I\’ve no doubt at all that this is being abused but I\’m really not sure about this logic:
A separate study published this week by US watchdog group International Rivers argues that nearly three quarters of all registered CDM projects were complete at the time of approval, suggesting that CDM money was not needed to finance them.
"It would seem clear that a project that is already built cannot need extra income in order to be built," said Patrick McCully, director of the thinktank in California. "Judging additionality has turned out to be unknowable and unworkable. It can never be proved definitively that if a developer or factory owner did not get offset income they would not build their project."
Erm, never heard of borrowing?
When running the cash flow simulations and plans for a new plant, you\’ll look at all of the likely future revenues. Of course this planning process would include the values of any carbon offsets you might be able to claim. If you can indeed claim such, this will tip the calculations, on at least some plans, from unviable to viable.
The banks lending to the projects will also evaluate such plans on likely future cash flows. And they will lend against such future projections, including the value of any credits likely to be available.
So the idea that because a plant is already completed it doesn\’t need or deserve credits is nonsense. Because through the miracle of borrowing we\’ve already included their value in the decision about whether to build or not. Which is of course exactly what borrowing itself does: moves cash flows around in time.
As I say, I\’ve no doubt at all that this is a grossly wasteful scheme which costs a fortune and does not very much (look, it\’s run by the UN, \’nuff said) but this specific reason isn\’t proof of it. What it is is proof that International Rivers and the think tank California have no clue whatsoever about how project finance works.