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CDM Watch Newsletter #6, February 2010

Dear friends,

This first CDM Executive Board meeting in 2010 from 8 – 12 February will start off with a rather unusual challenge. For the first time in history, not all Board members were elected during the annual procedure as part of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol in Copenhagen (CMP.5) in December 2009. The Asian Group neglected to nominate an individual to serve at the Board. This could result in the first constellation of the Executive Board ever to rule over projects without a Chinese voice.

This comes especially as a surprise since the number of projects under scrutiny during this meeting hits records: 117 projects will be discussed of which the majority are Chinese wind and hydro projects. This large amount of projects under review or where review is requested do not only hit the Chinese CDM market (which does no longer seem to be a priority for the Chinese government), but raises serious concerns about the performance of Designated Operational Entities (DOEs).

It is important to recall that it is not only the growing number of reviews that is worrying but also the concern about registered projects and issued CERs that have already slipped through the process due to the poor performance of DOEs. These concerns could result in more suspensions during this meeting further to recently conducted spot checks of TÜV-SÜD and TÜV-NORD. A swift implementation of the policy framework to monitor performance and address non-compliance by DOEs is therefore essential. However, the first progress update of this policy framework to be discussed this week lacks substance and did not take CDM Watch´s recommendations for more transparency and stricter sanctions on Board.

The poor performance of DOEs also impacts the growing number of reviews for issuance of CERs. The Board will have to double check whether 23 projects qualify for the requested issuance of 4.587.937 CERs, equalling more than 55 Mill €. Amongst the four additional CER issuance requests under review is one of the prime examples of CDM in-efficiency and carbon leakage: SGS has requested issuance of 2.244.051 CERs for one adipic acid production project for effectively two months monitoring period from December 2008–January 2009. This amount translates into more than 27 Mill € to be divided between Natsource Asset Management Corp (Canada), Goldman Sachs International (UK) and Fortis Intertrust (Netherlands) B.V. However, 3 suspicious Board members requested review arguing “incompetence” of the issuance request by SGS (which was previously suspended because of under-qualified staff). The review should eventually lead to the rejection of this excessive request.

When it comes to the poor performance of DOEs, CDM Watch also challenges a TÜV-SÜD validation report of a large hydro project currently under review. It is set to be rejected due to serious inconsistencies with CDM Watch´s eye-witness account.

But to start with, this newsletter will give a short overview about CDM Reform novelties decided in Copenhagen 2009 and of importance to civil society organisations. These include invitations to cross-check CVs to be published by Board members against potential conflicts of interest; the opportunities of a future appeal procedure against performance of DOEs and Board decisions; and a reminder to make submissions for the development of standardized baselines until 22 March 2010.

Happy reading!

Table of contents

  1. Wrap up of CDM Reform in Copenhagen
  2. Newly elected Board to take office without Chinese member
  3. Record of project and issuance reviews based on DOE non-compliance
  4. SGS requesting issuance for non-additional CERs: request for review entitled “incompetence”
  5. Eye-witness account of non-additional project compared to TÜV SÜD validation report


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