One fifth of the emission reduction credits sold under the Kyoto Protocol's Clean Development Mechanism (CDM) are fundamentally flawed, according to a new report from the WWF.
The study, Is the CDM fulfilling its environmental and sustainable development objectives, assessed a sample of 93 emission reduction projects that had been approved by the CDM Executive Board and were selling credits through the CDM trading scheme.
It found that there were questions over the "additionality" of many of the projects and concluded that 20 per cent of the emission reductions certified under the initiative would have been delivered anyway without CDM financing.
Under the CDM, industrialised nations can partly meet their Kyoto emission reduction targets by financing low carbon initiatives in developing countries and buying carbon credits from those projects. However, for projects to qualify for the scheme they have to prove they deliver "additional" carbon savings and would not have gone ahead without the external investment from developed nations.
Kirsty Clough, climate change policy officer at the WWF, said that the effectiveness of the scheme was being undermined by an apparent conflict of interest experienced by the Designated Operational Entities (DOEs), whose job it is to verify the projects and prepare their CDM applications.
"The Executive Board, which has the final say on approving the projects, relies on the DOEs to do a good job," she said. "But they are operating in a competitive market so they are under pressure to complete the assessment process at a time and cost that appeals to the project manager."
The WWF report said there was an urgent need to strengthen the project methodologies and increase the controls and transparency of the verifying o rganisations in order to improve the credibility of the CDM.
Clough added that firms buying credits through the CDM – either to meet their obligations under the European emissions trading scheme (ETS) or offset their emissions as part of a voluntary initiative – should aim to source them from projects that have qualified for the NGO-backed CDM Gold Standard.
"The Gold Standard is based on the CDM criteria, but takes a particularly conservative approach to assessing projects and provides an extra level of scrutiny," she explained. "If you are buying in credits for CSR reasons, you have to accept there is considerable reputational risk if the credits you are buying are flawed."
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