Patrick Kamotho - A Human and Environmental Campaigner Rights Advocate.
Community Advocacy on Environmental and Social Justice
Sunday, 5 March 2017
The Carbon Crooks – Movie
The Carbon Crooks – Transcript
For decades, world leaders have struggled to reduce carbon emissions.
The result is a vast and complicated system in which pollution has become a commodity
Carbon credits have become part of the financial market.
Carbon credits have become part of the financial market.
In order to buy and sell the credits, one must be registered as a carbon trader.
Reporter: Was it a good business?
Daniel Butler: In the early days it was a good business. I could make roughly around 50,000 € in five minutes.
Also the criminals saw opportunities in carbon credits.
Rob Wainwrigth: We saw organized crime moving into this market to carry out sophisticated online attacks of VAT fraud – coming to losses to around 5 billion Euros a year.
The market for carbon credits was created to curb global warming.
But carbon emissions have never been higher in the history of mankind.
Jørgen Henningsen: The European carbon credit market has de facto collapsed. The price is so low that fluctuations don’t affect carbon emissions.
Archive: Connie Hedegaard lost an important climate vote in the EU Parliament.
The proposal to withdraw 900 million carbon credits has been rejected.
Martin Lidegaard: The EU’s carbon credit market has problems. The prices are too low.
Archive: Connie Hedegaard wanted to raise the price for carbon pollution. The price has fallen from 30 euros per ton to about 4 euros per ton.
Jørgen Henningsen: Only the financial markets have a real interest in the carbon trading system.
Daniel Butler: It’s a very large business but I think that you have to realize that a lot of people – and a lot of financial organisations wouldn’t have come in to this market unless there was a profit to be made and in that some crooks were taking advantage of that fact.
In 2005, the first carbon credit went on sale in Europe.
One carbon credit is equivalent to one tonne of carbon –
or the volume of one hot-air balloon.
Kyoto, Japan 1997 – Here, world leaders met to sign what would be known as the Kyoto Protocol
But even before the summit there was conflict over the issue of global warming.
A few months earlier, a new bill had been introduced in the US Congress.
The bill prevented the U.S. delegation from signing an agreement limiting emissions of greenhouse gases – even if this could harm the US economy.
The bill was known as “Byrd-Hagel” and was unanimously approved.
Still, the U.S. delegation went to Kyoto.
Chuck Hagel: Mr. President: This makes no sense. No sense at all.
The Environmental Commissioner in the EU, Ritt Bjerregaard, negotiated for the EU.
Ritt Bjerregaard: We knew that there were serious problems with the Americans. In Kyoto, we were wondering whether they would send out a new signal.
In the years leading up to the summit in Kyoto, the EU had worked on a proposal that would tax greenhouse gas emissions to motivate polluters to reduce their carbon emissions.
Reporter: You worked out the proposal for a tax-based credit system.
Jørgen Henningsen: This was in the early 90s, and it was purely a tax system. It was widely supported, and Delors was very much in favour of it.
But Americans are opposed to a tax system where the emitters, for example, pay a fixed fee for each tonne of CO2 they emit. Such a tax would never be approved by the US Congress. Bill Clinton and Al Gore were aware of this.
Instead, they wanted to introduce a market system in which CO2 emitters could buy carbon credits for excess carbon emissions.
If they stayed within the limits, they could sell their excess credits.
Ritt Bjerregaard: If they send Al Gore in person, it must mean that they want a result they will try to get passed subsequently. So, our spirits rose when we learned that Al Gore was coming.
Al Gore: After talking with our negotiators this morning and after speaking on the telephone from here a short time ago with president Clinton I’m instructing our delegation right now to show increased negotiation flexibility.
Ritt Bjerregaard: We were quite optimistic. We simply didn’t think he’d come without being able to get something passed subsequently.
After intense negotiations at Kyoto, the Americans got what they came for:
A market based system in which carbon emissions could be traded as carbon credits.
Ritt Bjerregaard: In the beginning we weren’t very happy about the idea of trading carbon credits and such. We were worried that it wouldn’t work. But it was the only option.
