Developing countries will create 1 billion tons of carbon credits

By the year 2012, 1 billion tonnes of carbon credits will be produced by developing countries, the UN Framework Convention on Climate Change (UNFCCC) reports. The Clean Development Mechanism (CDM) projects will create enough offsets to equal the equivalent of combined emissions of the UK and Spain in one year.

The CDM is an arrangement under Kyoto Protocol that allows industrialised countries to set up emission reduction projects in other countries up projects that cut emissions and earn carbon credits which can be bought by countries seeking to meet their Kyoto targets or sold through emissions trading schemes. The amount of carbon credits produced has mushroomed in the past year, form 140 project registered in 2005 to 800 in 2006.

With the rise in popularity of carbon credits on a corporate and consumer level, there is much optimism in the new currency of carbon credits. Some commentators have been sceptical about the future of financing for CDM's, because of the uncertainty over whether there will be a market for credits they generate after 2012 when the Kyoto Protocol ends. With the UK's new climate change commitments, and the anticipation of the USA and India taking on an environmental outlook, this might be the beginning of a lucrative green industry in developing countries.

Most projects are located in China and India, which are also some of the most polluting countries in the world. With financing going towards reducing these countries emissions, it is hoped they will be at the stage in 2012 to sing the revised Kyoto Protocol. There is also concerns that the poorest developing countries are not benefiting from the CDM such as countries in Africa. Although there was a five-fold increase in the number of projects in Africa over the last year, from five projects to 27, the UNFCCC is still concerned that not all developing countries are benefiting.

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