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Market News

 December 06, 2009
Who is cashing in on carbon credits?

 

The global carbon credit market will grow in leaps and bounds if government leaders attending this week's climate change conference in Copenhagen commit to stiffer reduction targets for CO2 emissions. The value of the carbon market-currently worth as much as $126-billion-may grow to as much as $1.9 trillion by 2020.

To help keep track of dealings and hold accountable parties that are buying and selling these carbon credits, Probe International has created an interactive Carbon Credits Database. The database provides a comprehensive list and associated documentation of all the projects around the globe that have received carbon credits through the UN's Clean Development Mechanism (CDM).

Carbon credits are quickly becoming a popular tool for both governments and private parties to offset their "carbon footprint." Even rock stars buy them to "green" their image and assuage anxious fans who fear planetary damage from energy intensive concerts. But whether carbon credits will save the planet is doubtful. Indeed, growing evidence suggests they do harm.

Officially, carbon credits, specifically those issued through the CDM, allow companies or governments in the developed world to "offset" their carbon emissions by financing "green" or carbon reducing projects in the developing world.

This market, supporters claim, acts as an efficient way to cut global carbon emissions.

But, in reality, as Probe's carbon credit database shows, all is not well on the carbon-trading front. Carbon credits are financing projects such as hydro dams that are causing environmental and social problems of their own, while discouraging developing nation governments from introducing more stringent national pollution standards.

"Absolutely, organized crime will be involved,"

Moreover, carbon markets seem especially prone to fraud and organized crime. This summer, for example, officials in the UK discovered an alleged $60 million fraud involving the trading of carbon credits. And Peter Younger, an environmental crimes specialist at Interpol warned, "there will be fraudulent trading of carbon credits."

If organized crime and environmental damage aren't enough to cast a shadow over carbon credits, there is the added problem that carbon credits are a highly vulnerable asset because governments determine the value of CO2 by fiat.

Government manipulation of the carbon market could leave investors holding devalued assets. Or, if investigations into the recent leaked emails-known as "Climategate"-conclude that the climate data has indeed been distorted and that the scientific basis for man-made global warming is unfounded, governments may retract regulations that created the carbon credits in the first place. Either way, investors in carbon credits are in a high-risk market.

For the details of CDM carbon credits, you can go directly to our carbon credit database.

Things you should know about carbon credits:

  • China has received almost 50 percent of all carbon credits issued through the CDM. These credits are worth $3.2 billion at current prices.

  • China has also received around 4 million CDM carbon credits worth $75 million at current prices and used the funds to build 47 new dams.

  • China has received nearly 8 million credits for wind projects, worth $153 million at current prices. An estimated $2.5 million of these wind credits are now under review by the UN because they may not have been eligible.

  • India has received 20 percent of all carbon credits issued through the CDM. These credits are worth $1.9 billion at current prices.

  • Together India and China have received around 68 percent of all carbon credits issued through the CDM, worth $4.6 billion at current prices, and used them to build 70 new dams, more than 100 wind projects and more than $3 billion worth of hydrofluorocarbon-23 (HFC-23) projects-a byproduct in the manufacturing process of HCFC-22, which is a gas used as a refrigerant.
Source: www.probeinternational.org