Deadline rules may jeopardize 20% of carbon reduction projects
Deadline rules may jeopardize 20% of carbon reduction projects
London: Proposed certification deadlines threaten 20% of carbon reduction projects, said Ram Babu, managing director of broker CantorCO2e India Pvt. Ltd.
Det Norske Veritas, SGS SA, TUV SUD AG and other certification companies said on 9 July that project developers must apply for credits within a year of their start.
The firms are trying to eliminate bottlenecks in the approval process to speed registration of projects that help curb output of heat-trapping gases blamed for climate change.
Carbon abatement projects developed under the UN-managed Clean Development Mechanism, or CDM, include wind farms in China and manure-to-energy plants in South Africa.
Credits can be bought by polluters to offset emissions in countries that pledged to curb carbon dioxide output under the terms of the Kyoto Protocol.
“It discourages investors if rules can be arbitrarily changed," said Mumbai-based Babu in a 25 July phone interview from London. “There should be stability in the rules."
Certified emissions reduction credits for December from the CDM were traded at a record €23.38 ($36.81) a tonne on 2 July. On Monday, they fell 57 cents to €19.55 a tonne, according to the European Climate Exchange in London.
It’s a valid goal to want to smooth the project approval process, Babu said. The certification firms should not try to implement new rules without consulting developers of projects, he said. “It’s being implemented immediately with no warning."
CantorCO2e is a unit of New York-based broker Cantor Fitzgerald L.P. There are more than 3,000 projects seeking emission credits under the CDM, according to the website of the UN Framework Convention on Climate Change.
Delays in the certification pipeline stem partly from the time needed to show that a project genuinely requires CDM credits in order to proceed, said Sven Kolmetz, head of the carbon management service at TUV SUD, the Munich-based certification firm.
“We need clear guidelines, clear rules," Kolmetz said. “If we have clear rules, it’s easier to decide," he said on 23 July by phone.
The audit firms will take into account any CDM executive board ruling on the proposed 12 months maximum time lag between project implementation and application for CDM credits, Kolmetz said. A ruling might come as early as this week after the board considers the proposal at a meeting in Bonn that runs through 2 August, a UN official said on 10 July.
TUV SUD is hiring to help smooth the project registration process, Kolmetz said.
The number of employees in the UN emission credit unit of the company’s carbon management service will rise to about 100 by the end of this year, from about 60 at the beginning of the year, he said.
“Hiring is still difficult," with few experienced candidates, he said.
The certifiers are known as designated operational entities, or DOEs, in the jargon of the rules of the 1997 Kyoto Protocol. To be eligible for credits, project developers must meet one of three conditions within 12 months, the certification firms said earlier this month in a statement.
Developers must submit to a certification firm a project for validation that employs an approved technology for emissions reduction. Otherwise, they must submit to the Clean Development Mechanism Executive Board, the regulator, a new methodology or submit a letter to a certification firm stating that the project is waiting for approval of a new methodology.
“This commercial decision by some DOEs will discriminate against project developers with fewer resources and will slow mankind’s response to climate change," Steve Drummond, co-chief executive officer of CantorCO2e in London said on 25 July by email.
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