Being from a renewable energy world, I (and am sure many like me) have been following the recent developments in the “climate-politics” arena closely. And like many other clean energy lovers, I have a lot of hopes from the ongoing discussions in Bali (which conclude this Friday) that are aimed at setting an agenda and deadline for negotiations leading to a global warming pact to succeed the Kyoto Protocol at the end of 2012.
For readers who are new to the climate change terrain, the global community led by the Intergovernmental Panel on Climate Change (now headed by RK Pachauri) agreed upon the Kyoto Protocol in 1997 (ratified in 2005) where 38 industrialized/developed countries (US and Japan were two key countries that stayed out of this; incidentally US is the biggest greenhouse gas emitter!) agreed to reduce their emissions by 2008-2012 to an average of about 5% below their 1990 levels. The developing countries were exempt from targets at Kyoto. According to the Protocol, to bring down their emissions, the developed countries can trade carbons in an international exchange, jointly implement projects within the developed country community, or buy credits by funding projects (through clean development mechanism, or CDM) that reduce emissions in the developing countries. The current talks in Bali are expected to draw up the post 2012 plan.
The conventional wisdom in India on CDM-based funding is that it is the best thing to happen to the Indian renewable energy arena, as the projects (mainly solar, wind, small-hydel, waste-heat conversion, aforestation, energy efficiency, cogeneration, etc.) now have another source of funding through CDM. The NGOs are gung-ho on the concept, the ministry is bending backwards to ensure we have a smooth process to bring “carbon money” to India, the financial institutions are more-than-ready to structure such projects.
I however feel the CDM mechanism is not ethical. Why should developed countries (such as US, EU and Japan) continue to contribute more than their share of global carbon emissions by buying ‘cheap’ carbon credits in developing countries? At best they should trade emissions among themselves!
For readers who are new to the climate change terrain, the global community led by the Intergovernmental Panel on Climate Change (now headed by RK Pachauri) agreed upon the Kyoto Protocol in 1997 (ratified in 2005) where 38 industrialized/developed countries (US and Japan were two key countries that stayed out of this; incidentally US is the biggest greenhouse gas emitter!) agreed to reduce their emissions by 2008-2012 to an average of about 5% below their 1990 levels. The developing countries were exempt from targets at Kyoto. According to the Protocol, to bring down their emissions, the developed countries can trade carbons in an international exchange, jointly implement projects within the developed country community, or buy credits by funding projects (through clean development mechanism, or CDM) that reduce emissions in the developing countries. The current talks in Bali are expected to draw up the post 2012 plan.
The conventional wisdom in India on CDM-based funding is that it is the best thing to happen to the Indian renewable energy arena, as the projects (mainly solar, wind, small-hydel, waste-heat conversion, aforestation, energy efficiency, cogeneration, etc.) now have another source of funding through CDM. The NGOs are gung-ho on the concept, the ministry is bending backwards to ensure we have a smooth process to bring “carbon money” to India, the financial institutions are more-than-ready to structure such projects.
I however feel the CDM mechanism is not ethical. Why should developed countries (such as US, EU and Japan) continue to contribute more than their share of global carbon emissions by buying ‘cheap’ carbon credits in developing countries? At best they should trade emissions among themselves!
According to a recent study, the annual per capita energy consumption in India is 0.53 tonnes of oil equivalent per person, and the average per capita electricity consumption in India is about 450 kWh per year — less than 1/5th of the world average and 1/30th of the US average! The volumes of certified emission reductions of carbon dioxide (CERs) recorded annually by the UNFCCC (UN agency regulating the emission reduction) are 174 million tones; and the price for CERs is “engineered” at less than $20 per CER. Researchers indicate that if the developed countries had to meet their Kyoto targets, the economic cost incurred by the US would be $32 billion, by the EU would be $14 billion and for Japan it would be about $6 billion. This would indicate costs of reduction ranging from $41 to $55 per tonne of CO2. This is more than double the existing price of the CERs!
India (along with China) is actively participating in CDM activity with approx 300 projects with 28 million CERs registered per year. Most of these projects allow the industrialized countries to pick up the low hanging fruits at the cheapest price.
So in effect we are allowing the developed countries to keep polluting the climate by selling our carbon credits. And, we are not even making enough money in the process! So, is promoting CDM a smart opportunistic move or poor judgment? I leave the decision to the reader…
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