The biggest environmental scandal in history

A UN board could rein in $2.7 billion carbon market to prevent the double dipping of CFC manufacturing incentives and carbon credit sales, as discovered to be happening in China.

Guest post by Ric Werme

Image from: made-in-china.com click for details

Excerpts from: http://news.yahoo.com/s/ap/20100821/ap_on_bi_ge/un_un_carbon_cutting_scheme# reports

UNITED NATIONS – An obscure U.N. board that oversees a $2.7 billion market intended to cut heat-trapping gases has agreed to take steps that could lead to it eventually reining in what European and U.S. environmentalists are calling a huge scam.

At a meeting this week that ended Friday, the executive board of the U.N.’s Clean Development Mechanism said that five chemical plants in China would no longer qualify for funding as so-called carbon offset credits until the environmentalists’ claims can be further investigated.

This is coupled with the production of the “ozone friendly” refrigerant HCFC-22 (chlorodifluoromethane). A byproduct of production is another gas, HFC-23 (trifluoromethane) which has been determined to be 11,700 times more powerful than CO2 as a greenhouse gas.

Not only are the manufacturers able to sell carbon credits for producing HCFC-22, they can also sell “certified emission reductions” (CERs) for destroying HFC-23, to the tune of about $100,000 per ton! 

Not surprisingly:

“The evidence is overwhelming that manufacturers are creating excess HFC-23 simply to destroy it and earn carbon credits,” said Mark Roberts of the Environmental Investigation Agency, a research and advocacy group. “This is the biggest environmental scandal in history and makes an absolute mockery of international efforts to combat climate change.

This is not a new problem. While looking for a decent image, I came across the 2007 article http://www.carbon-financeonline.com/index.cfm?section=features&action=view&id=10420 which notes:

The creation of carbon credits from the destruction of the potent greenhouse gas (GHG) trifluoromethane (HFC23) has been one of the most controversial issues during the early life of the Kyoto Protocol’s Clean Development Mechanism (CDM).

A by-product of the manufacture of the refrigerant HCFC22, many viewed HFC23 destruction projects as a cheap money-maker for a small number of industrial sites in a handful of developing countries that provided little discernible sustainable development benefit to those countries.

With CERs currently selling for €11 ($14)/t, the profit margins from HFC23 destruction projects are obvious. For example, Indian chemicals firm SRF, which operates one of the 10 registered HFC23 destruction projects, said in a recently released earnings report that it has, so far, sold 3.65 million CERs in the 2006-07 financial year for Rs4,050 million ($96 million). The sale of CERs has become a significant revenue stream for the company, second only to its technical textiles business and ahead of its chemicals and packaging units.

Current state-of-the-art production facilities, such as DuPont’s Louisville Works in the US, have HFC23 generation rates as low as 1.37%, so there may be some scope for the volume of CERs from new production, if allowed, to be considerably less than from existing plants.

DuPont is not involved in HFC23 destruction in the CDM market. But it has destroyed HFC23 as part of a set of 1991 internal goals to reduce GHG emissions. “We were doing this way before the carbon market,” says Mack McFarland, an environmental fellow with DuPont Fluoroproducts in Wilmington, Delaware.

That article has a graphic…

…that shows HFCs as half the CDM market in the first 3 quarters of 2006.

In 2008, http://blueskieschina.com/mambo/content/view/257/90/ noted

While China has long been ahead of India in terms of potential carbon credits generated by registered projects, India has dominated actual CER issue since January 2006.

But a bumper start to 2008 for China saw over 10 million CERs issued in January, accounting for over 90% of all CERs issued that month (chart 2). These credits, stemming from just four chemical plant HFC23 destruction projects, pushed China into first place in the issued carbon credit leaderboard for the first time since the CDM programme began.

There’s a lot more background at http://www.sourcewatch.org/index.php?title=Clean_Development_Mechanism_and_HFC-23_destruction

I guess it’s too late to invest in new HCFC-22 chemical plants.

