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New research shows that most of the money spent on carbon offsetting through the Clean Development Mechanism is lost to investors, brokers and other actors, rather than being spent on environmental projects. The CDM is a large scale UN programme through which projects such as wind farms and hydroelectric dams are built in poor countries. Buyers in rich countries fund the projects by paying for carbon credits, which are used to offset their carbon footprint. But most of the money that buyers spend on carbon offsets is lost to brokers, consultants, investors and other intermediaries. Carbon Retirement, a company that provides an alternative approach to carbon offsetting, conducted the first end-to-end review of the costs in the CDM process. The research, which drew on publicly available data, shows that for every £1 that an end buyer spends on carbon offsetting, typically 31p is spent on the project's set-up and maintenance costs. 34p goes to the broker that takes on the risk that the project may fail. The project's investors take 19p, with smaller amounts of money being distributed between organisations involved in brokering and auditing the carbon credits.
Some individuals and companies buy credits delivered through the CDM to offset their carbon footprint. For this type of purchase, more money is lost through costs incurred by retailers. For this reason, for each £1 spent by this type of buyer, only 28p goes to environmental project. The research methodology and full results are available at http://www.carbonretirement.com/project-offsetting-costs. These findings are particularly relevant given the imminent UN climate change negotiations at Copenhagen. The CDM is a key point in the discussions, and this research underlines the need for reform. Dan Lewer, a director at Carbon Retirement said: "this research shows that around 70p in every pound spent on offsetting through the CDM is lost in the complex supply chain. This is not good value for money. People and companies who are buying offsets should think carefully about where their money is going, and if there is a more efficient way of spending it."
Source: Realwire
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