The Great HFC-23 Scam

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A few years ago, Congress passed a tax credit for companies that agree to mix some kind of alternative fuel into their fossil fuels. In theory, this reduces greenhouse gas emissions and is good for the environment. But the paper industry found a loophole: they already use an alternative fuel called black liquor in their plants, so they mixed in some fossil fuels in order to qualify for the tax credit. That’s not what Congress had in mind, but hey — a mixture is a mixture. The result was a boom in papermaking because the tax credit was so lucrative.

Today, the New York Times tells us about an international version of this. The UN has a program that provides carbon credits for reducing greenhouse gases, with especially dangerous gases earning more credits. Coolant manufacturers spied an opportunity:

They quickly figured out that they could earn one carbon credit by eliminating one ton of carbon dioxide, but could earn more than 11,000 credits by simply destroying a ton of an obscure waste gas normally released in the manufacturing of a widely used coolant gas. That is because that byproduct has a huge global warming effect. The credits could be sold on international markets, earning tens of millions of dollars a year.

That incentive has driven plants in the developing world not only to increase production of the coolant gas but also to keep it high….Since 2005 the 19 plants receiving the waste gas payments have profited handsomely from an unlikely business: churning out more harmful coolant gas so they can be paid to destroy its waste byproduct. The high output keeps the prices of the coolant gas irresistibly low, discouraging air-conditioning companies from switching to less-damaging alternative gases. That means, critics say, that United Nations subsidies intended to improve the environment are instead creating their own damage.

As it happens, this has been a known problem for about five years (see here and here for more). So why hasn’t anything been done about it yet? Blackmail, basically:

The manufacturers have grown accustomed to an income stream that in some years accounted for half their profits. The windfall has enhanced their power and influence….And each plant expects to be paid. Some Chinese producers have said that if the payments were to end, they would vent gas skyward. Such releases are illegal in most developed countries, but still permissible in China and India.

Nice atmosphere you got there, pal. Be a shame if anything happened to it. If you want to know why global warming is going to be so hard to address effectively, this is the answer in a nutshell.  James Inhofe is a pussycat compared to these guys.

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THIS IS BIG FOR US.

And we won't beat around the bush: Our fundraising drive to finish our current budget on June 30 and start our new fiscal year on July 1 is lagging behind where we need it to be.

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If you're new to Mother Jones or aren't yet sold on supporting our nonprofit reporting, please take a moment to read Monika Bauerlein's post about our priorities after these chaotic several years, and why this relatively quiet moment is also an urgent one for our democracy and Mother Jones’ bottom line—and if you find it compelling, please join us.

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