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Gary Hladik

According to a UN spokesperson, the UN is also reviewing its international hole-mitigation program, because unscrupulous governments are said to be digging new holes in order to get paid for filling them up again.

oakgeo

“… what European and U.S. environmentalists are calling a huge scam.”
Interesting that environmentalists are given credit for exposing this. When skeptics bring up issues like this, they are usually met with silence or scorn in the MSM.

Tom S

Ahh yes…. What could possibly be wrong with trying to solve global warming even if there is a slim chance the problem doesn’t exist? You want a cleaner planet riiiight??
^^ Almost everyone I’ve argued with…
Yet here is one of those glaringly obvious examples of government created problems resulting from government solutions to solve non existent problems.
Can anyone else name a few??? Most of today’s issues come to mind for me.

Michael Schaefer

Where’s a buck, there’s a crook.
But the idea to make purchasing emission rights of a naturally existing gas, which is THE essential raw material for the functioning of the circle of life on Earth, an obligation for doing industrial business, is as poetic as it is crazy.
I expect the whole carbon-credit scheme to wither away within the next two years.

Alan Simpson not from Friends of the Earth

I read the story behind this months ago and my reaction http://www.youtube.com/watch?v=C_S5cXbXe-4
You know what they say about best intentions…
I suspect the next scam is already lied up to replace this, the UN has never been anything resembling an, ” Honest Broker “, Tch!

Henry chance

The frauds we face in the intangible products are massive. Some of us expected this. There will be no oversight. How do we know there isn’t some other gas in those tanks?

latitude

and now, from the same people that brought you “Oil for Food”….
…..We have “Creating Pollutants for Dollars”
Why do I feel like I’m watching a Sham-Wow commercial?

rbateman

Once again, a scam is found out after the damage has been done.
Just another good reason why Carbon-Trading is but a vehicle for the unscrupulous, with the regulators deep behind the 8 ball.
Only the naieve would hang on to double-ended firecrackers while others light them, but then we are talking the UN here.

woodentop
Richard Briscoe

No surprise here, the Chinese have long experience of this sort of idiocy.
When Mao declared that peasants must eliminate flies, officials demanded that everyone produce 20 dead flies per day. Enterprising peasants promptly built mesh cages, put in rotten meat, and bred flies by the thousand to meet the quota.

George E. Smith

Can somebody please explain what it means to be 11,700 times as powerful a greenhouse gas as CO2.
Does that mean that CF-23 at 33 parts per billion of the atmosphere does as much warming as CO2 does at 390 ppm ?
And what is the LWIR absorption spectrum of CF-23 at least in the range of 5 microns to 80 microns wavelength which is about where 98% of the surface emitted LWIR is to be found ?

The UN is the wrong place to look for honest brokers of anything.
Can someone explain how something is 11,700 times as powerful a greenhouse gas as CO2?

Leon Brozyna

Free money from an extra-governmental entity, responsible to no one. What could possibly go wrong with that?

Scarlet Pumpernickel

This looks worse then the BP spill

Dave N

oakgeo:
Even with environmentalists crying foul, I doubt that this story will gain much traction in the MSM.
There’s already been numerous stories of fraud in emissions trading schemes which have been largely ignored by the MSM, presumably because it would expose holes in the CAGW agenda.

James Sexton

Wow, whodda thunk? Somebody should’ve warned them guys!

James Sexton

BTW, $2.7 bil. ? I doubt very seriously if that is the biggest scam being perpetrated.

The biggest environmental scandal in history?????
Ever hear of Climategate?

Richard North covered this quite some time back. But the thing is growing and it is good to see these ‘money for nothing’ schemes come to light.

JRR Canada

Biggest Environmental scandal? NO it is still unfolding, or rather unravelling, can’t wait till the people who have paid the bill get angery.

TomRude

Funny how everybody hated Bush when he did not want to fund the UN… Well, now you got what you deserved: big UN corruption and Obama.

