CDM carbon offset applicants accused of "falsifying documents"

Companies are falsifying documents in their attempts to gain certification for projects under the clean development mechanism (CDM), according to analyst Point Carbon.

The CDM allows carbon reduction projects in the developing world to issue so-called certified emission reduction (CER) credits, which can be sold to governments or businesses in the developed world and used to count towards their carbon emission targets.

To qualify to as CDM-approved projects and issue CERs, firms need to prove that their projects are "additional" and will deliver emission reductions that would not have occured without the extra revenue raised through the sale of CERs.

According to Jorund Buen, director at Point Carbon, annual reports by organisations that verify the validity of CDM projects – in particular SGS, Det Norske Veritas, and TUV – have highlighted attempts at falsifying some of the documents required to help prove this " additionality" and establish whether or not the methodology for measuring carbon emission reductions is robust.

"It seems when the money is just around the corner, some people are cutting corners," he said. "Several verification firms have mentioned attempts at falsifying documents."

These verification firms, known as Designated Operational Entities (DOE) are designed to ensure that projects result in real, measurable, emission reductions.

A project must be rubber-stamped by two DOEs – one for validation and another for verification.

The CDM Executive Board then decides whether or not to register the project.

In related news, a recent study by the University of Zurich highlighted statistics that suggested some projects were proving more adept at gaining approval than others.

"We find that the Executive Board is strongly committed to quality criteria, " it concluded. "At the same time, our results suggest that a number of political-economic variables also drive outcomes of Executive Board decision making."

The study noted that all 29 projects for which the World Bank was the credit buyer successfully achieved registration.

Moreover, in all seven cases in which the validator's government was represented on the Executive Board, projects were successfully registered.

The report noted that according to official rules, Executive Board deliberations should be open to the public, though the Board can decide to exclude the public in exceptional cases.

But these exceptions have become the rule in the case of deliberations and decisions about individual CDM projects, which are now frequently taking place behind closed doors.

The regulation system has been mired in controversy as numerous NGOs have said that many projects do not provide additional carbon reductions.

Various studies have estimated that between a fifth and more than half of CDM projects would have happened regardless of the extra revenue they gain by selling CERs.

And an investigation by the BBC in June found two large projects in India that only applied for CDM approval once work had already begun on the projects – undermining their claims that they are "additional".

However, it remains unclear if the firms verifying such projects can be held to account for rubber-stamping initiatives that are not delivering expected carbon emission reductions. A report for the World Bank on the carbon market earlier this year found that although the DOEs have liability for their errors, it is not clear whether that liability can be penalised through the courts in some countries.