Is Bitcoin a Ponzi Scheme?

Just because it's risky, doesn't make it a scam.

by Emma Newbery | Motley Fool

Published on July 1, 2022


Key points

Ponzi schemes are scams in which fraudsters use money from new investors to pay rewards to the existing ones, without ever generating any revenue.

Bitcoin is a high-risk investment, but it has many traits that do not chime with being a Ponzi scheme or a scam.

Ever since people first began to invest in Bitcoin (BTC), skeptics have lined up to label it a Ponzi scheme. The thinking is that Bitcoin doesn't actually do anything, so the only way its value can go up is if people buy more of it and push the price up. But does that make it a Ponzi scheme? Let's dive in and find out.

What is a Ponzi scheme?

A Ponzi scheme is an investment scam that uses funds from new investors to pay high rewards to the existing ones. It's named after Charles Ponzi, who conned a number of investors in the 1920s. Unlike a real investment, the fraudster doesn't actually invest money or do anything to generate revenue.

Let's say you were an early entrant into a Ponzi scheme, and put in $500 with a promise of gaining a 20% APY. The scammer would use your $500 to pay the interest on other people's so-called "investments." He or she would then need to convince more people to put in more money, and use that to pay you. But eventually there wouldn't be enough new money coming in, the scam would unravel, and your $500 would have disappeared.

The most famous crypto Ponzi scheme is probably OneCoin -- a supposed cryptocurrency that didn't even have a blockchain behind it. The swindlers tricked investors around the world out of over $4 billion. Ruja Ignatova, the main figure behind OneCoin, disappeared and has never been caught.

How does this apply to Bitcoin?

The easiest way to answer this question is to look at some of the SEC's definitions of Ponzi scheme red flags and see how Bitcoin adds up.

1. High returns with little or no risk

Bitcoin has generated high returns in the past, but few crypto investors think there's little or no risk involved. For sure, if you'd invested in Bitcoin five years ago, you'd be up over 700% today -- in spite of the recent crash. However, this wasn't in any way guaranteed. This is still a relatively new and unregulated asset class and there is a lot of uncertainty about what will happen next.

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2. Overly consistent returns

If Bitcoin were a Ponzi scheme, investors would be receiving regular payouts from somewhere. In truth, the value of Bitcoin is anything but consistent and its price can swing wildly. It isn't uncommon for Bitcoin to gain or lose 20% in a single day.

There are platforms that pay steady APYs on Bitcoin. Indeed, it would be fair to question whether any of the platforms paying crazy high returns on crypto deposits are Ponzi schemes. But to level this accusation at Bitcoin would be the same as calling the dollar a Ponzi scheme because some scammers use it as a form of payment.

3. Unregistered investments and unlicensed sellers

The SEC says, "Ponzi schemes typically involve investments that are not registered with the SEC or with state regulators." This is an area where crypto does run into more troubled waters. It is relatively unregulated, and only a few cryptocurrencies have registered with the SEC as investments. Most cryptos are regulated by the CFTC (Commodity Futures Trading Commission), as they are treated as commodities rather than investments.

In terms of the sellers, some crypto exchanges are not fully licensed. But there are also a number of top crypto exchanges that work hard to stay on the right side of regulators. Crypto platforms in the U.S. have to have something called a money transmitter license. It isn't the same as being an SEC-authorized investment firm, but it's also not totally unregulated.

Just because it's risky, doesn't make it a scam

Many crypto investors bought for the first time last year. And a number of them -- me included -- are looking at significantly devalued portfolios right now. Some individual cryptocurrencies are down 90% or more from their all-time highs. These prolonged price drops have caused some investors to wonder if the naysayers were right all along. Which is entirely understandable.

Did we all just fall victim to an enormous scam? Unlikely. Not least because if Bitcoin were a scam, there'd be a nefarious person or people behind it actively profiting from the scheme. One of the core premises of Bitcoin is that it is decentralized -- there is no middleman. That isn't to say that crypto hasn't attracted its fair share of sketchy characters. It absolutely has. It's just that the digital currency itself doesn't fit the definition of a Ponzi scheme.

Put simply, there's a huge difference between putting money into a high-risk investment and actively being scammed. For starters, there's a good chance Bitcoin's price will eventually recover, meaning the investment could eventually come good. Plus, there's no Charles Ponzi-style figure tricking people into buying Bitcoin for his or her personal gain.

Bottom line

People who invest in Bitcoin do so because they hope it might prove transformative. Some see it as a form of digital gold, and others believe it could eventually become the currency of the internet. It could also capture a significant chunk of the lucrative remittance market. The challenge is that Bitcoin might not achieve any of these things. It is a highly speculative asset and the industry is in its infancy. There's a chance quantum computing or strict regulation could stifle the digital asset market before it has a chance to fully develop.

Nonetheless, the dramatic price drop and onset of crypto winter does not mean we can call Bitcoin a Ponzi scheme. Whether it can achieve everything Bitcoin believers believe it might is another question entirely.

CRIMINAL CAPITALI$M

The CFTC just charged a bitcoin firm with

operating the 'largest ever fraud' involving 

the cryptocurrency

Jennifer SorFri, July 1, 2022 

Bitcoin cryptocurrency coin and a graphSTR/NurPhoto via Getty Images

• The CFTC announced charges against a bitcoin firm for defrauding investors out of $1.7 billion.

• Mirror Trading International operated as a fraudulent multi-level marketing scheme, the CFTC said.

• "This action is the largest fraudulent scheme involving Bitcoin charged in any CFTC case," the regulator said,

The Commodities Futures Trading Commission on Thursday charged Mirror Trading International and the firm's owner, Cornelius Steynberg, with fraud, claiming the company operated as a fraudulent multi-level marketing scheme that scammed billions from investors.

"This action is the largest fraudulent scheme involving Bitcoin charged in any CFTC case," the commission said in a statement. Investors who pooled funds in the company, which was advertised as a bitcoin trading pool, lost a total 29,421 Bitcoin, a value of over $1.7 billion.

The firm, based in South Africa, advertised returns as high as 10% a month through investments manged by a trading "bot". CFTC documents state that Mirror Trading invented account figures and created "a fictitious broker at which the trading purportedly took place." Commissioner Kristin Johnson called the company a "Ponzi scheme" in a statement.

Cryptocurrency investors have dealt with a wave of scams and hacks this year. Earlier this month, the FTC reported that over 46,000 crypto owners were scammed in 2021, accumulating losses of over a billion dollars in bitcoin, ether, and other digital assets.

News of Steynberg's fraud also came on the same day the FBI announced a $100,000 reward for "Cryptoqueen" Ruja Ignatova, who stole $4 billion from victims in another scam. The Department of Justice on Thursday also charged six individuals with running various crypto schemes.

The CFTC said it was looking into heavier regulation of cryptocurrencies last month, according to the Wall Street Journal. In the meantime, the commission stated it is in the process of returning funds to MTI's investors – although it may not fully recover the money members had in the pool.