In the US, the new market was met with enthusiasm.
Bill Clinton: I am particularly pleased that the agreement strongly reflects the commitment of the United States, to use the tools of the free market to tackle this problem. We got what we wanted which is joint implementation, emissions trading – a market oriented approach. It’s a huge first step and I did not dream when we started that we could get this far. We should be very, very proud of this. Thank You
But the Kyoto Protocol was never put to a vote in the United States.
I 2000, Al Gore lost the presidential election to George W. Bush, who backed out of the agreement.
George W. Bush: The Kyoto protocol was fatally flawed in fundamental ways.
Svend Auken: It’s a catastrophe for the effort against climate change.
Ritt Bjerregaard: I wasn’t suprised that a Republican president wouldn’t do anything for the climate.
But I was disappointed that Al Gore and Clinton didn’t deliver anything.
Jørgen Henningsen: You can’t blame the protocol that the US backed out. The remaining countries ought to have admitted and realized in 2001 that without the US there was nothing left. Politicians and green organizations had invested so much prestige that enthusiasm for the Kyoto Protocol remained even though the basis had been eroded.
Although the United States – the Worlds biggest emitter of carbon – pulled out, the
EU still set up its own carbon credit system – known as the EU ETS. European Emission Trading System.
The EU identified the 11,000 largest European emitters and set a limit is for how much carbon they could emit.
If they exceeded their limit, they would have to buy carbon credits.
This is called “Cap and Trade”
Up to 2013, the EU handed out 10 billion carbon credits to member states in order to start the market.
A carbon credit only exists as a computer file and each credit has a unique serial number.
Marius-Cristian Frunza: They were supposed to be traded by everybody – Everybody could trade it – not only industrialists – Obviously to bring liquids to the market.
Daniel Butler: If I bought credits from a factory in Eastern Europe, that factory would go to his computer. He would login to his account. He would say I’m delivering credits 25.000 from my account to the buyers account. It would happen really – It could be done really in under five minutes.
The EU handed out the credits to the member states. Each member state established a registry that would distribute credits to the polluting companies.
And now the trading could commence. Just like the stock market
Daniel Butler: I could buy from somebody for example at 15 € and 30 cents and sell them to somebody in London at 15 € and 80 cents. I could make something like half a € per carbon credit by broking these to western buyers.
But it was not only financial houses, brokers and consultants who spotted an opportunity to earn fast money.
Marius-Cristian Frunza: All the infrastructure is a computer and an Internet connection. That is in very plain words what is needed for this trade. So obviously, if you want to do crimes and if you want to be fast and untraceable, carbon is one of the perfect candidates.
Reporter: Bo Elkjær, you found out that a man called Mirza Ghalib was living in this housing estate north of Copenhagen called Tingbjerg. Who’s Mirza Ghalib?
Bo Elkjær: He’s India’s national poet. India’s H.C. Andersen and also his contemporary. He died in 1869, but is registered as a carbon trader at this address.
Reporter: On the second floor?
Bo Elkjær: On the second floor to the left. He appeared in the Danish registry and was able to trade carbon credits.
Reporter: How was that possible?
Bo Elkjær: The people administering the Danish registry didn’t check the information given by people. So people could write fake addresses and names. There’s an Auni Hysenai living at Ingebolden 26 in Hvidovre. That address and name don’t exist. And you can Google Mirza Ghalib who’s just a poet and was very dead when he was registered.
Due to the fast trade in carbon credits, they soon became vey popular and the number of registered traders rapidly increased.
Daniel Butler: I set up a carbon registry account in Denmark and I remember filling out the form – and I don’t like filling out forms, but these were very short.
Reporter: It was easier to join the Danish registry?
Bo Elkjjær: In the UK it takes three months, in Denmark it took minutes online.
The Danish registry quickly became the largest in the world because anyone could be accepted as a carbon trader without any form of ID. The Danish authorities did not check traders’ names or addresses.
According to the Danish daily Ekstra Bladet most of the carbon traders were fraudsters.
Bo Elkjær: More than 97 % of the information registered was fake. They were fraudsters.
