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Shell, AES Criticize UN CDM Program for Delays, Transparency
2010-10-27 08:58:02.106 GMT
By Dinakar Sethuraman
Oct. 27 (Bloomberg) -- Royal Dutch Shell Plc and AES Corp.
said that a United Nations program to approve carbon credits to
offset emissions by companies is slow and opaque.
"There's a clear lack of transparency in how the Clean
Development Mechanism board makes its decisions," Ming-Yee Lim,
environmental products originator for Shell, said today at the
Carbon Forum Asia 2010 conference in Singapore. "This has made
us delay our approval process and impacts investor confidence to
a large extent."
The CDM mechanism allows companies in developed countries
to offset their greenhouse gas emissions by paying for
reductions in pollution output in developing nations. The CDM
market was valued at about $20.2 billion last year, the World
Bank said in May.
Shell was finalizing talks to source credits from a wind
project in China when the CDM board rejected some of these
ventures, Lim said. Europe's largest oil and gas company sources
certified emission reduction credits to offset emissions from
its refineries and for customers, she said.
CDM offsets, known as Certified Emission Reductions credits,
are currently used for compliance in the European Union's carbon
market, the world's biggest. UN CERs for December dropped 0.1
percent to 12.83 euros a ton at 3:25 p.m. Singapore time.
The time taken for registration of process and issuance of
credits has quadrupled in the last few years with submissions of
proposals stagnating in a 3 1/2 month-long queue before being
touched, said Leo Perkowski, director of regulatory affairs at
AES, an Arlington, Virginia-based power producer. It takes an
average 10 1/2 months for issuance of credits, he said.
Developer Complaints
The UN has also started a move to trim the time required to
register carbon-credit projects under the CDM mechanism to 28
days from as long as two years after developers complained of
delays in securing approvals for issue of Certified Emission
Reduction units, Clifford Mahlung, chairman of the UN CDM
executive board, said in June in Singapore.
The UN CDM board mustn't change rules midway through a
program, Fumio Hoshi, executive director at the Japan Bank for
International Cooperation, said in an interview today. A UN
panel is evaluating the methodology for issuance of carbon
credits for hydro-fluorocarbon (HFC) combustion plants and
reviewing rules on renewable energy and industrial projects in
countries including China and India.
"Rules must be consistent," Hoshi said. "This has
discouraged many investors to do projects." Projects must be
approved even if they are very profitable as long as they reduce
emissions, Hoshi said.
"There's a lack of transparency and decisions are made
behind closed doors," Madlen King, global head of climate
change at Lloyd's Register Quality Assurance, which validates
and verifies carbon emissions, said at the conference.
For Related News and Information:
Top Environment Stories:GREEN <GO>
--Editors: Clyde Russell, Jane Lee.
To contact the reporter on this story:
Dinakar Sethuraman in Singapore at +65-6212-1590 or
dinakar@bloomberg.net
To contact the editor responsible for this story:
Clyde Russell at +65-6311-2423 or crussell7@bloomberg.net.