BAD MINER

Bitcoin Miner Loses Bid to Renew Power-Plant Permit in N.Y.

Josh Saul and David Pan
Thu, June 30, 2022 

(Bloomberg) -- New York State rejected the renewal permit for a power plant used by Greenidge Generation Holdings Inc. for Bitcoin mining, a decision that comes after about six months of delays.

The Department of Environmental Conservation said it denied the application because of statewide limits on greenhouse gas emissions.

The ruling comes amid a heated debate between environmental groups and cryptocurrency miners about Bitcoin mining, which uses energy-intensive computers to process records of transactions and earn rewards in the virtual currency. It has become one of the most lucrative businesses and has expanded rapidly in the US.

Still, New York is putting forward restrictive measures on crypto mining facilities. The state Senate recently passed a bill that bars miners from using fossil-fuel sources to power their operations.

The bill is set to be delivered to Governor Kathy Hochul, who will decide whether it should become law. Hochul didn’t respond to a request for comment on the legislation.

This is the first time Greenidge’s permits to operate the natural-gas fired facility in upstate Dresden have come up for renewal. The state agency delayed decisions in January and again in March.

In its notice, the regulator said Greenidge hasn’t identified adequate mitigation measures or alternatives, and the mining operation’s inconsistency with emission limits isn’t justified.

Greenidge has said its operations are carbon neutral. Still, environmental advocates have criticized the mine, and politicians such as US Senator Elizabeth Warren have questioned the entire industry about its impact on the climate.

“Governor Hochul and the DEC stood with science and the people, and sent a message to outside speculators: New York’s former fossil fuel-burning plants are not yours to reopen as gas-guzzling Bitcoin mining cancers on our communities,” said Yvonne Taylor, vice president of Seneca Lake Guardian, a nonprofit group advocating for environmental protection.

Hochul administration moves to shut gas powered cryptocurrency plant


AP Photo/Ted Shaffrey

Marie J. French
Thu, June 30, 2022 

ALBANY, N.Y. — Gov. Kathy Hochul’s administration on Thursday denied a key permit for a gas powered cryptocurrency mining operation in the Finger Lakes, saying the facility spews too much planet-warming pollution to be allowed under the state’s climate law.

The decision by the state Department of Environmental Conservation on the Greenidge gas plant is the latest step in New York to curb the pollution from cryptocurrency mining facilities that have started to proliferate across upstate New York for the growing industry.

“We are applying a new law to a new operation which had significant increases in emissions — almost tripling emissions,” DEC Commissioner Basil Seggos told POLITICO in an interview Thursday. “The company itself was unable to demonstrate that it could come into compliance with the law.”

Hochul faced political pressure to deny the permit, but delayed it until after Tuesday's gubernatorial primary that she convincingly won. She is also being pushed to sign a measure to put a moratorium on any other new fossil powered cryptocurrency mining projects in New York.

The 106 MW Greenidge gas plant hosts a large-scale Bitcoin mining facility, with about 17,000 miners. The plant has faced aggressive opposition from many local residents, lawmakers and winemakers in the region.

Greenidge Generation Holdings Inc., the company running the plant that employs about 50 people, said they plan to appeal the decision and that it will keep operating as usual while the process plays out in a statement Thursday.

“We believe there is no credible legal basis whatsoever for a denial of this application because there is no actual threat to the State’s Climate Leadership and Community Protection Act (CLCPA) from our renewed permit," the company said in a statement.

"This is a standard air permit renewal governing emissions levels for a facility operating in full compliance with its existing permit today. It is not, and cannot be transformed into, a politically charged ‘cryptocurrency permit’."

Environmental advocates and other opponents of the project argue the increased emissions from the cryptocurrency mining threaten achievement of New York’s sweeping Climate Leadership and Community Protection Act. The measure requires emissions to be slashed 40 percent from 1990 levels by 2030 and 85 percent by 2050.

DEC agreed in a letter explaining the decision to deny a renewal of the plant’s Title V emissions permit. The agency also said the company failed to provide any justification for a reliability or other need for the project given that it would interfere with the state’s climate goals, and that the purpose of the plant had changed significantly since the original permit was issued in 2016 for the plant.

“Any increase in emissions at this point makes it challenging for us to hit our targets which are very ambitious,” Seggos said. “As a slice of total emissions, this is but one operation but we are looking economywide … and we need to begin putting in place these strategies to reduce emissions as quickly as possible.”

Advocates who had pushed for the denial of the renewed permit praised the decision.

"Governor Hochul and the DEC stood with science and the people, and sent a message to outside speculators: New York's former fossil fuel-burning plants are not yours to re-open as gas-guzzling Bitcoin mining cancers on our communities," said Yvonne Taylor, vice president of Seneca Lake Guardian in a statement.

Greenidge has 30 days to pursue an administrative appeal of the permit denial. If it does not appeal, operations at the plant, which employs about 50 people, would have to cease.

The decision has significant implications for the state’s efforts to enforce the climate law, and may also alarm manufacturers, hospitals, universities, power companies and other businesses looking to renew their Title V permits. Seggos said the decision was narrowly tailored to the new cryptocurrency mining taking place at the plant.

DEC previously rejected two air permits to repower fossil fuel plants, building new gas turbines. The Greenidge plant was not seeking to build any new power generation, but instead sought to keep running the existing turbine at higher levels than in previous years while keeping emissions within previously permitted limits.

DEC’s decision letter notes that the actual emissions have increased since 2016, when the original permit was issued, and 2020, when the climate law was passed. That increase is because “Greenidge substantially altered the primary purpose” of the plant. A renewal would enable the company to continue to increase greenhouse gas emissions “for the benefit of its own behind-the-meter operations,” the letter states.

The DEC rejected arguments from Greenidge that the plant is only a fraction of the state’s total emissions and that a permit expiring before 2030 can’t interfere with the state’s 2030 emissions goals.

“Achieving the Statewide GHG emission limits will require substantial action prior to 2030, including to transition the energy sector away from its reliance on fossil fuels,” the letter states. “Even during the permit term, the Facility’s continued operation for the purpose of providing energy behind-the-meter to its cryptocurrency mining operations would make achievement of the Statewide GHG emission limits more difficult.”

The crypto mining now uses about 45 megawatts of the capacity of the 106 MW gas plant. When it runs, the plant is consistently selling power to the grid as well.


Greenidge was built in the late 1930s as a coal plant. It went out of service in 2011 and the new owners received state subsidies to convert to gas in 2017 when natural gas power was viewed as a “bridge” rather than a dead end for the planet. They then turned to Bitcoin to increase profits in 2020. The plant is owned by publicly traded Greenidge Generation Holdings, which also has digital currency mining operations in South Carolina.

The DEC had delayed the decision on a renewed permit again in March, citing a high volume of comments and an offer from Greenidge. Greenidge offered to cut its emissions 40 percent from current permitted levels by 2025 and be a zero emissions facility by 2035. That’s ahead of deadlines in the state’s climate law.

But those proposals are not sufficient, and the company failed to justify a need for the project, the department found.

