Published April 20, 2009
A greenhouse gases trading system funded with the support of then-Illinois State Sen. Barack Obama, which is likely to play a major role in his $650 million cap-and-trade initiative, lists five present or former top-ranking U.N. officials on its board of directors and advisory board who've had enormous influence over climate change matters -- including one who received $1 million from a convicted South Korean lobbyist.
The most controversial figure of the five, board of director Maurice Strong, was one of former Secretary General Kofi Annan's key aides at the U.N. for years until the Iraq Oil-for-Food scandal forced him to leave. Since then Strong has lived mostly in China. Calls to the exchange for comment about Strong's role, and that of other U.N. figures, were not returned.
The Climate Exchange, which began operations in 2003, provides trading in carbon emissions and their offsets, along with those of other greenhouse gases, is among a group of companies and institutions that voluntarily participate in the program. It bills itself as the only voluntary, legally binding exchange of its kind in North America. Among its member companies are Ford, DuPont and United Technologies as well as a number of electric utilities; other participants include the City of Chicago and Miami-Dade County.
In the latest budget submitted to Congress last month, President Obama proposed backing cap and trade as the nation's primary response to reduce global warming; a bill with that aim has also been submitted in the House of Representatives. Under the cap and trade plan a fixed number of carbon producing "permissions" would be made available to manufacturing and other industries each year; the totals would be reduced over time, forcing down the overall total of carbon dioxide emissions.
To meet their targets, companies would either have to cut production of the offending carbon-based gases or buy "offsets," or credits from companies that do not reach their allowed levels or actively create projects that reduce carbon in the atmosphere. Offsets also include planting trees and other activities that remove carbon from the atmosphere. However it is used, the scheme is guaranteed to boost the cost of fossil and other gas producing forms of energy in the U.S., as well as the costs of every economic sector that relies on that energy.
The likelihood of cap and trade or a similar scheme being enacted got a significant boost last week, when the Environmental Protection Agency officially announced that greenhouse gases pose a threat to public health and welfare via global warming, a prelude to official regulation of the emissions.
The Chicago Climate Exchange is the brainchild of Richard Sandor, an economics professor who has worked for the both the Chicago Mercantile Association and the Chicago Board of Trade. Known as "Mr. Derivative," for his work in creating interest rate futures markets, Sandor first proposed the creation of the climate exchange in 2000, just before the signing of the Kyoto Accord on greenhouse gas reduction.
Initial funding of almost $1 million which was crucial to the exchange's launch came in 2000 and 2001 from the Chicago-based Joyce Foundation, whose board of directors, which approved the funding, included Barack Obama, then an Illinois state senator.
Click here to read about Obama's early connections to cap and trade.
Paula DiPerna, the Joyce Foundation's president at the time funding was approved, became the Climate Exchange's vice president by the time the foundation gave a second, and larger, tranche of money to the budding venture. Barack Obama, by that time an Illinois state legislator, was still on the foundation board.
Along with Maurice Strong, the other current or former U.N. officials on the climate exchange's 18-member advisory board are: Elizabeth Dowdeswell, former head of the UN Environmental Program (UNEP); Rajenra Pachauri, head of the U.N. Intergovernmental Panel on Climate Change; Michael Jammit Cutajar, former executive director of the U.N. Framework Convention for Climate Change (UNFCCC); and Thomas Lovejoy, former science adviser to UNEP and currently senior adviser to the president of the U.N. Foundation, which was originally founded with a $1 billion gift from CNN founder Ted Turner. The foundation calls itself "an advocate for the U.N. and a platform for connecting people, ideas and resources to help the United Nations solve global problems."
On one level Strong's involvement in the exchange is not surprising. He has been a player in virtually all the U.N.'s environmental initiatives over the past four decades. His work includes organizing the 1972 U.N. conference on the environment in Stockholm, which was a launch pad for the worldwide environmental movement, as well as the 1992 Earth Summit and the Kyoto Accords.
The New York Times once called Strong, a native Canadian, "The Custodian of the Planet." In 1972 Strong also became the first head of the United Nations Environmental Program. In 1997, he helped Annan launch a program of internal reform of the U.N., and subsequently served as Annan's special envoy to North Korea.
Strong left the U.N. under a cloud in 2005, after an investigation into the corruption ravaged Oil-for-Food Program revealed that he had received nearly $1 million in cash from Tongsun Park, a South Korean businessman who was later convicted of conspiring to bribe U.N. officials who ran the program. Strong claimed that the money was an investment by Park in a company owned by Strong's son. He admitted personally taking other money from Park but claimed it was for an "office rental." After the revelations Strong resigned his last U.N. post as Annan's North Korea envoy and moved to China.
Contacted to comment on his involvement in the exchange, Strong originally agreed to accept a list of questions from FOX News. However, after receiving the e-mail, he failed to respond. Among the questions: What was his role on the board? Because President Obama was involved in the early funding of the exchange, did he meet with members of the exchange? Is Strong involved in setting up a similar exchange in China?
The Climate Exchange's 18-member advisory board is made up of leaders in business, science and academia. According to interviews with members who cooperated more than Strong did, membership is an unpaid position and the advisory board rarely meets. It was originally used to advise the company on "procedures and standards," such as calculating carbon emissions and setting prices, when the company was being formed, according to one participant. Today most of the advisory board's work is done over the phone on an as-needed basis, according to a board member.
