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How The Smart Guys Are Making A Killing Out Of The Carbon Credits

Publication Date: 
August 05, 2008
The Age
Tony Parkinson

The Age (Melbourne, Australia) references a recent study by Professor David Victor and Assistant Professor Michael Wara about international carbon offset trading:

The problems inherent in the CDM (Clean Development Mechanism) have been exposed to searching analysis by two Stanford University experts on international environmental law, Michael Wara and David Victor. In their study, A Realistic Policy on International Carbon Offsets, Wara and Victor scrutinized more than 3000 projects either applying for, or having won, approval under the CDM, only to discover that up to half of all these projects had not delivered, or would not deliver, real additional reductions in carbon emissions.


As Wara and Victor demonstrate, the system is prone to aggressive gaming. In an article published by a Stanford University newspaper in May, Victor sounded a clear warning: "The current strategies for taming the volcano of emissions from the developing world are not working," he wrote.


Wara and Victor concluded that most projects should not have been considered for help because "they would have been built anyway".


As Wara wrote in the journal, Nature: "HFC 23 emitters can earn almost twice as much from the CDM credits as they can from selling refrigerant gases — by any measure a major distortion of the market."