Greenidge said the department did not engage on that proposal.

"They chose to pass up the opportunity to materially improve the environment, choosing instead to burden New York taxpayers with the expense of funding a lengthy administrative and judicial battle that could have easily been avoided," the company said in the statement.

Greenidge has increased the amount of pollution it spews into the air and the water it sucks in from the lake and dumps at a higher temperature into a trout stream since it began mining cryptocurrency in 2020.

Greenidge expected its actual, on-site carbon dioxide emissions in 2022 and beyond to be 520,386 metric tons annually, according to filings. Emissions in 2019 were 65,607 metric tons and lower than 200,000 in the two prior years.

Environmental groups have also raised concerns about the water quality and aquatic life impacts. Like many combustion plants located on shorelines, Greenidge sucks up water for cooling and dumps it back at an elevated temperature.

California advances bid to create legal drug injection sites


DON THOMPSON
Thu, June 30, 2022 

SACRAMENTO, Calif. (AP) — The California Assembly on Thursday approved a controversial bill allowing Los Angeles, Oakland and San Francisco to set up places where opioid users could legally inject drugs in supervised settings.

The move follows more than a year of legislative consideration, with proponents saying it would save lives and detractors saying it would enable drug addiction.

The Assembly's approval sends the bill back to the state Senate for final consideration in August, after lawmakers return from a monthlong summer recess. Senators approved a slightly different version more than a year ago, with no votes to spare.

The idea is to give people who would use drugs anyway a location to inject them while trained staff are available to help if they suffer accidental overdoses.

The move comes amid a national opioid crisis and spike in overdose deaths particularly if users inadvertently ingest drugs spiked with fentanyl.

New York City in December opened the first two publicly recognized overdose prevention sites in the United States, intervening in more than 150 overdoses, although its operation does not have federal approval to operate. Rhode Island approved testing such centers for two years.

The U.S. Justice Department under the Biden administration recently signaled it might be open to allowing the sites with “appropriate guardrails,” a turnaround from the Trump administration that won a lawsuit blocking a safe consumption site in Philadelphia.

The measure passed the Assembly on a 42-28 vote, one more vote than needed.

But it had bipartisan opposition amid a sometimes personal debate. Two members, Carlos Villapudua and Freddie Rodriguez, disclosed that their brothers had each died of complications from drug abuse, and they were among Democrats who spoke against the proposal.

“This is not the one thing that is going to stop the fentanyl or opioid epidemic in our state, but it will help. It will help, and it will save lives,” said Democratic Assemblyman Matt Haney, a former San Francisco supervisor who represented the troubled Tenderloin neighborhood and carried the bill in the Assembly.

But some members of each party said the sites only make things worse, as lawmakers cited dueling statistics from locations in other nations.

“Sending our kids the message that ‘Hey, we’re going to help you manage your drug addiction’ is not the answer,” said GOP Assemblyman Kelly Seyarto.

About 700 San Franciscans died of accidental drug overdoses in 2020, a record. Those deaths “far exceeded the number of individuals who died of COVID-19” in 2020, when 261 deaths from the coronavirus were recorded, San Francisco Mayor London Breed noted. She cited skyrocketing drug overdose rates in her declaration of an emergency in the Tenderloin neighborhood.

Los Angeles County was on pace to have 1,000 opioid deaths last year, though not all such deaths come from injections.

Across the nation, drug overdose deaths exceeded 100,000 from April 2020 to April 2021, according to the U.S. Centers for Disease Control and Prevention, including about 10,000 Californians.

California first to cover health care for all immigrants





Civil rights activist Dolores Huerta, left, talks with Beatriz Hernandez, right, at a rally calling for health care for all low-income immigrants living in the country illegally, held at the Capitol in Sacramento, Calif., on Wednesday, June 29, 2022. Hernandez' health care insurance has fluctuated because of her immigration status. Gov. Gavin Newsom is expected to sign a $307.9 billion operating budget on Thursday June 30, 2022, that makes all low-income adults eligible for the state's Medicaid program regardless of their immigration status.(AP Photo/Rich Pedroncelli)More

ADAM BEAM and DON THOMPSON
Thu, June 30, 2022 
SACRAMENTO, Calif. (AP) — California on Thursday became the first state to guarantee free health care for all low-income immigrants living in the country illegally, a move that will provide coverage for an additional 764,000 people at an eventual cost of about $2.7 billion a year.

Gov. Gavin Newsom signed a $307.9 billion operating budget that pledges to make all low-income adults eligible for the state's Medicaid program by 2024 regardless of their immigration status. It’s a long-sought victory for health care and immigration activists, who have been asking for the change for more than a decade.

Nationwide, federal and state governments join together to give free health care to low-income adults and children through Medicaid. But the federal government won't pay for people who are living in the country illegally. Some states, including California, have used their own tax dollars to cover a portion of health care expenses for some low-income immigrants.

Now, California wants to be the first to do that for everyone.

About 92% of of Californians currently have some form of health insurance, putting the state in the middle of the pack nationally. But that will change once this budget is fully implemented, as adults living in the country illegally make up one of the largest groups of people without insurance in the state.

“This will represent the biggest expansion of coverage in the nation since the start of the Affordable Care Act in 2014,” said Anthony Wright, executive director of Health Access California, a statewide consumer health care advocacy group. “In California we recognize (that) everybody benefits when everyone is covered.”

People living in the country illegally made up about 7% of the population nationwide in 2020, or about 22.1 million people, according to the Kaiser Family Foundation, a health care nonprofit. They are not eligible for most public benefit programs, even though many have jobs and pay taxes.

Immigrants have slowly been getting access to some health care programs. Eighteen states now provide prenatal care to people regardless of their immigration status, while the District of Columbia and five states — California, Illinois, New York, Oregon and Washington — cover all children from low-income families regardless of their immigration status. California and Illinois have expanded Medicaid to cover older adult immigrants.

In California, Republicans and conservative groups have opposed expanding health care to immigrants living in the country illegally. Jon Coupal, president of the Howard Jarvis Taxpayers Association, said offering free health care will make California “a magnet for those who are not legally authorized to enter the country.”

“I think many of us are very sympathetic to the immigrant community, but we really wish we had better control of who enters this nation and this state,” Coupal said.

California's expansion of Medicaid won't be easy. A confluence of events, including the state's slow rollout of the expansion and the end of some federal pandemic policies, mean about 40,000 low-income immigrants will likely lose their health coverage for up to a year in 2023 before being eligible to get it back — illustrating the difficulty of navigating the government-run health insurance system that is supposed to make it easier for people to get coverage.

Beatriz Hernandez came to the United States in 2007 as a 11-year-old. She got health care through Medicaid when she was a child. She lost that coverage once she turned 19 because of her immigration status, but it was restored in 2020 when the state began covering low-income immigrants 26 and younger.

