Carbon Corruption

Iran, North Korea, Sudan rack up millions by trading U.N. carbon credits


The U.N. is funneling millions of dollars worth of tradable carbon credits to corrupt nations worldwide, including Iran, North Korea, Sudan, and Uzbekistan in an attempt to encourage clean energy projects in the developing world.

The U.N. Clean Development Mechanism (CDM) is defined in Article 12 of the Kyoto Protocol. Western European countries fund energy projects in the developing world in order to obtain Certified Emission Reduction credits (CERs), tradable credits that enable Europeans to count foreign emission reductions towards their own domestic emission reduction targets.

“The CDM started from a page and a half in the Kyoto Protocol,” said David Abbass, a spokesperson for the U.N. Framework Convention on Climate Change. “In the beginning they thought there would be maybe 600 projects, but now there are over 4,000 projects.”

Iran, Uzbekistan, Sudan, and North Korea are among the more than 70 countries currently hosting CDM projects.

Iran, with 16 separate CDM projects, brings in around 4.8 million CERs, worth about $26 million, every year, despite numerous U.N. sanctions against the Islamic Republic.

Uzbekistan, dominated for the last two decades by the autocratic Islam Karimov, hosts 20 different CDM projects, with a combined annual value of over 7.5 million CERs, or roughly $40 million.

Sudan, whose president Omar Hassan al-Bashir came to power via military coup over 20 years ago and is wanted by the International Criminal Court on charges of genocide, crimes against humanity, and war crimes in Darfur, is on the receiving end of two different CDM projects, with a combined annual value of over 180,000 CERs, or almost $1 million.

North Korea is hosting seven hydroelectric dams, which may generate over $1 million in CERs annually.

North Korea, Sudan, and Uzbekistan are among the 10 most corrupt nations worldwide, according to Transparency International’s 2011 Corruption Perceptions Index.

It is unsurprising that North Korea is using U.N. money to develop its own infrastructure, said Claudia Rosett, journalist-in-residence at the Foundation for Defense of Democracies.

“One of the first questions with any U.N. program is, ‘Who is overseeing this?’” said Rosett. “Very often no one is.”

The worldwide expansion of the CDM has been accompanied by “troubling stories in various countries,” said Abbass. “When you have over 4,000 projects, you’ll have some projects in areas in dispute.”

“We learn by doing,” he said. “We’re fixing as we go.”

CDM support is open to any country with the appropriate bureaucratic machinery in place. Abbass maintained that the CDM is not concerned with human rights issues and that the Kyoto Protocol merely set up the system—individual projects “come from interest in the private sector.”

The program was born of European self-righteousness, said Chris Horner, a senior fellow at the Competitive Enterprise Institute. European governments have staked their reputations on environmental issues, but cannot meet emission reduction targets on their own, he said.

Europeans therefore “buy phony reductions” through the CDM, said Horner.

“Europeans basically say to the developing world, ‘I’ll pay you not to treat this byproduct as a waste product,’” said Horner, referring to numerous CDM projects that focus on reducing perceived waste in the developing world, from natural gas flaring to the release of methane from farm animals.

More than 83 percent of CDM projects are based in Asia, while Africa and the Caribbean account for a tiny fraction of CDM projects, according to U.N.F.C.C.C. data.

CDM projects are concentrated in Asia due to the disastrous environmental effects of communism and the bureaucratic savvy of China, experts say.

“Communism created the most intensely wasteful society the world has ever seen,” said Horner, explaining why former Soviet states in Central Asia such as Uzbekistan and Turkmenistan receive substantial support from the CDM.

The Chinese government, an aggressive host for CDM projects, has manipulated the system, going so far as to re-open defunct factories in order to get Europeans to pay them to close them again.

The Chinese are adept at twisting the “mandated inefficiency” of CDM projects to their own benefit, said Horner.

Haiti has set up the bureaucratic mechanisms required to host CDM projects, but is currently sponsoring zero projects.

Dorine Jean-Paul, an energy specialist at Haiti’s Ministry of Environment, decried a lack of support from the U.N.

“I believe the U.N. is not helping the countries that need it the most,” said Jean-Paul.  “Besides some training sessions that are organized with the U.N. support in the [Latin American and Caribbean] region, we don’t get assistance or funds for a specific and national identified need.”

Abbass acknowledged that CDM projects are concentrated in Asia, and said the under-representation of Africa and the Caribbean might be addressed at the upcoming Rio +20 conference.

But he also noted that any substantial changes to the CDM could be a long time coming.