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posted by takyon on Thursday August 27 2015, @09:15AM   Printer-friendly
from the leaky-market dept.

The Stockholm Environment Institute issued a report which attempts to quantify the effects of a loophole in the creation of carbon offset credits on EU carbon markets which was removed in 2013.

This study systematically evaluates the environmental integrity of Joint Implementation (JI) in the first commitment period of the Kyoto Protocol.

The analysis indicates that about three-quarters of JI offsets are unlikely to represent additional emissions reductions. This suggests that the use of JI offsets may have enabled global GHG emissions to be about 600 million tonnes of carbon dioxide equivalent higher than they would have been if countries had met their emissions domestically.

Of the six largest project types assessed in more detail, the authors find only one – N2O abatement from nitric acid production – had overall high environmental integrity. The evaluation clearly shows that oversight of an international market mechanism by the host country alone is insufficient to ensure environmental integrity.

Joint Implementation is an activity allowed by the Kyoto Treaty to help countries with firm emission targets meet their goals by implementing emission reduction projects in other countries (including non-EU countries) with likewise emission targets. In practice, this was implemented by the EU carbon markets as carbon credits.

A considerable number of such projects were created in Russia and the Ukraine (though the study cites emission reduction projects in other countries, particularly the former Eastern Bloc) and allowed to sell carbon credits on the EU carbon markets. The study evaluated in particular claims of "additionality" for a sample of these projects, namely, the claim that the projects would not occur otherwise (pp. 5-6 from the report PDF).

In a random sample of 60 projects, the additionality claims do not seem plausible for 73% of the ERUs issued and are questionable for another 12%.

We assessed the plausibility of additionality claims of JI projects through an in-depth review of the information available for a sample of 60 projects, drawn in a representative manner taking into account the host countries, project types and project scale. While this approach has clear limitations – it is a subjective judgment of the authors based on the limited information publicly available – it is based on a careful analysis applied in a consistent manner across projects, assessing the plausibility of the timeline of project implementation and registration under JI as well as the information on the main additionality tests used to determine additionality (investment analysis, barrier analysis, common practice analysis, reference to a comparable project).

Here's an example of a "project type" with "low" environmental integrity (pg. 7):

Natural gas transportation/distrib. [accounts for 10% of Emission Reduction Units (ERU) issued]

This project type involves reducing methane leaks from natural gas transportation and distribution or expanding natural gas networks in order to replace coal or oil.

Additionality not plausible: The project starting dates of the 30 projects located in Ukraine were between 2003 and 2006, while most projects received their Letter of Endorsement only in 2012.

Some overcrediting likely: The network expansion projects assume that they solely replace fossil fuels such as coal and heavy oil. But in rural areas newly available gas would also substitute biomass. The exclusion of the use of biomass may inflate the baseline emissions. For projects addressing methane leaks, the implied leakage rates in the absence of JI exceed historical emission rates reported in Russia's GHG inventory, which suggests that either in the absence of the JI projects Ukraine's emissions from this activity would have risen, or emission reductions claimed by the projects are overestimated.

To give an idea of the scale of these emission credits, the yearly emission cap for the entire EU was 2.08 billion tonnes of CO2 emissions per year for the period 2008-2012. Most of these questionable credits were apparently issued in the years 2011-2012, which makes it up to 15% of emissions for those two years.


Original Submission

 
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  • (Score: 4, Insightful) by Runaway1956 on Thursday August 27 2015, @02:16PM

    by Runaway1956 (2926) Subscriber Badge on Thursday August 27 2015, @02:16PM (#228578) Journal

    Carbon credits are a scam, from start to finish. Businesses figured that out early on, and took full advantage of the public's gullibility. "Let's play shell games with our carbon emmissions, except, we'll use dozens of shells, and we won't even put any carbon inside of any of the shells. Since the gullible fools can't find the carbon, they'll believe that we have reduced carbon emissions!"

    Meanwhile, in third world nations, the smokestacks continue to multiply, sans scrubbers or filters.

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  • (Score: 1) by khallow on Thursday August 27 2015, @02:46PM

    by khallow (3766) Subscriber Badge on Thursday August 27 2015, @02:46PM (#228595) Journal
    What's interesting is how fast the situation was exploited. When you're designing markets, you need to worry a lot about how traders can exploit the structure of the market. I've seen situations where traders were exploiting a modest flaw in the default display settings for viewing trades (in Eve Online, the trade contract window used to default to displaying the first 200 most recent contracts rather than the cheapest contracts. They flooded certain high volume contracts with hundreds of new orders every day). A program like this where accountability is so easy to circumvent and there are huge sums at stake, is red meat for anyone looking to do a bit of highly profitable fraud.
    • (Score: 0) by Anonymous Coward on Thursday August 27 2015, @03:09PM

      by Anonymous Coward on Thursday August 27 2015, @03:09PM (#228607)

      I have seen people game the system to get 2 cent mcdonalds toy. We have people exploiting the length of your cable to a trading house to end run you.

      That an artificial construct like the carbon trading market was exploited? Not surprised at all.