Hernandez turned 26 in February. She hasn't lost her coverage yet because of emergency federal rules during the pandemic. But those rules could expire later this year, making her one of the estimated 40,000 people who will temporarily lose their coverage before California's new program starts on Jan. 1, 2024, according to an analysis by the nonpartisan Legislative Analyst's Office.

Hernandez lives in Merced in California's Central Valley and works as an organizer with the California Immigrant Policy Center. She said her mother would benefit the most from the expansion, having never had health insurance since moving to the U.S.

But for Hernandez, she's worried a gap in her coverage would cause her to lose access to the medication she takes to treat depression. In the meantime, she's scheduling as many appointments as she can this year — including for the dentist, optometrist and dermatologist — before she loses coverage.

“It’s great that California is taking that step to set that example for other states,” said Hernandez, who said she does not have a work permit or other permission to live in the United States. “I do believe that we can do better by making sure that people like myself and hundreds of others, thousands of others, do not fall out of their health care simply because they turn 26.”

Previous expansions of California's Medicaid system have taken six months to a year to implement. But the Newsom administration says it needs a year and a half to complete this expansion because it is so much larger than the previous ones.

Health care advocates say the gap in coverage is significant for low-income immigrants living in the country illegally because they don't have other options. Citizens who lose their Medicaid coverage can purchase coverage from Covered California, the state-run health insurance exchange, and likely qualify for a significant discount.

“But for this population, that's it. (Medicaid) is the only public program available to them,” said Sarah Dar, director of health and public benefits policy for the California Immigrant Policy Center.

Democrats in the state Legislature say they are working with the Newsom administration on speeding up the process.

“We're doing all that we can. We’re talking to the administration, talking to the leadership in the (California) Department of Health, to make sure that we do it as fast as possible and that nobody loses it in the meanwhile,” said Democratic Sen. Maria Elena Durazo. “It doesn’t make sense to lose them and then pull them back in.”

Newsom signs nation's most sweeping law to phase out single-use plastics and packaging waste

Susanne Rust, Anabel Sosa
Thu, June 30, 2022 

A trash can overflows with plastic waste at a park. The bill requires that by Jan. 1, 2028, at least 30% of plastic items sold, distributed or imported into the state be recyclable. (Jacquelyn Martin/Associated Press)

Striking a blow against a pernicious form of pollution, Gov. Gavin Newsom signed into law Thursday the nation’s most far-reaching restrictions on single-use plastics and packaging.

The legislation heads off a November ballot measure that many lawmakers and the plastics industry hoped to avoid, and it puts California at the forefront of national efforts to eliminate polystyrene and other plastics that litter the environment, degrade into toxic particles and increasingly inhabit human blood, tissue and organs.

Sen. Ben Allen (D-Santa Monica) had tried for years to get state legislators to tackle the growing plastic pollution crisis but has faced opposition from the plastics industry, some food container manufacturers and environmentalists who believe the law doesn't go far enough.

"Relief," was how he described his emotional state after the legislation was signed. "It's been a long journey."

The California Senate approved the bill Thursday morning with 29 ayes and zero "nos," after the Assembly passed it 67 to 2 late Wednesday. Backers in both houses applauded the bill's historic nature and bipartisan support, as did Newsom.

“Our kids deserve a future free of plastic waste and all its dangerous impacts," said the governor in a statement. "Everything from clogging our oceans to killing animals — contaminating the air we breathe, the water we drink, and the food we eat. No more."

"With this legislation, California continues its tradition of global environmental leadership," Allen added. The new law, he said, would "grow markets, create incentives for investment, and give tools to other states and countries to help play their part in this fight."

For the past six months, a team of roughly two dozen negotiators — mostly women — hammered out language designed to reduce plastic, increase recycling and shift the economic burden of waste disposal to plastic producers and packagers. They also sought to find language that would satisfy those producers, as well as waste managers, packaging companies and environmentalists.

As recently as two weeks ago, environmental leaders were divided on amendments to Allen's bill, with backers of the ballot measure claiming his bill gave away too much to industry. But following more talks and revisions, initiative backers have since come behind the legislation and agreed to drop their ballot plans.

At the Capitol on Thursday, the atmosphere was festive, as environmentalists congregated on the building's steps with a giant, inflatable turtle. They held signs showing support for the bill, while they danced and shuffled to the Beach Boys' "Surfin USA."

The bill requires that by Jan. 1, 2028, at least 30% of plastic items sold, distributed or imported into the state be recyclable. By 2032, that number rises to 65%. It also calls for a 25% reduction in single-use plastic waste by 2032 and provides CalRecycle with the authority to increase that percentage if the amount of plastic in the economy and waste stream grows.

In the case of expanded polystyrene, that number needs to reach 25% by 2025. If the number isn't hit, the ubiquitous, hard-to-recycle foamy plastic will be banned.

Some 128 California cities already have bans on polystyrene.

"It's a de facto ban," said Jay Ziegler with the Nature Conservancy, of the bill's polystyrene recycling requirement. He added that current recycling rates for polystyrene are in the low single digits, making it improbable that a 25% recycling target could be met in three years.

Plastics waste has become an increasing scourge nationwide as plastics packaging has become ubiquitous in groceries, fast-food outlets and other businesses, and consumers — especially during the pandemic — have embraced take-out items delivered in single-use containers. The resulting waste pollutes marine environments and clogs landfills, in part because of challenges in recycling plastics, including China's decision to end imports of plastics waste several years ago.

The bill is based on a policy concept known as Extended Producer Responsibility, which shifts the responsibility of waste from consumers, towns and cities to companies manufacturing products with environmental impacts. . It also gives plastics companies extensive oversight and authority in terms of the program's management, execution and reporting, via a Producer Responsibility Organization, which will be made up of industry representatives.

Among various duties, the group will be responsible for collecting fees from its participating organizations to pay for the program, as well as an annual $500-million fee that will be directed to plastic pollution mitigation fund.

CalRecycle has ultimate authority over the program.

Negotiators, including Heidi Sanborn, founder of the National Stewardship Action Council, said past failures in Extended Producer Responsibility laws influenced how this legislation was written, enabling the authors to identify areas that could be abused or ignored.

In 2010, the state created a similar producer responsibility law mandating carpet recycling. Overseen by the industry, the target was 24% recycling by 2020. Recycling rates decreased after the program was instituted. CalRecycle sued the group for $3.3 million in 2017 for failing to meet its target, and in 2021, they settled for $1.175 million.

In another case that involved California's Paint Care program, the manufacturers ultimately sued the state and used the funding from the program to cover their litigation costs.

Language in this new plastic bill includes clear dates and consequences for failure, including a $50,000-per-day fine on any company or "entity" not in compliance with the law, as well as directions for how collected fees can and cannot be used.

"We've learned from mistakes in the past," said Sanborn. "This legislation is solid."

Not everyone is happy.

The American Chemistry Council's vice president of plastics, Joshua Baca, issued a statement on Wednesday saying that although his organization had worked alongside Allen and the negotiators for months, the final version "is not the optimal legislation to drive California towards a circular economy."