Scammers found a loophole in the EU carbon credit system. They registered in the world’s largest registry in Denmark were no one asked who you are or where you come from.
Daniel Butler: I don’t remember being asked for any identification. In these days you always are asked for id and power of attorneys and ownership documents of the companies I work for – it’s under the system called KYC – Know Your Client. But back then I only remember filling out a document and have my director of the company to sign it – and we send it into Denmark and waited for the post to get our passwords back
These scammers found a way to earn a lot of money. Very fast. The scam is known as a VAT-carousel.
When a group of criminals make a VAT-carousel they usually do so in this way:
A company in an EU member state sells carbon credits to a company in another EU country.
When a sale is completed across an EU border, the invoice is minus VAT.
The buyer of the credits now sells them to either shell companies involved in the scam, or to companies who are unaware of the scam.
The company charges VAT on the sale.
Every time the carbon credits are traded, the price increases as does the VAT.
For the final link in the chain, the scammers now sell the credits to a new shell company – this time in a different EU country.
Sales across borders are once again VAT exempt.
Since the final company in the chain has paid VAT on the purchase of carbon credits, the VAT is refunded by the state.
But the VAT – which the treasury claims back from the very first company – is never paid, because the companies and the VAT scammers have disappeared.
The whole scam can be done in minutes.
And the Treasury is left with the bill.
Rob Wainwright: In this case we saw organized crime groups manipulating the EU Carbon trading emission system and trying to exploit loopholes in the system in particular to carry out sophisticated online attacks of VAT fraud – combinating to losses to around 5 billion Euros a year. So this was big business – organized crime – seeing the loopholes. Exploiting it very quickly and earning a lot of illegal money
Bo Elkjær: Unlike cell phones or flat screens or car tires or whatever, carbon credits are brilliant because they’re electronic certificates. You can control it from your laptop and sell these certificates through your various companies in different countries. You then generate the VAT from the different countries very quickly by moving the credits from one account to the next on your laptop.
To start a VAT –carousel, the scammers must have huge amounts of money at their disposal. They must be well organized and understand the market.
Marius-Cristian Frunza: The person who enters the VAT-fraud – ideally he would generally need millions. 4, 5, 10 millions of seed capital. (and) ….where the money came from to seed it, is manly the new wave of organized crime witch is described by middle east organizations – terrorist financing, far east Asia, ex-Soviet Union – and bits and pieces from south of Italy and Israel as well.
Rob Wainwright: We saw criminal groups trying to identify the weak spots in the European Union and then just exploiting it to the maximum to get what they can out of it. And by generating these huge volumes of illegal money. You know this has a big effect not least on the national governments themself. That’s five billion € of Government revenues that otherwise would be spend by governments to build hospitals and schools or to reduce the debt right now to help governments to cure the economic recovery.
When Europol and the EU become aware of the scam in May 2009, the member states were warned and VAT on the trading of carbon credits was removed.
Except in the world’s largest registry in Denmark.
Bo Elkjær: The Danish Energy Agency aren’t aware that they have to go back, too. They have to stop everyone in the registry and check their addresses, but they don’t.
Former Energy – and Climate minister Connie Hedegaard was informed about the VAT fraud in a confidential memo from the Danish tax authorities in August 2009.
Bo Elkjær: She’s responsible for the registry which is the huge open gateway this fraud is going through, and she can close this gateway. She can do it in August, July or earlier. They become aware of the fraud in the summer of 2009, and Europol also informs the police authorities, but she doesn’t. She doesn’t do anything. Not until Lykke Friis becomes minister, do they begin to close the gateway and check the registered accounts.
1,256 carbon traders were registered in the world’s largest carbon credit registry in Denmark. When the authorities finally started checking the identity of carbon traders, this dropped to just 33 legitimate traders within a few months.
When the state prosecutor for financial crime in Denmark investigated the Danish registry, they found suspicious carbon credits, which they seized.
But on November 3rd 2010 – shortly before midnight – they disappeared.
The state prosecutor for financial crime had been hacked.
It is still unclear who was behind the hacker attack.
And the credits have never been recovered.
