Major publicly traded U.S. corporations, including Dow Chemical, ConocoPhillips, Chevron and Cabot Corporation, have secured multi-million-dollar dubious carbon credits to compensate for their greenhouse gas emissions in Europe, as revealed in this investigative report.
Dow scored the largest purchase volumes. The Michigan-headquartered giant owns dozens of CO2-venting plants producing plastics and chemicals in Germany, the Netherlands, Belgium, Spain and Poland. Altogether, those plants ranked 21st among the top 100 European buyers of certified emissions reduction certificates (CERs) that originated from questionable projects.
Power and processing plants operating in the European Union (EU), including subsidiaries of U.S. companies, are required to reduce their greenhouse gas emissions – which cause global warming – by switching to cleaner technologies or offsetting their emissions through the purchase of CERs.
For companies it is cheaper to offset their emissions than to actually reduce them. And due to weaknesses in European rules, they are able to do so.
CERs are issued by the Clean Development Mechanism (CDM) of the Kyoto Protocol, the only internationally binding agreement that obliges industrialised signatory countries to reduce their greenhouse gas emissions.
Each CER is equivalent to a ton of carbon dioxide that has not been released into the atmosphere. They are issued for projects that have been approved and certified once it is determined that emissions have genuinely been reduced. They can then be converted to tradable instruments, subject to the laws of supply and demand.
The CDM was originally designed by the United Nations for industrialised countries to subsidise climate change mitigation in developing countries. But it ended up creating a perverse incentive to maximise profits for a few industrial gas manufacturers, mostly based in China and India, which obtained 19 of these projects.
Jiangsu Meilan Chemical in China and Navin Fluorine International in India, among others, committed to capture and destroy HFC-23, an unwanted byproduct of the production of HFCF-22 (hydrochlorofluorocarbon), a refrigerant banned in the European Union and United States because it depletes the ozone layer.
HCFC-22 is also a “super greenhouse gas” that is 1,810 times more potent than carbon dioxide, while its byproduct HFC-23 is 11,700 times more harmful.
But the Chinese and Indian companies produced far more gas – and thus received far more CERs to sell – than was necessary, according to an investigation report by the CDM methodology experts panel in 2010.
In June 2010, two environmental NGOs – CDM Watch, based in Bonn, and the Environmental Investigation Agency (EIA), based in London – discovered this gross misuse of the CDM and supplied proof of it.
“HFC-23 credits don’t represent real greenhouse gas reductions,” explained Diego Martinez-Schuett of CDM Watch via email. “Buyers then used those false reductions as permits to pollute further in Europe.”