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July 07, 2011

Suspending Carbon Credits for Coal Plants

India Coal PlantsIn a note published yesterday (pdf), a UN panel of technical experts called to immediately suspend coal projects under the Clean Development Mechanisms (CDM) after an analysis revealed that the current rules could lead to millions of artificial carbon credits, as coal and other carbon intensive projects are actually rewarded despite their obvious contribution to global climate change. The CDM Executive Board is expected to make a decision at its upcoming meeting beginning July 11th in Marrakesh, Morocco.

The very idea of giving carbon credits to coal plants is absurd, and yet projects like the 4,000 MW Sasan coal-fired power plant in India, which will produce an astounding 26-27 million tons of carbon each year, won valuable credits for supposedly "reducing" carbon pollution.

So how do the proponents of dirty, coal power get away with it? They argue that coal plants using modern efficiency technology should be rewarded for producing less carbon than less efficient plants, and that without carbon credits they could not afford to install this technology. This, of course, if far from the truth.

First, the coal plants applying for carbon credits are exploiting faults in the CDM methodology. The baseline efficiency that these new plants improve on is over 10 years old, and woefully out of date. Moreover, the UN panel found issues in the surveys that established this baseline. As a result, emission reductions have been overstated by 25 to 50 percent. "In the worst case, the implementation of the project that claims emissions reductions, in fact, might have caused an emissions increase."

Second, the supposedly new technology that would be cost prohibitive without carbon credits is actually already mainstream technology. The dramatic rise in the price of coal provides a strong incentive for coal producers to use efficient technology. With over 500 supercritical units in operation, representing more than 20 percent of units installed worldwide, supercritical coal technology is already the technology of choice. In other words, not only is the baseline methodology flawed, but the technology would likely be installed without carbon credits.

The last argument, and really the only argument we should need, is that awarding carbon credits to coal only perpetuates its use. Coal is not part of a sustainable future. Financial support for the world's most carbon intensive fuel fundamentally undermines the CDM's climate mitigation goals. In addition, coal causes enormous environmental and social damage during mining, locks in decades of new carbon emissions, and leaves local communities to deal with a myriad of toxic air and water pollutants. By giving carbon credits to coal projects, the CDM could waste hundreds of millions of dollars on fossil fuel projects at a time when the scarce resources available should go to renewable energy sources that can help build a sustainable future.

Even the UN's own technical body is calling these credits into question. It is vital that the CDM Executive Board suspend the current methodology that allows dirty coal plants to win carbon credits. With four projects already approved, and 32 more projects in the process of applying, the hundreds of millions of artificial credits at stake -- worth billions of dollars in windfall profits -- threaten the very integrity of the CDM.

(Photo credit: Nicole Ghio. Coal plants in Singrauli, India.)

-- Nicole Ghio

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