He said the law's definition of recycling "needs to be improved and made clearer so new, innovative technologies that keep hard to recycle plastic out of the environment and landfills count in achieving the circularity goals in the legislation."

Environmental justice groups had expressed concern that the bill left open the opportunity for waste companies to try to recycle plastics by employing polluting methods such as pyrolysis and gasification, which convert plastics into fuel, energy or other forms of plastic.

"The bill, with my committee's amendments, bans chemical recycling and includes recognition of the protection of disadvantaged and low-income communities," said Assemblymember Luz Rivas (D-North Hollywood). "I would not let the bill out of my committee if I felt that a chemical recycling plant could be built in my community."

Other critics say the bill doesn't explicitly single out plastics but includes language that could pull in other materials such as paper, cardboard and glass.

Materials "that are not tossed out as trash should not be treated as solid waste, and the Legislature must act to eliminate any confusion about that,” said Melinda Andrade, executive director of the Assn. of California Recycling Industries.

Kevin Messner, with the Assn. of Home Appliance Manufacturers, voiced a similar concern. He said the language of the bill, which includes all packaging material, will hurt his clients and create a disincentive for them to use non-plastic materials, which are often heavier, bulkier and more expensive.

But environmentalists, including Anja Brandon with the Ocean Conservancy, said the bill takes an important step toward ensuring all single-use items are recycled.

"We have set up the system so that everyone who creates single use packaging pays, but they pay at a different rate," she said. "We're investing in building a recycling infrastructure and getting away from extractive practices that focus on virgin material."

Nick Lapis of Californians Against Waste said that passage of the bill sets the bar for the rest of the nation. But for it to be successful "it will be incumbent on us and the regulators to keep industry’s feet to the fire," he said. "We absolutely cannot claim a victory and walk away."

Lawmakers agreed, with one saying it should have come earlier.

“It's incomprehensible the level of plastic pollution across the globe and how it's affecting our water waste and air. ... I just hope we're not too late, " said Sen. Nancy Skinner (D-Berkeley).

Rust reported from Menlo Park and Sosa from Sacramento.

This story originally appeared in Los Angeles Times.

Like California, India starts phasing out single-use plastic

ANIRUDDHA GHOSAL
Fri, July 1, 2022

Workers at a helmet store put up a sign in the shop window in Hyderabad, India. (Mahesh Kumar A. / Associated Press)

India banned some single-use or disposable plastic products Friday as part of a federal plan to phase out the ubiquitous material in the nation of nearly 1.4 billion people.

For the first stage, it has identified 19 plastic items that aren't very useful but have a high potential to become litter,. The new law makes it illegal to produce, import, stock, distribute or sell items such as plastic cups, straws and ice cream sticks. Some disposable plastic bags will also be phased out and replaced with thicker ones.

Thousands of other plastic products, such as water bottles and potato-chip bags, aren't covered by the ban. But the Indian government has set targets for manufacturers to recycle or dispose of them after their use.


Plastic manufacturers had appealed to the government to delay the ban, citing inflation and potential job losses. But India's environment minister, Bhupender Yadav, said at a news briefing in New Delhi that the ban had been in the pipeline for a year.

“Now that time is up,” he said.

This isn't the first time that India has considered a plastic ban. But previous iterations have focused on specific regions, with varying degrees of success. A nationwide ban that includes not just the use of plastic but also its production or importation was a “definite boost," said Satyarupa Shekhar, the Asia-Pacific coordinator of the advocacy group Break Free from Plastic.

Most plastic isn't recycled globally, and millions of tons pollute the world's oceans, affect wildlife and turn up in drinking water. Scientists are still trying to assess the risks posed by the tiny bits of broken-down plastic, known as microplastics. In 2020, more than 4.5 million tons of plastic waste was generated in India, according to the country's federal pollution watchdog.

The creaky waste-management system in India's burgeoning cities and villages means that much of this waste isn't recycled and ends up polluting the environment. Nearly 14 million tons of plastic waste was either littered or not recycled by the South Asian nation in 2019 — the highest in the world, according to Our World in Data.

Making plastic releases planet-warming greenhouse gases into the atmosphere, and India is home to factories that make more than 268,000 tons of disposable plastic each year. This means that reducing the manufacture and consequent waste of plastic is crucial for India to meet its target of reducing emissions from economic activity by 45% in eight years.

Although the new partial ban is a step in the right direction, Shekhar criticized it as inadequate.

“Given the magnitude of the plastic crisis, this is too little. And it’s too little both in its scope as well as the coverage,” said Shekhar.

Ravi Agarwal, the director of Toxics Link, a New Delhi-based advocacy group that focuses on waste management, said that the ban was “a good beginning” but that its success would depend on how well it is enforced by states and municipalities.

Indian officials said the banned items were identified with the availability of alternatives in mind, such as bamboo spoons, plantain trays and wooden ice-cream sticks. But in the days leading up to the ban, many vendors professed confusion.

Moti Rahman, 40, is a vegetable vendor in New Delhi. Customers at his cart carefully picked out fresh summer produce Tuesday before he tipped them into a plastic bag.

Rahman said he agrees with the ban but added that if plastic bags are stopped without a readily available and equally cost-effective replacement, his business will be negatively affected.

“After all, plastic is used in everything,” he said.

This story originally appeared in Los Angeles Times.

This Is What a Radical Plastic Ban Looks Like

Ismat Ara / New Delhi, India
Thu, June 30, 2022 

India garbage

Credit - Zangrilli Andrea—Getty Images

As dawn breaks out over New Delhi, 15-year-old Alamgir Munna picks up his thela (cart) and heads out for work, such that it is.

At an age when he should be in school, the young ragpicker sifts through heaps of garbage for scraps of salable plastic and metals at the Okhla landfill, one of the three giant dumping grounds in the sprawling Indian capital, which produces about 10,000 tons of garbage every day. Munna is among the estimated 150,000 ragpickers in Delhi who work at the country’s three trash mountains—one of which is as tall as the Taj Mahal. Not officially recognized as sanitation workers, they brave the methane and other deadly chemicals from the decomposing waste, wild dogs, disease and putrid stench, to recycle about a fifth of the city’s garbage.


Munna makes a pittance, about 500 rupees, or $7, a day for his back-breaking work. Even that sad apology for a livelihood is about to disappear as India is set to implement a ban starting July 1 on single-use plastics, which are used to make items like earbuds, lollipop sticks, polystyrene packets, plates, cups, spoons, packaging wraps, cigarette packs and stirrers, among the other items of daily use that populate our life. Manufacture, import, stocking, distribution, sale, and use of these items made of single-use plastics which have “low utility and high littering potential” will not be allowed anymore, according to the Ministry of Environment, Forest and Climate Change. Penalties include up to five years in jail, 100,000 rupees ($1,200) or both.

