KAI RYSSDAL: As long as we’re talking about the environment, let’s move on to something simple like the Kyoto Protocol’s carbon-trading scheme. OK, not so simple But here’s the idea: Let industrialized countries buy the right to pollute by paying for greenhouse-gas reductions in developing countries that can’t afford to do it.
A report out today in the journal Nature says that market solution is actually wasting billions of dollars. From the Marketplace Sustainability Desk, Sam Eaton has that story.
SAM EATON: The study found that the largest volume of greenhouse gas reductions on the global carbon market have come from a small number of factories in China and India that make air conditioners and refrigerators. That process emits a greenhouse gas known as HFC-23. It’s so potent that the gas’ effect on global warming is about 12,000 times that of carbon dioxide. That potency makes any reductions in HFC-23 emissions extremely valuable on the global carbon market. And because it’s so cheap to fix — only about a couple million dollars a pop — the profit margins for the Chinese and Indian factories are huge. The report’s author, Michael Wara, says that’s distorting the entire carbon market.
MICHAEL WARA: What that’s doing is funneling all of the money that the developed world is putting into lowering carbon emissions in the developing world into this one industry. And my main finding is that that’s probably not the best way to be spending our money.
Wara says industrialized nations have spent billions of dollars buying up carbon credits for these projects, even though the actual cost of upgrading the factories was a mere fraction of that. He says that leaves less money to address major challenges to the world’s climate like moving China away from coal-fired power plants. China is expected to overtake the U.S. as the world’s number one greenhouse gas emitter by 2009. But carbon market expert Mark Trexler says blaming Kyoto for the loophole isn’t fair.
MARK TREXLER: Kyoto was intended to be much broader spectrum. The U.S. was supposed to be part of Kyoto and that would have meant a lot more demand for reductions, which would have moved us up past a lot of this low-hanging fruit.
Trexler says until the U.S. joins the Kyoto club, the impact of the global carbon market will be symbolic at best.
In Los Angeles, I’m Sam Eaton for Marketplace.
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