CDM Watch

Scrutinizing Carbon Offsets

Newsletter #2 / April 2011

CDM Watch News for Civil Society and

Policy Makers #2 April 2011
As the CDM Executive Board is meeting
in Bangkok from 11-15 April 2011 for their
second meeting this year, we are taking
the opportunity to bring another per-
spective into the discussions: the views
of civil society on specific CDM projects
and wider policy developments.

This edition of the CDM Watch Newsletter contains three eye witness reports. All
three of them reveal shocking shortcomings of the CDM which need to be addressed
on the very project level but also on a much more generic policy level in order to avoid
that any of the problems replicate in the future.

The first project we are looking at is a biogas project in Honduras that is linked to seri-
ous human rights violations. If registered under the CDM, EDF trading would receive
carbon credits with the authorization of the UK government for emission reductions
obtained despite killings related to land disputes over the project site and closely
linked to the project developers.

The second project we are examining is a large hydro power project in Western Panama.
The validation has recommended registration despite massive local resistance against
the project. A dedicated Panamanian human rights activist gives a firsthand account of
his experience with how the application of the Barro Blanco is handled in reality.

Thirdly, we look again at a biogas project, the first registered project in Tanzania. So
far, CDM biogas projects have been praised as the most sustainable projects im-
plemented under the CDM. But both the Aguan as well as the Mtoni project tell a
different story.

On the basis of the input we receive from our CDM Watch Network from the ground,
we have formulated input to international policy developments. In this newsletter
you will also find a brief summary of our submissions responding to the following
calls for public input 1) means for direct communication between the CDM Executive
Board and relevant stakeholder groups; 2) CDM appeals procedure; 3) the issue of
materiality in the CDM; and 4) the inclusion of reforestation of lands with forest in
exhaustion as A/R CDM project activities.

Finally we are giving some insight into lessons learnt in two fruitful workshops which
we organized in Mesoamerica in February 2011 to empower local communities.

Happy reading.

PS: please note that we are recruiting!

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Table of contents

1. Human Rights Violations in Honduras linked to Aguan Biogas Project continue

2. Massive Protests against Barro Blanco Hydropower Project in Panama
3. Mtoni Dumpside CDM Project in Tanzania putting livelihoods
of farmers and wastepickers at risk
4. CDM Watch UNFCCC submissions
a. Areas and means for direct communication between
the CDM EB and relevant stakeholder groups
b. CDM appeals procedure
c. The issue of materiality in the CDM
d. Inclusion of reforestation of lands with forest in
exhaustion as A/R CDM project activities
5. Civil society’s view on the CDM in Mesoamerica
6. CDM Watch is recruiting

1. Human Rights Violations in Honduras linked to

Aguan Biogas Project continue
Two months on from our first report1 about the Aguan biogas project2 in Honduras
which is currently seeking registration under the CDM, human rights violations
continue.

See a video documentary (9.45 minutes) of March 2011 giving a good but shocking
overview about how the current situation in Honduras is linked to the protests in the
Aguan valley and the CDM project in question – please note that the video contains
disturbing images.

Also a second CDM application by the same project participants - Exportadora del
Atlantico and EDF Trading, authorised by the UK government - is awaiting validation.
Both projects would, if approved, generate around 23,000 and 25,500 CERs annually,
equaling to about €276,000 and €306,000 respectively for the two projects.
The company behind the project, Grupo Dinant subsidiary Exportadora del Atlantico,
is implicated in assassinations and other serious human rights abuses in Honduras
and there are grave concerns that additional funding through the CDM could be used
to pay for more armed paramilitaries.

1 http://www.cdm-watch.org/?p=1662
2 Project 3197 : Aguan biogas recovery from Palm Oil Mill Effluent (POME) ponds and biogas utilisa-
tion - Exportadora del Atlántico, Aguan/Honduras http://cdm.unfccc.int/Projects/DB/TUEV-SU-
ED1260202521.42/view
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The applications were authorised by the UK government and would allow the energy
company EDF Trading to buy carbon offsets from Grupo Dinant in respect of biogas
capture at two palm oil mills.

A recent report by the Inter-American Commission on Human Rights in Honduras

confirms that 23 people have been killed between January 2010 and February 2011 in
land conflicts involving Grupo Dinant. The violence and assassinations have invol-
ved paramilitaries armed by Grupo Dinant‘s owner, Miguel Facussee, some of whom
are reported to be hired death squads responsible for large numbers of murders in
Colombia, as well as the military and police. If CDM funding is granted, this will
generate more profits for a company likely to spend them on more paramilitaries and
more oppression of peasant communities, many of which are trying to reclaim land to
which they are legally entitled.

See a recent report by Giorgio Trucchi (translation V.C.) published on 26 March 2011.

The massacre must not be supported by the CDM

Current CDM rules rely on the CDM host country government to assess whether a
project contributes to sustainable development. This places the assessment of susta-
inable development in the hands of governments that would like to see more invest-
ment in their respective countries. As a consequence, no CDM project has ever been
rejected on the basis that it did not contribute to sustainable development.

Allegations of serious human rights abuses related to CDM project applications in

Honduras and Panama have caused an outcry amongst civil society organisations and
widespread dismay that human rights are not being taken seriously under the CDM.

