Swiss CO2 offset system vulnerable to fraud

Fuel importers will need to invest around CHF 1 billion in projects and programmes by 2020 in order to reduce emissions. Keystone

Switzerland’s Federal Audit Office has released a report that says the nation's system for compensating for CO₂ emissions does not adequately avoid fraud. Tighter controls are recommended, but authorities are concerned about increasing bureaucracy.

Since Switzerland’s CO₂ lawExternal link was enacted in 2013, fuel importers must compensate for part of their CO₂ output by financing projects aimed at reducing emissions.

Ten private audit offices are responsible for auditing these projects before they get the green light from the environment ministry, which gives companies a certificate worth CHF100 ($104) for each tonne of CO₂  reduced.

However, the Federal Audit OfficeExternal link reports a high risk of fraud, noting that the current system is too complex.

The office cites evidence of inefficiencies in the project auditing process, as well as false information provided by project owners, incomplete and missing documentation submitted to the environment ministry, and inconsistent treatment of different projects by auditors. It also warns that the independence of the auditing bodies is not guaranteed, and must be improved.

The Federal Audit Office called on the Swiss government to take action, notably by sanctioning  false project declarations.

Swiss news agency ATS reported Tuesday that the environment ministry has agreed that the next revision of the CO₂ law should introduce a mechanism to better verify the independence of supervisory bodies.

However, the ministry is concerned that several of the Federal Audit Office’s recommendations could lead to more bureaucracy, going against demands of policies to reduce it.