BANGALORE, Sep 8, 2006 (IPS) - India is leading developing nations in carbon credits, expecting over 2.27 billion US dollars by selling certified emissions reduction units (CER) from approximately 300 Clean Development Mechanism (CDM) projects, according to the country's ministry of environment and forests.

But some CDM consultants cite low CER rates, non-enforcement of rich nations' renewable energy investment commitments in poor nations, lack of transparency in the CDM quantification process and several other irregularities in the CDM market.

The CDM, one of three mechanisms of the Kyoto Protocol, allows Annex I or industrialized nations to buy emissions reduction units, called CERs, from non- Annex developing countries.

Annex I rich nations can then count these credits towards their greenhouse gas emissions targets. The principle is to help rich nations reduce the costs of meeting their reduction targets by 2012 whilst mitigating climate change and helping developing nations.

There are six greenhouse gases (GHGs), carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. One tonne of carbon dioxide (CO2), or its equivalent of the other five gases, makes one CER.

As per the CDM rules, the emissions reduction should benefit sustainable development, help alleviate poverty, create clean technology in a carbon-less economy and produce local benefits among others.

But not a single one of India's 252 CDM projects, as per the United Nations Environment Programme, deals with afforestation, agriculture or even rural development. The majority of that number are energy-efficiency projects from industries.

Since renewable energy technologies are given tax rebates as an incentive by the Indian government, industry is now quick to catch on to the double benefit of harnessing a CDM deal.

With a history of renewable energy ventures falling by the wayside once this rebate has been used, the CDM's real contribution to development in India is a debatable one. Awareness on CDM in India also continues to remains poor.

CDM consultant S C Rajshekar of the Bangalore-based Symbiotic Research Associates has other worries. ‘'The Protocol says Annex I countries are to invest capital in renewable energy technology to be able to gain their CO2 offsets. But this is neither happening, nor is there any mechanism to enforce this,'' he says.

Further, the CDM was to be between Annex I and developing country parties. But Annex I governments with their clout have now entered the scene, making small industries in developing countries unable to negotiate their own terms or prices with giant partners.

Monish Das of Amodya Solutions, which helps Indian industry find CER buyers, believes the market will allow CER rates to find its own level, but others like Rajshekar say this is a ‘charitable' way of seeing the current situation.

"We are selling off our assets without pinning a real value on our CO2 tonnes, and checking to see whether our sustainable development is real or not", he says.

"Rich nations are holding the power and dictating terms to developing nations. I see a clear parallel between the WTO and the CDM process evolving", comments Rajshekar.

But environment secretary Prodipto Ghosh does not agree to the apprehensions. "Rates are market given. Given that there are large sellers like Brazil and China in the field, I do not believe the government can intervene successfully,'' he said in an interview with IPS.

Ghosh does agree though that small community and rural development projects are being left out, unable to sell their small numbers of carbon offsets. "We are now in the process of training various departments on ‘bundling' small projects together. Once that is done, we will move to raising skills and awareness amongst those in this sector," the top bureaucrat said.

Another phenomenon in the market is an increasing number of ‘Type 2' CDM deals between parties who do not fall under targets. The scenario in type 2 deals is fraught with irregularities and poor execution which, even the WB has expressed concern over.

"The voluntary market lacks an internationally agreed, standardized protocol for engagement, leaving investors, buyers, project developers, verifiers and others to proceed on an ad hoc basis", writes Mahua Acharya of the World Bank's Carbon Finance Unit.

Britain's ‘Sunday Telegraph' reported on Apr. 30 that the rock band Cold Play had given 33,000 pounds (62,000 dollars) towards offsetting production damages from its second album ‘A Rush of Blood to the Head', to the ‘Carbon Neutral' company.

Carbon Neutral had contracted Women for Sustainable Development (WSSD) in Gudibanda, in Karnataka state to plant 10,000 mango trees in the villages. Four years later, village women complain they received neither sufficient saplings nor money and had no water in their arid fields anyway.

WSSD's coordinator Anandi Sharan Miele refused to comment on the report when queried by IPS. (END)