Add greenhouse gas trading to the list of scams in China. Apparently earning and trading carbon credits is one dodgy business and a few Chinese chemical companies had mastered its loopholes to the tune of $2.8 billion. That is, until they finally caught the eye of Europe’s carbon market sheriffs.
The companies in question were manufacturing an environmentally friendly refrigerant called FCFC-22 simply so that they could turn around and destroy it’s potent byproduct, HFC-23. The result, a carbon credit payload. Now however, the European Commission is considering banning the credits because of the companies’ demonstrated “total lack of environmental integrity.”
At the center of the scheme is the UN’s Clean Development Mechanism (CDM), which allows economically advanced nations to meet emission targets by investing in clean energy projects in developing nations. With China being a beneficiary of 48% of global CDM credits it was only sooner or later before someone started looking for something to exploit.
Of course carbon credit controversy is not new for China. In the past couple of years, industry hounds have been barking about the Middle Kingdom gaming the system with its massive hydroelectric dam construction efforts and push to ramp up wind farm capacity.
There were loud cries that these projects didn’t meet the criteria of additionality. More plainly put, that China would build these farms regardless of whether credits were given or not, thus disqualifying their eligibility.
And just yesterday, this being the carbon credit merry-go-round it is, PetroChina, the largest oil company in China, also announced that it is opening a UK-based trading desk to gain a foothold in the European carbon market.
Makes us wonder if China is going after Coca-Cola and Pepsi next in order to unify all carbons and create the greatest “carbonation” the world has ever seen! If so, this should help.