UN moves to tighten offset scheme

UN climate change officials have this week set out plans to toughen up the rules governing its Clean Development Mechanism (CDM).

They are attempting to stop projects that would have gone ahead regardless of the revenue attained from selling offsets from being able to issue carbon credits.

The CDM works by allowing approved carbon reduction projects in the developing world to attract funding by selling carbon credits called certified emission reductions (CERs). These credits can then be bought by industrialised nations to count towards their emissions targets under the Kyoto agreement.

However, the $13bn CDM market has been widely criticised by some environmental groups which claim that the scheme is "flawed" and failing to deliver expected emission reductions.

A WWF study last year found that as many as a fifth of the CERs in circulation should not have been issued. Those were hydroelectric projects that would have gone ahead regardless of the extra funding gained from the sale of carbon offset credits.

Meanwhile, several other investigations have revealed projects already under construction before they were approved by the CDM, suggesting that the ability to issue CERs is not essential to their existence.

The UN responded yesterday with the release for consultation of new rules, initially applying to biomass plants but likely to be extended to cover other projects, which would require all projects applying for CDM status to prove that the emission cuts they plan to deliver are a direct result of their joining the UN scheme.

The panel behind the new proposals said that the focus of UN inspectors should be on checking which projects fail this so called "additionality" test. "The primary focus... should be on exploring which types of project activities are potentially very profitable even without considering additional revenues from the CDM," it said.

According to Reuters' reports, the proposed changes come just a week after UN officials approved plans to further tighten the project approval process by ensuring that any developers hoping to attain CDM approval inform both their local environment ministry and the UN within six months of starting a new project.

It is hoped that the move will make it harder for developers to overstate the extent to which CDM approval is a necessary part of their business model.