Only those who want to derail a new climate agreement will cheer the FT's revelations that subsidies to Chinese wind farms under the Clean Development Mechanism have been halted on worries of manipulation. As evident as the CDM's flaws are, however, they only add to the importance of establishing a global carbon emissions trading system that works.
Under the CDM, the UN awards carbon credits to emissions-reducing projects in the developing world. When credits are sold on to rich countries, the buyers can count them towards their Kyoto emissions targets. Supposed to kill two birds with one stone – reduce emissions and transfer money and technology to the poor – this was, however, never likely to work.
The CDM inherits the UN's suffocating bureaucracy, so smaller projects struggle to gain approval. But more important than what it keeps out is what it lets in. The criterion of “additionality” is supposed to rule out projects that would not be undertaken without CDM payments. Not only is this counterfactual approach utterly unverifiable; it is also an ideal target for gaming.