It's not going to work

Concluding his litany of the deficiencies of the United Nation's Clean Development Mechanism (CDM), Mark Schapiro says the market for carbon offsets is:

...an elaborate shell game, a disappearing act that nicely serves the immediate interests of the world's governments but fails to meet the challenges of our looming environmental crisis. Conning the Climate (subscription), Mark Schapiro, 'Harper's Magazine', February

Not only the immediate interests of the world's governments (politicians and bureaucrats) but also the interests of the legions of economists, assessors, validators, and big corporations. Everybody who counts that is. Heaven forbid that we reward the outcome we actually want to achieve: a climate that's reasonably stable, however one wants to define that.

Even if we believe that capping anthropogenic greenhouse gas emissions is consistently found to be the best way of averting climate change and its worst effects; even then, this author believes that the CDM and all entire Kyoto-Copenhagen edifice is structurally unsound.

But how would my proposal - a Climate Stability Bond regime - be any better? Holders of Climate Reduction Bonds would probably still target anthropogenic greenhouse gases in a similar fashion to Kyoto, but they would have strong incentives to do so more efficiently. They would want and would have wider scope for action. For example, they wouldn't be bound by political correctness or realpolitik of the sort that exempts some countries that emit huge quantities of greenhouse gases from any disciplines at all. They would have the flexibility to buy these regimes off or otherwise undermine any weakening of the disciplines. Kyoto-Copenhagen is so politicised and its money flows so unpalatable that it is seen as an imposition: in the rich countries it’s seen as an imposition by environmentalists on everybody else. In the poor countries it’s seen as an imposition by the rich countries on them. It means huge upfront costs for a very small payoff well into the future. Being a political construct it is so compromised that even its most ardent advocates think it ineffectual in its own right. They see it as first step; but it is one that might well not be actually taken – as distinct from being endlessly discussed, debated, written into law and performed as an elaborate charade or shell game.

Climate Stability Bonds, in contrast, would target an array of outcomes that ordinary people can understand, empathise with, and support, or at least, buy into; and that would entail taxpayer spending only when it had been achieved. If we are serious about climate change and its effects, we are going to need the buy-in that only an outcome-based regime, such as Climate Stability Bonds, can bring about.