UN emission market needs urgent reform

The United Nations (UN) global carbon market requires substantial reform because it too often fails to support the projects and people it is meant to help, according to new research from the University of Sussex.

The research findings are released as the UN, which has designated 2012 the International Year of Sustainable Energy for All, begins a policy dialogue about its Clean Development Mechanism (CDM), under which companies are allocated tradable credits if they pay others to cut their carbon emissions.

The CDM is designed to help finance investment projects that reduce emissions and bring real development benefits to those communities in poorer countries that host them.

But a three-year ESRC research project led by Professor Peter Newell to explore the politics and governance of the CDM found that it is skewed towards the interests of polluting corporations and people who earn a living from the CDM market rather than the communities that host the projects.

“The goals of CDM are being undermined by poor governance and vested interests, especially in the energy sector,” said Professor Newell. “We have found a strong link between who takes the decisions about which projects earn CDM credits and who benefits.”

He added: “There is a real danger that the mechanism could become a ‘rich man’s club’ of project developers, emission verifiers, and government officials where these roles overlap and lack transparency.”

Under the CDM, projects that reduce emissions in developing countries can earn credits that they sell to industrialised countries. The buyers use them to meet some of their emission reduction targets under the UN’s Kyoto Protocol.

But critics of the CDM claim that many of the projects that earn credits do little or nothing to actually reduce emissions. They also argue that industrialised nations should be doing more to cut their emissions, rather than buying “pollution rights” from the developing world.

“We need to reform the CDM as soon as possible so that it does more to channel investment to projects that will make a real difference,” said Professor Newell.

“Our research shows that we need to get local communities more involved in decisions, build stronger governance institutions and coordinate CDM finance with other development money in the area of climate change.

“But crucially, we need wider political changes – the barriers to promoting clean energy cannot be overcome by carbon markets alone.”

He added: “If we don’t seize this opportunity to reform the way the CDM operates, then I fear that the problems we uncovered with our research will only become worse.

“Reform of the Clean Development Mechanism would be an excellent way for the UN to show it really is committed to sustainable energy.”

Professor Newell was also among a distinguished panel of speakers, including Tony Blair’s former climate-change advisor Mark Kenber, who considered the future of global climate politics at a public event at Sussex on Wednesday (14 March). A short report will be produced from the debate and circulated widely to decision-makers, outlining concrete ideas about how to break the current deadlock and advance progress on this most critical of issues.