NEW DELHI: The Centre for Science and Environment (CSE) has questioned the role of the United Nations (U.N.) and reputed international consultants in the Clean Development Mechanism (CDM) projects. The CDM procedures designed by the U.N. had made it not only a cheap development mechanism but also a corrupt development mechanism, the CSE alleged in a report released here on Tuesday.

The CDM was agreed upon so that the industrialised countries in the North — which produce excessive emissions — could pay developing countries to shift to cleaner energy sources. But CDM procedures have been designed in such a way that it has become an easy way for rich polluting nations to buy cheap credits for reduction of carbon emissions — with a little help from the U.N., the report alleged. The CSE says its research shows that companies involved in CDM projects are getting huge financial benefits without contributing to sustainable development. The rich countries have created a mechanism to get the cheapest deals - buying emission reductions from the developing countries by directly negotiating with private companies, through privately hired auditors to certify the projects, it is claimed.

The CSE alleges that the reports prepared by internationally acclaimed auditors such as PricewaterhouseCoopers and Ernst & Young, which are used to get these million-dollar projects cleared, are at times, clearly fraudulent. For instance, the project design documents prepared for big CDM deals such as Gujarat Fluorochemicals Limited (GFL) and SRF Fluorochemicals simply copy and paste entire sections relating to stakeholder consultations.

"CDM has been designed deliberately to make it a bilateral business deal, a private-private partnership, which will give the rich countries a cheap deal," says CSE Director Sunita Narain.

Kyoto Protocol

As agreed at Kyoto in 1997, the CDM was to be an effective way to combat the urgent threat of climate change. The mechanism is governed by the parties to the United Nations Framework Convention on Climate Change. Industrialised countries can reduce their burden of excessive greenhouse gas emissions by investing in clean projects in developing countries. The emissions that are reduced because of these investments go into the balance sheet of the rich country. They buy the emission reduced by the developing world. In return, developing countries can use the funds to reduce their emissions. The CSE report says investigations reveal that companies such as GFL, located near Godhra, or SRF located in Alwar, Rajasthan, have sold their emission reductions for an undisclosed price to governments and companies abroad.

Research also finds that all CDM projects are done by the private sector. There are no public sector projects in the critical power and transport sectors. Even the biomass energy projects — which constitute almost 44 per cent of the CDM portfolio of the country — are done by the private sector. There is little reliable information that these projects are sourcing their biomass in a sustainable manner, it is alleged.

The CSE has said that the CDM be reformed by the U.N. so that it can be an effective tool to combat climate change. Currently, the procedures are convoluted, the discussions on price are non-transparent, the methodology to assess what project qualifies leads to bad decisions. In all these arrangements, the role of governments is minimised. This obsession with lack of regulation is leading to a corrupt and highly ineffective system, the CSE alleged in the report.

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