Posted by: carboncreditsusa | December 20, 2008

Voluntary Carbon Credit Markets, Including Chicago Climate Exchange And Voluntary Carbon Standard, Operate Outside Of Kyoto Accord And Prices Trade At Historic Low Levels ($1.50 Per Tonne) Whereas European Union Emission Trading Scheme Credits Sell At Around 14 Euros Per Tonne

Two of the biggest voluntary carbon offset standards bodies – the global Voluntary Carbon Standard and the US-based Chicago Climate Exchange – are fuelling a revolt against the offset scheme set up under Kyoto to generate carbon abatement projects in developing countries.

 

On the Chicago exchange, credits currently trade at around a dollar and a half per tonne of abated carbon, and the VCS has yet to set up its first credit registry…
Meanwhile, carbon credits are trading on the EU Emissions Trading Scheme for around €14 per tonne, as Kyoto-compliant countries buy up vast quantities of credits generated under the CDM in order to meet their 2012 emissions targets.

 

 

“It’s difficult to establish the worth of the voluntary market,” says Lisa Ashford, head of commercialisation at Ecosecurities Europe. A number of voluntary credit registries with differing standards exist, she says, adding that the system suffers from a distinct lack of transparency.

 

http://www.climatechangecorp.com/content.asp?contentid=5862

 

Carbon credits are in danger of losing their credibility as mistrust within the offset industry reaches toxic levels.

Two of the biggest voluntary carbon offset standards bodies – the global Voluntary Carbon Standard and the US-based Chicago Climate Exchange – are fuelling a revolt against the offset scheme set up under Kyoto to generate carbon abatement projects in developing countries. The organisations tell ClimateChangeCorp that they are willing to consider carbon credits rejected by the scheme, known as the Clean Development Mechanism (CDM), for sale under their own standard.

David Antonioli, recently appointed head of the Voluntary Carbon Standard (VCS), criticises the CDM for “unfairly” dismissing offset projects that fall outside the boundaries of the scheme’s narrow rules.

On top of this, the CDM has come under fire from carbon offset project developers, who last month set up a pressure group, called the Project Developers Forum, to voice their discontent about the way their proposals are handled. The CDM executive board, made up of an international panel of experts, have the final word on whether to award carbon credits under Kyoto. The board currently rejects around 10% of offset projects under deliberation, while project assessors, the gatekeepers to the board, automatically reject many more for failing to meet CDM rules.

Along with CDM rules, carbon offset project developers criticise the board’s tactics, which they say include changing regulations at short notice in order to disqualify projects, and rejecting projects on minute details that project assessors claim are immaterial.

According to Martin Enderlin, leader of the Project Developers Forum pressure group and an ex-member of the CDM board, the CDM’s approach to project approval has been “paranoid” for about a year, ever since carbon-offsetting cowboys began to be exposed in the media and by independent studies. The CDM executive board is not shy of penalising its stakeholders – project assessors are also feeling the pressure after one of the biggest CDM auditing firms, Det Norske Veritas, was suspended last month for failing to comply with internal management rules.

Enderlin says that the new super-cautious attitude of the board is to find each project “guilty until proven innocent”, a process that currently takes around a year to complete. He accuses the CDM board members of lacking the expertise to credibly contest project assessors and of playing a “political game” through the approvals process and with their continuous rule-making. “I’ve never seen a standard evolve as much as the CDM standard,” he says.

This month’s international climate negotiations in Poznan, Poland, brought about a host of recommendations to the CDM executive board on how to tidy up its act. Much of the emphasis was on the need for the board to be more transparent and democratic in its decision making process.

The ultimate fear of project developers is that the current decision-making structure of the CDM may be too inefficient to persuade negotiators to bring the scheme into the post-2012 climate agreement – a decision which could leave them creditless and out of pocket.

At the Project Developers Forum launch event, CDM board members retaliated by voicing their own doubts about the “environmental integrity” of the project developers.

Voluntary markets: A solution or sidetrack?

The culture of mistrust between the CDM board and project developers is being compounded by the voluntary offset sector’s readiness to take rejected Kyoto credits off the hands of developers.

Enderlin warns that selling rejected credits on the voluntary markets would be “extremely risky” and would both undermine the CDM’s position and increase its paranoia about carbon cowboy developers.

Whilst some developers, such as global offset developer Ecosecurities, deny trading rejected Kyoto credits, others, like Trading Carbon, based in London, say they are happy to sell credits that have failed to meet the criteria of the CDM board, as long as they are from “high quality” offsetting projects. These would include projects that have failed bureaucratic CDM rules on application time schedules, for example, but not those failing because of a lack of carbon abatement “additionality” – in other words, because the carbon abatement in question doesn’t really need the incentive of credits to go ahead.

Rafael Marques, senior vice president of the Chicago Climate Exchange (CCX), the first cap-and-trade system to be set up in North America, and representing a fifth of companies in Dow 30 Index, tells ClimateChangeCorp: “The CCX is willing to review all projects submitted to the programme, regardless of decision by the CDM”. He goes on to explain that the “CCX is a separate system, with its own set of rules and approval criteria”.

David Antonioli of the VCS, which was set up by project developers in partnership with the Climate Group, says that voluntary standards need to reserve the right to take on failed CDM projects that may have been rejected on immaterial grounds, or – as is the case with forestry projects – were simply “too innovative” to be covered by CDM rules.

However, the voluntary market has yet to prove its worth. Voluntary credits rely heavily on corporate and individual buyers of carbon offsets. On the Chicago exchange, credits currently trade at around a dollar and a half per tonne of abated carbon, and the VCS has yet to set up its first credit registry.

Meanwhile, carbon credits are trading on the EU Emissions Trading Scheme for around €14 per tonne, as Kyoto-compliant countries buy up vast quantities of credits generated under the CDM in order to meet their 2012 emissions targets.

 

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