To give countries options in how they meet their targets for reductions in emissions, 'flexibility mechanisms
' such as the Clean Development Mechanism and Joint Implementation have been set up so that any country may meet its targets in part by funding emissions-reducing projects in other countries where costs may be lower.
Of these, the CDM seems to have most problems. They are described in the following sources:
In summary, the main problems appear to be these:
- Additionality: Although, under CDM rules, funding should not be provided for projects that would have gone ahead anyway, it can be difficult to establish whether or not that is true.
- Leakage: If a project is funded in a country with no comprehensive policy for reducing emissions, then any reductions achieved by the given project may be nullified by increases in emissions elsewhere.
- Permanence: Projects to capture carbon by, for example, growing trees provide no guarantees that the carbon will be sequestered permanently.
- Trying to include such things as 'foregone deforestation' is fraught with difficulties.
- Perverse incentives. There are reports that, in some countries, factories have been set up to make CFCs so that CDM payments may be gained for projects to destroy them.
- Fraud: There are many opportunities for fraud.