Paella wrote on Dec 20
th, 2009 at 11:43am:
I'm not following the logic here. The sponsoring country (or company) OWNS the project. Why would they abandoned it before it starts producing carbon reduction credits? That would be irrational behavior indeed.
Originally you gave the example of the host country building an inefficient power station. Presumably the money that would have gone towards building the inefficient power station should go towards the new power station.
As I understand it, the financial support from the sponsoring country would not extend to the total cost of the new renewable power station - just the difference between the costs. Now if the sponsoring country would provide the whole cost, then it's a similar result, but at least it would get built.
The net result of this will be to build a large number of power stations
that would not have been built in the first place. It's basically not having any impact on greenhouse gas emissions, except during the construction phase - and that would be a net positive emission.
Let's examine the with and without scenarios:
No subsidy - no power station gets built - zero carbon emissions.
With a subsidy, there would be the carbon emissions associated with construction.
Therefore, the net result of the subsidy is carbon positive.
The money should have been spent for renewable projects in developed nations rather than
non-developing nations.