The World Bank has defended its investment in chemical plants accused by green groups of raising production of greenhouse gas HFC-23 with the aim of incinerating it to get extra carbon offsets worth millions of dollars.
Approved under the Kyoto Protocol's $2.7 billion Clean Development Mechanism (CDM) scheme, 19 plants mainly in China and India are issued offsets by the UN for incinerating the refrigerant waste gas called hydrofluorocarbon-23.
But environmental groups including Germany's CDM Watch have accused some of the plants, in which the World Bank is an investor, of intentionally boosting refrigerant gas production just collect more offsets by destroying it. The CDM's executive board last week halted issuance of offsets to five projects, including two with World Bank funding, pending an investigation. "The analysis conducted by CDM Watch is based on a narrow and simplistic approach. Key parameters have been discarded, such as operating conditions and technical capacity," the World Bank said in an undated report on its website, adding there was not enough evidence to support the allegations.
But environmental activists were not convinced. "The World Bank is one of the largest investors in HFC-23 projects and clearly has vested interests in protecting its investments and ensuring a continuous flow of credits," said CDM Watch programme director Eva Filzmoser by email. "CDM Watch considered all parameters available and is confident that our analysis that some plant operators are gaming the system to extract huge profits from the CDM is correct."
A molecule of HFC-23 traps 11,700 times more heat than a molecule of CO2, making the 19 projects lucrative for their long list of investors, which UN data said include Goldman Sachs, Barclays and Deutsche Bank. The World Bank said on its website its Umbrella Carbon fund had contracted to buy from two contested Chinese HFC-23 projects some 130 million tonnes in offsets through 2013, which at current market rates are worth about 1.76 billion euros ($2.2 billion).