UN CDM Executive Board Holds Project Auditors Accountable

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Kudos to the Executive Board (EB) of the UN Clean Development Mechanism (CDM) Board for announcing that it will publish the names of the auditing companies that signed off on projects that violate eligibility rules. In our recent report, Bad Deal for the Planet, International Rivers called for the EB to strip auditors of their accreditation to work for the CDM if they fail to apply the CDM’s rules. “Naming and shaming” does not go as far as we would like, but will enable the public to know who the repeat offenders are and to put pressure on the EB to give them the boot.

Research from International Rivers and others over the past several years has shown that the CDM’s auditors (known as Designated Operational Entities or DOEs in CDM parlance) are giving the rubber stamp to applications with laughable additionality arguments and calculations of emission reductions against an unrealistic baseline. Since the DOEs are paid by developers to validate their projects, it is no surprise they have failed miserably at playing the role of competent, independent and objective auditors.

The EB could eliminate this conflict of interest by randomly assigning project auditors to each project or having the UN hire the project auditor, as Bad Deal for the Planet suggested. This would be an important improvement, but would still not fix the fundamental flaw of the CDM. It is nearly impossible to unequivocally prove additionality and determine how many offsets to grant to a project, since this requires knowing with certainty the original intentions of developers and investors and what would have happened had the project in question not been built (i.e. what the business-as-usual baseline emissions would be).

My colleagues and I will be following whether the CDM EB sees the folly of their ways at the upcoming UN Climate Conference in Poznan, Poland. Stay tuned for timely dispatches providing you with the juiciest details of the negotiations as it relates to dams and climate change.