Dr. Dave

In pure $ amount the CFC ban/ozone hole fraud was a much bigger scam. The ozone hole fraud has been quietly brushed under the rug now that the eco-geeks and the big manufacturers of proprietary refrigerants have gotten what they wanted. Talk about specious, unproven science! I refer to the CFC ban as the pilot episode to the long running sit-com called AGW.
http://www.americanthinker.com/2010/02/the_cfc_ban_global_warmings_pi.html

H.R.

latitude says:
August 24, 2010 at 3:54 pm
“and now, from the same people that brought you “Oil for Food”….
…..We have “Creating Pollutants for Dollars”
Why do I feel like I’m watching a Sham-Wow commercial?”

At least with the Sham-Wow, you get something you can use to dry off your car, whereas the $2.7 billion? Down the rat hole. And that was all OPM (Other People’s Money).

rbateman

Leon Brozyna says:
August 24, 2010 at 4:25 pm
Free money from an extra-governmental entity, responsible to no one. What could possibly go wrong with that?

Everything, that’s what could go wrong.
Gentleman, start your vacuum cleaners.

Frank K.

Leon Brozyna says:
August 24, 2010 at 4:25 pm
“Free money from an extra-governmental entity, responsible to no one. What could possibly go wrong with that?”
Sounds like Climate Ca$h to me…the climate scientist’s best friend…

Ben Hillicoss

When you hear the word “environmentalist” just break it down:
envi : the resentful or unhappy feeling of wanting somebody else’s success, good furtune, or qualities.
iron : a heavy malleable abundant element
mental : a term meaning unintelligent or silly
ist : one who is these things or believes
So to sumerize, a resentful unhappy person wanting to steal success, who is extremally malleable, or easily influenced, who is unintelligent and believes in this non-sence

H.R.

Oh, BTW, wherever did my manners go?
Nice to see a post here from you, Ric. I’ve always appreciated your comments. (And thank you too for having him on, Anthony).

Pamela Gray

What!!??!?!? Are you freaking kidding me???? Fraud in carbon trading???? GAWD! I never would have guessed, and certainly THIS web blog never mentioned it!!!!

oakgeo says:
August 24, 2010 at 3:44 pm
> Interesting that environmentalists are given credit for exposing this. When skeptics bring up issues like this, they are usually met with silence or scorn in the MSM.
Apparently the CERs for HFC-23 have been discussed at all the COP sessions from Kyoto to Copenhagen. Lotsa enviromentalists there. My guess is that they’re annoyed because:
1) The system encourages production of HCFC-22.
2) The system encourages production of HFC-23.
3) The system encourages production when we all should be conserving and shrinking our carbon footprint.
4) The influx of CERs depresses the value of CERs so power plants and other entities that are required to offset their CO2 emissions can find plenty of CERs, cheap, when the system should be making CERs ever more scarce to force power plant operators to be ever more green with renewal energy like bird slicers and nighttime lighting by whale oil substitutes.
In short, it all screws up their world view and must be fixed.

Pamela Gray

Hey, where’d my post go about the possibility of carbon scandal never being mentioned on WUWT?????

Walt

HCFC-22 is not considered ozone friendly. The manufacture of new air conditioning and refrigeration equipment utilizing R-22 is currently banned per phase-out dates dictated by the Montreal Protocol. The production of R-22 is still allowed, but only as a service refrigerant.
So I am confused.

