‘Rich Man’ Greenhouse Market Needs Better Governance, UEA Says

The world’s biggest greenhouse gas offsetting market may attract even more criticism because it is failing to boost sustainable development in poor nations, while extending the life of dirty industries, said the University of East Anglia.

The United Nations-overseen Clean Development Mechanism “could become a ‘rich man’s club’ of project developers, emissions verifiers and government officials, in roles that overlap and rotate so frequently that any notion of independence and transparency is tested to the limit,” according to the report, which was funded by the U.K. government-backed Economic and Social Research Council.

Large corporations including Mumbai-based Tata Steel Ltd. have used the CDM “to prop up existing investments in fossil fuels,” the UEA and the University of Sussex in England, who carried out research, said in the report. The market needs stronger international and local governance from independent and credible institutions to address corruption, they said.

“Support to fossil-fuel industries is not an appropriate use of CDM finance when projects with strong environmental and social credentials are vying for attention,” they said.

UN CER credits dropped to a record 6.35 euros ($8.65) on Nov. 3 as a French-German split over Europe’s rescue strategy emerged before a meeting in Brussels to craft a solution to the region’s sovereign-debt crisis. EU factories and power stations provide most demand for the credits. CERs for December dropped 0.9 percent to 6.92 euros a metric ton on ICE Futures Europe exchange yesterday.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net