction?

34 Department of Climate Change, Nigeria (2015). Reduction of Gas-Flaring in Nigeria. Department of Climate Change, Nigeria. December 2015.http://climatechange.gov.ng/reduction-of-gas-flaring-in-nigeria/Accessed 25 May 2016

35 Clean Development Mechanism Project Design Document Form (CDM-PDD) for projects for ‘recovery of associated gas that would otherwise be flared at Kwale oil-gasprocessing plant, Nigeria’, http://www.dnv.com/focus/climate_change/upload/final%20pdd-nigeria%20ver.21%20%2023_12_2005.pdf.

the CDM has given companies reasonto stall while making carbon creditclaims. Indeed, the big oil companiesmake claims for carbon credit via theCDM by arguing that Nigerian laws arenot worth obeying. Eni-Agip stated inits presentation to the CDM that“whilst the Nigerian Federal HighCourt recently judged that gas flaringis illegal, it is difficult to envisage asituation where wholesale changes inpractice in venting or flaring, orcessation of oil production in order toeliminate flaring will be forthcomingin the near term.” Rather than obeyNigerian laws and regulations, theCDM allows companies like Eni-Agipto recourse to purely commercialarguments for why only the CDM canstop the pollution caused byassociated gas flaring in Nigeria. It isinstructive to note that Eni-Agipcommenced investments inassociated gas gatheringinfrastructure before the KyotoProtocol and the CDM. However due tothe neoliberal turn of theenvironmental debate the companyonly keyed into the CDM processunder the Kyoto Protocol to claimcarbon credits. Since then, its drive toaddress gas flaring has been reducedrather than enhanced.

29

34

35

A CDM project must provide emissionreductions that are additional to whatwould otherwise have occurred. Thegreenhouse gas emissions afterimplementation of a CDM project activityare expected to be lower than those thatwould have occurred in the mostplausible alternative scenario to theimplementation of the CDM projectactivity. This is to avoid giving credits toprojects such as the ENI-Agip and Xenergithat would have happened anyway.

Everyone knows that gas flaring has beenillegal in Nigeria since 1985. “Howevermonitoring and enforcement of this hasbeen poor”, as even the Nigerian FederalMinistry of Environment agrees.Companies like Eni-Agip have beenpaying a penalty for gas flaring fordisobeying Nigerian laws. But while thegovernment has failed to vigorouslyenforce its own laws, the general moodof the Nigerian public sphere had causedall major oil companies to initiate projectsfor flares reduction. That thedevelopment of these projects coincidedwith the emergence of the CDM hasmeant that oil companies wanted to cashin. However, rather than spurinvestments in gas flare reduction, incompliance with Nigerian law andgovernment's stated policy for usingassociated gas for electricity generation,

But more fundamentally, it amounts to bad faith to reward cash to oilcompanies, via carbon credits, for cleaning up their own mess. Rather thanbeing held responsible for their pollution, the CDM is paying the polluter. Thesehave contributed to emboldening the mostly transnational oil corporations thatwork to undermine Nigerian government efforts to address gas flaring outsideof the CDM instrument. The abuse of Nigerian laws through gas flaring andshort-changing of policy levers was made manifest when the Department ofPetroleum Resources (DPR) increased the penalty on gas flaring from the paltryten Naira to $3.50 for every 1,000 scf of gas flared. The oil companies simplyrefused to pay.

36 Newswatch Times (2013) Oil firms defy FG’s policy on gas flaring. http://www.mynewswatchtimesng.com/oil-firms-defy-fgs-policy-gas-flaring/

37 Osuoka, A. I. (2009). Paying the Polluter? The Relegation of Local Community Concerns in ‘Carbon Credit’ Proposal of Oil Corporations in Nigeria in Upsetting theOffset-The Political Economy of Carbon Markets.Edited by Steffen Bohm & Siddhartha Dabhi.Mayfly Books, 2009..

Measurability of Gas FlareReduction?The net change of anthropogenic emissions by sources of greenhouse gaseswhich occurs outside the project boundary, and which is measurable andattributable to a CDM project activity cannot be reasonably determined withthe gas flare reduction projects in the Niger Delta, as currently presented. Thisis because the actual mix of associated gas from oil fields (which is flared) andnon-associated gas from gas fields (which is not flared) that are all feeding thesame gas gathering plants is not indicated by the oil companies making carboncredit claims for such plants. As has been shown in the case of the Eni-Agipproject, apart from the mention of 170,000 barrels of oil per day produced byEni-Agip, the company did not produce figures of current gas production andflaring in Ahaka, Beniku, Okpai, Kwale and Irri-Isoko area (OML 60) in thedocumentation to support carbon credit claims via the CDM. Even the CDMExecutive Board doesn’t know for sure, nor seem to care about the need forsuch details. What they report in official documentation is that “large portion”and “a certain percentage” of associated gas and non-associated gasrespectively is planned to be used for the Okpai gas plant, which is a CDMproject.

30

36

37

Postscript:Where is the UNAdaptation Fundin the Niger Delta?