Things like this expose the ultimate naivety of those who think they can control environmental issues through regulation. It is almost as ludicrous as what frequently passes for science in the AGW debate itself. The environmentalists are ticked for two reasons. First, they were behind this regulatory regime in the first place, so of course they are upset when they learn that their intent has been circumvented. Secondly, and more importantly, it exposes the ultimate flaw in their plan to save the planet from evil human beings who work hard and smart and create wealth.
When anything becomes highly regulated, there is always someone, somewhere, who will find a way to skirt the regulations for profit. Cocain trafficers are building their own submarines now to haul their cargo undetected to the shores of highly policed countries, and they haul it from countries that look the other way at the massive production facilities. Many ships are registered in places like Liberia because they have fewer regulations and almost no inspection system. In the western world, child labour is illegal, and we have a minimum wage, as a consequence of which many of our shoes and clothes come from factories in countries that use children as slave labour.
The truth of the matter that environmentalists cannot seem to wake up to is that even if the entire world adopted the most stringent of CO2 reduction regulations, there would be many, many, many places on this planet where dictators and opportunists will look the other way or falsify documentation in order to profit from the enormous profits inherant in any industry that can free itself of regulation.
The environmentalists can’t save the planet from “evil” human beings working hard and smart to create wealth. All their noble efforts can result in a change in who makes the money and where they make it, and probably rising CO2 emissions to boot as the illegal factories would likely be less efficient and certainly not environmentally conscious. Their scheme will simply put vast amounts of money into places where “evil” is a whole different order of magnitude from those the environmentalists are taking aim at right now.

Chris Edwards

I think the nice train engineer who runs the UN climate change department has one of those plants?
The UN needs to be de-funded, it serves no good (unless you are underage and desire to trade sex for food.)

Based upon my analysis, the purpose of regulation and legislation is to create loopholes.
Invariably, newly-minted rules create unexpected and unintended opportunities because clever or unscrupulous individuals realize that, legally, the “letter” of the law is more important than its intent.
This is a lawyer’s-eye-view of any such document and it is not surprising that while lawyers are not always involved in the preparation of such propositions, they are always available for the interpretation and exploitation of said loopholes.
It must surely irk the CAGW crowd to realize that their prized methods to save the world are rapidly leading to its impoverishment and dilapidation. Tends to lend credence to the supposition that the actual GW information is also lacking.

pat

reuters is now also reporting on this particular scam, but no MSM coverage as yet:
24 Aug: Reuters: Are Chemical Companies Gaming the Carbon Credit System?
http://www.reuters.com/article/idUS271914704820100824
23 Aug: Reuters: Divisive HFC carbon-cut plants gain W.Bank support
The bank’s Umbrella Carbon fund has contracted to buy from two HFC-23 projects in China some 130 million tonnes in offsets through 2013, worth 1.76 billion euros ($2.24 billion) at current market rates.
But offset issuances to these two projects and three others were halted last week by the CDM’s executive board pending further investigation into the allegations. ..
The 19 HFC-23 projects account for over half of the 430 million offsets doled out to the 2,326 projects approved under the CDM to date..
http://af.reuters.com/article/energyOilNews/idAFLDE67M0YM20100823?sp=true
24 Aug: Reuters: Carbon trade lobby calls for rule clarity from EU
An emissions trading lobby group has called for the European Commission to clarify rules on UN-backed carbon offset use in the third phase of its emissions trading scheme in order to boost ebbing market confidence…
“A vital principle of private financing appears to have been lost: the need to guarantee regulatory certainty and business continuity for investors,” said IETA President and CEO Henry Derwent…
http://www.reuters.com/article/idUSTRE67N27G20100824?loomia_ow=t0:s0:a49:g43:r1:c0.333333:b36789316:z0

pat

UK Tele does at least have an update on another carbon fraud:
24 Aug: UK Telegraph: Emma Rowley: Crackdown on carbon credit scam
Carbon credit trading is to be subject to reverse value-added tax (VAT) charges in a bid to prevent fraud
Last year, Europol, the cross-border police force, said that carbon trading fraudsters may have accounted for up to 90pc of all market activity in some European countries, with criminals mainly from Britain, France, Spain, Denmark and Holland pocketing an estimated €5bn (£4.1bn).
Figures from New Energy Finance showed the value of the global market fell from $38bn in the second quarter of last year to $30bn in the three months to the end of September after several countries cracked down…
http://www.telegraph.co.uk/finance/newsbysector/energy/7960622/Crackdown-on-carbon-credit-scam.html

