A Fifth of UN Carbon Credits May Be Bogus
LONDON - One in five carbon credits issued by the United Nations are going to support clean energy projects that may in fact have helped to increase greenhouse gas emissions, environmental group WWF said on Thursday.
The United Nations runs a scheme under the Kyoto Protocol that allows rich nations to invest in clean energy projects in developing countries and in return receive certified emissions reduction credits (CERs) to offset their own emissions.
But WWF said in a report that the credits are being delivered to projects that would have gone ahead anyway, even without the extra incentive provided by U.N. approval under the scheme, called the Clean Development Mechanism (CDM).
The report, prepared by Germany's Oeko Institute for Applied Ecology, said projects lacking this so-called 'additionality' help increase gases blamed for global warming by giving firms a spurious justification for continuing to pollute.
"One out of five emissions reductions credits sold under the Kyoto Protocol's Clean Development Mechanism (CDM) lack environmental integrity," WWF said in a statement.
It said the problem damages the global carbon market, which is expected to more than double in value to around $70 billion this year.
"The CDM is a new and very important tool and needs to be fine-tuned to reach its purpose," Stephan Singer, head of WWF's European Climate Policy Unit, said in a statement.
The report recommends improvements in the CDM, a market worth some $5 billion in 2006 according to the World Bank.
Strengthening procedures and increasing controls of the bodies that verify the projects are among changes that WWF hopes governments will discuss next week at a U.N. climate conference in Bali, Indonesia.
"Promoting sustainable development... seems to have been largely forgotten by project developers, verifiers, and the CDM Executive Board," the report said.
"The same is true for stakeholder consultation, considered by project developers as a burden rather than an opportunity to gain public acceptance."
The U.N.'s CDM scheme also works with the European Union's emissions trading scheme, the 27-nation bloc's flagship program to help meet commitments under Kyoto.
In phase 2 of the European Union scheme, lasting from 2008-12, countries are able to import around 10 percent of their required credits from UN-approved projects, amounting to an expected market demand of up to 280 million CERs per year.
WWF proposes that the EU should limit the importing of the U.N. scheme's CERs to those certified by the Gold Standard, a quality label developed with help from WWF and endorsed by some 45 non-governmental organizations worldwide.
Gold Standard-certified CERs can fetch between 26 and 28 euros, well above EU credits and ordinary secondary CERs, which trade around 23 euro and 18 euro respectively.
But of the near 94 million CERs issued by the U.N.'s climate change secretariat to date, only around 72,000 are Gold Standard-certified, with a further 3.5 million per year expected to 2012.
This compares with more than 500 million CERs expected annually from some 2,600 projects already in the U.N.'s pipeline.
To read the WWF report or for additional analysis on the carbon markets, click on http://www.reutersinteractive.com
(Reporting by Michael Szabo; Editing by Anthony Barker)
© Reuters 2007