The state prosecutor declined to be interviewed for this film.
It took the EU six months to shut down the VAT carousels in the carbon trade.
According to Europol, the scammers got away with 9 billion Euros from the EU member states.
But this was by no means the only type of fraud that was linked to carbon trading.
Daniel Butler: On the 18.th of January 2011 my friend was on the tram – going to work – and he told me that he had to get off the tram because they blocked of the street – right down there – in front of the tram at the intersection. And he had to get off the tram and he noticed that there were a lot of police cars and sniffer dogs going into this building. So what happened was that someone called in a bomb threat and everyone was evacuated.
The building houses the national Czech carbon credit registry.
Daniel Butler: Nobody knew that they were targeting the registry – and while they are out they hack into the computers and transfer the emission allowances.
Reporter: And do you know what happened to the credits?
Daniel Butler: Well, they tracked them and we know that they were delivered from Czech republic to Estonia and then to Poland – and then to Lichtenstein – and finally to Germany where they were sold. If a registry can be hacked into by just calling a bomb threat and someone can access to millions of millions of dollars of Carbon credits – it’s quite a serious thing.
The attack on the Czech registry is not unique.
Hackers have hit several other European countries.
Rob Wainwright: We had serious incidents around 2011 of hacking which led to the theft of up to about 4 million carbon emissions or credits rather. So we have seen them operate online, and this is a new feature of organized crime as a whole actually how much more significant the Internet has become as a primary facilitator of organized crime activity. Well, off course it’s easier to steal a carbon credit. It’s easier to perpetrate a fraud on-line, than it is to steal money from a bank or steal a car. So the old form of criminality has been quickly overtaken by a new form – which is sustained on line by what we regard to be a virtual underground economy.
Reporter: Every single carbon credit has a unique serial number. Why on earth can’t they find them?
Rob Wainwright: Well, you have to ask the authorities in those countries on that – I’m not responsible for finding these. I´m just responsible at Europol in trying to identify the criminals that is behind this.
Europol estimates that the stolen credits are worth nearly 60 million Euros
However, Europol has no mandate to arrest or prosecute offenders.
It’s up to the national police and judiciary authorities.
Reporter: How many credits is still gone missing?
Marius-Cristian Frunza: Millions. Between 3 and 5 millions
The immense VAT fraud did not only involve transnational criminal networks.
Big banks – such as Deutsche Bank – are accused of having laundered millions of Euro for the VAT scammers.
In December 2012 the German police raided Deutsche Bank’s headquarters.
Several of the bank’s employees are still imprisoned.
Daniel Butler: I think that a lot of companies might have delivered stolen credits without knowing it. And I think that they all believed that the registries were protecting them.
Bo Elkjær: At some point the stolen credits have been laundered and begun to appear in legitimate trades. They’re certificates that just pass between some brokers. They’ve been stolen and sold. But even though the one who sells them is a handler of stolen goods, he’s still a legitimate trader receiving these credits. So suddenly the stolen credits appear on the white market. Apparently, they can’t find out how to seize stolen credits.
A number of the stolen credits from the Czech registry had already been stolen once before.
In 2010, 1.6 million carbon credits were stolen from the world’s second largest cement company, Holcim.
Romanian police managed to locate 600,000 credits but Holcim is still missing one million credits, worth an estimated 15 million Euros.
Holcim demanded that the EU Commission, as the responsible authority, find and return the stolen carbon credits.
But the EU Commission refused on the grounds that it was confidential information that only police and prosecutors could obtain.
Reporter: When I talk to people who are informed, they say that the security’s been awful. Some credits haven’t been found even though they have unique numbers. There are examples of legitimate trades involving stolen credits. A big cement company has taken out a summons against the Commission. They want 15 million euros returned because they lost one million credits. Will you give them 15 million euros?
Connie Hedegaard: No, but the lawyers must handle that.The crucial thing is that it has now been stopped. You can always say that crimes in cyberspace are a problem. But it happens in all kinds of financial transaction systems. During the financial crisis we’ve seen transactions you can’t trace back to their origin. That’s not an excuse, but you have to know that these kinds of crimes do take place. It’s very difficult to create a system which cuts out crime. I won’t say it can’t happen again. Nobody can say that. When you trade in cyberspace, fraud is possible, just as it is when it’s not in cyberspace, but ordinary crime.
