Carbon Traders Demand More UN Market Experts
Date: 08-Nov-07
Country: SINGAPORE
Author: Annika Breidthardt
The carbon project developer was speaking on Wednesday, the day after it lowered its profit forecasts, citing problems of UN red tape.
Under the Kyoto Protocol, whose present commitments rules expire in 2012, rich countries can meet their domestic greenhouse gas emissions limits by buying carbon offsets from developing nations, through the so-called clean development mechanism (CDM).
Trade in these offsets is booming and has attracted western speculators such as EcoSecurities, which hunt for the most lucrative emissions-cutting projects to cash in on differences in carbon prices around the world.
"We would like to see a CDM executive board that is populated with more people with direct market regulatory experience, financial regulators, utility regulators, people with direct experience," Marc Stuart, EcoSecurities co-founder and director of new business development, told Reuters.
"With all due respect, these guys are generally (climate change) negotiators...Understanding what is material and what is not is not necessarily one of their strong points," he said on the sidelines of a conference on global carbon markets.
The head of the CDM project judging panel, Lex de Jonge, accepted that having some panel members with a financial background could help.
"Having knowledge of the financial background would be one of the useful factors a board member should bring," de Jonge told Reuters. "But it would not be very productive if all board members had that background. We need the variety."
EcoSecurities acknowledged on Tuesday that its trimmed profit forecast was also partly due to its greater exposure to administration costs than competitors, because it had more, smaller projects.
"We've decided to focus our efforts on projects that we think will have good returns," EcoSecurities Finance Chief Jack MacDonald told Reuters on Tuesday, adding that meant especially dropping small projects.
DELAY
De Jonge said more projects had come under review in recent months, because the board now had more resources to scrutinise them, but he said delays were also the fault of applicants, saying they should listen more to UN rules.
"At least 75 percent of cases that trigger a review now are for mistakes that could happen once but then people should learn from them and not make them again," de Jonge said.
Project developers hire designated operational entities (DOEs) to approve their proposals before submitting these to the United Nations for official registration.
Stuart said the UN judging panel should trust DOEs more.
"If you have DOEs and they give their opinion, it should be extraordinary that their opinions should not be respected," he said, adding it now often took about eight months longer than expected for projects to be approved.
Carbon offset trading under the Kyoto Protocol's CDM was worth US$5 billion last year, part of a global carbon market that is worth at least US$60 billion this year.
(Additional reporting by Gerard Wynn in London, editing by Ramthan Hussain and Anthony Barker)