This issue clearly needs to be addressed at the next climate change conference in
Durban, South Africa (COP-17). However, in the meantime the CDM Executive Board
must re-assess their mandate and find ways of preventing projects that are linked to
any sort of violations of international laws from acquiring eligibility under the CDM. A
stringent requirement for DOEs to check conformity with international human rights
law when validating the project would be an option. Another more efficient option
would be to link remedies to the monitoring periods of a given project. The detection
of non-conformities, e.g. incidents that involve human rights violations should lead
to the project being stripped of CDM eligibility or at the very least lead to the suspen-
sion of issuance. This would only be a logical move given that responsible investor
would not be interested in buying carbon credits from projects that do not comply
with minimum international standards.

Perspectives GmbH which initially drafted the PDD has already publicly distanced
itself from the project. Civil society representatives are now calling on other Parties
involved to follow this example and to take a stand against human rights abuses in
Honduras, especially in the context of the CDM.

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On 4th February, an Open Letter signed by 76 organisations was sent to the UK‘s
Department of Energy and Climate Change (DECC), calling on them to withdraw their
authorisation and thus to stop the project from going ahead.

Yet after more than two months, neither the UK Government nor EDF Trading has
responded to these grave concerns. Also a letter sent to the CDM Executive Board on
4 January remains without a response.

The CDM Executive Board must take this issue seriously. If there are no rules in place
that allow for the rejection of the project based on human rights abuses, it is time to
change this now.

2. Massive Protests against Barro Blanco Hydropower

Project in Panama
Guest article by Oscar Soganda-

»
res, Asociacion Ambientalista de
Chiriqui (ASAMCHI) My t-shirt still smells from the firewood of the protest camp, where I spent several
nights accompanying their cause. The beginning of the day would start with group
prayers in Ngobe and in Spanish requesting the help from the Almighty in this
unequal struggle3. The M10 (April 10 Movement for the Defense of the Tabasará)
which gathers all the affected communities on the banks of the Tabasará River (which
is sacred to the Ngobe Bugle Indians) protest group have already 12 days camped
outside of the entrance of the Barro Blanco Dam project site, thereby effectively
blocking the entrance of additional machinery to the project site. The two remaining
machines have long run dry of fuel and are unable to continue with their tasks of
devastation of the Tabasará riverbed4.

The protesters have nothing to lose, they are even willing to give up their lives if need
be I was told. Just as one of the leaders told me” I am losing 5 hectares of my best
farming land to the project so I have nothing to lose”. They even dared to close one
of the lanes of the Pan-American hwy. (because according to Panamanian legislation
closing up one lane is still considered „peaceful protest“) but also threatening to
entirely block the entire highway5. The police immediately came to the scene to warn
then, but after two hours they returned to their designated point. They were even ad-
vised against this by their fellow indigenous leaders, that it’s better to maintain their
point at the entrance as a peaceful struggle than lose everything in the desperation.

The trucks and cars would honk and wave at us in support of our actions, where in
a tiny province as Chiriquí of less than 6000 square kilometers there are more than
120 projects in different stages of development, 160 in the entire country of Panama –
more than the entire Central America isthmus put together. Most of them “run of the
river” type plants which threaten to „desertify“ the province. The fact is that Chiriquí

3 http://chiriquinatural.blogspot.com/2011_04_03_archive.html
4 P4060011(2) Vista de pala mecanica y retroexcavadora que devastaban el Rio Tabasara en dias pasados
http://www.box.net/shared/ioaqoy1ns7 and http://chiriquinatural.blogspot.com/2011/03/devastacion-
en-el-tabasara.html
5 http://74.52.113.70/periodico/edicion-actual/hoy-interna.php?r=hoypan&story_id=1034873
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is one of the places of the world in danger of desertification due to soil mismanage-
ment attributed to agribusiness, but now due to this present surge of hydroelectric
plants which dot their river basins6. On the other extreme are the full scale dams
with reservoirs such as Fortuna, Bayano and now Barro Blanco which will effectively
flood hundreds of hectares, and threaten to flood thousands of hectares more in
the future.

Privatization of energy sector cashes in on energy surplus from hydro dams

There was a time when Panama had more than enough

energy for its needs and we only had Bayano, Fortuna and
Estrella los Valles, and we still had an energy surplus (and we
didn‘t have the energy saving light bulbs in our households in
that time either). That was in 1995, suddenly the government
under the Balladares administration (presently under legal
investigation) started to „privatize“ all the government
generators and „globalize“ our economy. The Bayano went
to AES, so did Estrella Los Valles and Fortuna has gone through a string of different
hands and is finally with Enel.

Then in 2001 Vicente Fox president of Mexico, a ranch owner and Coca Cola executive
(where he sported his trademark Stetson hat, but perhaps all he needed then were to
bring his six-shooters with him) comes to Panama and announces the Plan, Puebla
Panama to enable Panama to „export“ energy to Central America and Mexico, but
actually to balance out his own energy deficit gap with the USA, due to his recently
signed NAFTA Treaty with his northern partner and the Sistema Integrado SIEPAC
transmission line7 was built which crosses Central America into Mexico and „sudden-
ly“ Panama‘s energy needs become insufficient.

