By Matthew Chapman
Five Live Report
Money pledged by the UK to help an African township cut energy costs is paying for bureaucrats and accountants, BBC's Five Live Report has found out.
Governments are coming under pressure to protect the environment
The donation was meant to make up for the pollution caused by the world leaders flying to last years G8 summit in Gleneagles hosted by Tony Blair.
The revelations led to Friends of the Earth calling the scheme "a fiasco".
Questions have also been raised about the UK government promoting firms that offset pollution with other measures.
For example, under carbon offset schemes, companies are offering to plant trees or invest in energy saving projects on behalf of air travellers to compensate for the pollution their flights have caused.
Ministers announced that last year's G8 meeting would be the first ever carbon neutral summit and pledged that £50,000 would be given to a scheme in a township in Cape Town which provided energy saving light bulbs and fuel efficient stoves to local residents.
The money is being routed through the United Nations-run Clean Development Mechanism, which gives the stamp of approval to energy saving schemes.
The travel industry has come under scrutiny over its green credentials
However, the BBC has learned that the whole scheme has turned into a bureaucratic nightmare for the local council who face being left in debt.
Council spokeswoman Shirene Rosenberg said the British money would have to be spent on auditors hired from an international accountancy firm who would check on the efficiency of the scheme.
Other sources have said that one of the jobs of the auditors may be to count the light bulbs to check how many have been broken.
"It's been a complicated and onerous process," said Ms Rosenberg. "It would definitely make the council think twice about being involved in another project like this."
The scheme allows the council to engage in carbon trading whereby they calculate how many tonnes of carbon dioxide could be saved by the project and then sell off these potential saved pollutants, or carbon rights, to Western donors like the UK government.
South South North, an independent organisation involved in the project, has calculated that the scheme will raise £37,000 pounds from selling these carbon rights, which should then be invested back into the poverty stricken township.
However, they have then calculated that filling in all the forms demanded by CDM, as well as hiring auditors, will cost £54,000, leaving Cape Town council in debt to the tune of £17,000.
It has also emerged that the South African energy firm Eskom has launched its own scheme to supply energy efficient light bulbs in the very same area potentially replicated the work done on the project.
Environmental campaigners say the G8 leaders should have come up with a programme to reduce greenhouse gasses rather than get involved in carbon offset schemes.
"The whole of this G8 offsets scheme has been a fiasco from start to finish," said Mike Childs of campaign group Friends of the Earth.
"The government would have done better to concentrate on the supply of low energy light bulbs in the UK before moving on to Africa."
The South African project was meant to help fulfil a promise by ministers to create a carbon-neutral government.
The Department for the Environment and Rural Affairs (Defra) has responded to the allegations saying that the government wanted the CDM system to become faster and more efficient.
They also said that auditors were needed to check the project was delivering energy efficiency.
Defra is thought to be weeks away from announcing which company will have the contract to handle up to £1m of government money aimed at buying carbon offsets to compensate for all the air travel taken by ministers and civil servants.
Can planting trees really help offset the effects of a plane journey?
One of the favourites is thought to be the Carbon Neutral Company, which along with Climate Care is being promoted on several government websites to airline travellers in the UK.
The Carbon Neutral Company allows people to buy into forests in the UK, but despite references to "your forest" on their website, some customers do not realise they have not bought a tree with their money.
Instead some mistakenly make the trek to a remote forest on the Isle of Skye.
"Unfortunately yes they do seem to labour under that misconception," said Kevin Sutton, who manages the Orbst Forest on behalf of its owners, a government quango called Highlands and Island Enterprise.
"They ask 'where is the tree that I bought?' I have to refer them back to the company," he explained.
What customers of the Carbon Neutral Company have bought stems from a contract between the company and the owners of the forest agreeing not to cut the tree down for 99 years.
This allows the company to sell the carbon rights of each tree for 99 years.
Several landowners contacted by the BBC, including the Highlands and Island Enterprise, said the forests were going to be grown anyway and being public forests were unlikely to have been cut down.
They said the Carbon Neutral Company's investment was relatively small in the overall budgets of the forests.
A spokesman for the Carbon Neutral Company said they had a raft of quality assurance measures in place to make sure that all their projects represented the best practice in the market.
They said all their projects were continuously reviewed by an independent advisory board.
Matthew Chapman's report, Trading Trees can be heard on Five Live Report on Sunday 29 October at 1100 GMT and will also be available at the Five Live Report website.