Ragpickers search for recyclable waste at a Delhi landfill site.Vijay Pandey—Picture Alliance/Getty Images

Like many other migrants who clean after the city’s leftovers, Munna is contemplating leaving Delhi and returning to his village. With the ban looming and no alternative livelihood in sight, he is bracing for an uncertain economic future—along with the rest of India’s 5 million ragpickers, equivalent to Ireland’s total population. For someone like him, with no skills or education and just about surviving on the margins of society—and the law—economic uncertainty is a euphemism for destitution, hunger, and worse.

The outlook is far less dire but no less alarming for the country’s 50,000 plastic manufacturing units—most of them small and medium-sized companies that, combined, employ about 400,000 people—as well as consumer conglomerates that depend on plastic for their wares. Leading beverage companies, for example, have been pleading with the government to put off the ban as they struggle to find replacements for the ubiquitous plastic straws accompanying their drink products.

As India finally takes the plunge in the war against plastic, the confusion, panic and uncertainty mirror the global struggle to transition away from plastic-dependence that is crucial to meet emission goals. It also underscores the urgency of breaking an addiction that is wrecking the planet and the heavy price nations have to pay for it.

Read more: U.S. Plastic Recycling Rates Are Even Worse Than We Thought

Few countries exemplify the double bind more than India. The Environmental Performance Index report for 2022 released on June 5 by Yale and Columbia universities ranks India (tied with Nigeria) as the least environmentally sustainable country out of a list of 180. India has rejected the findings of the report, but it accounts for a third of the 11 million tons of plastic waste flowing into the oceans every year, according to government figures. The country’s laws require all plastic waste to be separated and reused in projects like paving road and that only a small percentage of recyclables should be dumped in landfills. Mountains of garbage such as the one at Okhla speak otherwise. More than 40% of the total plastic waste in India is not even collected, let alone separated and recycled.

Some Indian states, such as Maharashtra and Karnataka have tried to ban single-use plastic in the past, but those efforts have largely been failures. That leave many skeptical about the new nationwide attempt. But Venkatesh Dutta, a professor at the School of Earth and Environmental Sciences in the Babasaheb Bhimrao Ambedkar University says that unlike the unsuccessful bans of plastic bags that have been tried earlier, this time the federal government is addressing the problem through the entire supply chain—starting from banning the manufacture and distribution of single-use plastic to banning its sale, possession, and imports.

If this national ban going into effect July 1 works, India will replace single-use plastic bags with thicker ones that are more durable, which in turn should help reduce overall plastic use. It will also move a step closer to eliminating multilayered plastic in future, the final frontier in the war on non-recyclables. The government has been toying with the idea of banning multilayered plastic, used in consumer-packaged goods of all manner, from ready-to-eat snacks to milk packets, but has been held back by the economic disruption such a move could unleash.

Read more: Reusable Packaging Is the Latest Eco-Friendly Trend. But Does It Actually Make a Difference?

That poses a problem for the lofty goals that the world has set for itself. In what the United Nations Environment Programme calls the most important environmental deal since the 2015 Paris Agreement, 175 countries, including India, signed a treaty this March at the UN Environment Assembly that pledged to end plastic pollution by formulating an internationally binding treaty by 2024.

But transitions such as these are daunting even for the most advanced of economies. Earlier this month, the U.S. announced a plan to phase out the sale of single-use plastic products in national parks and other public lands, but only by 2032. For a country such as India aiming for a more radical ban and much earlier, the challenges are even greater. But Prime Minister Narendra Modi’s government, which first announced the single-use plastic ban in 2016, has refused to budge in the face of the chorus of appeals from industry groups to postpone the ban.

A 10-year-old ragpicker shows the money he earned after selling recyclable items he collected at the Bhalswa garbage dump in New Delhi.Vijay Pandey/Picture Alliance via Getty Images

Sunita Narain, director of the Center for Science and Environment in New Delhi, says pushing through the ban is one thing, but implementing it is a different matter altogether, given the limited resources of the country’s pollution board, lack of public awareness, and a proper plan to transition into recyclables.

“You can’t just dictate these things,” says Narain. “It has to be a priority for the government to support the small-scale industries in the transition process.” Companies recycling waste plastic into products such as tiles and furniture often struggle to compete in the market because of their high production costs. Environmentalists like Narain have been calling for government incentives to help such companies in the recycling business.
Recycling is the way to go, not fines and bans

Globally, Kenya’s 2017 ban on single-use plastic bags, which imposed one of the heaviest fines in the world for manufacturing or possessing plastic, is often hailed as one of the most successful steps toward eliminating plastic. But Leah Oyake-Ombis, director of the Africa Livelihood Innovations for Sustainable Environment Consulting Group at the University of Nairobi and a notable critic of the ban, advocates a different approach, which emphasizes recycling and waste management over fines or bans. Developing economies are more likely to benefit more from this strategy, thanks to the employment opportunities it can create within the recycling chain, Oyake-Ombis says.

Government subsidies would be key to creating jobs while transitioning. But right now the bigger problem is keeping jobs. Much of the loss will be felt in India’s vast informal economy, which employs more than 80% of its workers such as Munna. “What will we do when there are no plastics to sell?” Munna asks, perhaps looking for suggestions.

In the formal sector, while India’s consumer goods companies will in general suffer as a result of the ban, small companies will be hit disproportionately harder, says Ashok Kumar Agarwal, president of the Indian Industries Association. That’s because, unlike conglomerates, they won’t be able to absorb the coming losses. “The government should offer subsidies for new machines, and other incentives for the transition to alternatives,” he says.

As of now, there is no such assistance available, creating a supply crunch in recyclable replacements for the plastic needed to make consumer packaged goods. It also keeps plastic much cheaper than the alternatives available.

Ragpickers collect reusable material at a garbage dump in Hyderabad, India, on June 4, 2022.Mahesh Kumar—AP

In 2016, the same year that the Indian government announced the plastic ban, Hemant Rohra left his full-time job and took a huge personal risk to start a small business making carry bags using a more biodegradable form of polypropylene—the basic element used to make plastic—by adding calcium and other minerals to it.

He had hoped that demand for biodegradable bags would increase with time. But it didn’t happen, as his bags cost six times more than regular plastic bags. He now wants lower taxes for his products. But more importantly, he says, the government should make sure that the ban is implemented properly.

In India, ambitious laws can often be applied lightly on the ground, allowing for loopholes. Similar expectations for this plastic ban is not misplaced given that industry groups have been urging the government to extend the deadline or go slow even days before the law is to kick in.

But the government is in no mood to bend. It is setting up control rooms and special enforcement teams across the country. State border checkpoints have been asked to look out for the banned items. As Environment, Forests and Climate Change Minister Bhupender Yadav, said on June 28, “We have given manufacturers plenty of time for preparation—11 months—before the ban was to come into force.”

Twelve is recycling captured CO2 into fuel, sunglasses and more


Andrew Mendez
Thu, June 30, 2022

As climate change continues to be a forefront issue globally, many are petitioning for change and finding unique solutions to solving this issue. Twelve, a self-proclaimed “carbon transformation company” is attempting to be part of the solution by turning captured CO2 into products usually made from fossil fuels.

