Carbon credits are of help
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The pollution concerns offer developing economies such as India an opportunity to earn billions of dollars through carbon credits, writes MYTHILI G. NIRVAN
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Big challenge: Cleaning up the environment is what most cities need to look into.
With serious concerns arising on the level of carbon emissions and its impact on global warming, the Kyoto Protocol has found ways to regulate pollution control measures. The Protocol has set binding targets for 37 developed countries and the European Community, making reduction of Greenhouse Gas (GHG) emissions amounting to an average of five per cent against 1990 levels mandatory. This is to be achieved over the years 2008-12.
The participating countries can reduce their carbon footprint through concerted measures. One such is the Clean Development Mechanism (CDM), where the signatories to the protocol can implement emission reduction projects in developing countries. Under CDM, developed countries can purchase certified emission reduction credits (CERs), generally called carbon credit, each equivalent to one tonne of CO2 from developing countries to meet their emission targets.
While developing countries currently have no obligation to constrain their GHG emissions, they stand to benefit monetarily if they do so voluntarily by hosting projects under the CDM. In developing countries, CERs are issued by the UNFCCC (United Nations Framework Convention on Climate Change) CDM Executive Board to the registered CDM projects that can be shown to reduce emissions of greenhouse gases. Such projects can earn CERs which can be sold in a new environmental market at a price (10-15 Euro per tCO2e).
Various types
GHG reduction projects can be of various types such as rural electrification using solar panels, installation of more energy-efficient boilers, renewable source-based power plants such as biomass, wind and hydro, afforestation, to name a few. However, these realised emission reductions should be in addition to what would otherwise have occurred.
CDM has been operational since the beginning of 2006 with more than 1,086 projects registered. It is expected to produce CERs over 2.7 billion tonnes of CO2 equivalent for the period 2008-12. Currently, India has one of largest number of projects using CDM technologies. Out of the total 1,086 registered CDM projects worldwide, 348 (36 percent) are from India, of which 224 projects have been issued CERs. With 949 projects already approved by the ministry concerned and waiting final clearance from the U.N., Indian projects seems to gain the maximum from this new environmental market.
Vast potential
A majority of the projects in India are in renewable energy (biomass, hydro, wind-based power generation projects), while a few projects have come up in areas such as waste heat and waste gas recovery-based power generation. Other popular areas are fuel switch, biogas, methane recovery, methane capture and cement. Recently, energy-efficiency projects are also gaining momentum in India with 15 projects already registered with UNFCCC CDM EB. Some of the emerging industries such as construction have vast potential for exploring and implementing energy-saving technologies.
As the global market for CDM evolves, the bulk of the projects are likely to be concentrated in those developing countries which have the infrastructure and institutional support to handle such investments. Several advisory firms provide carbon advisory services to industrial units in designing, approval and registration of CDM projects with UNFCCC CDM EB.
Given the increasing demand for carbon credits from developed countries to comply with Kyoto norms, studies indicate that developing countries including India, by supplying such credits, stand to gain billions of dollars every year.
(With inputs from Uma Rajarathnam, Head- Environment Practice, Enzen Global Solutions, an energy and environment consulting firm)
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