December 2, 2008

U.N. Suspends One Of Its Largest Auditors of Clean Energy Projects

The U.N. climate change body recently suspended Norway’s DNV, one of the largest auditors of clean energy projects, for five “non-conformities” relating to its practices, Reuters reports (via Forbes).

The suspension means DNV cannot file for project registration or request credits under the Clean Development Mechanism (CDM) for its clients. The suspension is the most visible recognition to date of problems with the CDM.

According to U.N. data, CDM projects verified by DNV have received over one quarter of the more than 200 million credits issued to date, with over 900,000 in October.

Henrik Madsen, CEO of DNV, said the company has to “improve in some areas, but in our opinion a temporary suspension is a strong reaction by the CDM Executive Board.” Madsen said the company hopes to regain its accreditation within one to two months, depending on the schedule of the CDM Executive Board, and the formal procedures.

The CDM market has been plagued by criticisms. In October, Jorund Buen, director at Point Carbon, said some companies are forging documents in an attempt to gain certification under the CDM.

In addition, the World Bank has criticized CDM as being “expensive and time consuming” because it requires project managers to follow new rules regarding emission reduction technologies.

Earlier this year, U.N. regulators who administer the CDM questioned whether projects produce a real environmental benefit and raised concerns about some independent auditors of the projects.

Last summer, a CDM senior figure suggested there may be faults with up to 20 percent of the carbon credits already sold.

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