The multibillion-dollar climate change offset market is already providing huge sums to China, according to a recent article on the site Yale Environment 360, and boosting the manufacture of a harmful refrigerant in the process. China has collected hundreds of millions of dollars from European companies to destroy triflouromethane or hfc 23 in order for companies to meet European emissions targets. The gas is a byproduct of a refrigerant that’s been banned in developed countries and is being phased out elsewhere, and it’s 11,000 times more potent than carbon dioxide. But European companies are not only paying more than 70 times the cost to have hfc 23 destroyed—they are creating a new market for the banned refrigerant in the process.
The article reports: “…in an odd twist, the incentives offered through the UN’s Clean Development Mechanism (CDM) also appear to be stimulating production of an ozone-depleting refrigerant gas that has been landing in the U.S. black market.” The banned refrigerant, hcfc 22, has been discovered by U.S. Environmental Protection Agency and Customs agents as smugglers have brought it into the U.S. When sold, it goes to supermarkets, trucking companies, auto supply stores and other major outlets, since hcfc 22 is much cheaper than the cleaner, non-greenhouse-gas-producing refrigerants required by U.S. law.
The money generated by global carbon offset markets has led to this twisted course of events: European companies pay the Chinese to incinerate a harmful gas—paying $15 per ton when the actual cost is 20 cents a ton. This payment allows those companies to continue polluting. Meanwhile, other companies in China and India produce more of this harmful refrigerant to sell on the U.S. black market, ensuring even greater quantities of greenhouse gases are pumped into the atmosphere as a result. A German nonprofit called CDM Watch has found that inflated prices have created a real market for the heavily polluting gas: “According to the Environmental Investigations Agency, the price for a ton of hcfc 22 fluctuates from $1,000 to $2,000, while that same ton can generate about $5,000 to $6,000 in hfc 23 Clean Development Mechanism credits.”
And the high prices are also providing a major competitive boost to China’s growing renewable energy technology market—directly threatening the ability of companies in the U.S. and Europe to compete.