WikiLeaks reveals that most Indian claims are ineligible.

As the world gears up for the next round of United Nations climate-change negotiations in Durban, South Africa, in November, evidence has emerged that a cornerstone of the existing global climate agreement, the international greenhouse-gas emissions-trading system, is seriously flawed.

Critics have long questioned the usefulness of the Clean Development Mechanism (CDM), which was established under the Kyoto Protocol. It allows rich countries to offset some of their carbon emissions by investing in climate-friendly projects, such as hydroelectric power and wind farms, in developing countries. Verified projects earn certified emission reductions (CERs) — carbon credits that can be bought and sold, and count towards meeting rich nations' carbon-reduction targets.

But a diplomatic cable published last month by the WikiLeaks website reveals that most of the CDM projects in India should not have been certified because they did not reduce emissions beyond those that would have been achieved without foreign investment. Indian officials have apparently known about the problem for at least two years.

"What has leaked just confirms our view that in its present form the CDM is basically a farce," says Eva Filzmoser, programme director of CDM Watch, a Brussels-based watchdog organization. The revelations imply that millions of tonnes of claimed reductions in greenhouse-gas emissions are mere phantoms, she says, and potentially cast doubt over the principle of carbon trading. "In the face of these comments it is no wonder that the United States has backed away from emission trading," Filzmoser says.

The cable, written on 16 July 2008, was sent by the US consulate in Mumbai, India, to the US secretary of state, and summarizes a discussion of the CDM involving representatives of the consulate and the US Government Accountability Office, along with Indian officials and executives of large Indian companies. At the time, 346 Indian projects had been registered with the CDM's executive board. Today, more than 720 Indian projects have been approved and have gained some 120 million tonnes' worth of carbon credits, a large fraction of the 750 million tonnes issued since 2005 (see 'Cleaning up').

Yet on the evidence of discussions at the meeting, most of the carbon-offset projects in India fail to meet the CDM requirements set by the UN Framework Convention on Climate Change. The cable also describes the UN's validation and registration process as "arbitrary".