Brussels, 03/05/2011 (Agence Europe) - The NGO Transparency International (TI) has just published a global report on the threat of corruption in the funding process of the fight against climate change. The report slams inter alia the European Union's Emissions Trading Scheme (EU ETS). The report highlights that the carbon market, as developed by the EU has built-in risks of over-allocation of carbon permits resulting from undue influence from vested interests. The consequence will be a fall in the price of permits which would discourage investment by business in clean energy and could lead to the collapse of the market.
The TI report illustrates the risks, citing, for example, Slovakia which, in 2008, held substantial reserve of permits thanks to a 32% reduction in its carbon emissions compared with levels in 1990, the reference year set by the Kyoto Protocol. The sale of these permits, carried out without public auction, provoked wide-ranging debate, with the Slovakian media and opposition demonstrating later that the quotas were sold for probably half what they were worth to a newly created business.
Another example provided in the report is the allocation of permits during the creation of the EU ETS. In this phase, between 2005 and 2012, each EU member state was to allocate emission permits according to the needs of its industrial sectors. The European Commission was then responsible for approving the allocation. In 2007, the Commission flagged up that Hungary had over-allocated permits as a result of using a defective method of calculating the carbon emissions of some industries and decided to reduce the emissions allowed that country by 12%. This led the Hungarian government to allot the permits anew. Still, according to TI, the process was no less opaque than the preceding one, with emissions being allocated to some with no justification by precise data.
The opaqueness of the transactions and the lack of public data may also be seen as ingredients that could lead to corruption in the emissions trading system. According to Huguette Labelle, Chair of TI, the mechanisms used in tackling climate change must above all be “enhanced by transparency and accountability” and have greater public participation. (J.K./transl.rt)