Climate scams- Russian and Ukrainian carbon offsets damage EU carbon trading.

 According to a study published in the scientific journal Nature, millions have been made at the expense of the climate through carbon credits in Russia and Ukraine.[1] The authors of the study say that offsets created under the scheme “significantly undermined” efforts to tackle climate change. The UN scheme allowed countries like Russia and the Ukraine to create carbon credits, they were then able to sell these credit to the European Union’s Carbon market. European companies then bought these credits to avoid making their own more expensive emissions cuts.[2] However it appears that some Russia and Ukrainian firms manipulated their emissions to gain from the scheme.

Research by the West German Radio (WDR) and the Süddeutsche Zeitung (SZ) have shown that in this way, among others, the Russian company HaloPolymer made a profit of nearly $200 million.[3] HaloPolymer had initially and intentionally increased its greenhouse gas emissions substantially and then claimed millions of carbon credits for destroying them after an initial trading scheme went into effect.[4]  According to Lambert Schneider, an SEI associate and co-author of the study, this essentially amounted to “damaging the climate for profit”.[5]

Due to this supposed extreme efficiency, certification for more pollution could be sold to other industrialized countries without there actually being a reduction of climate-damaging greenhouse gases in Russia. These practices can only be carried out when public authorities and company heads look the other away when awarding projects. Criticism has been lobbied towards decisions made by Sberbank and the Ministry of Economic Development and Trade for not being transparent regarding these transactions. Sberbank handed out over 17.1 million carbon credit of which 75% went to HaloPolymer.[6]

In the Ukraine the carbon credit scheme was manipulated through the claim it was preventing ‘coal waste fires’. The study showed that these schemes that received carbon credits were not plausible.

An efficient implementation of the carbon trading scheme is therefore only possible with better oversight and regulation of the market. Given the recent loopholes of the Kyoto Protocol any possible follow up agreement at the Climate Change Conference in Paris (COP21) later this year must address these issues.  

According to James Wilde from the Carbon Trust, “If firms are to invest at scale driven by a price for carbon, they need to know that the schemes setting this price in future will be robust and survive for the lifetime of investments.”[7]

[1] Nature Climate Change: Perverse effects of carbon markets on HFC-23 and SF6 abatement projects in Russia, 24.08.2015, abgerufen am 25.08.2015 
[2] McGrath, M (2015): Carbon Credits undercut Climate Change Action, BBC News, 25 August. 
[3] Süddeutsche Zeitung: Gelddrucken im Treibhaus, 24.08.2015.
[4] Stockholm Environment Institute (2015): Carbon credit scheme linked to increased greenhouse gas production, 24 Aug.
[5] Darby, M (2015): Russia, Ukraine dodgy carbon offsets cost the climate, 24 Aug. Climate Change news. 
[6] The Moscow Times (2011): Carbon Credit Deals seeing controversy
[7] McGrath, M (2015): Carbon Credits undercut Climate Change Action, BBC News, 25 August.