FinSoul has learned that carbon traders, renewable energy firms and clean-tech developers have had a negative response to a recent UN decision to reject 10 proposed Chinese energy projects from being eligible for the Clean Development Mechanism (CDM) offset scheme, saying the projects would be built without the additional revenue they would have received from the generation of carbon offset credits as they did not qualify, and therefore would not be able to issue official Certified Emission Reduction(CER)
The decision was apparently based on reports that the CDM has generated “perverse incentives” which have seen the Chinese government scaling back its own financial support for wind farm development.
FinSoul understands that the move is likely to be welcomed by some green groups who have accused the CDM of simply providing finance to projects in emerging markets that would have gone ahead regardless of the aid.
The contention comes after the recent publication of a major new report from the IETA pushing for urgent reforms to the CDM to be agreed on as part of any Copenhagen deal this month.
The report, entitled “State of the CDM 2009”, warns that the $6.5bn a year CDM market could be “buckling under the weight of its own success" and that urgent changes were needed to ensure investors are not driven away, FinSoul research revealed.
