December 9, 2008
One Reason Why I'm Skeptical of Carbon Markets: UN Suspends CDM Carbon-Offset Verification Firm
Quirin Schiermeier of Nature News reported today Nature link that the UN has suspended the main company that validates carbon-offset projects in developing countries, "sending shockwaves through the emissions-trading business." Certified emission-reduction credits from verified projects are traded and sold on the carbon emissions market, helping industrialized countries to meet their emissions-reduction targets under the Kyoto Protocol. However, only environmentally sustainable projects that would demonstrably not go ahead without additional revenue from sales of these credits (thus meeting the "additionality" requirement) may be certified.
Det Norske Veritas is the largest verification company, a billion dollar business employing 8000 staff. In the past four years, DNV validated and certified almost half of the 1,200 projects approved under the CDM. At its November meeting, the CDM's executive board temporarily withdrew DNV's accreditation after an audit revealed serious flaws in project management. The CDM board did not specify the projects affected by the problems, but indicated that there were problems with the company's internal auditing processes and staff qualifications, with at least one staff member who verified CDM projects without proper sectoral expertise. DNV cannot propose new CDM projects to the UN for formal approval while suspended. 20–30 projects currently in the process of validation may be delayed and DNV cannot take new projects as long as the suspension remains in effect. DNV will continue to validate and verify ongoing projects.
CDM projects under way in 51 countries are supposed to save some 250 million tons in greenhouse-gas emissions. The UN hopes the CDM will abate almost 3 billion tons by the end of 2012,
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