Panama’s artificial “growing energy needs”

While the official picture is portrayed to the local citizens that all these projects are
due to Panama‘s „growing needs“, which the officials don‘t even themselves believe.
Another added incentive in this mad rush for more hydroelectric projects is the added
bonus of CERs or carbon credits, like the „icing“ on the cake. The margin of profit on
these projects has been so great where 1 kw/hr of water generated electricity is sold
slightly lower than fossil fuel generators ($0.18 fuel, $0.12 - $0.17 hydro and where
1 MW =$1million), with the additional feature that the „fuel“ employed --water is
free, and that the CERs themselves have been spent on simply “public relations” for
their project. Everyone is starting to learn how the CERs and the CDM projects have
been mismanaged in the world, where highly questionable projects such as mono
cultures where primary forests are chopped down to make way for oil palm farms, or
these very hydroelectric projects which devastate thousands of hectares of natural
gallery forests, some with endemic species found nowhere else in the world, disrupt
ecosystems and displace thousands of perfectly happy river dwellers in the face of a

6 NATIONAL REPORT ON DESERTIC CONDITIONS AND DROUGHT REPUBLIC OF PANAMA

http://www.unccd.int/cop/reports/lac/national/2000/panama-summary-eng.pdf
7 http://www.iamericas.org/presentations/energy/Honduras_2010/Karla%20Hernandez.pdf
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highly questionable „progress for a few“ and are financed by these carbon indulging
companies who get their sins cleansed by „investing“ in these “carbon credits”.

Agreements to stop hydroelectric projects with Ngobe Bugle Comarca breached

The humble Ngobe Indians are portrayed in the press as „savages“, “ignorant“, „ra-
dicals“, „backward“ and all other kinds of derogatory labels, especially by the special
interest owned press, whose owners happen to be partners of the many hydroelectric
ventures, perhaps orchestrating eventually and unfortunately, unjust and criminal
repression against these humble dwellers that have everything to lose and nothing
to gain with these greedy business projects. There the airwaves are taken over by
the „technocrats“ who worship hydroelectric energy as the panacea for all evils in
the country, notwithstanding all the names which ring a bell when we refer to the 50
most wealthy families in Panama. The Gonzalez- Revilla, Eleta, Btesh, Virzi, among
others. The mining episode has been a similar case where names such as Pfeiffer,
ex-governor of Coclé, who happened to „borrow“ from the government funds to pay
off his own partnership in the Petaquilla Gold Venture. Unfortunately this country is
full of examples of corruption and „juega vivo“ -- or „play smart“ attitude. But who’s
general opposition and protests mainly by the Ngobe Bugle people once again to
this highly unpopular mining code forced the government to backtrack and repeal
its highly controversial law 8. The agreements with the govt. included an immediate
stop to the hydroelectric projects which would affect the Ngobe Bugle Comarca or
indigenous Reserve, such as the highly controversial Barro Blanco Project. But now
the govt. wants to backtrack on its hydroelectric concessions part and is delaying the
issue. Nonetheless the Barro Blanco project has proceeded days after the massive
mining code protests ended to swiftly commence its controversial project.
“All the odds are stacked against
the communities” How could it feel if suddenly our protest groups were helped by the A-Team who could
champion our cause, where we are faced with all the odds stacked up against us?
Actually today the government (which in fact considers itself the government of the
“entrepreneurs”) has enacted the first initial debate in their party controlled legislati-
ve assembly or parliament where now companies participating in projects of “social
interests” (to include hydroelectric projects) will not even have to participate in bids
and could be “directly contracted” by the government18. The consultation periods
will be thereby shortened, the participation of the public will be further reduced. All
the odds are stacked against the communities. See La Prensa 6 April 2011 Economy
Section9.

The contested past of Barro Blanco

Now going into details of this controversial project which is none other than the Taba-
sará 1 and 2 projects (the first one would produce 220MW) originally presented in the
end of the 1970’s and start of the 1980’s which was to provide energy for the ominous
Cerro Colorado mining project to mine copper and gold, since there were not enough

8 Reformas apuntan a hidroeléctricas La Prensa 6 april 2011

http://mensual.prensa.com/mensual/contenido/2011/04/06/hoy/panorama/2557117.asp
9 Reformas reducen plazo de impugnación La Prensa 6 april 2011
http://mensual.prensa.com/mensual/contenido/2011/04/06/hoy/Negocios/2556253.asp
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power plants to provide the huge energy demand for such gargantuan project. But
General Omar Torrijos after the continuous protests by the Panamanian people inclu-
ding the Ngobe indigenous population known then as Guaymi, and consultation with
his environmental advisors who warned against disastrous ecological consequen-
ces10 (Torrijos used to say he who consults most, errs the least) in a solemn pledge
before the indigenous Ngobe leaders cancelled the mining projects, as well as both
the Tabasará hydroelectric projects -- if this were the wish of the indigenous commu-
nity. It was not long after General Omar Torrijos perished in a mysterious airplane
crash in 1981.

The front line of defense in the struggle against this excessive proliferation of the hydro-
electric projects, which obey no common sense except the market economy – is the Bar-
ro Blanco project, long rejected by the community in all its editions. It is the updated
version of the Tabasará 1 of the 1980’s with 220MW output and Tabasará 1 of the 1990’s
and 2000 with its toned down 46MW11. This time Barro Blanco had initially projected
19MW but revised it to 28.8 MW in order to compete for carbon credits or CERs.

