The United Nations-administered cap and trade system to reduceplanetary greenhouse gases through investment in green projectsin developing countries has directed most of its billions ofdollars in investments to China and India, two of the world s mostnotorious polluters. Indeed, China and India together have gotten more than 70 percentof the more than 4,100 projects so far registered for the system,while most developing nations, aside from a handful, have gottenhardly any at all, according to the system s own accounts. At the same time, critics are charging that the system establishedunder the controversial Kyoto Protocol to combat greenhouse gasemissions, and nown as the Clean Development Mechanism, or CDM, is costly, unpredictable, unreliable, prone to gaming, and counter-productive due to perverse incentives, according to aconsultants report prepared for the European Commission inBrussels last December. The question of whether it has, in fact, reduced global greenhouseemissions by the equivalent of some 927 million tons of carbon, asheralded by the carbon reduction certificates tallied on the CDM website s also open to vigorous dispute. |
In all, one gets the impression of a mechanism that has notdelivered on its objectives as well as many had hoped, as theEuropean Commission consultants delicately put it, while theycritiqued the cap and trade system s lack of transparency, inconsistency of decisions, conflicts of interest, andextensive support for unsustainable technology for emissionsreduction. Click here for the report. At the same time, the study also declared that in many respects,the CDM can be considered a resounding success, for, among otherthings, positively influencing awareness of clean technologies,helping developing countries gain experience at controllinggreenhouse bases, and providing a unique laboratory in betterunderstanding how to regulate and support carbon markets. In other words, the system is going to continue. The European Commission study s on-the-other-hand support for theCDM points to the stark fact that despite deep misgivings, nobodyis yet backing away from the controversial system of creatingcarbon reduction certificates that lies at the heart of globalcap-and-trade and the U.S., which is not yet a participant, maysoon be joining in.
The carbon reduction certificates are the U.N.-backed proof thatgreenhouse gases of various kinds have, in fact been reduced. Theytrade on exchanges and can be purchased to offset other emissions,and can rise and fall in value depending on demand assuming alwaysthat they are what they represent. A small portion 2 percent ofthe certificates are supposed to be set aside for an adaptationfund to help vulnerable countries deal with climate change. The CDM is a mechanism created by the Kyoto Protocol--which theU.S.
signed two decades ago, but never ratified due to unanimousopposition in the U.S. Senate. Kyoto formally expires this year,however, and he Obama Administration has been heavily involved inthe bargaining for the potential successor. Formal negotiations onthat successor treaty are expected to begin next year, and theaccord itself is expected to be in place by 2015.
Additionally, the Obama Administration has already formallycommitted to reduce U.S. carbon emissions by 17 percent by 2020, astance reaffirmed at a U.N. sponsored climate change conference inDurban last December. hat target is unlikely to be met withoutextensive reliance on a cap and trade system. The most visible symbol of the CDM s durability is the host ofinternational delegates and experts of various kinds who aremeeting in Bonn from May 14 to 25, under the auspices of the UnitedNations Framework Convention on Climate Change (UNFCCC).
Amongtheir aims: to onsider ways to extend the cap and trade system tonew areas of land use and forestry, in advance of the Rio + 20Summit Conference on Sustainable Development, which starts inBrazil on June 21. The goal of the Bonn conference is, among other things, to furtherrefine what the CDM claims to be doing, and bolster its credibilityin advance of a new round of climate change negotiations that willstart next year to create a replacement for the controversial KyotoProtocol on combating climate change, which expires at the endof 2012. The conference clearly has its work cut out for it. Among otherthings, delegates are going to be pondering a research paper on thechallenges of combining the reduction of a wide variety ofgreenhouse gases into a common set of measurements, or metrics, essential to a cap and trade system.
The paper underlines thestructural and scientific uncertainties of emission metrics, thepolitical and economic uncertainties in the implementation ofcommon metrics, [and] the uncertainties of different policyapproaches to deal with GHGs [greenhouse gases], among otherthings. Click for the paper. In other words, the researchers are reporting on the greatuncertainty attached to all the things that the CDM, with its vastarray of green projects, each tagged with different numbers of certified emission reductions certificates (CERs), representinga ton of carbon that is not released into the atmosphere, isassumed already to be managing successfully, through a huge arrayof staggeringly diverse green projects. Click for an inventory of CDM projects, and the countries that hostthem, with links to their underlying project documents.
As the CDM s own numbers show, most of the predominately Europeaninvestment money that has gone into CDM projects has gone to arelative handful of the most successful rising middle-incomenations. After China (48 percent of CDM projects) and Indian (20percent), these include Brazil (nearly 5 percent), Mexico (3.36percent), Malaysia (2.6 percent) and rapidly rising Vietnam (2.77percent). Virtually none of the projects so far have gone to the poorestcountries of Africa, the Middle East, Asia, or other regions thatproponents of he CDM initially argued would benefit from theelaborate mechanism to combat climate change, though CDMofficials now say hey are now pondering ways to change that. CDM is a market-based mechanism, explains a CDM spokesman.
It s left up to companies to decide whether and where they wishto pursue a project. What has been observed is that the number ofprojects more or less matches the foreign investment that countriesattract. art of the logic, the spokesman noted, is that thebiggest rapidly industrializing countries, like China and India,have lots of pollution that needs to be abated. The nature of that abatement has already caused significantcontroversy, and may be doing more, not less, to increase globalcarbon emissions and cause other forms of environmental damage.
Included among nearly 2000 CDM projects in China, for example, areroughly 80 that are aimed at destroying a powerful gas known asHFC-23, used in digital chip-making and as a refrigerant. In thearcane calculations of the CDM, a ton of HFC is said to beequivalent to about 11,700 tons of carbon dioxide, and projectsthat destroy it receive hundreds and thousands of times as manycarbon reduction certificates as other projects, such as wind farmsor bio-mass disposal. (The CDM inventory for India includes roughly 30 HFC-23 destructionplans, out of roughly 800 entries.) The catch is the producing HFC-23 is cheap so cheap that thereward for destroying it creates an incentive to create even moreof the gas for what some critics have decried as billions ofdollars worth of windfall profits. Moreover, because the CDMcertificates generated by HFC-23 reduction can be used to offsetother carbon emissions, the inflated number of certificates forHFC-23 actually create get-out-of-jail-free cards for largerconventional carbon emissions. The counter-argument, from a CMD spokesman queried by Fox News onthe topic, is that about half of the HFC-23 produced indeveloping countries is incinerated; that half covered by the CDM.Without CDM a great deal of a very potent greenhouse gas would begoing into the atmosphere.
The problems with HFC-23 destruction have been known to the CMD,and its parent UNFCCC for years, and have been opaquely discussedat meetings similar to the Bonn conclave where no consensus onwhat to do has been achieved. The European Commission hasunilaterally declared that it will ban trading in certificates fromHFC-23 projects in May, 2013. UNFCCC bodies studying the problem have not come to a finalconclusion. The CDM is young, it s the first of its kind, and it hasinspired participation well beyond expectations, argues the CDMspokesman in defense of the institution. It is a tool thatcountries have, now, at their disposal to incentivize investment inemission reduction projects and assist in sustainabledevelopment.
Even if, as the UNFCCC s own experts report, the metrics stillneed work. Maybe a lot of ork. George Russell is executive editor of Fox News and can be found onTwitter @GeorgeRussell Click here for more stories by George Russell.
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