The intention of the Kyoto Protocol's Clean Development Mechanism is to encourage capital investment by developed economies in under-developed and developing economies. The theory behind it, which is sound, is that capital resources for CO₂ abatement assets should be directed to projects that will effect the greatest abatement. However, due to the CDM's "additionality" requirement, this is not the effect. In fact, one of the effects of the CDM is that governments hold off viable renewable energy projects in the hope of obtaining CDM certification for them.

Ironically, however, much of the criticism of the CDM comes from the opposite angle: that capital is being directed to projects that would have proceeded in any case. There is no evidence that this is actually the occurring, but it's a good line for our own renewable energy enterprises to spin: tabloids love that sort of stuff. Never mind that the motivation is purely to try to snaffle investment for their own ventures.

It would be better to completely do away with the additionality requirement. Does it really matter if we end up investing in projects that "would have proceeded anyway"? The ultimate effect would be that that the cost of capital in developing economy abatement projects is lower, and therefore more such projects will proceed. This will achieve a far greater emissions reduction for each dollar invested.

Certainly the bureaucracy around the CDM is the primary cause of its impotence, but the additionality requirement provides them with an easy opportunity to avoid making decisions. And while those decisions are not being made, or they are being made but on spurious grounds, developing economies are sitting on their hands knowing that if they proceed with renewable energy investment now they may sacrifice the opportunity for cheaper funding that may, one day, follow.

The proposed CPRS was awful, but I'm in two minds about it being canned. On the one hand, it was really really lame, so it's no great loss. On the other hand, even a lame ETS would be whipped in to line by a succession of subsequent trade agreements. It would take a long time, but eventually it would be as robust as any other ETS.

I think their are some pretty clever people in the Department of Climate Change, but there are a bunch of spineless gits in cabinet. And the biggest git with the greatest spinal void sits at the end of the table.

Whoa, sorry there muso, the penny's just dropped. You are telling me that the EITE scheme is being incorporated into the MRET? How the FLICK does that work? And why?

Are you referring to the REC liability incurred by wholesale purchasers of electricity? I'm just trying to understand how this operates (My exposure is on the generation side, not the wholesale purchasing side). If I'm on the right track, it seems that wholesale buyers meet their liability by paying an additional amount to the seller, who then takes on the liability and has to buy the RECs. Is that how it works?

In any case, I love these scams, I mean, umm, schemes. Just like the banking meltdown: everyone had to pay for it except the bankers who caused it. Now everyone has to pay for carbon pollution except the carbon polluters.

Ahhh, liberalism!