Clean Development Mechanism Auditor Suspended

The accreditation of SGS United Kingdom Ltd. to validate and verify carbon emissions reduction projects was suspended Friday by the Clean Development Mechanism Executive Board, after a determination that SGS technical reviewers had not properly audited projects seeking to qualify for carbon credits.

The Clean Development Mechanism allows projects that reduce or remove greenhouse gas emissions in developing countries to earn certified emission reduction credits, each equivalent to one metric tonne of the greenhouse gas carbon dioxide, CO2.

These credits can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.

The CDM allows industrialized countries to invest in projects that reduce greenhouse gas emissions in developing countries as an alternative to domestic emissions reductions, which may be more costly.

Six problems with SGS UK audits were detailed by the Clean Development Mechanism Executive Board in its meeting in Bonn on Friday:

• Lack of evidence that independent technical reviews had been conducted on requests for revision of monitoring plans for two projects
• SGS's internal technical review not capturing issues lacking in draft reports prepared by the validation and verification team
• Lack of thorough implementation of the contract review procedure
• Project staff evaluated based on anecdotal evidence and not on working experience as required by the accreditation standard
• Reports used to monitor and evaluate project assessors do not indicate that identified shortcomings are used as the basis for improvement opportunities
• Appraisal of the performance of validation and verification assessors was not applied in some competency evaluations

These wind turbines on the island of San Cristobal in the Galapagos are part of a certified Clean Development Mechanism wind-diesel hybrid system to reduce use of diesel fuel. (Photo courtesy Galapagos Wind)

Still, the suspension is in effect until the Board is satisfied that "duly assessed corrective actions have been implemented following on-site verification of implementation of corrective actions."

In November, the Norwegian certification company DNV was suspended for similar violations. DNV has done compliance auditing for about a third of the projects submitted for Executive Board approval.

In February, the Board reinstated DNV, and the company says the suspension provided the incentive to improve its operations.

"We took the spot check findings very seriously, and we have allocated our best resources to correct them. Through these actions we have now further formalized and thus improved the documentation of our processes for validation and verification of CDM projects. Today we are better able than ever to carry out this work," said DNV's chief executive Henrik Madsen.

Critics of carbon offsetting regard the latest suspension of an auditing firm a humiliating blow to the carbon credit trading system especially at this time. Climate negotiators are entering an intense period of frequent meetings and negotiations in advance of the United Nations climate conference in Copenhagen in December. There, world leaders are expected to finalize an agreement to limit greenhouse gas emissions that will take over when the Kyoto Protocol's first commitment period expires at the end of 2012.

Some environmental groups are critical of the entire carbon offsetting industry.

In its June report on the Clean Development Mechanism, "Dangerous Distraction," Friends of the Earth UK argues, "Dangerous climate change will be unavoidable if the UK, EU and USA succeed in increasing the use of carbon offsetting," calling the practice "ineffective and damaging."

The CDM co-generation power project at Khatauli, India burns sugar cane waste. (Photo by Adeel Halim courtesy Climate Care/UNFCCC)

Friends of the Earth wants a commitment from rich countries to cut their carbon emissions by at least 40 percent by 2020, "through real change at home, not by buying offsets from abroad."

FOE UK Executive Director Andy Atkins said, "Western governments are cheating us all by plotting to expand carbon offsetting at the UN climate talks - which means avoiding real action through dodgy accounting instead of taking bold action to tackle the climate crisis."

"Carbon offsetting is doing nothing to combat climate change, is putting the lives and livelihoods of millions of people at risk and is entrenching inequality between rich and developing countries' levels of emissions," Atkins said.

The green campaign group is urging people to join its Demand Climate Change campaign by signing an international petition to "call for an end to the carbon offsetting con and put pressure on world leaders for real action."

On the other hand, the CDM gives developing countries opportunities to install renewable energy facilities they might not otherwise be able to afford.

In the Ivory Coast, for instance, the first waste-to-energy carbon offset project in West Africa, proposed by the French carbon dealer ecosur, was approved in August under the Clean Development Mechanism.

Locally owned by Societe Ivoirienne de Traitement des Déchets, the pilot project is being established just north of the capital city of Abidjan. Until now, the Ivory Coast has generated all its electricity by burning fossil fuels. The CDM project's goal is to reduce greenhouse gas emissions by more than 71,000 tons annually.

Under the project, more than 200,000 tons of waste will be collected and sorted each year. The glass, paper, cardboard, plastic, and metal will be sold for recycling.

The remaining organic waste will go into biodigestors to produce biogas to generate electricity for the national grid and compost for local agriculture.

To date, 1,814 projects have been registered for carbon credits by the Clean Development Mechanism Executive Board.

Copyright Environment News Service, ENS, 2009. All rights reserved.