In an article by Allan Marks and Jeff Rector in "Electric Light & Power" magazine, the authors postulate:
The advantages of a bilateral offset mechanism are simple. The carbon-capped and capital-exporting nation bypasses the UNFCCC bureaucracy and determines which projects are eligible for the credits and establishes its own rules for certification. To enhance international credibility, bilateral mechanisms likely will track calculation methodologies and auditing mechanisms analogous to those employed for CDM (Clean Development Mechanism). Because the capital-exporting country can pick which technologies are targeted for the credits, the bilateral offset mechanism can be used as a tool for domestic industrial policy, thereby securing more sustained domestic political backing. A key feature of Japan's bilateral offset scheme is the inclusion of nuclear and high-efficiency coal as technologies eligible to earn emissions credit. If adopted, carbon credit for nuclear would prove to be a significant subsidy, and Japan is in negotiations with Vietnam with the intention to make use of such a program to help finance two nuclear reactors in the country.It will be interesting to see how the Fukushima disaster affects Japan's negotiations with Vietname regarding new nuclear power plants.
In addition to pointing out that, in the Kyoto Protocol, the CDM does not recognize nuclear as carbon-reducing technology, the authors also accurately conclude that getting the signatories to agree is like herding 193 cats:
There are too many parties–193–with too divergent of interests–richRead the entire article. We think they have accurately predicted the future path of global climate change mitigation.
nations, poor nations, heavy emitters, light emitters, island nations, drought-vulnerable nations, flood-vulnerable nations, oil-exporting nations, oil-importing nations, nations with resource rights under ice, etc., and too much value at stake–hundreds of billions of dollars annually–to realistically expect existing international political institutions to be capable of developing and agreeing upon a global cap-and-trade mechanism from the top down.