Perverse effects of carbon markets on HFC-23 and SF6 abatement projects in Russia

  • Nature Climate Change volume 5, pages 10611063 (2015)
  • doi:10.1038/nclimate2772
  • Download Citation
Published online:


Carbon markets are considered a key policy tool to achieve cost-effective climate mitigation1,2. Project-based carbon market mechanisms allow private sector entities to earn tradable emissions reduction credits from mitigation projects. The environmental integrity of project-based mechanisms has been subject to controversial debate and extensive research1,3,4,5,6,7,8,9, in particular for projects abating industrial waste gases with a high global warming potential (GWP). For such projects, revenues from credits can significantly exceed abatement costs, creating perverse incentives to increase production or generation of waste gases as a means to increase credit revenues from waste gas abatement10,11,12,13,14. Here we show that all projects abating HFC-23 and SF6 under the Kyoto Protocol’s Joint Implementation mechanism in Russia increased waste gas generation to unprecedented levels once they could generate credits from producing more waste gas. Our results suggest that perverse incentives can substantially undermine the environmental integrity of project-based mechanisms and that adequate regulatory oversight is crucial. Our findings are critical for mechanisms in both national jurisdictions and under international agreements.

  • Subscribe to Nature Climate Change for full access:



Additional access options:

Already a subscriber?  Log in  now or  Register  for online access.


  1. 1.

    Climate Change 2014: Mitigation of Climate Change (eds Edenhofer, O. et al.) (Cambridge Univ. Press, 2014);

  2. 2.

    State and Trends of Carbon Pricing 2014 (World Bank, 2014);

  3. 3.

    Climate Change, Carbon Markets and the CDM: A Call to Action. Report of the High-Level Panel on the CDM Policy Dialogue (CDM Policy Dialogue, 2012);

  4. 4.

    Assessing the additionality of CDM projects: Practical experiences and lessons learned. Clim. Policy 9, 242–254 (2009).

  5. 5.

    et al. Study on the Integrity of the Clean Development Mechanism (CDM) (AEA Technology, 2011);

  6. 6.

    Clean-energy credits tarnished. Nature 477, 517–518 (2011).

  7. 7.

    & The Clean Development Mechanism: A review of the first international offset programme. Greenhouse Gas Meas. Manage. 1, 179–203 (2011).

  8. 8.

    et al. Assessing the Impact of the Clean Development Mechanism (High Level Panel on the CDM Policy Dialogue, 2012);

  9. 9.

    & Standardization of baseline and additionality determination under the CDM. Clim. Policy 13, 191–209 (2013).

  10. 10.

    Issues Arising from the Implementation of Potential Project Activities under the Clean Development Mechanism: The Case of Incineration of HFC-23 Waste Streams from HCFC-22 Production (United Nations Framework Convention on Climate Change, 2005);

  11. 11.

    , & Instrumentation of HFC-23 Emission Reduction from the Production of HCFC-22. Assessment of Options for New Installations (Ecofys, 2006);

  12. 12.

    Report of the Task Force on HCFC Issues (with Particular Focus on the Impact of the Clean Development Mechanism) and Emission Reduction Benefits Arising from Earlier HCFC Phase-out and Other Practical Measures (United Nations Environment Programme, 2007);

  13. 13.

    Perverse incentives under the Clean Development Mechanism (CDM): An evaluation of HFC-23 destruction projects. Clim. Policy 11, 851–864 (2011).

  14. 14.

    Note on the Revision of AM0001 (United Nations Framework Convention on Climate Change, 2011);

  15. 15.

    & Costs of certified emission reductions under the Clean Development Mechanism of the Kyoto Protocol. Energy Econ. 47, 129–141 (2015).

  16. 16.

    CDM/JI Pipeline Analysis and Database (United Nations Environment Programme Danish Technical University Partnership, 2015);

  17. 17.

    , & Industrial Gas Projects Under The CDM: Adipic Acid—A Case of Carbon Leakage? (Stockholm Environment Institute, 2010);

  18. 18.

    Information Note on AM0028: Catalytic N2O Destruction in the Tail Gas of Nitric Acid or Caprolactam Production Plants and AM0034: Catalytic Reduction of N2O inside the Ammonia Burner of Nitric Acid Plants (United Nations Framework Convention on Climate Change, 2012);

  19. 19.

    & Global emissions of HFC-23 estimated to year 2015. Atmos. Environ. 41, 1560–1566 (2007).

  20. 20.

    2006 IPCC Guidelines for National Greenhouse Gas Inventories (Intergovernmental Panel on Climate Change, 2006);

  21. 21.

    Common Reporting Format Tables Submitted to the UNFCCC (Government of the Russian Federation, 2014);

  22. 22.

    COMMISSION REGULATION (EU) No 550/2011 of 7 June 2011 on Determining, Pursuant to Directive 2003/87/EC of the European Parliament and of the Council, Certain Restrictions Applicable to the Use of International Credits from Projects Involving Industrial Gases (European Commission, 2011);

Download references


We would like to thank K. Anttonen, O. Baskov, A. Friedrich, H. Laurikka, M. Lazarus, L. Mortier and V. Zhezherin for helpful input and comments. The research was prepared as part of a larger research project evaluating the environmental integrity of Joint Implementation, commissioned by the Austrian Federal Ministry of Agriculture, Forestry, Environment and Water Management, the Ministry of the Environment of Finland, and the Federal Office of the Environment of Switzerland. Any views expressed are those of the authors and do not necessarily reflect the official views of the Austrian, Finnish and Swiss governments. The research team bears sole responsibility for the content.

Author information


  1. Stockholm Environment Institute, SEI US Center, 11 Curtis Avenue Somerville, Massachusetts 02144-1224, USA

    • Lambert Schneider
    •  & Anja Kollmuss


  1. Search for Lambert Schneider in:

  2. Search for Anja Kollmuss in:


L.S. evaluated the data and analysed the results. L.S. and A.K. wrote the paper.

Competing interests

L.S. is member of the CDM Executive Board under the Kyoto Protocol.

Corresponding author

Correspondence to Lambert Schneider.

Supplementary information