Daniel Butler: When they started trading carbon credits and they set up this system where you log into a computer and deliver carbon credits within minutes. I have never seen anything like that. You know it just happens so quickly, so I think it was a product of the rush and the political support that a different kind of system of transferring carbon credits was put into place. I think that they just made it too easy – to simple. And with so many different weaknesses I think it was bound to happen that someone would hack into others account and steal credits.
Reporter: And who invented it? It was invented by the EU-Commission?
Marius-Cristian Frunza: Yes, it was the EU Commission – but people obviously ignored the fact that theft, fraud and other things could occur
Reporter: So it falls back on the EU-Commission?
Marius-Cristian Frunza: Yes, everything. Both on the EU-Commission and the European Union
Reporter: The EU Commission which is responsible for all of the credits in the EU, that’s 10 billion, do they know where the credits are?
Bo Elkjær: Yes.
Reporter: Why can’t we find the four million credits then?
Bo Elkjær: You’ll have to ask the EU Commission. They know where the credits are.
But the EU Commission will not disclose where the stolen credits are.
They believe that fraud and theft are a matter for national governments and maintain that they are subject to a confidentiality clause.
VAT carousels, computer hacking, theft, money laundering and fraud with carbon credits have cost the European taxpayers an astronomical amount.
Marius-Cristian Frunza: Including the V.A.T.-fraud, the money laundering and the electronic theft it’s around 15 billion.
Reporter: 15 billion Euros?
Marius-Cristian Frunza: Yes, 15 billion Euro’s. And almost more than half – more than 60 % is due to V.A.T.-fraud.
Rob Wainwright: “Crime of the Century”, Well, I think it’s a good example of crime in the modern 21. Century and how in particular the Internet is used to exploit criminal opportunities.
Fraud and theft of electronic credits are far from the only problems facing this system.
If you buy a carbon credit, you do so because you think that somewhere in the world one less tonne of carbon will be emitted.
This guarantee is one of the cornerstones of the UN and the EU carbon credit system.
In the spring of 2008, Denmark prepared for the biggest summit ever. The UN Climate Conference COP15, in Copenhagen.
The Ministry of Foreign Affairs decided that Cop15 would be carbon neutral
This can only be done by buying a certain type of credits.
These credits are issued by the UN and are called CDM – Clean Development Mechanism.
The UN carbon credits are designed to promote the green transition in developing countries.
It’s a condition that the projects in which the rich countries buy credits are “additional”, meaning that they must lead to a reduction of carbon emissions that would not have occurred otherwise.
The reduction may then be used in rich countries that emit.
Peter Pagh: If we make reductions in China instead of reductions in Europe by investing in greater technology, the developing countries will develop differently which in the long run may result in reduced carbon and in the very long run may prevent large carbon emissions, or at least make them acceptable.
Martin Lidegaard: When these mechanisms were invented, a lot of people though that it was a great idea that the industrialized countries can help the developing countries.
Connie Hedegaard: It may seem strange that you can buy a project in another country. I’ve just visited Tanzania, one of the poorest countries in the world. They had one wish: “Please invest in some of the things we have to do by getting an indulgence through the making of a project. So we don’t begin building coal power plants or whatever, but invest in clean energy. It’s more expensive, but can be financed through this mechanism where we pay while we’re credited the amount of saved energy. That’s not a bad principle if you want a global transition.
To make the summit in Copenhagen climate neutral, the Danish government bought credits in a CDM project in Bangladesh.
The project was to reduce carbon emissions in the production of bricks. Of the country’s 6,000 brick factories, eight factories have introduced a new technology that reduces emissions.
The United Nations has named them, “smokeless factories”
In 2010 Climate Commissioner Connie Hedegaard visited one of them:
Connie Hedegaard: I think this is just one example of how big a difference relatively small money can, can do.
