Just when you thought it was safe to talk carbon offsets…

UNFCCC/Tao Ketu

UNFCCC/Tao Ketu

Proponents of the Clean Development Mechanism – the UN’s scheme for approving projects in the developing world to generate carbon offsets for use by developed countries covered by the Kyoto protocol – have some more bad news to contend with. Reuters reports:

The reputation of a Kyoto Protocol carbon finance scheme was dealt another blow after a UN climate panel late on Friday suspended the third emissions cut verifier in 15 months, and partially suspended a fourth.

The scheme’s executive board suspended emissions auditors TUEV SUED and partially suspended Korea Energy Management Corporation (KEMCO) after spot checks at the companies’ offices revealed procedural breaches.

The board, an arm of the UN’s climate change secretariat, said it will work with TUEV SUED and KEMCO to ensure timely resolution of the issues.

This follows the suspension of two other auditors in the past year (one has since been reinstated), all of which will fuel accusations that the whole offset system is fundamentally unworkable.

It does have problems, some of them very challenging indeed – but offsets can also be a cost-effective way to reduce emissions and transfer funds to developing countries.

And it had looked like things were just starting to pick up for carbon offset markets, with CarbonDesk writing early on Friday that the effect of the ‘recycled offsets‘ scandal looked like it had finally left the market.

But also on Monday morning, Carbondesk mentioned that some of the price support for CERs, the offset units generated by UN CDM programmes, had come from a shortage of projects in the pipeline, adding:

… on Friday the Japanese government minister for economy, trade and industry said that Japan would be looking to find alternatives to the UN-controlled carbon credit programmes.

This wouldn’t be the same country that allows trade in second-hand CERs and is rather interested in using controversial AAUs from former Soviet countries now, would it? Neither of which, no matter how one looks at it, result in actual emissions reductions.

Related links:

Hungary’s used carbon offset sale accelerates market fragmentation - FT Energy Source
Details of the UNFCCC’s meeting on CDMs last week, including the two suspensions
Carbon offsets: Money-saving, but difficult – FT Energy Source
Everything you ever wanted to know about carbon offsets - FT Energy Source

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