[November 27 2007] The global exchange system designed to cut greenhouse gases through traded carbon credits is being gatecrashed by hundreds of projects that will actually increase the net amount of carbon going into the atmosphere, a report published today finds.As the latest UN conference on climate change opens in Bali, the report from International Rivers, an NGO based in California, warns of a surge in hydropower project developers seeking to use the UN's Clean Development Mechanism.
The mechanism, part of the Kyoto protocol, allows organisations in richer countries to emit extra greenhouse gases by paying for carbon credits to fund schemes in poorer countries that cut emissions.
The report, Failed Mechanism, claims that the majority of these hydro projects, in China, South America and Africa, are using "Alice in Wonderland" arguments to pretend they are cutting emissions.
The hydro firms can earn millions of dollars by selling fake carbon credits to companies and governments which can use them to justify an increase in emissions.
"Public and private money that should be supporting decarbonisation in developing countries is flowing into the coffers of hydropower developers with the only effect on emission levels being to increase them," says the report. "How wise is it for the main mechanism supporting climate change mitigation in developing countries to be standing on a foundation of lies?"
All projects applying to join the Clean Development Mechanism must show that if they are allowed to sell carbon credits they will make cuts in emissions which are additional to any they would effect if they just went about their business as usual.
International Rivers says the majority of hydro projects fail this additionality test. "Most credits that may be generated by these projects should therefore be considered to be 'hot air' - fake credits which will increase global greenhouse gas emissions."
The NGO says that for years the Chinese government has been committed to hydropower. Yet China's hydropower developers are now trying to persuade the CDM that, without funds from carbon credits, which have been available only since January 2005, they cannot proceed. "The apparent collapse in Chinese hydro developers' ability to implement projects without carbon finance can only be explained as an artefact of creative writing."
The report also says almost all of the hydro projects accepted by the CDM were under construction before the developers applied, and a third of them had already been completed. "It is clear that these projects still would [have gone] ahead even if they were not successfully registered as CDM projects."
The report says of Kenya's Sondu Miriu hydro project that its construction began in 1999; yet last year it applied to the CDM saying it proceeded only on the basis that it would earn income from carbon credits.
Similarly, with the Campos Novos dam in Brazil, electricity began to be generated from there in 2007. But the firm is now trying to claim the right to sell carbon credits by arguing that the project would not have been developed without that income.
Hydro projects applying to the CDM have doubled in number every six months since the scheme began. They account for a quarter of all projects in the CDM pipeline - 507 hydro applications are being considered by specialist validation firms and a further 147 are already accepted. Well over half the projects are Chinese.
The report says: "Hydro developers are repeatedly justifying their applications to the CDM with surreal arguments... Even worse is that the validation companies and the CDM's executive board seem prepared to endorse such Alice in Wonderland arguments."
The report's author, Barbara Haya, said hydro projects could end up claiming to be cutting global carbon dioxide emissions by 58.5m tonnes a year, and carbon credit sales would let factories and other groups exceed current limits. If the hydro projects are truly not providing additional cuts, the net effect is a rise in global greenhouse gases by the same amount each year.
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