Carbon Market Watch

For fair and effective climate protection.

Board to close loophole in CDM biodiesel methodology (Newsletter #10)

18 Sep 2010

The Methodology Panel has prepared a revised methodology ACM0017 Production of biodiesel for use as fuel to address several deficiencies of the first version of this methodology that was adopted in 2009. At the time, CDM Watch and Wetlands International highlighted serious concerns related to loopholes in the methodology that allowed the production of biodiesel from designated plantations established on degraded lands.

These degraded lands could still contain large amounts of soil carbon. The most extreme example is the widespread use of peatlands in Southeast Asia for the production of palm oil (for either food or biodiesel). This production requires drainage of peat swamps to a depth of at least 80 centimetres to enable the palms to grow, thus exposing the organic carbon of the peatsoils to the air and triggering biological processes that turn the organic carbon into carbon dioxide (CO2). This results in continuous emissions of 50-75 tonnes carbon dioxide per hectare per year. Currently, several million hectares of oil palm plantations are active on peatlands, and several million supplementary hectares have already been allocated in concessions for palm oil plantation development in Indonesia and Malaysia.

The existing CDM methodology would allow CDM projects to take place in these areas once the forest cover is gone and the areas are classified as “degraded”. Use of palm oil produced on peat as a biodiesel results in eight times more emissions than the use of fossil fuel diesel. This in turn would mean that CDM revenues would directly support projects that result in huge emissions. A detailed analysis on this has been published by scientists of the Greifswald University19 .

The draft revision is now putting things straight by explicitly excluding the use of peatlands for A/R CDM projects excluding a direct threat to peatlands, the most important carbon stores in the world. For more information, contact

Action to be taken by the Board: Wetlands International and CDM Watch recommend the adoption of this revised version 01.1 that eliminates the threat this methodology poses to peatlands. However, it is important to note that the revision does not yet address many other important issues, such as sustainability criteria and indirect land use impacts of biofuel production. Without taking full account of the negative impacts of biofuel production, CDM Watch does not believe that biofuels production should be supported as part of the CDM.