Key to the EU system (known as the European Trading System or ETS) is the notion of carbon offsets, more officially referred to in the Kyoto Protocol as Certified Emissions Reductions (CER), which allow carbon emitters (think big coal company) to contribute funds to projects (think wind or hydro) with small carbon footprints in developing countries (think Kenya and China). The carbon emitters get credit within the ETS for their contribution, but only if these projects wouldn’t have occurred without their support.
In theory, the exchange helps emitters comply with ETS regulations and helps developing countries avoid building greenhouse gas-emitting projects. And to assure that the new projects are legitimate, an executive board, as well as an independent third party, oversees the deal. It’s their job to make sure that all this haggling results in a reduction in greenhouse gases.
But the devil is in the details, or so finds a new study by David Victor, director of the Program on Energy and Sustainable Development at Stanford University, and his colleague Michael Wara. They write that the most popular type of CER, the Clean Development Mechanism (CDM), “…does not reflect actual reductions in emissions, and that trend is poised to get worse.”
Not good! And yet almost predictable. The system for verifying CDM credits is riddled with conflicting incentives. Victor and Wara write:
Their study goes on to suggest possible reforms to the CDM system, such as requiring an entity other than project developers to pay third party verifiers and limiting the number of CDM projects under consideration.
Now about that reward we promised. Having made it this far in the ethereal world of climate change policy, you have officially reached the level of ‘carbon wonk’ — a term so insidery it hasn’t even hit Wikipedia. Congratulations, Grasshopper.
Story by Victoria Schlesinger . This article originally appeared in Plenty in May 2008. The story was added to MNN.com in July 2009.
Copyright Environ Press 2008