Yesterday, The Guardian’s environment editor John Vidal reported on two new studies that show the UN’s clean development mechanism (CDM – an international system established by the Kyoto process that allows rich countries to meet emissions targets by funding clean energy projects in developing nations) is “being routinely abused by chemical, wind, gas and hydro companies.” Vidal writes:

A working paper from two senior Stanford University academics examined more than 3,000 projects applying for or already granted up to $10bn of credits from the UN’s CDM funds over the next four years, and concluded that the majority should not be considered for assistance.

A separate study published this week by US watchdog group International Rivers argues that nearly three quarters of all registered CDM projects were complete at the time of approval, suggesting that CDM money was not needed to finance them.

The ability of European companies to buy carbon offsets on the world “market” is a key reason why the EU cap and trade system has been a complete failure. The Warner-Lieberman cap and trade bill, set for debate next week, also allows US companies to buy as much as 15% of their needed carbon credits from the world “market.”

Since virtually all economic activity produces some carbon, any effective cap and trade system would require legions of skilled technicians to monitor carbon reductions. These technicians simply do not currently exist. Without the monitoring necessary to make sure carbon credit benefits are actually being produced, any cap and trade system will ultimately prove ineffective as unverifiable projects flood carbon credit demand with unverifiable supply. The only winners of a cap and trade system will be the lobbyists in Washington who rake in millions finding loopholes for their energy company clients, cynical marketers intent on greenwashing, and deal-happy Wall Streeters looking for a shiny new billion-dollar trading toy.