World’s Largest Carbon Market Facilitates Pollution
An article in the Guardian newspaper reveals that billions worth of ‘clean’ investment on the world’s largest carbon offsets market ends up polluting the environment. The article cites researchers who’ve reviewed the participating companies in the Kyoto Protocol Clean Development Mechanism (CDM). They issued a report which seriously undermines the credibility of the CDM.
The CDM certificates facilitate the funding of clean technology investments by Third World companies that are expanding their operations. Western companies can buy the certificates to offset their own pollution. But it turns out that in reality most of the funds go to coal and oil companies, builders of destructive dams and other enterprises that are not green in the slightest.
The research that revealed the practices is of major importance not least because policymakers are set to review the CDM in the near future as the Kyoto Protocol expires in 2012. CDM credits are the world’s largest offset market, with annual trading last year totalling around EUR40 billion. Most credits are currently traded on the European Trading System (ETS) by European countries and companies but when the US starts to participate, something that’s more or less a given, trading will rise to over EUR 100 billion within two years easily.
The Stanford scholars opened a can of worms. They say that “Much of the market does not reflect actual reductions in emissions, and that trend is poised to get worse.” They researched more than 3,000 projects that had been applying/granted for up to $10bn of credits for the next four years and said that most of the applications should be rejected. If the scheme operated in any way realistically, we’d see a much smaller market, they say cautioning that there’s hardly enough clean air available for the demand that will build up in the near future. That’s rather an important point to consider ahead of next week’s Warner-Lieberman cap and trade bill which proposes US companies are allowed to buy up to 15% of their needed carbon credits from the (successor to the) CDM.