HFC-23 destruction credits under the CDM (China, India)
- In eastern China the emission rose from 5.0 gigagrams a year in 2008 to 9.5 in 2019.
- Communities and civil society Environmental Investigation Agency: Reported that a China CDM Fund official said producers would stop burning the gas if credit trading ended. Environmental Investigation Agency
- Researchers Climate Policy paper (2011): Cited in the record for the perverse-incentive reading: more HFC-23 produced during crediting periods in China, India and Mexico. Centre for Climate Change Economics and Policy (Climate Policy, 2011)
- Government and regulators China and India: Opposed closing the gap.
The UN Clean Development Mechanism issued carbon credits for destroying HFC-23, a by-product gas of refrigerant manufacture. Records describe production of the gas rising during crediting and global emissions reaching a record in 2018.
As stated in the sources: destruction about €0.17 per tonne CO2e; credits sold at an average of about €12. Not calculated here.
Status Latest dated item in the sources reviewed: eastern China HFC-23 emissions of 9.5 Gg a year in 2019; no reclaim of issued credits found.
- HCFC-22 manufacturers in China and India — Credits worth, for Indian producers, up to 88% of annual profits by their own account.
- The Chinese state — A 65% levy on credit revenue; $1.3 billion collected. Environmental Investigation Agency
- The atmosphere — Record HFC-23 emissions of 15.9 Gg a year in 2018.
What happened
Factories that make the refrigerant gas HCFC-22 emit HFC-23, a potent greenhouse gas, as a by-product. The UN Clean Development Mechanism (CDM) issued carbon credits to projects that burned it. The sources reviewed put the cost of destroying the gas at about €0.17 per tonne of CO2 equivalent and the average credit price at about €12.
One account counts 19 HFC-23 projects in the CDM (11 in China, 5 in India) that were expected to generate about 500 million credits, about half of all credits, with destruction costing $0.20 per tonne and payment up to 70 times that. Indian manufacturers said the credits reached up to 88% of their annual profits. China and India opposed closing the gap.
The Chinese state taxed 65% of the credit revenue and collected $1.3 billion. In 2011 the Environmental Investigation Agency published a press release reporting that an official of the China CDM Fund, Xie Fei, had said producers would stop burning the gas if credit trading ended.
In Russia, every HFC-23 and SF6 project under the parallel Joint Implementation scheme raised its output of waste gas to what a source describes as an unprecedented level once crediting began. A 2011 paper in Climate Policy, cited in the record as supporting the perverse-incentive reading, concerned HFC-23 projects in China, India and Mexico, with more gas produced during crediting periods.
After the payments ended, atmospheric measurements showed global HFC-23 emissions at a record 15.9 gigagrams a year in 2018, when a fall of 87% had been expected. Emissions in eastern China rose from 5.0 gigagrams a year in 2008 to 9.5 in 2019. Credits already issued remained valid; the sources reviewed record no reclaim.
- 2005Crediting of HFC-23 destruction under the CDM and Joint Implementation begins (start of the period covered by the sources)
- 2008Eastern China HFC-23 emissions: 5.0 Gg a year
- 2011EIA press release reports a China CDM Fund official's statement on what producers would do if credit trading ended; Climate Policy paper on perverse incentives
- 2018Global HFC-23 emissions reach a record 15.9 Gg a year
- 2019Eastern China HFC-23 emissions: 9.5 Gg a year
What was said
Where accounts differ
Each party's account, side by side, with its source. The record does not settle these points; it shows them.
Reported that a China CDM Fund official said producers would stop burning the gas if credit trading ended.
Environmental Investigation AgencyCited in the record for the perverse-incentive reading: more HFC-23 produced during crediting periods in China, India and Mexico.
Centre for Climate Change Economics and Policy (Climate Policy, 2011)Opposed closing the gap.
How it looked
Shown
- HFC-23 destroyedThe credit registry, which recorded the gas as destroyed
Recorded
- Destruction cost about €0.17 per tonne CO2e; average credit price about €12
- Chinese state levy of 65% on credit revenue; $1.3 billion collected
- More HFC-23 produced during crediting periods in projects in China, India and Mexico (Climate Policy, 2011)
- Global HFC-23 emissions at a record 15.9 Gg a year in 2018, against an expected fall of 87% after payments ended
- Eastern China HFC-23 emissions 5.0 Gg a year in 2008 and 9.5 Gg in 2019
- Credits already issued stayed valid; no reclaim recorded
Who gained
Reached nature or the ground
Gained elsewhere
Responses on record
- china-cdm-fund (2011): An official, Xie Fei, said in 2011 that producers would stop burning the gas if credit trading ended (as reported by the Environmental Investigation Agency). · Environmental Investigation Agency
- indian-hfc-23-producers (not stated): Said the credits reached up to 88% of their annual profits.
- china-india-governments (not stated): China and India opposed closing the gap.
In court and with insurers
Lawsuits and rulings
Insurers
What nature saw
Nature's report opens this page. Below: further outcomes measured on the ground.
What we don't know
Nature
- Disputed Did crediting give producers a reason to make more HFC-23?
Court
- None on record No court case on record.
Record
- Insufficient Reported but not independently verified: that the European Union stopped accepting these credits after April 2013.
- Insufficient Reported but not independently verified: a Max Planck-linked analysis (November 2024) putting real emission reductions at 68% of credits for HFC-23 projects, against under 16% across all credit projects.
- Insufficient Reported but not independently verified: an estimate that an installation of about $100 million earned about $4.7 billion in credits by 2012; the attribution is uncertain.
- None on record The sources reviewed record no clawback or cancellation of the credits issued.
Did the harm stop?
Emissions are recorded rising after crediting payments ended; credits already issued remained valid.
Who paid?
Buyers of the credits paid about €12 per tonne for destruction costing about €0.17; the atmosphere carried the later rise in emissions.
Sources
Communities and civil society
- China threat to vent super greenhouse gases in bid to extort billions (press release)Environmental Investigation Agency · 2011
Researchers
- Perverse incentives under the CDM: a comment (Working Paper 53)Centre for Climate Change Economics and Policy (Climate Policy, 2011) · 2011
- Climate impact of carbon crediting projects substantially overestimatedMax Planck Society · 2024-11
Connected cases
- EIA report examines Dall's porpoise hunt in Iwate, Japan Japan · 2016–2018
- Environmental Investigation Agency (NGO) — here: NGO that published the 2011 press release; there: publisher of the 'Stop the Dall's Disaster' report