CDM Auditors Flunking Additionality

DNV and BV Cert both received an F
DNV and BV Cert both received an F
Misbehaving school children aren't the only ones in need of remedial classes this summer. Auditors (or DOEs) of CDM projects have been given abysmal scores in a new report by WWF and the Öko Institute for Applied Ecology.

The report states as its objective:

"To assess to what extent DOEs are fulfilling the requirements and expectations of the CDM Executive Board (EB)."

The rating system is also meant to provide greater transparency for project participants and the rest of the international community:

"This appears important in the light of concerns that have been raised about the performance of some DOEs."

The report directly cites one such concern, that of DNV. On a scale of A to F, DNV received an F (bad news for an auditor that validates more projects than any other), largely because the Norwegian firm was suspended for around three months last year by the UN-appointed executive board for breaking rules. Even without suspension, DNV would’ve received a D-rating. Perhaps the whistle-blowing of International Rivers and others are finally being heard.

The ratings survey also gave an F rating to Bureau Veritas, a Paris-based verification company. German auditors TUV-NORD and TUV-SUD got a D rating, while SGS was given an E. All of these companies had high rejection rates and a large percentage of their projects had to undergo review and corrections. All these companies are also major validators of hydropower projects.

At the last CDM Executive Board (EB) meeting, four hydropower projects in China were rejected for failing to prove additionality – the most important issue for the integrity of the mechanism. (22 hydro projects have been rejected or withdrawn so far.) According to one of the authors of the report, Lambert Schneider of the Öko Institute, another major problem is that auditors are "caught in an inherent conflict of interest. They should serve as the extended arm of the EB but are paid by the project developers." While many believe that the CDM can be improved, it will take a lot more than tweaking the rules to prevent offset fraud and storytelling.

Needless to say, the auditors are feeling the pressure. Data from UNEP Risoe showed 437 projects had their project application terminated or rejected by the auditors themselves at an early stage of development. Hydro accounted for the majority of projects that failed, with 82 projects failing to progress past the initial validation stage. Of these, 45 were in China.