LONDON, June 12 (Reuters) - International certification firm SGS said it will no longer provide auditing services for clean energy projects in developing countries seeking to earn carbon credits, citing concerns over costs and falling demand.
Geneva-headquartered SGS, the second major auditor to pull out of the United Nations’ Clean Development Mechanism (CDM) this year, will also surrender its accreditation under the carbon trading programme, it said in a release on its website dated June 10.
“SGS’ decision reflects the continuing contraction in the CDM market and its continuing concerns with the costs and risks associated with the CDM accreditation process,” it said.
“SGS thanks all its clients for their custom over the last 10 years and regrets that the current state of the carbon market prevents our continued involvement.”
The CDM, established under the 1997 Kyoto Protocol treaty, helps fund climate change mitigation efforts in poor countries while generating carbon offsets for investors.
But low ambition from governments to cut their greenhouse gas emissions has led to a collapse in demand for CDM offsets, causing prices to crash by 99 percent to around 0.12 euro each and prompting others to scale back activities in the sector.
The announcement from SGS comes just two months after it said it was moving its UK-based CDM auditing business to India in an attempt to cut costs.
The firm this week said those plans are no longer viable.
In February, Norway-based DNV GL - previously the largest CDM project auditor - shut its validation and verification business after plummeting offset prices caused investment in the programme to dry up.
“Further deterioration of the CDM infrastructure will consequently accelerate market fragmentation, sharply increase future mitigation costs and reduce the prospects of building a coherent and efficient global carbon market,” said lobby group the Project Developer Forum.
SGS, which provides technical advice and training to industries including oil and gas, agriculture and mining, said it will continue to participate in combating climate change by focusing on emissions trading schemes and initiatives such as water management and measuring corporate carbon footprints. (Reporting by Michael Szabo; Editing by)