Reporter: In 2010 you visited what the UN calls a smokeless factory. We visited it, too, and could hardly breathe.
Connie Hedegaard: To call it smokeless is a misrepresentation.
The United Nations has approved 6,700 CDM projects throughout the developing world.
60 percent are located in China.
But not all projects have proven to meet the UN standards, says a survey from the 92 Group, which consists of 22 Danish NGO’s.
Reporter: What was the result of your survey?
Tarjei Haaland: It was that a lot of them weren’t additional. That means that they would have been carried out anyway. It becomes fraud when you receive a credit for a project and are allowed to pollute equivalently at home. When the reduction actually isn’t a new reduction, it’s fraud.
The survey shows that more than half of the projects didn’t meet UN standards.
Western countries and companies have bought UN credits for Chinese wind turbines which were not even connected to the grid.
And credits were sold for Hydro power plants that had already been built.
Tarjei Haaland: It’s interesting that Denmark based the entire climate policy on buying as many credits as they were allowed. You send money to questionable projects around the world, instead of using them on the transition in Denmark which could reduce the use of fossil fuels and make the transition.
Peter Pagh: You can always find examples of fraud, and with each example you increase the control which ends up causing the system to collapse under the transaction costs.
Connie Hedegaard: I’m sure you can find examples where you can ask: “Is this really good for the environment or other social issues?” But I’ve also seen projects which amazed me. I saw a project in Bulgaria, a very big fertilizer factory. I saw pictures of how polluted the area had been before. Then I saw how it looked after this CDM project. I saw how green and clean the area had become. Now it was one of the least polluting fertilizer factories in Europe.
Martin Lidegaard: The Danish government doesn’t support shifting credits back and forth. But I have to say when looking back on a lot of the evaluations of the projects, it hasn’t worked. It’s been a lot of hot air with few concrete results. A lot of us agree on that and that’s why I’m sure that you have to look at how you define this internationally and that we in Denmark have to make our green transition here.
The Danish taxpayers paid 700,000 Euros, making COP15 the first CO2-neutral summit. In total the state of Denmark has purchased UN credits for 215 million Euros.
But it is not only governments and corporations that can purchase the credits.
Individuals who would like to have a better green conscience can also buy them.
But can they trust that they are getting the CO2 reduction they have paid for?
In 2011, in Western Kenya, 900,000 water purification filters were distributed for free. Behind the distribution is one of the giants in the aid industry, a company called Vestergaard-Frandsen
The water filters are called “LifeStraw” and were invented and distributed by Vestergaard-Frandsen.
Nick Moon: When the LifeStraw project arrived a couple of years ago, I was very interested because it promised to really improve the kind of health levels of local people by reducing the incidents of waterborne diseases – and I thought it was a great idea.
The distribution of the filters is the first part of a larger plan, conceived by Vestergaard-Frandsen.
The plan is that when people are given a LifeStraw, they no longer need to use firewood to boil their drinking water.
According to Vestergaard-Frandsen, the LifeStraw will help to reduce carbon emissions because the many trees felled in the area are not being replaced with new trees.
This reduction can then be converted into carbon credits that Vestergaard – Frandsen can sell.
The more carbon saved – the better a business it can become.
Nick Moon: It is true that some people do boil their water. As I understand it, surveys have shown that perhaps a fifth or a quarter of the population do so, but the vast majority don’t
According to Vestergaard-Frandsen, 36 percent of the families in Western Kenya boil their drinking water. But this was not enough for the Lifestraw to be a success.
Their success was entirely dependent on how many carbon credits the project could trigger.
Therefore, Vestergaard-Frandsen, conducted a feasibility study asking people whether they WOULD boil their water – IF they had the time and IF they could afford it.
A total of 79 percent said that they WOULD boil their drinking water IF they had the time and IF they had enough money.
Far more than the percentage who actually boil their drinking water.
The difference is called a “suppressed demand”
Peter Pagh: Suppressed Demand is an economic theory. You try to establish what people would have done if they had the opportunity. That’s the mathematical formula you believe in. The only thing you can say to that is that’s it’s a theoretical concept and we don’t know the result.
