The Price of a Tonne · Episode 3 of 14 · 24 min
The Factory That Was Paid to Pollute
In 2012 a chemical company in Gujarat earned about $187 million in carbon credits for burning the waste gas from its refrigerant plant. Nineteen such plants generated over half the credits in the Clean Development Mechanism's first six years, because destruction cost under a dollar a tonne while credits sold for ten or twenty euros. The episode traces the design flaw behind it, the additionality test, and the mechanism's wind-down.
Who's who
- Michael Wara+1 more episodeStanford law professor who questioned whether the global carbon market worked
- David VictorCo-author with Wara of the HFC-23 arithmetic
- Barbara Haya+4 more episodesBerkeley researcher who critiqued measuring emissions against an alternative future
- Lambert Schneider+2 more episodesÖko-Institut researcher who assessed additionality in CDM projects
- Martin CamesLead author of the 2016 study for the European Commission
- Valli MoosaChair of the 2012 High-Level Panel on the CDM
- Connie HedegaardEU Climate Commissioner who proposed banning HFC-23 credits
Where it happens
- Gujarat, IndiaHome of a plant earning about $187 million in 2012
- China+2 more episodesHosted roughly half of CDM credits; taxed HFC-23 revenue at 65 percent
- Mexico+10 more episodesSite of a refrigerant producer earning HFC-23 credits
- Nova Iguaçu, BrazilSite of the first registered CDM project in 2004
Timeline
- December 11, 1997Kyoto's Article 12 creates the Clean Development Mechanism.
- November 18, 2004The first CDM project is registered at Nova Iguaçu, Brazil.
- July 2010A watchdog publishes evidence of plants running waste ratios at the methodology cutoff.
- November 2011The allowable HFC-23 waste ratio is cut from 3 percent to 1 percent.
- May 1, 2013The EU ban on HFC-23 credits takes effect.
- June 30, 2026The last date for new credit issuance requests passes.
Still debated
The HFC-23 destruction was real and metered, so the critique concerns price, incentive, and over-crediting rather than fraud. The 2016 finding that 85 percent of projects were likely non-additional is a likelihood estimate disputed by developers, and plant manipulation rests on pattern evidence.
