Yesterday, the International Emissions Trading Association (IETA), representing more than 180 corporations engaged in carbon trading, released its GHG Market Report (pdf) at Poznan. In the preface, IETA president notes that “the success of the CDM has expanded over the last year, with almost 4000 projects now in the pipeline.” Yet, it laments the fact that market growth is hindered by a slow and unpredictable approval process, increasing risks to investors.

Last month, the IETA’s State of the CDM 2008 (pdf) suggested five guiding principles for improving CDM governance; effectiveness, predictable, consistent, measurable, and standardized. How about credible ? Recently, DNV, the Norwegian firm dominating the CDM validation and accreditation market, had its license to do so taken away by the CDM Executive Board. (via Climate Progress) The report was pretty damning (pdf), identifying five “non-conformities” in its auditing. DNV is no small fish, having verified almost 40 percent of all the more than 1,000 projects that have put before the CDM Executive Board for final approval.

The suspension is the culmination of a long-standing disagreement between the parties on the verification of projects. In response to the suspension, DNV lamented the “strong reaction by the CDM Executive Board” but accepted that it had to make improvements. It predicts it will regain its license within 1-2 months. But even if temporary, the decision to suspend DNV is nevertheless a blow to the credibility of the nascent CDM market and will give added credence to claims that it has until now been a huge money-making machine that has done little to promote real, additional, and measurable emissions reductions.

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