One of the most ambitious of the Kyoto Protocol's plans to help cut greenhouse gases was the Clean Development Mechanism, through which companies in the rich world could earn credit not for reducing their own emissions but for investing in energy efficient projects in the developing world. The idea, which was included in the Kyoto Protocol at the insistence of the U.S., has helped create a global trade in carbon credits, in addition to the broader emissions-trading market. So far, hundreds of projects have been approved, some two-thirds of them in just three countries: Brazil, China and India. Together, the projects save the equivalent of about 115 million tons of carbon dioxide per year, and range from installing more energy efficient machinery in paper and cardboard factories to building wind turbines to generate renewable power.
There have been some hiccups. A recent study found that factories in China were using relatively cheap cleaning systems and then exploiting a loophole to claim hundreds of millions of dollars in carbon credits. But that is no reason to abandon the CDM mechanism argues Rajesh K. Sethi, secretary of India's CDM Authority in the Ministry of Evironment and Forests. Sethi says the CDM is "one of the most succesful ways we've found to reduce greenhouse gases. It needs to be extended, not abandoned." The trade in carbon credits would explode if the regulations were made more predictable, so that poor world companies didn't have to wait so long for the go-ahead for projects. Says Sethi: "We're very much encouraged by how well this has done, but we can do a lot better."
This is an extended version of the article that originally appeared in TIME Magazine.