The world’s biggest greenhouse gas offset market may attract criticism because it’s failing to boost sustainable development, 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.
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, which 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.
Projects should be made to meet the sustainable development targets in their documentation written when applying for credits, said Peter Newell, a professor at the School of Global Studies at the University of Sussex, who helped write the report.
‘Withhold a Portion’
Where there is a risk the projects aren’t meeting sustainable development criteria, the Bonn-based CDM executive board, regulator of the program, could “withhold a fixed portion of credits, perhaps in the range of 10 percent to 15 percent,” Newell said. That would help make sure that revenue from selling credits helps make poor-nation economies less carbon intensive, he said.
UN CER credits dropped to a record 6.35 euros ($8.59) a metric ton 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 rose 1.3 percent today to 7.03 euros a ton on the ICE Futures Europe exchange.