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164 development dialogue september 2006 – carbon tradingAs a result of this and other factors, the CDM is dominated by big,non-renewable projects that generate a lot of cheap credits but arenot leading to structural change – in particular a handful of schemesto capture and destroy greenhouse gases called HFC-23 and N 2 O.HFC-23 (a by-product from the manufacture of HCFC-22 and asubstance used in air conditioners and refrigerators) is an extremelypotent greenhouse gas estimated to be 11,700 times as climaticallydamaging as carbon dioxide. N 2 O, another very harmful greenhousegas, is emitted during the industrial production of adipic acid, a rawmaterial for nylon.Capturing and destroying the two gases is relatively convenient andeasy. You do it all in one place – the factories where the gases are generated.The technique is uncomplicated, politically speaking – you justbolt extra bits of machinery onto an existing plant. And, because theseHFC-23 and N2O are so potent climatically, the dividends are huge.The Clean DevelopmentMechanism (CDM) ‘isnot encouraging companiesto devote funds torenewable energy sources…to the extent…hoped.’Wall Street Journal,11 August 2005Could you give an example?The Gujarat HFC-23 project in India, set up to supply credits to Japan,will prevent the emission of only 289 tonnes of HFC-23 annually. Yetbecause HFC-23 is such a potent greenhouse gas, this single quick fixwill yield a whopping 3 million carbon credits per year, more thandouble the yield of all 20 CDM renewable energy projects registeredwith the CDM by May 2006. As of the same date, a single HFC-23 decomposition project, the Shandong Dongyue scheme in China,represented 19 per cent of all the credits generated under CDM. Aconsortium of Japanese, Italian and Chinese partners is meanwhileinvestigating a project spread across 12 HCFC-22 plants in Chinathat would yield 60 million credits a year from 2008. Just seven of the265 projects registered by August 2006 accounted for nearly three -quarters of all CDM credits. All were gas capture projects. 373 Renewableenergy projects make up only 2 per cent of CDM credits (seeFigure 8). The current proportion of world market investment in renewableenergy or energy efficiency due to the CDM – also a mere 2per cent – can only shrink.Even so, the cost and inconvenience of having to come up with carbonaccounting documents irritates business, Northern governments,and agencies such as the World Bank, who want as many cheap creditsto be flowing into the market as fast as possible so that fossil fuels cancontinue to be burned at their accustomed pace. In 2005, for example,the World Bank pushed for the CDM Executive Board to be sidelined,claiming it was being too meticulous about reviewing methodologiesat a time when thousands of projects had to be approvedin a hurry. As a result, the pressure is on technocrats and consultants