But raising its dam level in the future from 103mts, (long after the CER’s are dis-
bursed) to 160mts will enable it to produce the massive amount of 220MW; flooding
6000 hectares (raising it to 200mts will flood 10,000 hectares and enable it to produ-
ce even further amounts of energy). That is why the community should not allow this
sinister project to make their foothold. Once Barro Blanco (or Tabasara 1 “revised”
version) is in place Tabasará 2 whose owners are wealthy and dubious businessmen
as Gabriel Btesh and Luis “Pipo” Virzi (the latter incidentally relative to President
Martinelli) will kick in.12 13 There simply will be no stop to this.

Besides the harm done to the flooding of hundreds of hectares of indigenous and
peasant land bordering the Tabasará River, the loss of an exuberant pocket of gallery
forest of more than 50-100 hectares (contrary to what the EIA or the PDD indicate)
with many centennial trees which perform a highly important CO2 function and which
will inexorably be logged down (how could a project as destructive as this compete
for carbon credits in the first place?), where endemic species of wildlife which are
in extreme danger of extinction such as the Tabasará Blue Rain frog “craugastor
tabasarae”14 which inhabit precisely these threatened gallery rain forests, and
nowhere else in the world. The loss and extinction in these waters of diadromous mi-
gratory fish15, from the word “dia” in latin or “between” which complete their life cy-
cles in the two habitats the marine estuaries and the fresh water Tabasará River head
waters, and which form an essential part of the Ngobe diet. These will inevitably be
blocked by the physical presence of the dam (not considering the future existence of

10 http://chiriquinatural.blogspot.com/2011/01/de-codemin-tiomin-cerro-colorado-un.html
11 Tabasara I EIA Extract http://www.box.net/shared/ir5u5hml6b
12 Angry reception for dam surveyors www.thepanamanews.com/pn/v_14/issue_13/economy_08.html
13 http://www.kaosenlared.net/noticia/panama-mafiocracia-gabriel-btesh-socio-amigo-narcotraficantes-
tambien-http://www.kaosenlared.net/noticia/panama-mafiocracia-gabriel-btesh-socio-amigo-narco-
traficantes-tambien-
14 http://animal.discovery.com/tv/vanishing-frogs/pictures/tabasara-rain-frog.htm
15 Fish migration http://en.wikipedia.org/wiki/Fish_migration

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the Tabasará 2 project) or will be sliced to pieces by the turbine blades16. Many other
river species accustomed to free flowing waters will not survive the oxygen deprived
lake conditions.

RECAPITULATION

» The Barro Blanco project (3237) is a 28.84 MW hydroelectric power plant in the
district of Tolé, within the province of Chiriquí, Panama. The project has faced
wide resistance dating back to 200817 (but actually since the 1970’s in its different
versions) and criticism related to serious concerns about the additionality of the
project as well as lack of adequate public consultation and human rights abuses
involving the company GENISA against the lands of the Ngobe indigenous peoples.
The Ngobe peoples inhabit the areas next to the Tabasará River, where the project
is planned to be implemented. The project is currently pending registration which
means that the members of the CDM Executive Board will decide upon its fate at
this upcoming meeting.

» To the shock of Ngobe indigenous peoples, the project has now commenced con-
struction despite the ongoing local resistance which is increasing as construction
machinery is moving in. Just recently, massive demonstrations by the Ngobe indi-
genous people have led to the suspension of a newly passed and heavily contested
mining code. This mining code would have allowed even foreign states to invest
directly in mines (contrary to the constitution) in Panama and would have spoiled
the pristine jungle and forced Indian communities to relocate18.

» Comments outlining these concerns were officially submitted by numerous indige-

nous communities and environmental groups in Panama during the public com-
menting period of the project and even prompted an investigation by the European
Investment Bank (EIB). The results of the investigation are currently pending.

» Although confirmation was sent from the UNFCCC secretariat that comments were
received, the auditor (AENOR) has never made them public nor taken them into
account when validating the project.

» This has led to the first launch of a complaints procedure against a DOE pursuant
to the new rules for complaints procedures against a DOE.

16 Helical Turbine and Fish Safety By Alexander Gorlov, August, 2010 (see Kaplan Turbine Fish kill page 3)
http://www.mainetidalpower.com/files/gorlovrevised.pdf
17 http://archives.huntingtonnews.net/columns/081027-staff-columnspanama.html and http://www.
carbontradewatch.org/index2.php?option=com_content&do_pdf=1&id=226
18 http://www.terradaily.com/reports/Panama_Injuries_arrests_in_mining_law_protests_999.html

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Major concerns about the Barro Blanco project raised by civil society groups include:

› Validation Report Omissions: With regards to the CDM consultation, ACD submit-
ted comments in the first consultation process conducted in 2008. These concerns
were never addressed by the CDM validator. Instead, AENOR opened a second
validation process, in which both ACD and ASAMCHI again submitted comments.
The CDM website acknowledged receipt of the ASAMCHI comments through email,
but the website failed to display the comments as received by AENOR.

› Public Participation: The Bakama area is legally recognized by the Government of

Panama as collective property of the Ngobe indigenous people. Yet, most of the
consultation for CDM validation, including the site visit by AENOR, only considered
the opinion of the non-indigenous population. In this regard, the validation process
for Barro Blanco violated the international principle of free, prior and informed
consent contained in ILO 169 and the UN Declaration on Indigenous Peoples.

