http://www.smh.com.au/environment/climate-change/chinese-firms-blamed-in-huge-greenhouse-gas-scam-20101027-173yh.html

BRUSSELS: The European Commission is planning to clamp down on a €2 billion ($2.8 billion) carbon trading scam involving the deliberate production of greenhouse gases which the fraudulent manufacturers are then paid to destroy.

The Climate Change Commissioner, Connie Hedegaard, says the use of these carbon permits, from industrial gas projects in China, could be banned because of their ''total lack of environmental integrity''.
Billions of euros worth of the controversial permits were used between 2008-09 in the European Union's emission trading scheme, in which companies must exchange pollution permits for emissions produced.
The scheme allows some of those permits to be bought in from developing countries.
The most popular of these so-called offsets come from projects that destroy the greenhouse gas HFC-23, a byproduct of the manufacture of the refrigerant gas HCFC-22.
The Environmental Investigation Agency said in June that many Chinese chemical companies were manufacturing HCFC-22 primarily to earn money from destroying HFC-23, which can be five times the value of the refrigerant gas the plants are ostensibly set up to create.
In 2008-9, 134 million permits (84 per cent) of offsets used in the scheme were from industrial gas projects in China and India, according to data from the carbon trading think tank Sandbag.
Buying this amount of permits in the scheme would cost €2 billion at today's prices. British companies used 7.6 million of these offsets in 2008-9, worth €116 million, instead of cutting emissions from their own operations.
The gas offsets have attracted criticism, with suggestions some plants exist only to earn money from the offset scheme.
''If you finance an HFC-23 project to reduce the equivalent of a tonne of carbon dioxide, it costs close to nothing,'' Ms Hedegaard said. ''Why should the Chinese put a stop to these projects if they get money for continuing to create HFC-23? Here we have a perverse incentive.''
Ms Hedegaard's office will publish proposals soon on how to end the use of industrial gas offsets in the emission trading scheme. The power to ban their use already exists.