According to co-founder and CEO Nicholas Flanders, the company produces “building blocks for a wide range of materials, chemicals and fuels that are currently made from fossil fuels today.” He claims the products made this way have no change in quality compared to the ones they replace.

So far the company has internally developed products like CO2-derived sunglasses (which retail for $495) and carbon-neutral fuels, but the plan is to integrate their technology into companies that want to reduce emissions across their supply chains and operations.

Based in Berkeley, California, Twelve says it has already partnered with Mercedes-Benz, Procter & Gamble, Shopify, NASA and the Air Force to create products for the automotive, household and governmental spaces, though it declined to answer how many products it has sold or share its revenue.

After announcing a $130 million Series B funding round — led by DCVC with participation from Series A investors Carbon Direct Capital Management and Capricorn Technology Impact Fund — the company is slated to build out what they call an "industrial-scale carbon transformation platform."

Flanders explained the platform consists of planting their system, a reactor, at partnered manufacturing locations to change emitted CO2 directly into products (the "building blocks," likely more complex hydrocarbons) partner companies can use.

“Up to now, the focus has really been on invention and creation and building the product. So this round really represents an exciting inflection point,” Flanders said.

Sunglasses with lenses made from CO2-derived materials. Image Credits: Twelve

Since its founding in 2015, Twelve has raised over $200 million, according to Crunchbase and will use this round's funds to expand and prepare for the real-world deployment of their technology.

“One big benefit of our technology is that it's helping customers address a lot of the volatility they're seeing in their supply chains, because our main inputs are CO2, which we capture locally, and electricity, which is something you can get a really long-term contract for, and very stable pricing,” Flanders said. “So we actually see what we're doing as not only something that has a positive environmental impact, but actually something where customers can have a bit more control over their long-term pricing and predictability.”

The company also sees opportunities for partnering with companies that are already working on capturing and storing CO2 emissions, like Global Thermostat and Shell.

“Whether it's point-source capture, which means capturing from industrial sources of CO2, or direct-air capture, which means pulling it out of the air, all of those companies are potential partners for us," explained Flanders, "because we answer the question of, 'okay, great, I captured CO2 … Now what do I do with it?'"

Despite having a mission to reduce carbon emissions, the company emits a carbon footprint in manufacturing their own product, but Flanders said that they pay back this carbon debt quickly once up and running. Whether that includes Scope 3 emissions is unclear.

Disclose your Scope 3 emissions, you cowards

Wheat Sinks to Pre-War Levels as Recession Fears Grow



Kim Chipman and Michael Hirtzer
Fri, July 1, 2022 

(Bloomberg) -- Crop futures sank in the US, with wheat closing the week at levels not seen since before Russia’s invasion of Ukraine, as concern mounts that a global economic slump might hobble demand for farm commodities.

The worry hits as anxiety about possible grain shortages is easing. Two key reports from the US Department of Agriculture on Thursday indicated bigger-than-expected grain supplies.

Even as uncertainty persists over how the ongoing war will impact exports, nervousness is growing that a recession could crimp crop demand. Futures are down from near-record highs, which could help pause the food inflation that escalated earlier this year. In the nearer term, traders on Friday were busy positioning ahead of the three-day holiday weekend in the US.

“Buyers are not to be found right now,” said Arlan Suderman, chief commodities economist at StoneX. “It’s all about trading chart signals and momentum. Nobody wants to step in front of this freight train.”

Read more: War-hit wheat faces moment of truth as harvests arrive

Even soybeans plummeted, despite the USDA estimating smaller acreage than initially expected. The seedings still would be the third-biggest on record if realized.

Most-active benchmark wheat settled down 4.9% to $8.41 a bushel in Chicago, the lowest since Feb. 18, a few days before the invasion upended commodity markets. The futures jumped to an all-time intraday high of $13.635 a bushel in early March, spurring food cost spikes, grain hoarding and widespread fear of severe supply shortages.

Both corn and soybeans ended the trading day at their lowest levels since late January, as did the soybean oil relied on for processing food and making climate-friendly diesel. Soy meal, used to help feed hogs and chickens, plunged 4.1%, the biggest drop in almost a year.

Amazon wild west: where drugs, fish and logging are big money but life is cheap

Oliver Laughland and Roberto Kaz on the Itaquaí River
Fri, July 1, 2022 

Photograph: Ricardo Oliveira/AFP/Getty Images

Near a sharp bend on the Itaquaí River, perched on a steep muddy bank, a lone wooden structure marks the last outpost of a fragile resistance.

This is the informal checkpoint used by the Indigenous rights advocate Bruno Pereira, an isolated stilted shack he hoped could help curb the rampant organised crime which threatens the pristine rainforest of the remote Javari Valley, the ecosystems within it and the Indigenous communities who call it home.

But two weeks after the bodies of Pereira and the journalist Dom Phillips were recovered, there is little here to suggest any improvement in security.

The outpost is intermittently frequented by members of Univaja, the Indigenous rights collective for whom Pereira had worked. But it is currently manned by a lone resident: a 76-year-old Peruvian named Juan da Silva and his black labrador mutt. Equipped with a torch, a fishing rod, a few cans of food and occasionally a radio, he fears for his life every night.


“I want to get out of here,” says Da Silva. “I don’t want to die. I want to live.”

The outpost is where Phillips and Pereira slept the night before they were killed. Da Silva points to the hooks that held their hammocks, bolted to wooden posts under a small porch.

Pereira had slept on the right side of the building, which overlooks a small estuary used by illegal fisherman to enter a lake with thousands of valuable pirarucu fish – and a pathway into Indigenous land that evades a government checkpoint a few miles upstream.Interactive

“The fishermen get very angry if we don’t let them through,” Da Silva says, pointing to the stream, where a shaggy crested Amazon kingfisher sits on a branch scouring the water. “Sometimes I can’t stop them, because if I did they would kill me.”

Such are the contrasts in this underreported part of the Amazon rainforest where magnificent natural beauty has become a backdrop to increasing violence and impunity. It is the setting for a battle over access to resources that has intensified following the election of Brazil’s far-right president, Jair Bolsonaro, in 2018.

Law enforcement officials say the Javari Valley, an area the size of Portugal and home to the world’s largest concentration of uncontacted Indigenous tribes, is now Brazil’s second largest drug trafficking route, where the interwoven illicit industries of fishing, logging and mining have proliferated over the past decade.

A few miles downstream from the makeshift checkpoint, at the small fishing community of São Rafael, the village president, Manoel Vítor Sabino da Costa, known as “Churrasco”, spoke of the many threats he has faced in recent years. Churrasco was initially a suspect in the killing, but denied any knowledge or involvement.

Pereira and Phillips had tried to meet with him shortly before they were killed, but the fisherman was out on a nearby lake when they arrived, he said. He pulled a strip of lined paper from a small drawer and showed a note the pair left behind with a request to call.

Pereira had worked with villagers here, trying to steer them away from illegal fishing – many of the river’s species are subject to strict regulation to manage stocks, and it is prohibited to fish in Indigenous territory further upstream. But a single pirarucu, one of the world’s largest freshwater fish, which grows to over 100 kilograms, can be sold for $1,000 at market price, while a single Amazon river turtle can be sold for $200.

