Damned if you do, damned if you don’t

There has been more gnashing of teeth about the carbon markets, and questions about its legitmacy, following news that SGS UK has had its accreditation to audit carbon projects suspended.

According to The Times, this is because it was unable to prove that its staff had effectively reviewed potential CDM projects, or that its staff were qualified to do so.

A central premise of the CDM was to develop clean energy infrastructure for developing nations. Given that GHGs are damaging no matter where they’re emitted, the idea was that its best to start by cleaning them up where cheapest – in the developing world. By transferring money and technology to the developing world through these CDM projects, the system helps keep emissions down and ensures that developing markets have access to technologies which can help them contain their own growing emissions. But the rules are complicated, as are the projects and their risk profiles.

Resources have been a problem in the CDM market since its inception, whether of the number of people actually working for the CDM Board, or the skills and expertise available to help conceive, create, develop and implement emissions reduction programmes, or even the skills to confirm that the projects conform to the guidelines. One of the problems suffered by SGS was that, following a suspension of another auditor – DNV in 2008 – it took over a lot of extra work, putting its team under enormous pressure.

Yet surely the very point that SGS has been suspended while its procedures are reviewed means that the market is maturing – that UN reviews and regulations have teeth? Critics are consistently arguing that the system is not sufficiently well policed but, when it is, they complain that its proof that the system fails.

It seems as if each step the market makes is immediately seen as a sign of trouble. Concern is understandable, especially given the collapse of the banking markets that precipitated the credit crunch, but the very fact that current verification systems are under review means that they’re being closely watched. There are clear flaws within the current emissions trading markets but it’s consistently improving, and there are high expectations that a review of the CDM will result in significant changes at the next major UN negotiations in Copenhagen in December 2009. That should give comfort, rather than remove it. Instead of carping about the problems, critics should try suggesting ways and means of improving the system.