Also on the board of advisors is another Canadian and close associate of Strong's: Elizabeth Dowdeswell, another former head of the United Nation's Environmental Program who is remembered for leading the organization into the deepest crisis in its history during her five-year tenure from 1993 to 1998.
In 1997, the State Department charged that the UNEP under Dowdeswell's tenure suffered "from a lack of focus, strategic vision and influence." It also charged that the organization had been "marginalized to a perilous extent." As a result of the crisis of confidence in her leadership both the US and Britain threatened to withhold funding from the organization.
Dowdeswell, a former school teacher and home economist, was also attacked by environmentalists, financial donors, governments and her own staff for inept management that left the agency "irrelevant," according to critics.
In response to the firestorm of criticism Dowdeswell announced that she wouldn't seek a second term in the UNEP position.
Her record shows that she has often followed in Strong's footsteps. She spent much of her early career as a Canadian bureaucrat in the environmental field dominated by Strong. Her public career began as Saskatchewan's deputy minister for youth and culture and later Canada's deputy assistant minister of Environment. From there she followed Strong to the United Nation's Environment Program as executive director, a post that Strong had created and previously held. She was involved with him in organizing the Rio Summit.
Dowdeswell was also sent a list of questions about her involvement with the Chicago Climate Exchange. She has not responded.
Another member of the advisory board is Rajendra Kumar Pachauri, who has headed the U.N.'s Intergovernmental Panel on Climate Change since May 2002. The panel was co-recipient, with Al Gore, of the Nobel Peace Prize in 2007 for bringing global warming to the top of the world's agenda.
The panel's reports over a 10 year period tracked scientific studies and in 2007 concluded that the weight of scientific evidence now showed not only that global warming was occurring, but that it was a man-made phenomenon and that its consequences were immediate and dire. The reports have become the basis for all the proposals to bring about drastic reductions in man-made greenhouse gases, starting immediately.
But the panel's conclusions did not come without major controversy.
The IPCC reports, compiled by hundreds of scientists around the world, were meant to provide definitive up-to-date answers to questions about global warming based on current scientific data. Yet when the reports were issued, a number of scientists who had contributed to them challenged the conclusions.
They charged that Pachauri, who is an economist and industrial engineer and not a climate scientist, had written the final draft of the report in collaboration with other political figures before it was released, adding errors and unsubstantiated conclusions. The critics also charged that he had over-stepped the mandate of the IPCC by advocating policy, something the panel was supposed to avoid.
In January 2005 Chrisopher Landsea, a leading hurricane expert with National Oceanic and Atmospheric Administration resigned from work on the IPCC report, saying that it was "both being motivated by pre-conceived agendas and being scientifically unsound." He said that the panel had deliberately linked recent hurricane severity with global warming when no scientific link had been established.
Pachauri is enthusiastic about his involvement with the Chicago exchange. "I believe the exchange has an extremely important role in view of President Obama's inclusion of cap and trade in the new budget. I see it emerging as the principal market in the U.S. and beyond when cap and trade becomes a reality," he said in response to questions submitted by FOX News.
He said he joined the exchange board in December 2006 at the invitation of the exchange's founder, Richard Sandor. He said the advisory board is "designed to consist of thought leaders in the environmental, business, public policy and academic fields from India and all around the world."
He also said that he has no financial interest in the exchange or any other role except to provide advice. However, he was hopeful that the exchange would become a powerful force in the global marketplace.
Malta native Michael Jammit Cutajar was a former Assistant Secretary General of the UN and the former executive director of the United Nations Framework Convention for Climate Change (UNFCCC) until his retirement from the UN in early 2002. The UNFCCC is supposed to keep the Kyoto Accords process moving forward by setting up meeting between member states. It is currently organizing a major summit on climate change in Copenhagen later this year, where a successor to the Kyoto Accords is expected to be drafted and signed.
Currently Malta's Ambassador on Climate Change, Cutajar most recently chaired a U.N. forum on climate change in Bonn where unsuccessful negotiations took place to update the greenhouse gas emission cuts promised by participants at Kyoto. He too was sent a list of questions by FOX NEWS and has not responded.
The fifth former UN official on the board is Thomas Lovejoy, who says he was also recruited by Sandor after giving a talk about the need for a carbon exchange "years ago" at the University of Oklahoma. Lovejoy said he served as science advisor to UNEP while Dowdeswell was in charge.
He is also chief biodiversity advisor to the World Bank and senior adviser to the president of the United Nations Foundation. He is noted for developing "debt-for-nature swaps," under which environmental groups purchase troubled foreign debt at low prices. They then convert the discounted debt into local currency to purchase environmentally sensitive tracts of land. Critics of the scheme argue that the plan deprives poor nations of a chance to extract raw materials that are critical to their economic growth.
Lovejoy says he has not had the same depth of involvement in the exchange as many others on the board because his scientific specialty is forests and the exchange is just beginning to look into reforestation as part of the cap and trade process.
He says his involvement is voluntary, unpaid and that there are few meetings. "We are called as needed," he said.
"I just wanted to see if it works," he said in a phone interview.