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Source: Reuters Interactive Online
By Gerard Wynn and Michael Szabo The world's biggest source of private sector investment to fight climate change in the developing world has stalled pending complex global climate talks and uncertain demand. The $13 billion trade in carbon offsets (CERs) has also come under withering attack over profiteering and scam projects to cut greenhouse gas emissions. New UN data shows in the past three months UN approvers registered a third fewer projects compared to the same period last year, under a Kyoto Protocol scheme. New project applications, for example backing wind power or energy efficiency, hit a peak last July. "We have to continue to invest in it and that means more hard work on the design as well as the operation of the system, what it doesn't mean is giving up on it," said James Cameron, vice chairman at Climate Change Capital, which specialises in climate-friendly investments. CERs have become a major plank of European Union climate policy, allowing polluters to meet limits on greenhouse gases by funding emissions cuts in developing nations such as China and India, under Kyoto's Clean Development Mechanism (CDM). But EU officials say such imports will in future depend on similar compatibility with U.S. climate targets under a new administration, amid much U.S. scepticism. That has added to uncertainty over whether CERs have a place in the global fight against climate change, under UN rules slated for agreement next year and to come into force in 2013. "This means a CDM project has to pay for itself and turn a profit by 2012 to be worth doing at all," said Miles Austin, at project developers EcoSecurities <ECO.L>. LIMELIGHT Media criticism has focused on CER deals which have earned speculators 10 times or more their investment, and on claims for emissions cuts from CDM projects which were already profitable. A report for WWF earlier this month said that wind and hydropower in China -- the bulk of new CDM projects there -- were profitable anyway, making it inconclusive whether potential CER revenues were driving emissions cuts. But it identified more subtle benefits such as improving transparency for foreign investors. "We've got to believe we have enough wit and ingenuity to come up with something better," said Patrick McCully, director at the NGO International Rivers, advocating non-market approaches such as a multilateral climate change fund. The criticism has resonated with policymakers, helping brake the market. UN officials are poring over CDM project plans more carefully, industry experts say. Read full article at: Reuters Interactive Online
