Tue, Feb 15, 2005 - Page 9 News List

Loopholes in Kyoto protocol create headaches

Carbon trading rules spelled out in the Kyoto agreement are undercutting the reduction of harmful greenhouse gas emissions

By John Vidal  /  THE GUARDIAN , London

ILLUSTRATION: MOUNTAIN PEOPLE

In 15 year's time -- and much sooner if the economy continues to explode -- China will overtake the US as the world's largest single emitter of greenhouse gases. Now, this does not mean that by 2020 it will be a rich country with most people owning cars or using air conditioning like in the US or Europe. China plans by then to have only lifted its 1.4 billion people to the economic level of a semi-industrialized country such as Malaysia today. But just to get to that point, it will mean burning three times as much energy as now, say its leaders.

Kyoto was set up to force rich countries -- the world's largest greenhouse gas emitters -- to commit to reducing their emissions first, but hanging over the long political process has always been the thorny question of how and when to bring on board large developing countries such as Nigeria, India, Brazil, Mexico and China. US President George W. Bush cited their absence from any commitments as the reason for the US not ratifying Kyoto, and their rapidly rising energy use, particularly in transport use, threatens to undermine any cuts made by rich countries.

Talks will start this year with the largest countries, to try to persuade them to accept emission reductions in certain industrial sectors for the second round of Kyoto -- which starts in 2012. But in the meantime, both rich and poor countries are being encouraged to cut emissions with several "mechanisms" included in the Kyoto protocol, designed to help industrialized countries meet their goals.

One of the most ambitious is the Clean Development Mechanism (CDM). Only just up and running, this allows rich countries which are unable or not keen to cut emissions at home to invest in emission-reducing industrial projects in poor countries and then claim carbon credits for the greenhouse gas reductions achieved.

In what could become one of the largest and potentially most lucrative markets in the world, 240 million credits have already been claimed in 111 projects, but only two projects have so far been fully approved. In the next few months, a flood of new proposals will probably be launched as rich governments and companies see the potential to reduce emissions by investing in large but easily managed schemes.

The projects include many for extracting methane -- a major greenhouse gas -- from large landfill sites, tree plantation and projects that switch fuel use away from carbon-based fuels like coal and oil, to alternative sources.

However, CDM is proving controversial even before it has really got going. According to CDM Watch, a watchdog group which has monitored the scheme from the start, an offshore oil production works in South Vietnam and two coal mines in China are hoping to gain more than 17 million credits for capturing and using the methane released as part of their operations.

"A mechanism designed to promote sustainable development and climate protection should be reducing the number of coal and oil projects, not providing existing projects with a new revenue stream and diverting financing from renewable projects," said Ben Pearson of CDM Watch.

One of the first projects put up for approval was for a Brazilian company which claimed credits for not switching its pig iron operations in Minas Gerais, Brazil, from charcoal to coal. It also claimed credits for the carbon that it said would be temporarily stored if it planted 23,100 hectares of monoculture eucalyptus plantations to act as a "sink" to absorb carbon from the atmosphere.

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