› Compensation of affected communities: Following the principle that was also uti-
lized in the Chan 75 hydroelectric project, GENISA has proposed the use of carbon
credits to compensate the affected communities, including the Ngobe indigenous
peoples. In the Chan 75 case, this question is currently being examined by the
Inter-American Human Rights Commission, which raises serious questions about
the appropriateness of using CERs for the compensation of affected communities
when human rights violations have not been considered.

› Additionality: Hydroelectric investment in Panama has an extremely favorable net

present value, which derives from the sale of electricity generated by hydroelectric
plants at prices comparable to thermoelectric plants with higher operations costs.
This situation occurs when non-contracted electricity is sold in the spot market,
which happens regularly in Panama. For this reason, there are currently about
87 hydroelectric project scheduled for construction in Panama at this moment.
Recently, the Government of Panama has complained about the exaggerated levels
of profit raised by hydroelectric companies and has even started investigations to
avoid this type of speculation.

› Barro Blanco might place in extinction the endangered Tabasará rain frog species:
The construction of the Barro Blanco project is very likely to cause the extinction of
the Tabasará Rain Frog, a highly endangered species19.

Against the evidence provided in this article, many organizations, including the April 10
Movement for the Defense of the Tabasara River (M-10), Alianza para la Conservacion
y el Desarrollo (ACD), and the Asociacion Ambientalista de Chiriqui (ASAMCHI), Inter-
national Rivers and CDM Watch are calling on the CDM Executive Board to extend the
review of the project registration request to the issues raised above and to subse-
quently reject the project. Moreover, the results of the European Investment Bank´s
investigation should be taken into account when deciding upon the fate of the project.

19 http://animal.discovery.com/tv/vanishing-frogs/pictures/tabasara-rain-frog.htm
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3. Mtoni Dumpside CDM Project putting livelihoods

of farmers and wastepickers at risk
Guest comment by Finnigan

»
Wa Simbeye, Tanzania Daily
News So far, CDM biogas projects have been praised as the most sustainable projects
implemented under the CDM. However, a recent eye witness report from a much
touted biogas in Tanzania’s commercial capital Dar es Salaam tells a different story.

Carbon Credits from an Abandoned Dumpsite

The “Mtoni Dumpsite” in Dar Es Salaam, Tanzania was registered in June 2007 as the
first project in Tanzania. According to the project‘s design document, the Mtoni pro-
ject is supposed to reduce about 200.000 tons of CO2 emissions annually through the
combustion of methane contained in the biogas extracted from the dump site. Since
June 2007, the project has been issued 35.122 carbon credits.

The dumpsite was moved over 40 kilometers away from the location in order to serve
as a CDM project. Hundreds of waste pickers heavily protested against the closure
of the dumpsite in 1997/8 because they used to make their life by picking garbage to
recover recyclable materials at the Mtoni Dumpsite. Ironically the dumpsite is now
abandoned with erosion sweeping away the soil exposing some of the landfill waste –
contrary to its original plans to generate 2.5 megawatts of electricity from an estima-
ted 1.8 million metric tons of solid waste.

„People pass here freely throughout the day. Some of them are pick-pockets who hide
on the river banks after stealing from people,“ said Sophia Cholobi, a resident in the
area since 1981. She lamented over the closure of the dumpsite. She said she earned a
living through scavenging in the dumpsite.

A ‚Daily News‘ survey has noted that there was literally no security guard to protect
the project area from trespassing vandals. It has also been observed that soil erosion
from heavy rains has left plastic garbage projecting to the surface. Residents in the
area complained about the foul smell emoted by rotting garbage. Fumes can be seen
rising to the sky when it rains. According to experts this indicates that methane is
escaping into the air.

The Profiteers

The Dar es Salaam City Council (DCC) and an Italian company Consorzio Stabile Glo-
bus invested two million Euro in the project, which is the largest in East Africa.

While it was envisaged that the reduction of more than 200,000 tonnes CO2 should
lead to more than US$38,800 per year, the Mtoni project has only managed a fraction
of the initiative.

Failure by the Italian firm Consorzio Stabile Globus and the Dar es Salaam City
Council to implement the Mtoni Dumpsite biogas project on schedule has also dis-
appointed the Director of Environment in the Vice-President‘s Office. The Director of

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Environment, Mr Richard Muyungi – a former CDM Executive Board member – has

stated in January 2011 that delay in implementing the country‘s only Clean Develop-
ment Mechanism (CDM) project, has gone beyond acceptable standards. A vividly
disappointed Mr Muyungi said “this project is supposed to have started generating
2.5 megawatts of electricity from the dumpsite gas, but so far they are still using
Tanesco power and sometimes diesel generators.“.

Until early this year, the project was processing an average of 10 cubic metres of
methane daily. The DCC Assistant Dumpsite Manager, Mr Richard Kishere, said that
generation of electricity is behind schedule because of insufficient gas on the site.

Yet, the project has so far received more than 35.000 carbon credits. Whether these
were actually reduced was verified by the auditor TÜV SÜD who confirms in its audi-
ting report20 that “the project is partly implemented as described in the registered
PDD. Only phase-1 including a gas flare system has been installed. Phase- 2 consis-
ting of biogas fueled electricity generator for supplying to the grid was not implemen-
ted due to lack of sufficient biogas from the landfill”. The report also confirms that
“due to the lower biogas generation and non-implementation of phase-2 the emission
reductions presented in the current monitoring report are significantly lower from the
emission reductions as indicated in the registered PDD”.

Finally, the auditing report also states that “Installed equipment essential for gene-
rating emission reductions run reliably”.

