Clean Development a con?

A recent study by Stanford University academics has slated the UN’s Clean Development Mechanism (CDM), designed to fund new investment in clean energy, saying between a third and two-thirds of the annual $20 billion a year funding is wasted because it goes to projects that would have been built anyway, or are already built.

It’s the concept of “additionality” that’s the key here… funding is meant to stimulate additional investment in clean energy, not fund investment that would have occured anyway. 

The CDM, if you aren’t aware, is part of the Kyoto deal to allow rich nations to essentially outsource their emissions cuts to the developing world. Instead of investing in clean energy at home, they fund clean energy projects in poor nations such as China, which is cheaper and, in theory, delivers the same greenhouse gas reductions.

But not if half the firms involved are rorting the system.

The CDM has been criticised by environmentalists by allowing rich nations to shirk their duty to take action on emissions in their own countries.

More than that though, it shows the dangers of relying on the market to deliver climate solutions. Market-driven solutions try to encourage businesses to make money out of reducing emissions. But as long as money is still the motivation, you’ll inevitably get firms trying to rort the system. It’s like tax avoidance – as long as it’s not technically a crime it’s fair game. Isn’t it?

The alternative… western governments take climate change seriously, invest tax dollars in clean energy R&D to bring down the cost of clean energy technology, legislate in favour of clean energy…

But of course, these aren’t “market” mechanisms…

 

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