Perverse incentives

Following on from the article in The Sunday Times last weekend, The Economist has an article in this week's edition, Perverse incentives, that factories in China are ramping up the production of some of the worst greenhouse gases for financial gain. In this case they are producing HFC-23, which is 11,700 times more potent than CO2 and slated for elimination by the Montreal protocol, so that they can later reduce their emissions and sell the CO2 equivalent credits back to EU companies. It's estimated that this will make the Chinese companies approximately $6.4 bln when the cost of capturing the gas is only around $140m. And, of course, does the planet no good in the meantime.

What this requires is that the replacement for the Kyoto protocol, which expires in 2012, needs to be rather more savvy in understanding that the world is full of unscrupulous people who will quite happily destroy the planet for a quick buck. As The Economist itself points out, the real focus needs to be on reducing carbon emissions from power generation as it is by far the largest polluter.