Mtoni cause harzardous substances toxic to fauna, flora and human beings

This conclusion clearly does not take into account that leachate oozing from the
poorly covered dumpsite is threatening the lives of thousands of Dar es Salaam resi-
dents, as vegetable growing goes on using polluted Kizinga river water for irrigation.

A study by the Institute of Human Settlements Studies21 shows that soils used for
vegetable production around Mtoni dumpsite and the leachetes flowing to the Mtoni
Estuary and towards the Indian Ocean, contaminating the water that is used for
watering the vegetables contain a high concentration of heavy metals. Some of these
metals are toxic to both fauna and flora, soils close to the edge of the dumpsite con-
tain highly concentrated heavy metals, some of which are toxic to humans. Based on
these findings, the study recommends shifting vegetables at 10 m from the edge to at
least 200 m away from the edge of the dumpsite to reduce health risks. It also notes
that alternative income generating activities for farmers who depend on the soils
from this area for vegetable production is needed as the production of vegetables is
the sole source of income to the people in the area.

20 http://cdm.unfccc.int/filestorage/G/C/L/GCLJMY4KNZ5IBODWX2TFPQ968V31UE/Verification%20Re-
port.pdf?t=SnJ8MTMwMTkyMTE4MS43MQ==|VXA_mxd7tb5KDTn7DUF8amLF__c=
21 Heavy metal concentrations in soils and leachetes of Mtoni dumpsite bordering the Indian Ocean inDar
es Salaam, Tanzania, June 2010 http://www.academicjournals.org/sre/PDF/pdf2010/18%20Aug/Shem-
doe.pdf
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What’s next?

Biogas projects under the CDM that reduce emissions and contribute to sustainable
development are welcome. Likewise, they are not welcome if they fail to achieve
neither of their objectives. This applies to the Mtoni Biogas project as much as to
the development of biogas projects in general. Before implementing such a project, a
whole life-cycle assessment is needed. The Mtoni biogas project shows that simply
moving a dumpsite from one place to the other to save emissions by flaring gas does
not do the trick. It is now up to the CDM Executive Board to assess whether the Mto-
ni dumpside biogas project is eligible for generating carbon credits despite the state
it is in. CDM Watch and people living close to the project area do not believe that
the project developers of the Mtoni project should receive any more credits until the
serious problems it has caused have been fixed.

4. CDM Watch UNFCCC submissions

The month of March saw a number of deadlines for public input to the UNFCCC policy
process. The following section provides an overview of submissions made by CDM
Watch:

a. Areas and means for direct communication between the CDM EB and
relevant stakeholder groups

Communication between civil society representatives and the Board mainly happens
via means of public participation in the CDM process cycle. With the aim to present
the views of civil society in the carbon market, this submission focuses particularly on
how to improve the public participation as a means to improve direct communication
with the Board. In order to improve communication between civil society and the
Board following recommendations are made:

1. Set-up email notification systems for registration, issuance and methodology

processes as well as for all public participation procedures that depend on a
certain period of time
2. Further improve of the user-friendliness of the UNFCCC CDM website including
the translation into all official UN working languages
3. Make available essential documents of CDM projects (at least the PDD and the
EIA) in the language(s) of the host country
4. Make available hard copies of the translated PDD to affected communities
5. Ensure that all supporting documents are uploaded prior to the start of the pub-
lic commenting period
6. Allow submissions of comments in the language(s) of the host country
7. Allow delayed submissions of comments if the delay is due to a reasonable justi-
fication
8. Increase the public commenting period for large projects
9. Increase the public commenting period on new methodologies
10. Introduce a mechanism where concerns about CDM projects can be submitted at
any time

You can download the submission here.

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b. CDM Appeals Procedure

Jointly with ClientEarth and Transparency International CDM Watch has submitted
comments in response to a call for public input to allow for appeals against Executive
Board (EB) decisions22.

The right to information, the right to public participation and the right to seek justice
are human rights inherent to all individuals. The inclusion of an appeals procedure in
the CDM project approval process presents a crucial opportunity for the EB to secure
these human rights and to promote enhanced accountability, legitimacy and public
trust in and acceptance of the CDM as a valid tool for reaching its goals under the
Kyoto Protocol – namely, mitigating global climate change while promoting sustaina-
ble development.

It is likewise an opportunity to introduce coherence and quality control into the EB

decision-making process, as access to justice is a vital aspect of accountability, provi-
ding venues for the enforcement of procedural and substantive environmental rights
and duties.

The purpose of our comments is to outline the critical procedural aspects that must
be considered and included in a future CDM appeals procedure, so that it might
promote transparency, accountability, and consistency in the CDM project approval
process and improve the efficacy of the CDM as a tool for reducing greenhouse gas
emissions. Additionally, it may allow for more meaningful public input into the EB’s
decision-making – something that is woefully lacking under the current procedures.

You can download the submission here.

c. The issue of materiality in the CDM

In Cancun Kyoto Protocol Parties have decided to consider the issue of materiality
with the aim to prepare a draft decision on this matter for COP-17 which will take
place in December 2011 in Durban, South Africa.

“Materiality” would limit the liability of DOEs for errors in checking data in PDDs and
accompanying documents. In theory, DOEs are held responsible for any CER which
may be inappropriately issued. In such cases, DOEs have to replace a corresponding
amount of “valid” CERs for those CERs issued in error. Recentely, the EB has shown
in its new regulation for Programme of Activities (PoA) that this potential „buy back“
sanction is a serious option.