George E. Smith says:
August 24, 2010 at 4:03 pm
> Can somebody please explain what it means to be 11,700 times as powerful a greenhouse gas as CO2.
I wondered about that myself, but I was trying to get the post together before heading into work. I didn’t stumble on anything that explained that. My guess is that the extra atoms adds various vibrational modes to make the molecule absorb a broader portion of the radiated spectrum. 11,700 still sounds like a lot, though.
> Does that mean that HCF-23 at 33 parts per billion of the atmosphere does as much warming as CO2 does at 390 ppm ?
That’s what I figured. 11,700 still sounds like a lot, though.
> And what is the LWIR absorption spectrum of HCF-23 at least in the range of 5 microns to 80 microns wavelength which is about where 98% of the surface emitted LWIR is to be found ?
I didn’t stumble across that, I was hoping to. Looking around, I see http://www.tu-braunschweig.de/pci/forschung/bauerecker/kuehltechniken/kaltegase/index.html which doesn’t have numbers on the Y axis, the wavenumbers on the X axis center around 9 microns, I believe, but certainly don’t cover the whole important range. 11,700 still sounds like a lot.
http://www.epa.gov/stateply/documents/fridge_ac.pdf has a list of refrigerants and their Global Warming Potentials that they credit to the IPCC SAR in 1995. It does list it at 11,700, but since I searched for {trifluoromethane 11700} I’m not surprised. 11,700 still sounds like a lot, though I’m sure the SAR has no mistakes. 🙂
Aha – searching for {“global warming potential” ipcc} yields http://en.wikipedia.org/wiki/Global_warming_potential and http://www.ipcc.ch/publications_and_data/ar4/wg1/en/ch2s2-10.html . The GWP values are dependent on the clearing time of the gas, and HFC-23 is listed with a 270 year lifetime in the IPCC TAR in 2001! The longer the lifetime, the greater the GWP!
The Wikipedia page notes:
The GWP value depends on how the gas concentration decays over time in the atmosphere. This is often not precisely known and hence the values should not be considered exact. For this reason when quoting a GWP it is important to give a reference to the calculation.
This morning I found no page that gave a reference to the calculation.

H.R. says:
August 24, 2010 at 6:05 pm
> Nice to see a post here from you, Ric. I’ve always appreciated your comments. (And thank you too for having him on, Anthony).
Thanks! Actually, the main credit Anthony can claim is that he did very little with some of my Tips and Notes comments. It finally occurred to me that might simply be because Anthony is one of the busiest people on the planet and if I wrote the post instead of waiting for him, it would have a lot better chance of becoming a post.
The model seems to be validating. 🙂
A corollary, that writing a whole post instead of slapping a URL in Tips & Notes may interfere with getting to work on time, is also validating. Sigh.

Gerald Machnee

RE: George E. Smith says:
August 24, 2010 at 4:03 pm
**Can somebody please explain what it means to be 11,700 times as powerful a greenhouse gas as CO2.
Does that mean that CF-23 at 33 parts per billion of the atmosphere does as much warming as CO2 does at 390 ppm ?**
To your second question – sort of.
I think the answer is that one unit of Cf-33 will absorb 11,700 times as much radiation as one unit of CO2. But the problem is reality. Does it retain it or re-radiate it? There is very little CF-33 in the atmosphere, so at present the effect is negligible. The other problem is: Does CO2 cause warming, how much warming, and has anyone measured ti in the atmosphere. So the same questions can be asked of CF-33. It may absorb a lot in the lab test, but what happens in the atmosphere???

Eric Gisin

This was reported 3.5 years ago by FT.com:
China ‘exploiting Kyoto loophole’ http://www.ft.com/cms/s/0/9bdda3d4-a676-11db-937f-0000779e2340.html

Okay, although I am a realistic environmentalist, this is funny:
Ben Hillicoss says:
August 24, 2010 at 6:04 pm
When you hear the word “environmentalist” just break it down:
envi : the resentful or unhappy feeling of wanting somebody else’s success, good fortune, or qualities.
iron : a heavy malleable abundant element
mental : a term meaning unintelligent or silly
ist : one who is these things or believes
So to summarize, a resentful unhappy person wanting to steal success, who is extremely malleable, or easily influenced, who is unintelligent and believes in this non-sense

