Climate activists say businesses are buying their way out of costly greenhouse gas cuts

By Gretchen Mahan, AP
Thursday, March 11, 2010

Group: polluters use offsets to avoid carbon cuts

BRUSSELS — Major European polluters are buying their way out of making big cuts to greenhouse gas emissions by purchasing carbon offsets that pay for environmental programs in developing nations, a nonprofit group said Friday.

To avoid the high cost of becoming greener, power companies and steel makers are using offsets to meet emissions-reduction requirements, and thus undermining the EU’s cap-and-trade program that would otherwise punish them financially for not cleaning up their operations, the group Sandbag said.

Businesses and regulators should be “striving for the highest environmental standards, rather than the minimum level of compliance,” said the British-based nonprofit organization, which campaigns for stricter cap-and-trade rules to require companies to make bigger cuts.

Sandbag says European polluters are becoming heavily dependent on buying U.N.-monitored offsets, which pay for solar panels in India or environmental cleanup in China, in exchange for canceling out part of the company’s emissions. As a result, the company can avoid buying pollution permits from the EU’s cap-and-trade program.

Spanish energy company Endesa SA bought offsets worth a quarter of its total emissions, Sandbag said, while German steel maker ThyssenKrupp AG offset 29.6 percent of its emissions and Italian power firm Enel SpA purchased offsets for 12.4 percent of its carbon output.

The group said its data came from a European Union database, but it did not say how much money the companies had spent on the offsets.

Sandbag urged the EU executive to tighten its cap-and-trade program, saying more needs to be done to make sure offsets are not a “replacement for domestic action.”

Offsets are supposed to help pay for projects in poor nations that would help them reduce future carbon emissions.

But Sandbag says most of the offset money from wealthy European companies bypasses needy African nations and goes to wealthier, developing countries such as China, India and Brazil.

China dominates the offset scene, with some 41 percent of all projects. India has 31 percent, South Korea has 15 percent and Brazil 8 percent.

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