Industry
caught in carbon ‘smokescreen’
By Fiona Harvey
and Stephen
Fidler in London
Published: April
25 2007 22:07 |
Last updated: April 25 2007 22:07
Companies and
individuals rushing to go green have been
spending millions on “carbon credit” projects that yield few if any
environmental benefits.
A Financial
Times investigation has uncovered widespread
failings in the new markets for greenhouse gases, suggesting some
organisations
are paying for emissions reductions that do not take place
Others are
meanwhile making big profits from carbon
trading for very small expenditure and in some cases for clean-ups that
they
would have made anyway.
The growing
political salience of environmental politics
has sparked a “green gold rush”, which has seen a dramatic expansion in
the
number of businesses offering both companies and individuals the chance
to go
“carbon neutral”, offsetting their own energy use by buying carbon
credits that
cancel out their contribution to global warming.
The burgeoning
regulated market for carbon credits is
expected to more than double in size to about $68.2bn by 2010, with the
unregulated voluntary sector rising to $4bn in the same period.
The FT
investigation found:
■ Widespread
instances of people and organisations buying
worthless credits that do not yield any reductions in carbon emissions.
■ Industrial
companies profiting from doing very little –
or from gaining carbon credits on the basis of efficiency gains from
which they
have already benefited substantially.
■ Brokers
providing services of questionable or no value.
■ A shortage of
verification, making it difficult for
buyers to assess the true value of carbon credits.
■ Companies and
individuals being charged over the odds
for the private purchase of European Union carbon permits that have
plummeted
in value because they do not result in emissions cuts.
Francis
Sullivan, environment adviser at HSBC, the UK’s
biggest bank that went carbon-neutral in 2005, said he found “serious
credibility concerns” in the offsetting market after evaluating it for
several
months.
“The police, the
fraud squad and trading standards need
to be looking into this. Otherwise people will lose faith in it,” he
said.
These concerns
led the bank to ignore the market and fund
its own carbon reduction projects directly.
Some companies
are benefiting by asking “green” consumers
to pay them for cleaning up their own pollution. For instance, DuPont,
the
chemicals company, invites consumers to pay $4 to eliminate a tonne of
carbon
dioxide from its plant in Kentucky that produces a potent greenhouse
gas called
HFC-23. But the equipment required to reduce such gases is relatively
cheap.
DuPont refused to comment and declined to specify its earnings from the
project, saying it was at too early a stage to discuss.
The FT has also
found examples of companies setting up as
carbon offsetters without appearing to have a clear idea of how the
markets
operate. In response to FT inquiries about its sourcing of carbon
credits, one
company, carbonvoucher.com, said it had not taken payments for offsets.
Blue Source, a
US offsetting company, invites consumers
to offset carbon emissions by investing in enhanced oil recovery, which
pumps
carbon dioxide into depleted oil wells to bring up the remaining oil.
However,
Blue Source said that because of the high price of oil, this process
was often
profitable in itself, meaning operators were making extra revenues from
selling
“carbon credits” for burying the carbon.
There is nothing
illegal in these practices. However,
some companies that are offsetting their emissions have avoided such
projects
because customers may find them controversial.
BP said it would
not buy credits resulting from
improvements in industrial efficiency or from most renewable energy
projects in
developed countries.
Additional
reporting by Rebecca Bream
Copyright
The
Financial Times Limited 2007
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