A new report published in the AEA's Applied Economics journal introduces a new way to identify when subsidies (i.e. financial support) are being wasted. It applies this method to the Clean Development Mechanism (CDM), which is the world's biggest program for carbon offsets (credits that companies buy to reduce their carbon emissions). The study specifically looks at over 1,000 wind farms in India.

The findings suggest that more than half (52%) of the carbon offsets were given to wind farm projects that would have been built even without the subsidies. This means that the subsidies didn't help create new projects or reduce emissions as intended. In fact, the researchers found that by selling these unnecessary carbon offsets to companies that pollute, it actually ended up increasing global carbon dioxide emissions.  In simple terms, the research shows that a lot of money intended to fight climate change was misused, and it ended up making the problem worse.  Read more