North Korea won't tell its citizens this, but the Hermit Kingdom is broke. Luckily, ever-ingenuous Dear Leader Kim Jong-Il and his government have a new plan -- sell carbon offsets for cold hard cash. The isolated Stalinist enclave has a series of hydropower projects that it hopes to leverage with the United Nations' Clean Development Mechanism (CDM) scheme, which allows developing countries to partner with typically richer countries looking to reduce emissions under the Kyoto Protocol. The industrialized countries (or companies from such countries) earn carbon credits, while the host country gets cash from the sale of these credits.
Since 2006, over 2,000 projects have been approved -- according to the New York Times, 40 percent of the projects are located in China and most involve hydropower. In 2008, carbon credit transactions totaled close to $7 billion.
According to Reuters, North Korea is looking to get approval for three hydro power plants of 7-8 megawatts in the northeast part of the country.
North Korea -- currently facing sanctions over its nuclear weapons program -- faces serious challenges in selling carbon offsets. Aside from serious economic mismanagement, Reuters lists a whole host of reasons why these projects might not make it past the brainstorming stage:
"Even if they open up, who in the world wants to pay for North Korea that is blamed for its nuclear weapons programme?" said Choi Soo-young, a senior researcher at the Korea Institute for National Unification.
Cho said the UN needed to prevent outside cash going into its nuclear development activities, while Luckock, of global law firm Norton Rose, said: "Their limited access to hard currency has to be a concern for buyers - the damages clauses will carry limited weight without some security there."
Another challenge is that North Korea would have to make public its energy consumption and generation data and disclose information on the amount of energy linked to the hydro project.
"Annual inspection, constant measurement and energy flow posting on the [UNFCC] website - all these things are new for North Korea," [Bernhard] Seliger [of the Hanns Seidel Foundation of Germany] said.
North Korea has a history of serious flooding disasters, although these might be better solved through fixing the country's drainage systems and reversing the effects of enormous deforestation.
Of course, enabling North Korea's nuclear program might be good for the environment in other ways: NASA recently used computer simulations to prove that a "limited" nuclear war might temporarily halt global climate change.
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