However, in practice, this situation has never occurred. Nevertheless DOEs re-
main concerned over their liabilities and have pressured the EB to set a materiality
threshold. They argue that without the application of materiality a DOE would need
to be 100 % sure that no wrong figure or statement is given within the assessed

22 Based on decision 2/CMP.5, paragraph 42, taking into account the recommendations of the EB contained
in annex 2 to its annual report.
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documents no matter what significance (in terms of non-additional emissions) such a

mistake would have. But we believe that it is indeed the task of DOEs, to ensure that
no wrong figures or statements are given in the PDD and assessed documents.

We believe that in the case of the CDM, it is important to bear in mind that it is an off-
setting mechanism. This means that the emission reductions credited under the CDM
entitle the buyers of the CERs to increase their domestic emissions correspondingly.
The CDM in itself does not directly reduce global GHG emissions but helps to achieve
a given emission reduction target at a lower cost.

Therefore, our comments are presented in the light of the risks the CDM poses to en-
vironmental integrity if certified emissions reductions are issued as a result of wrong
figures or statements given in the PDD and assessed documents.

You can download the submission here.

d. Inclusion of reforestation of lands with forest in exhaustion as A/R

CDM project activities

Jointly with the Ecosystems Climate Alliance, CDM Watch also submitted its views on
the potential inclusion of reforestation of lands with forest in exhaustion as A/R CDM
project activities.

Currently, any plantation established on land that was forested after 1 January 1990
is excluded from the CDM. But a new possibility to include lands with “forests in
exhaustion” as A/R CDM project activities is currently being considered.

The term forests in exhaustion (FE) was proposed by Brazil at COP-14 in Poznan and
was used for the first time in Decision 2/CMP.4. But in the forestry sector this ex-
pression has not been used so far and a specific description or definition endorsed by
international organizations such as FAO, IPCC, etc. is not available.

This new definition would literally mean that an afforestation project could be im-
plemented on land which is already forest. This is completely absurd. The definition
may even include land areas with existing plantations or forests and builds on the
hypothetical assumption that they would be “finally harvested” at some point in the
future. This basically means nothing else than forest management would be allowed
under the CDM which would severely contradict the agreement reached in Marrakech.

This is a very arbitrary approach, opening considerable potential for gaming. In

practice, Brazil’s proposal would not benefit the climate but it would provide massive
subsidies for forest management in existing monoculture tree plantations. Accor-
ding to the REDD-monitor, Brazil’s “forests in exhaustion” CDM proposal would be
a disaster for forests and for the climate and create a massive subsidy for industrial
tree plantations. For more information about the impacts of this proposal and Brazil’s
alleged motivations, please see Why Brazil is interested in “forests in exhaustion”.

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In short, we consider this proposal to be little more than an attempt to provide subsi-
dies to industrial tree plantations in circumstances that encourage bad management
practices and the establishment of plantations in inappropriate locations. Such a
subsidy would insulate the wood growing and processing industries from commercial
pressures to improve their efficiency, reduce wastage, increase recycling and select
more suitable sites for plantation establishment. The “forests in exhaustion” propo-
sal also risks undermining the recently established REDD+ mechanism by incentivi-
zing the establishment of plantations under the CDM rather than the restoration of
natural forest ecosystems under REDD+.

The Ecosystems Climate Alliance and CDM Watch therefore consider that the propo-
sal to include the reforestation of lands with forest in exhaustion as a CDM project
activity should be rejected.

You can download the full submission here.

5. Civil society’s view on the CDM in Mesoamerica

In response to the growing number of CDM projects in Central America, CDM Watch
organized two workshops in Mesoamerica to discuss the role of civil society in the
CDM with representatives of the region.

A first workshop was organised on 16 February in Mexico City and a second two-day
regional workshop was organised on 26 and 27 February in Santa Cruz Michapa,
Cuscatlán, El Salvador bringing together more than 150 participants from all seven
Mesoamerican countries: Mexico, Guatemala, Honduras, Nicaragua, Costa Rica,
Panama and El Salvador. Representatives of environmental NGOs, social and gender
movements, activists, leaders of peasant and indigenous communities, representa-
tives of international networks, journalists and citizens came together to learn about
possibilities for public participation and to exchange experience with the CDM in the
respective host countries.

The workshops consisted of a detailed explanation of the origins and functioning of

the CDM, in particular about the opportunities of public participation in the CDM
project cycle. Participants also delivered presentations of case studies triggering
country- and case specific discussions on the CDM and its impacts on livelihoods and
the environment. Detailed discussions were concluded in “memorias” that provide
summaries of demands and recommendations for improvements at local, national
and international level for each of the participating countries.

Participants of both workshops clearly rejected the CDM as effective means to

combat climate change. They did not agree that the CDM has achieved substantial
emission reductions in developing countries but argued that many of the projects
would be implemented anyway. Moreover, workshop participants heavily complained
about enormous negative environmental and social impacts of large CDM megapro-
jects that are being implemented despite local resistance. They argued that when
validating a project on the ground, local opinion was strategically avoided and igno-

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red in the validation process. As regards the public participation process, the main
problems faced by local communities were timely access to information, linguistic
obstacles and tight deadlines combined with in-transparent closing times, according
to the workshop participants. Many discussions were focused on how to use com-
ments that were prepared with much effort but could not be submitted due to the 7
hour time difference - a seemingly small issue with a huge impact.