Related: Javari valley: the lawless primal wilderness where Dom Phillips went missing

Locals say illegal activities have become commonplace in recent years. One villager recently spotted a boat with three men carrying shotguns, laden with illegally caught fish. Illegal fishermen use small boats, laden with ice, to navigate into Indigenous land under cover of darkness, according to a report by Univaja, and then return to deliver their catches to larger boats waiting on the main river.

Churrasco knew the three men arrested on suspicion of the murders; they lived in the nearby fishing village of São Gabriel, now eerily almost empty. Two were his distant nephews. He said one of the suspected murderers, Oseney da Costa de Oliveira, had recently threatened him with a shotgun out on the lake.

“He put the gun in my face and threatened to kill me,” he recalled, saying the men had wanted access to fish illegally. The trigger was never pulled, but they sank his boat instead and Churrasco was left to swim for shore.

“They were involved with bad people,” Churrasco said of the suspected killers. He claimed to know no more than that.

Last week police said they had expanded their investigation of the murders to examine whether the killings had been commissioned, but said their working theory remained that it was “a crime of opportunity”.

The illegal fishing industry in the Javari Valley has become just as lucrative as drug trafficking, and operates under an interlinked umbrella of organised crime, said Alexandre Saraiva, a senior federal police officer.

Saraiva served as superintendent for the state of Amazonas until 2021, when he was sidelined by the Bolsonaro administration after leading an investigation that linked Brazil’s former environment minister Ricardo Salles to illegal logging in the rainforest.

“We made dozens of stops in Manaus [the state capital of Amazonas] of boats that carried both drugs and pirarucu,” he said, adding that a single boat can carry five tonnes of pirarucu, which can eventually be sold for $50,000. In one instance, Saraiva said, his officers apprehended a boat carrying 600 river turtles, with a street value of over $100,000.

A pirarucu fish is seized by the army after a federal police investigation examined a vessel seized by the taskforce for the rescue of Bruno Pereira and Dom Phillips at Atalaia do Norte, Amazonas, on 11 June. Photograph: João Laet/AFP/Getty Images

“Illegal fishing costs next to nothing”, he explained. “You don’t need to waste money feeding the fish, they’re relatively easy to catch, and the workforce is cheap.” A fisherman earns about one to two thousand Brazilian reais (around $400) for a whole month of work. “And it involves much less legal risk than drug trafficking.”

Logging is another lucrative criminal activity. Saraiva described the case of a local mafia figure, Alcides Guizoni, who was sentenced to six years in prison over cocaine smuggling, and later pivoted his activities to illegal logging from which, according to a federal police document, he earned 16.8m reais ($3.2m) over four years.

The potential profits to be made in the Javari Valley have drawn criminal organisations from across the country, including the Family of the North, the Red Command and First Capital Command, three of Brazil’s largest organised crime groups – and a local drug lord operating on the Peruvian side of the Javari river, known as “Colombia”.

With sweeping government cuts in the region – there has been no federal environmental agency [Ibama] base here since 2018 and just three, poorly resourced Indigenous protection agency [Funai] outposts – seizures have plummeted under the Bolsonaro administration, according to a report by Publica, a Brazilian investigative newsroom. According to internal Funai documents seen by the Guardian, the Funai outpost closest to where Pereira and Phillips were killed has come under fire seven times in the past two years.

The void has left advocates like Pereira and Univaja forced to undertake increasingly dangerous surveillance operations with no state support.

After Phillips and Pereira went missing, Bolsonaro appeared to blame them, describing their reporting trip “an adventure that isn’t recommendable”. Saraiva poured scorn on the comment.

“Dom Phillips was not on an ‘adventure’. He was a war correspondent documenting a war.”

Saraiva argued that the Brazilian government has more than enough resources to end the crime surge here, citing his own experience combating illegal gold mining in the Yanomami Indigenous territory by using the army to target illegal infrastructure such as boats and equipment.

“But they [the Bolsonaro administration] are not doing it for lack of political will.”

The police chief, now sidelined to a small municipality outside Rio de Janeiro, said he believed it was almost certain the murder of Pereira had been approved by a senior crime boss.

***

The stretch of the Itaquaí where Phillips and Pereira were shot dead is patrolled by a pod of endangered Amazon river dolphins, known as botos. They fish together, the sharp puff of their blowholes piercing the silence on the water.

Indigenous search parties identified the site where the men’s boat hit the shore by spotting subtle changes in the foliage around the banks. Twigs snapped at right angles. Patches of grazing on the bark. Two lines of yellow police tape remain tied to a munguba tree: one flutters in the breeze, the other droops to the water. But otherwise there is nothing to distinguish where the two men died.

In Atalaia do Norte, the small riverside town where Pereira and Phillips had been due to return, there has been an extended period of mourning. But there have also been mounting concerns among Indigenous communities that things will get even worse in the months ahead.

“Bruno and Dom Phillips were our great warriors,” said Delcimar Tamakuri Kanamari, an Indigenous leader and Univaja member. “They were part of our movement.”

A memorial service last week drew dozens of Indigenous people from at least five communities in the Javari Valley. Some spend the majority of the year in the protected rainforest, and had heard of the murders over the radio. Behind closed doors, a senior Kanamari tribal leader briefed the Guardian on how increasing drug traffic has wrought havoc on his community.

Related: Police losing narco war in deadly Amazon region where duo disappeared

The Javari River marks the border between Brazil and Peru, where cultivation of coca – the plant used to make cocaine has increased by almost 20% in the past year, according to UN data. Jungle laboratories on the Peruvian side of the river illegally transform coca into cocaine and then ferry it across the river to store on protected Indigenous land in Brazil where Peruvian police have no jurisdiction, the tribal leader said.

“That way no one will find it,” they said. “There is no enforcement whatsoever here and the criminals target any of us who try to stop them.”

Traffickers have also begun recruiting younger Indigenous men and boys into the drugs operations themselves, said Tamakuri. Drawn in by payments of a few hundred dollars for months of work, promises of clothing and mobile phones, the recruits then face execution if they try to escape.

Last week Tamakuri and others delivered a 20-page document to the Funai office in town, containing photographs of illegal camping, fishing boats and a floating home used by traffickers on their land.

“We are being menaced by the whites that come for fishing, the Peruvian loggers and the Colombian narcotraffickers,” it said, also mentioning threats from hunters and evangelical missionaries in the area.

Phillips had spent much of his recent career dedicated to reporting on the violence experienced by Indigenous communities here, including an alleged massacre of an isolated tribe by gold miners in 2017.

As the memorial drew to a close last week, the anthropologist Almerio Alves Vadique addressed the mourners near a large image of the two men, surrounded by orange tropical flowers.

“This was a tragedy foretold,” he said to the silent crowd. “Yesterday it was Bruno and Dom. But tomorrow it could be any of the people in here.”