Vestergaard-Frandsen’s project is not part of the EU or the UN carbon credit system.
This is a third type of carbon credits.
They are called voluntary credits.
They are aimed at companies and individuals who would like to make an extra effort to reduce their carbon emissions.
And the voluntary credits promise buyers that they will lead to a reduction of carbon emissions.
The buyers are then able to call themselves carbon or climate-neutral.
Peter Pagh: You think it works. In the project you’ve looked at, you think that they’ll use these water treatment systems and in that way save an emission. You can calculate it, but it’s nothing more than a forecast.
Before Vestergaard-Frandsen could get their LifeStraw project converted into voluntary credits, it had to be approved.
An organization called The Gold Standard approves and administers voluntary credits.
The Gold Standard was established by WWF – and 80 NGOs, including Greenpeace. The Gold Standard is approved by the UN.
(Editors note: Greenpeace did not estblish Gold Standard, but have been a supporter og Gold Standard since it’s inception)
The Gold Standard accepted the Suppressed Demand in Vestergaard-Frandsen’s LifeStraw project – and the project was approved.
In order for the economic theory of suppressed demand to be accurate, the population must use the LifeStraw instead of boiling their drinking water.
Nick Moon: We were given one – I have a household – a farm in this area and so when the LifeStraw people came around, we got one. I do not know anyone who uses it. It’s terribly “fiddly”. And it’s terrible slow. It takes such a long time to fill a glass of water. To my mind and my experience it’s totally impractical. I know a lot of people around this area, they – almost all of them – have been given LifeStraws. They don’t use them. They simply don’t use them.
In a written response, Vestergaard-Frandsen say that they visit about 90 percent of the families who received the LifeStraw once a year, and that they closely monitor up to 20,000 families’ use of the filter.
Since the project’s inception, Vestergaard-Frandsen have conducted three visits to the many families. The company refuses, however, to provide reports on their visits until their evaluations are complete.
During our visit in western Kenya, no one we spoke to said that they used the filter very often.
Reporter: You are a politician and you are meeting a lot of people around here I guess. And if you look at your neighbourhood here: Is anyone using it?
Lady 1: Almost none.
Reporter: Almost none? You know, they handed out almost 900.000 of these ones.
Lady1: Yes – and I am telling you almost none is being used.
Lady 2: Even my neighbour here was given one, but I don’t see him using it. That’s how it is.
Lady 3: We are visiting on average in a week about 18. 15 to 18 families
Reporter: And they all have this
Lady 3: And every household has this. But who is using it? Very few people are using it. In fact – for the last two years I have been here, I’ve only had one person saying that they are using it.
Vestergaard Frandsen’s project in Kenya is legal and far from the only project based on supressed demand theory.
The Gold Standard have approved a total of 119 projects. Almost half of them are based on suppressed demand.
A theoretical calculation based on a suppressed need.
Peter Pagh: Earlier you believed in the vicar’s blessing. Today you need a long mathematical formula and then it must be true.
After three independent studies The Gold Standard states they to found that 92% use LifeStraw.
However, The Gold Standard does not want to hand over the studies and The Gold Standard could not find time for an interview.
If the Gold Standard – over the next eight years – approve that LifeStraw is used by 92% of the population in western Kenya, Vestergaard-Frandsen can – given the current price on carbon credits – look forward to a total turnover of between 50 and 67 million €.
Vestergaard-Frandsen claims, however that declining prices on carbon credits also means a drop in revenue.
Therefore the company does not expect profit on the project.
Reporter: The principle thing about the project is 1) cutting down, reducing carbon emissions significantly in this area, and 2) reducing water borne deceases. Has this been done?
Nick Moon: I would say quite categorically no, it has not reduced significantly carbon emissions.
Vestergaard-Frandsen declined to be interviewed for this film.
The largest energy company in Denmark is Dong Energy, a company 80 percent owned by the Danish state.
In total, DONG Energy’s 10 largest power plants emit 11 million tons of carbon annually.
This corresponds to twice the emissions from Danish cars and makes DONG Energy Denmark’s largest emitter of carbon.
