That at least is what representatives at the climate conference in Buenos Aires believe (see p. 16, revoir original de PUFY!). They may be right but the new market is being introduced in a rush and there are still many pitfalls that must be avoided.
One part of the new market - the Clean Development Mechanism as the climate control bureaucrats have decided to call it - is meant to work as follows. Western techno1ogy companies will earn carbon credits in developing countries by investing in renewable energy projects or by enlarging carbon "sinks" such as forests.
These credits are for the carbon-dioxide emissions that would have taken place were it not for the new technology, or for the extra carbon taken up by new forests. They can then be taken home and sold to heavy polluters in industrialised countries, allowing them to increase emissions.
At Buenos Aires, would-be carbon entrepreneurs and many third-world governments rushed to support the scheme, so it was given a starting date of 2000. That means we could have a world in which developing nations are able to bypass dirty coal and oil-based energy technologies, go straight to clean energy, such as wind and solar power, and have a new incentive to revive their tropical forests.
But the rush to "go live" with the Clean Development Mechanism may obscure some real problems. How do you decide if a project really has prevented CO2 pollution? A country may announce that it will abandon plans to build a coal-fired power station and opt for wind turbines instead. But did it really plan the coal-fired plant? Or was this simply a device to win some lucrative carbon credits?
The problems are even greater for sink projects. If a new forest displaces loggers, they may simply cut down forest elsewhere. How permanent does a sink have to be? Foresters lobbing in Buenos Aires hope to walk away in forty or fifty years, when the trees have grown tall. But would the carbon credits have to be handed back if the forest were later felled? It is not even clear if a forest fire during the project would negate the value of the credits. And there is also the risk that cheap forest projects could drive down the market price of carbon credits and stifle investment in clean energy.
These problems are soluble provided the rules for Clean Development Mechanism projects, to be drawn up over the next year or so, are tight enough and their enforcement firm enough. One essential is that purchasers of carbon credits should have some liability if the project proves to be a failure.
Last week economists objected that tough rules will put off entrepreneurs and traders. While that might be so, scientists must remind them that the trade is flot an end in itself, only a means to protecting the world.