Sunday, July 3, 2011

Climate for Corruption

No this is not a post about those fiendishly clever climate change conspirators pulling a fast one on Claude or Ligna Coal Magnate.

The small Maldivan Newspaper Haveeru caught my eye, or rather my Google news feed, with the following interesting article about the potential for corruption in carbon markets and climate mitigation schemes.

Transparency Maldives launches Global Corruption Report on climate change

Haveeru Online, June 26.

MALE, June 28 (HNS) – Transparency Maldives Sunday launched the Global Corruption Report: Climate Change compiled by Transparency International.

Transparency International officially inaugurated the report, first of its kind to comprehensively explore major climate-related corruption risks, in April of this year at Dhaka, Bangladesh.

International watchdogs identify that improper or poor governance paves the way to corruption especially in the area of climate change governance, as huge amounts of money flow through new and untested financial markets and mechanisms.
The Global Corruption Report: Climate Change focuses on this issue along with making climate governance work, strategies for reducing carbon emissions, building effective adaptation to climate change, actions for sustainable climate governance and recommended actions for governments, businesses and civil societies.
The report stresses the importance of protecting from corruption the estimated US$700 billion budget allocated for mitigation efforts by 2020. It also highlights the inequality of the current processes for individuals and groups most directly affected by climate change.

Well not nearly as much as the US spends on oil wars but more than the ADF wastes (ie a lot).

“The quality of climate governance – the degree to which policy development and decisions are participatory, accountable, transparent, inclusive and responsive, and respect the rule of law – will determine how well it addresses inherent corruption risks,”

However, it is noted that organisations and personnel in developing countries most affected by climate change lack the skills and expertise needed to observe and track the projects undertaken.

By 2009, the registered number of observer organisations to the United Nations Framework Convention on Climate Change (UNFCCC) from the United Kingdom, Canada, and the United States reached more than 400 while from the developing countries, India, China and Brazil were only able to recruit just more than 10 organisations.

“According to a recent study in the North Africa region, however, almost 70 percent of the potential investors interviewed considered regulatory risk, including corruption, to be likely – and a serious impediment to investment,” it says.
“As a critical mechanism for mitigation, carbon markets need safeguards to reduce the risk of corruption, as well as to ensure their sustainability and capacity to reduce greenhouse gas emissions.”

Transparency International notes that adaptation to climate change requires large-scale infrastructure development like flood control systems in Bangladesh, which received a 2.4 score on the Corruption Perception Index (CPI) of 2010.
“None of the 20 countries most affected by climate change scored higher than 3.6 on the Corruption Perception Index,” the report stresses.

From the introductory page at Transparency International

Carbon markets: Managing public assets transparently

In international carbon trading schemes, individual governments can sell carbon credits when a country’s emissions are below their pollution targets. In an opaque market, the government mismanagement of credits can go unnoticed. Media investigations in Slovakia revealed that the government sold carbon credits at half their value to a company with links to officials in the ministry that made the sale. They made neither the contract nor the price public. The sale represented an estimated €75 million in lost revenue for the people of Slovakia.

What needs to be done

If climate governance is not prepared for corruption, corruption will undermine climate governance. The GCR does not just raise the alarm, it provides a risk map of ways to make climate change measures more effective.

Recommendations include:

  • All conferences and meetings where climate change targets are set should be open to the people they impact and transparent at the international and local levels
  • Experts monitoring and verifying projects must be independent and not paid from the budget of the project they are overseeing
  • All climate measures should have strong, well-resourced oversight bodies
  • Civil society must monitor government commitments to reduce emissions and be involved in development and oversight of national plans for mitigation and adaptation.


Global Corruption Report: Climate Change (full download)

Parts 2 & 3

Part 4

Part 5

Part 6

This report appears to have been released earlier and may be having regional releases.

Green schemes are 'wide open to major corruption'

The Independent, Sunday, 1 May 2011

Corruption is threatening global steps to combat climate change, a new report from Transparency International (TI) warned yesterday. Billions of pounds will be plundered and wasted, it says, unless stronger measures are introduced against embezzlement and misappropriation.

The organisation warns that 20 nations most vulnerable to climate change – where millions in grants and aid will be targeted – are judged to be among the most corrupt in the world – and stronger oversight is needed to ensure the funds are properly spent.

"Corruption holds nothing sacred, not even our planet's future," said Huguette Labelle

Although you don’t have to be corrupt to perceive the world through a cash register – greed will suffice.

"Failure to properly govern climate change measures now will not only lead to misallocated resources and fraudulent projects today, but also hurts future generations," …

"Where huge amounts of money flow through new and untested financial markets and mechanisms, there is a risk of corruption," [the report] says.