Karsten Anker Petersen: It is correct that we emit a lot of carbon due to the coal production at our power plants.
In the period between 2008 and 2012 DONG Energy emitted 7 million more tons of carbon than they had credits.
Therefore, DONG Energy had to buy 7 million carbon credits to comply with the rules.
When the EU started to distribute the credits in 2008 they were worth 30 Euros each.
In the spring of 2013 an EU credit was worth 3 Euros. A decrease of 90 per cent.
A UN-credit was worth 26 Euros – now they are being traded for less than 0.26 cents.
At the same time, the price of coal plummeted.
Karsten Anker Petersen: It’s a challenge. For the single coal power plant a low price on coal is good. But for Dong Energy and our strategy, the low price on coal is a challenge mainly because it drives gas power plants out of competition. They emit under half the amount of carbon compared to a coal power plant.
Reporter: So coal is here to stay?
Karsten Anker Petersen: Probably, and there’s lots of it. The problem is that due to the low price on credits you see that the European electricity companies invest in coal power plants rather than the green transition, and the existing power plants use coal because it’s the cheapest fuel.
Jørgen henningsen: The power plants being built now are coal power plants, rather than power plants using gas or wind or sun.
Jørgen Henningsen:It’s cheaper.
Reporter: So it’s never been cheaper to pollute?
Karsten Anker Petersen: With regard to the carbon credit system, that’s correct. We have stated very clearly – along with other energy companies and organizations in Europe that the low price on credits isn’t good for the green transition.
Reporter: Has it collapsed?
Karsten Anker Petersen: It’s certainly in distress.
Jørgen Henningsen: The European credit market has de facto collapsed. The price is so low that fluctuations don’t effect carbon emissions. It’s too low to have any significance. That means it’s collapsed.
The EU and the UN credit system are in trouble. This is not only due to the low price of coal. The global economic crisis has led to a sharp decline in industrial production – and thus in carbon emissions.
Therefore, there is no need for the many carbon credits on the market.
Martin Lidegaard: The system doesn’t work because it’s flawed. There are simply too many credits on the market.
Since 2005, the EU has issued 10 billion carbon credits.
And the EU Commission will continue to issue credits to European companies.
Connie Hedegaard: Anyone can see that there are too many credits on the market. Then it isn’t very clever to keep putting more credits on the market, but the member states have to agree before we can legislate.
In April 2013, the EU Commission tried to pass a new bill that would ensure that fewer carbon credits would be issued in the future.
The attempt was to – artificially – raise the price of the credits..
However, a majority in the European Parliament rejected the bill.
In 1997, the UN ratified the Kyoto Protocol.
The United States, with the then-Vice President Al Gore in the lead – rejected the EU’s proposal for a tax on carbon.
The result was a market-based system where carbon could be traded on the free market.
In 2007, Al Gore received the Nobel Peace Prize for his efforts against global warming.
Today, carbon emissions are higher than ever.
Kevin Anderson: We have spoken about it – and there has been a lot of rhetoric around the climate change. But the reality is that we have abjectly failed to get any control on our emissions.
Ritt Bjerregaard: Our original scepticism about the system has shown itself to be justified.
Jørgen Henningsen: It doesn’t contribute to protecting the climate, but it allows politicians and others to say that they’ve done something. It’s better to be forced to admit that you haven’t done anything than to do something with no effect which lets you look as if you’ve achieved something.
Kevin Anderson: No one is prepared to acknowledge the scale of the problem – and when we do acknowledge the scale we say: It’s not our fault – some one else must act first. And what’s happening? The emissions go up every single year
Ritt Bjerregaard: The depressing fact is that the world is so dependent on these forms of energy that there’s no will to change it.
Kevin Anderson: There is now a lot of carbon trading – many billions – possible hundreds of billions pounds of carbon that are being traded – but it has nothing to do directly to the climate change. Indirectly I think it makes things worse. So I would say carbon trading again is worse than doing nothing.
Jørgen Henningsen: It’s dangerous to continue with policies that don’t contribute. Not until you accept that they don’t contribute, can you do something new.