From the front page of the Wall Street Journal:
A multibillion-dollar experiment designed to curb global warming is stumbling as regulators question whether the program is doing enough environmental good.
The United Nations is the main global policeman in an effort by wealthy nations to reduce the impact of their own pollution by paying for cleanups in the developing world. The program, known as the Clean Development Mechanism, is one of the most important coordinated efforts to attack global warming.
In recent months, however, U.N. regulators who administer the program have objected to dozens of these developing-world projects, ranging from hydroelectric plants to wind farms, questioning whether the projects would produce a real environmental payoff.
U.N. regulators are also concerned that some independent auditors of these projects, who are responsible for vetting their environmental legitimacy, have been letting project developers push through ventures of questionable environmental value.
The crackdown challenges a plank of the world's campaign against climate change: that polluters can pay someone else to clean up the mess. If the approach were to be discredited, curbing emissions could cost companies and consumers significantly more....Continued
The verifiers hold exactly the same position in the carbon world as appraisers do in the mortgage biz.
As we get into structured carbon finance (carbon notes, carbon backed securities) really slicing and dicing the cash flows, there will be room for all kinds of shenanigans. The key difference is that whereas Mortgage Backed Securities had real estate (even if overvalued) backing them, CBS's will be built on the absence of an invisible gas. Is it any wonder that GS is interested?
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