More specifically, the workshop conclusions call for a total reform of the CDM
especially with regards to public participation rules, accessibility of information and
transparency of procedures. Other demands include the automatic ‘disqualification’
of CDM projects proven to violate human rights or other international conventions,
as well as the exclusion of projects with inherent harmful social and environmen-
tal impacts such as large hydro and monoculture projects. Equally the exclusion of
projects extending the use of fossil fuels, such as supercritical coal and cement plant
projects was demanded by civil society representatives.

In both events the level of active participation and constructive discussion was
remarkable showing the interest of civil society representatives in the issue and the
huge potential of young professional that are eager and keen to learn more about
engaging in international climate policies. This was proven by the fact that several
workshop participants immediately replicated the event in their home communities.
The outcome of the workshop will be the basis of more coordination between local
communities and international NGOs, such as CDM Watch.

he aim of these workshops is to empower

T
local communities to understand the rights
they were given to by the international
community within the CDM process. With a
public participation process in place, we
believe that it should indeed serve as an
instrument to highlight concerns about
projects and if those concerns are justified,
that appropriate measures are taken. If the
CDM should be an international instrument to reduce emissions and contribute to
sustainable development, it must be able to withstand an effective public participati-
on mechanism. As long as the CDM’s reputation is famous for ignoring affected
communities’ opinions and enforced megaprojects combined with a weak validation
that allows those projects to slip through the process, public acceptance in CDM host
countries will not be possible. A thorough reform is needed.

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6. CDM Watch is recruiting

We are seeking a dynamic and experienced Policy & Advocacy Officer to

join our team and lead CDM Watch’s EU policy work as of May 2011. For
more information check the vacancy announcement.

Applicants should send their CV, references and a strong cover letter,
addressing the competencies required to info@cdm-watch.org.

Closing date: 15 April 2011. Interviews will be held on 20 April 2011.

Please forward this newsletter to anyone interested. To

subscribe or unsubscribe to this newsletter, send an email to
info@cdm-watch.org – please specify »subscribe« or »un-
subscribe« in the subject line.

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About CDM Watch

CDM Watch is an initiative of several international NGOs and was re-established in

April 2009 to provide an independent perspective on CDM projects, methodologies
and the work of the CDM Executive Board. The ultimate goal is helping to assure
that the current CDM as well as a reformed mechanism post-2012 effectively result
in emission reductions that are real, measurable, permanent, independently verified,
and that contribute to sustainable development in CDM host countries.

Contact

Eva Maria Filzmoser

Programme Director CDM Watch
NGO Forum Environment & Development

Rue d‘Edimbourg 26 . 1050 Brussels . Belgium

eva.filzmoser@cdm-watch.org

www.cdm-watch.org

The CDM Watch Network

Action Solidarité Tiers Monde – ASTM, Luxembourg / Asociación Comunidades Ecologistas la Ceiba.
Amigos de la Tierra Costa Rica – COECOCEIBA-AT, Costa Rica / Asociacion CEIBA. Amigos de la Tierra
Guatemala, Guatemala / Agricultural Development and Training Society – ADATS, India / Alianza para la
Conservación y el Desarrollo – ACD, Panama / Angikar Bangladesh Foundation, Bangladesh / Both ENDS,
The Netherlands / Centre for Education and Documentation – CED, India / Centro Salvadoreño de Tecnolo-
gía Apropriada. Amigos de la Tierra El Salvador – CESTA, El Salvador / Centre for Science and Environment
– CSE, India / Centro de Derecho Ambiental Mexicano – CEMDA, Mexico /  Church Development Service
- EED, Germany / Coordinadora Para La Defensa de Tierras y Aguas – CODETIAGUAS, Panama / Earthjus-
tice, USA / Federação de Órgãos para Assistência Social e Educacional– FASE, Brasil / Forum of Collective
Forms of Cooperation - FCFC, India / Forum Environment & Development, Germany / Germanwatch,
Germany / Global Alliance for Incinerator Alternatives – GAIA , Philippines / Indian Network of Ethics and
Climate Change – INECC, India / International Rivers, USA / Khazer Ecological and Cultural NGO, Armenia
/ La Vida no se represa - Movimiento Social por la defensa del Rio Sogamoso, Colombia  / Laya Resource
Center, Indien / Madre Tierra, Amigos de la Tierra Honduras, Honduras / Matu Peoples‘ Organisation,
India / Mines, minerals and PEOPLE – mmP, India / Movimiento de Victimas, Afectados y Afectadas por
el cambio climatico – MOVIAC, El Salvador /Movimento Nacional de Catadores de Materiais Recicláveis -
MNCR, Brasil / Noe 21, Schweiz / Otros Mundos. Amigos de la Tierra Mexico, Mexico / Orissa Development
Action Forum – ODAF, India / Paryavaran Mitra, India / Popol Nah Tun, Honduras / South Asian Network
on Dams Rivers And People – SANDRP, India / Stanford Environmental Law Clinic, USA / The fair climate
network – FCN, India / WWF European Policy Office, WWF Deutschland and WWF Japan 

Disclaimer: The opinions expressed here do not necessarily reflect the views and opinions of the entire
CDM Watch Network.
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