UN Panel Mulls Carbon Rule Tweak To Curb Profits
LONDON - A UN panel which
supervises trade in carbon offsets under the Kyoto Protocol is probing
tweaks to the rules as there is evidence of attempts to make excessive
profits, its vice-chair Lex de Jonge said.
Rich countries can meet their
binding caps on greenhouse gas emissions by funding emissions cuts in
developing countries under the Kyoto Protocol's clean development
mechanism (CDM) through a currency of carbon offsets.
The scheme has attracted speculators who establish
projects in developing countries to generate offsets and then sell
these on to companies and countries in the West.
Some participants were excessively focused on profits,
straying from CDM rules in the process, said de Jonge, who is also a
Dutch environment ministry official.
"This is a billion-euro market and attracts people not
only interested in the environment but in the money," he said on
Tuesday, citing as evidence the 12 percent of 284 project applications
which the panel had rejected since April 2007.
"They have fundamental flaws."
The panel tests whether emissions cuts only happened
because of the CDM scheme, meaning that the offsets sold as a result
had real environmental value.
The two main tests are whether the scheme either removed
barriers such as a lack of awareness of "green" technologies, or that
projects would not have been profitable without the CDM revenues.
Projects which were "very profitable" regardless of CDM revenues were a concern, said de Jonge.
"How credible are these barriers?" he asked a carbon
trading conference in London on Tuesday organised by the Institute of
Economic Affairs and Marketforce, referring to the case of very
profitable projects.
"That's a question the board (judging panel) is working on at the moment," he added.
It was unlikely that very profitable projects would be
excluded from the CDM, de Jonge said, but one option was to exclude in
some cases new installations that were starting from scratch and so
could easily implement the latest technologies.
For example, a steel plant can currently claim offsets
for installing kit which improves energy efficiency, thereby cutting
emissions of the greenhouse gas carbon dioxide. That could be changed
to apply only to existing rather than brand new plants.
The CDM attracted some criticism last year for not delivering additional emissions cuts.
Story Date: 17/2/2008
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