Carbon markets, the main financial tool for combating climate change, have already been hit by fraud, the report points out. In January, the European Union's carbon market was shut down after it was attacked by cyber-hackers. More than three million carbon credits were stolen from government and private company accounts.

The system has also been hit by repeated tax frauds. One scheme to meet all of Europe's power needs from concentrated solar power plants covering 1 per cent of the Sahara desert was undermined after experts said bureaucratic complexity and corruption in north Africa raised the risks and costs of investment there. After an investigation by Spanish officials, it was discovered that more than one in 10 of its solar parks was falsely registered as operational, despite making no contribution to the energy grid.

Illegal logging, an industry estimated to be worth more than $10bn a year, is fuelled by corrupted customs and other officials, the report says. Some countries have already claimed carbon credits for fictitious forest plantation projects. In Kenya, deforestation is exacerbated by corruption among under-resourced forest guards. TI estimates that in 1963 Kenya had about 10 per cent forest cover; by 2006, it was less than 2 per cent.

But its not just developing nations.

All countries are vulnerable: Britain is criticised for its failure to deal with so-called "greenwashing" marketing techniques used by companies to misrepresent how environmentally friendly their products are.

Also highlighted is America's failure to curb the influence of the "brown lobby" – the 2,000 registered oil, gas, coal and electricity lobbyists who spent an estimated $400m in 2009 compared with the green lobby's $22m.

And from Reuters – Africa,

Corruption must be cut to protect climate –report

Reuters, April 30 2011


Carbon markets, the main financial tool for combating climate change, continue to be shaken by fraudulent activity.

Over the past couple of years, the European Union's $134 billion emissions trading scheme has been blighted by the re-sale of used carbon offsets, hacking, theft and continuing value-added tax fraud. [ID:nLDE70J1KT]

The integrity of the U.N.'s Clean Development Mechanism (CDM), which encourages emissions cutting schemes in poor nations, was dented after some project developers were accused of exploiting the system. [ID:nLDE6AI1A3]

"Creative accounting can lead to the double counting of emissions by companies of their own reported mitigation efforts, (...), thus nullifying the environmental integrity of the emissions reductions," the report said.

Corruption risks also exist in political decision-making and climate financing and through the mismanagement of public funds, the report said.

We need only remember this fiasco…

Peter Garrett bears his cross alone in Parliament for the home insulation program, a well meant and effective measure poorly implemented and abused by shady businesses

                                                            … in a supposedly well regulated economy to see what flies are attracted to a shit load of money.


In a good move to avoid political interference in clean energy decisions in Australia,

New body to control clean energy grants

The Age, July 5, 2011

RESPONSIBILITY for handing out about $1 billion in clean energy grants will be taken out of government hands under a compromise with the Greens as part of a carbon price deal to be announced on Sunday.

The Age has learned that clean energy programs such as the $1.5 billion solar flagships program - designed to help build Australia's first large solar plants - will be removed from Energy Minister Martin Ferguson's control and run by an independent statutory body.

The new statutory body running clean energy grants is expected to take over responsibility for some of the $5 billion clean energy initiative announced in 2009, including the remaining $730 million in solar flagship funding.

And the West Australian also reports,

Rules to rein in carbon cowboys

July 2, 2011

Trade in international pollution permits will be strictly limited under the Gillard Government's climate change package to prevent so-called "carbon cowboys" from scamming the multibillion-dollar scheme.

In a significant departure from Labor's abandoned carbon pollution reduction scheme, international permit purchases are likely to be restricted to high quality sellers such as the European Union and the US State of California. The concern under the CPRS was that low-quality carbon abatement could be bought by Australian polluters from places such as equatorial Africa and South-East Asia through hard-to-verify and dubious projects such as tree plantations.

It is understood the Government agreed to "qualitative and quantitative controls" under its emissions trading scheme at the insistence of the Greens who opposed unlimited access to international permits under the CPRS.

Although Tony Abbott sounds increasingly like he is running for the Republican nomination in the US rather than as opposition leader of Australia, viz;

Opposition Leader Tony Abbott, who yesterday blasted the Government's planned carbon tax as "socialism masquerading as environmentalism"…


Ben said...

This is why a carbon tax is better than a emissions trading scheme. In a carbon tax, the government has a real incentive to find and squash this sort of thing, in an ETS, both the buyer of the carbon credits and the seller have an incentive to lie.

SP said...

TX Ben,
Then of course the issue becomes where does the money get invested and by whom?
Then pork barreling could become a problem. With both major parties adopting some form of the pike position for the coal industry...

With this form of investing transitioning into the serious money category transparency is key.