UN Carbon Agency Spends Millions On Staff As Projects Run Dry
The United Nations body tasked with channelling hundreds of billions of dollars to cutting emissions is under growing scrutiny as its once-booming investment program dries up, leaving most of its funds unspent while other climate initiatives are short of cash.
The Kyoto Protocol’s Clean Development Mechanism (CDM) has helped funnel almost $400-billion into emission-cutting projects in developing countries by allowing investors to earn carbon credits they can sell to companies and governments of richer nations that use them to meet emission targets.
From 2003, developers flocked to register projects such as destroying heat-trapping waste gasses at Chinese chemical plants or installing hydroelectric power stations in Brazil, and made huge profits by selling the resulting carbon credits for up to $30.40 a tonne in 2008.
But interest has waned while countries wrangled over setting new emission goals under the United Nation’s Framework Convention on Climate Change (UNFCCC), hammering credit prices down to unprofitable levels below $0.30.
The board appointed to oversee the CDM insists work should continue to improve the system to ensure it is ready when demand returns, yet analysts and governments see almost no prospect of a price recovery until 2020, when a new UNFCCC deal is due.
“We hope countries will come forward with ambitious reduction pledges but at the moment it is hard to see where demand for international offsets will come from (post-2020),” said Jacob Werksman, a senior official at the European Commission who negotiates on behalf of EU nations at UN. talks.
The latest UN financial statements show the CDM has operating cash of $148-million, on top of a separate reserve of $45-million, meaning the system’s administrators could continue at current levels almost until the end of the decade.
But with such a bleak outlook, some observers are calling on the CDM to drastically scale back its Bonn, Germany-based operations and want much of its near-$200-million of cash pile spent elsewhere.