July 18, 2007 / 5:07 PM / 10 years ago

Carbon trading questions remain: U.N. official

LONDON (Reuters) - Some lucrative projects which cut greenhouse gas emissions in developing countries are still getting U.N.-approval to sell carbon credits even though the cuts may have happened anyway, a U.N. official said.

The loophole was fading out, he added.

Carbon trading allows rich countries to meet greenhouse gas emissions targets by paying poor countries to make emissions cuts for them, through the exchange of tradable carbon credits.

The credibility of the trade worth $5 billion last year has been disputed by analysts who say some developing country projects had been in the pipeline anyway, and so were not delivering additional emissions cuts.

That view got some support on Wednesday from a member of the U.N. panel which judges developing country projects, under the U.N.’s Clean Development Mechanism (CDM).

“If the answer is ‘yes, the project would have happened anyway’ that’s not what the CDM is for,” said Lex de Jonge, who is a member of the CDM executive board and an official at the Dutch environment ministry, and was speaking at a carbon market event in London.

“By far the most projects are ok... but some you can see that there are huge profits.”

Lucrative projects were successfully claiming carbon credits by arguing that the U.N. process had removed technological, awareness or other barriers.

“If they are silent on the huge profits and only mention the barriers that’s where I get nervous. This is an area that we should look at more closely.”

De Jonge added that a lack of staff resources at the U.N. as recently as earlier this year had seen some undesirable projects slip through, but said that the vast majority of projects were now properly screened.

Carbon market participants have vigorously defended the CDM trading scheme.

“CDM is clearly working, if not 100 percent as intended, at least toward the aim we look for,” said Einar Telnes, a director at private carbon project verifying firm DNV.

“Why should the CDM only encourage marginally financially viable projects? This mechanism is supposed to govern the long-term response to climate change, which can’t be based on marginal technology.”

Technology barriers were a genuine handicap to starting greenhouse gas emissions cutting projects, and if the CDM overcame those that was important, said Edwin Aalders, from the lobby group the International Emissions Trading Association.

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