KenB

Heck, one more scam upon many scams, the first being the ozone hole scam that caused us to abandon R12 Chlorofluocarbon based R12 that was eating up the ozone with patented alternatives like, R134a that are less efficient than R12 and also less efficient than “Greenfreeze” a non patentable natural hydrocarbon refrigerant gas (akin to your barbecue gas) but subject to a scare campaign of “possibly” causing explosions (just ignore the fact that it has been used in Europe as an efficient coolant in refrigerators etc for many years with no problems) and in Australia that deliberate scare campaign is directed to restricting the spread of the automotive refrigerant gas marked here as Hychill and no more “dangerous” used correctly than the other “approved” gases like R134a which is a more serious so called “greenhouse gas” and of course the ones mentioned in this present cute scam.
It would be a joke, but the joke is on the consumer who has to pay for all these shenanigans in the end and the joke is compounded by the nice green wrapping of spin propaganda to increase the rip-off that is supposed to be done to protect the environment. Shame!!
A sign of things to come in the trading indulgence market scams!!

R. de Haan

One scam based scam artist discovering the scams of another scam based scam artist in the end results in the disappearance of an incredible amount of tax payers money.
It’s virtually evaporating in thin air.
The UN and our clueless political establishment are robbing us blind.

Mike McMillan

So the Chinese are using artificial numbers to buy artificial carbon credits. How is that a scandal?
Also, Wikipedia says HFC23 is 11,700 times as powerful a greenhouse gas as CO2, so there’s your proof, skeptics.
http://en.wikipedia.org/wiki/Fluoroform#Greenhouse_gas
</ 😉 >

It’s the gas William Connolley farts – 17,000 more noxious…

CRS, Dr.P.H.

Welcome to the bazaar!
http://www.cdmbazaar.net/
“STEP RIGHT UP, LADIES AND GENTS!! WE HAVE CREDITS LARGE AND SMALL, FOR EVERY NEED, EVERY BUDGET!! NO PUSHING, PLEASE, PLENTY FOR EVERYONE!!”
Jeez….there is a lot of stuff in There if you want to learn about joint implementation, additionality, CERs by sector, financing etc. Check out the “Guidebook to Financing CDM Projects” as a good primer on the subject.
I’ve done a fair bit of work in biomethane mitigation from manure-producing operations in Asia and South America….it was fun while it lasted!! Alas, all good things must come to end.
However, I never did come up with any scam as good as the HCFC-22 game!! I’ll bet there was a fair amount of this going on with point-source reduction of N2O from nitric acid production facilities, those were a rich source of credits for a while.

jorgekafkazar

The tiny scam inside the big scam. “Look! Look there! See those dirty cheaters? Pay no attention to the Rakshasa behind the curtain!”

jorgekafkazar

Tom S says: “…one of those glaringly obvious examples of government created problems resulting from government solutions to solve non existent problems. Can anyone else name a few??”
The government banned the use of propane propellants in hair spray, etc. A very few women were bogarting lit ciggy-boos while spraying their bee-hives. WHOOOMPF! What was substituted for the C3H8? You got it. Freon.

CRS, Dr.P.H.

Here’s a decent read that describes many of the fundamentals of the CDM and trading market:
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2649246/pdf/EHP-117-a62.pdf
They discuss other scams including landfill methane mitigation etc. The concept of “additionality” is key to certified emission reduction, and that is the largest door for scam operators. Very controversial & abstract, it is worth learning about.

Larry Fields

I’m confused. The blog post appears to be inconsistent. Here are the two quotes in question.
“Not only are the manufacturers able to sell carbon credits for producing HCFC-22, they can also sell “certified emission reductions” (CERs) for destroying HFC-23, to the tune of about $100,000 per ton!” 
and
“With CERs currently selling for €11 ($14)/t, the profit margins from HFC23 destruction projects are obvious.”
But I don’t know what the “t” in $14/t means. If it’s tons, then how is it that $100 thousand/ton is the same as $14/ton?