38 Rowling, M. (2015). Climate change projects in poorest nations lose out in battle for funds. Thomson Reuters Foundation, 18th June 2015.http://news.trust.org//item/20150618144038-9s98j

38

The Adaptation Fund was established in 2001 to finance concrete adaptationprojects and programmes in developing country parties to the Kyoto Protocol thatare particularly vulnerable to the adverse effects of climate change and financedwith 2% share of the proceeds from the projects activities of the Clean DevelopmentMechanism (CDM) sold as carbon credits or Certified Emission Reductions (CERs).Also, there is growing confirmation of the necessity to propose new developmentpaths under the banner of the UN Adaptation Fund to reduce vulnerability, reducerisk, and build the capacity to adapt. Nigeria, as a member of the Adaptation FundBoard, is working towards accessing the fund in line with its designation as aNational Implementation Entity (NIE). Since its inception in 2005, the CDM hasgenerated $315 billion in climate finance (Certified Emission Reductions) from richnations to poor ones including Nigeria. However, communities of the Niger-Deltahave thus far not benefited from the UN Adaptation Fund, despite the CDM beingactive in the region.

Apart from being a major location for emission of greenhouses gases by internationaloil companies, the Niger Delta is also vulnerable to climate change impacts.Communities in the coastal and low-lying plains of the Niger Delta river basin arevery vulnerable to sea level rise and other climate change impacts. Recent floodingincluding the major experience of 2012 underscores the reality of climate changeimpacts in the region. The communities of Kwale and Isoko, which were severelyaffected by the floods of 2012, led to severe destruction and hardships (from whichpeople are still recovering as at 2016) require investments in initiatives to supportcommunity adaptation to climate change. It is imperative for the UN Adaptation Fundto respond to the plight of these communities.

the CDM, which was created by the international community toenhance sustainable development is on the contrary generatingnegative consequences for local populations and theenvironment

32

39

39 Ahon, F. (2012).Flood: 53,000 displaced, 11 communities submerged in Delta. Vanguard Newspapers, 8th October 2012.http://www.vanguardngr.com/2012/10/flood-53000-displaced-11-communities-submerged-in-delta/

ConclusionProjects registered with the CDM for therecovery and utilization of associated gasfrom oilfields in the Niger Delta exposesthe inadequacies of international carbontrading as a mechanism for reducinggreenhouse gas emissions. As theexamples from Nigeria show, the CDMprojects promoted by petroleumcompanies may not address local concerns,are deficient on additionality and presentopaque data that would fail unbiased testfor measurability of emissions reduction.That such projects have been registered bythe CDM only suggest desperation on thepart of those struggling to present successwith ‘market’ mechanisms for mitigatingclimate change.

33

In the same vein, this report has shownthat the Executive Board of the CleanDevelopment Mechanism (CDM) hasfailed to ensure that the DesignatedOperational Entities (DNV and RINA) andthe Applicant Entities (ENI-Agip andXenergi) complied with the principles ofthe CDM. The Board has mostly glossedover issues of sustainable development,emission reduction, additionality, andmeasurability during its accreditation ofprojects.

There is an obsession of the CDM withproject economics and the sale ofCertified Emission Reduction (CERs) incarbon-markets as opposed to projecteffectiveness. This demonstrates howthe CDM under the watch of the ExecutiveBoard is being used to aggressively pushneoliberal market mechanisms formitigating climate change – even whenthe scheme is failing as the Nigeriancases show. ENI-Agip and Xenergistillroutinely flare gas and thrive on pipelinesthat are obsolete, corroded and easilygives way.

There is an obsession of the CDMwith project economics and thesale of Certified EmissionReduction (CERs) in carbon-markets as opposed to projecteffectiveness.

Rather than take serious action to stopthe environmentally destructive gasflaring, the Nigerian government and oilcompanies opted to increase crude oilproduction. As production increased, sohas the flaring of gas.

Since 1956, Nigeria’s Niger Delta hasbecome the hub of oil and gas exploitationin the country.

Communities in the region host petroleumproduction externalities likeenvironmental pollution and violentconflicts, which have not been adequatelymitigated by the government andcompanies. Crude oil reserves in theNiger Delta area contain a mixture ofalmost equal amount of crude and(associated) natural gas. During drilling,the oil wells pump out thesehydrocarbons mixed with water.

The whole mixtures are transported viaflowlines which are small pipelines thatare connected to flow stations. Theseflow stations are major installationswhere the produced water is dischargedinto the surrounding environment and theassociated gas from the wells areseparated from the crude oil and burntoff. This process is referred to as gasflaring. The discharge of produced waterand gas flaring are both damaging to theenvironment with local and globalconsequences.

34

Rather than take seriousaction to stop theenvironmentallydestructive gas flaring, theNigerian government andoil companies opted toincrease crude oilproduction. As productionincreased, so has theflaring of gas.

Social Development IntegratedCentre (Social Action) works topromote resource democracy,social justice and human rightsin the sectors of energy, mining,the environment and climatechange, trade and publicbudgets. We engage in researchand monitoring, populareducation and advocacy insolidarity with communities,activists and scholars workingto promote social change inNigeria and other countries inthe Gulf of Guinea region ofAfrica.

saction.org