A real problem with the Clean Development Mechanism. From Reuters.
Chemical plants in China can earn substantial windfall profits by destroying powerful greenhouse gases, underlining the need for changes to the rules of a Kyoto Protocol incentives scheme, a U.N. report shows.
Western investors who trade carbon credits may also make windfall profits from the scheme in its present form, Reuters data show.
China, with its fast-growing economy, has become crucial to the global fight against climate change.
It is set to overtake the United States this year as the biggest emitter of the commonest greenhouse gas, carbon dioxide.
But it has also become a big beneficiary of incentives to destroy more powerful greenhouse gases, through a scheme set up under the Kyoto Protocol on global warming.
Those incentives now appear very generous, the report by the United Nations Environment Programme (UNEP) showed.
Factories in China, and others in India, Mexico, Argentina and South Korea, will earn up to 10 times more money than they actually need to destroy the powerful greenhouse gases, the report found.
It suggested that "national levies are applied to limit the financial gain of individual manufacturers," after the first cycle of project funding ends in seven years.Kyoto is meant to fight global warming, and allows rich countries to buy carbon offsets, or carbon credits, which help them meet limits on their emissions by paying for emissions cuts in developing nations....MORE