Under the Kyoto treaty, companies investing in projects, such as energy efficiency schemes, that reduce emissions in countries such as Russia and China are awarded a credit for each tonne of carbon dioxide saved. These can be sold to countries such as Canada, Japan and EU member states that need to reduce their emissions under the protocol. The credits fetch between £2 - £8 each on the carbon market.
However HFC-23, a potent greenhouse gas far more toxic than carbon dioxide, is awarded many more credits than carbon dioxide allowing chemical factories, mainly based in China, that fit "scrubbing" equipment to reduce the gases to be awarded millions of carbon credits, generate huge profits through UK trading firms and flood the market with cheap credits bought by highly polluting governments in developing countries. Under the current Kyoto protocol this loophole is perfectly legal.
One example is Climate Change Capital, a London based firm that has £375 million worth of credits derived from Chinese HFC projects. Around 60% of all reductions issued under the Kyoto protocol are estimated to be from HFC removal despite the gas making up only a fraction of industrial emissions. This means that investment is potentially taken away from projects such as tidal energy and wind farms.