Wind farm in Africa (Image by: lollie pop)

The United Nations’ Clean Development Mechanism (CDM) adopted a novel project approach to countering or offsetting developed countries’ emissions.  The most visible and controversial component of the Kyoto Protocol has made large political and regional advances since its inception.

However, when it comes to global distribution of the projects that are actually generating carbon offsets, it falls short.  Nowhere has this been felt more, than on the African continent.  But why should this be the case when the CDM was designed to be a means to transfer technology, finances and development to the poorest and most vulnerable countries on the planet?

Reasoning a Failure?

The barriers of CDM expansion in Africa surround emission reduction potential, financing and institutional stability.

Africa’s contribution to global emissions is minimal; UN data estimate that Africa accounts for only 4% (1,500 million tonnes of CO₂ equivalent) of annual world emissions.  Stunningly, 75% of Africa’s emissions originate from just four countries (Algeria, Egypt, South Africa and Nigeria).

Consequently, the carbon mitigation potential in the remaining 49 countries is clearly small.  Per capita emissions in sub-Saharan Africa are the lowest in the world at 0.77 tCO₂(e).  Relatively speaking, the financial costs that accompany these potential mitigations are more expensive than anywhere else, so why would a project developer choose an African country to invest in when better and faster returns can be sought elsewhere?

Potential From Nothing

In spite of the obvious low attribution to Certified Emission Reduction (CER) volumes generated so far in CDM projects on the continent, there is a potential for substantial growth.

A study commissioned by the World Bank, detailed the possible emission reductions which could be actualised by a mechanism such as the CDM.

Key areas include: fuel shifting, improved agricultural processes and industrial energy efficiency schemes.  Importantly, the CDM can accommodate these reduction areas - with small-scale renewable schemes and process changes being effectively undertaken within the CDM.

As it stands, only 120 projects are hosted in Africa; of that, only 65 are in 20 sub-Saharan countries.  It has been estimated that up to 3,000 CDM projects can be hosted in Africa - there is a great deal of development left to be done.

One setback is that a country must have a Designated National Authority (DNA) before any CDM project can be contemplated.  This body is responsible for the regulation of CDM projects in their country.  Unfortunately for most sub-Saharan Africa, there are only 21 DNAs, meaning that many reduction opportunities are missed.

Overarching responsibility for tackling this dilemma ultimately lies with the CDM’s administrative body, the Executive Board (EB) and the UNFCCC.  Only recently has any real progress been made with respect to this.

Delivering the Mechanism

The difficulty is that the CDM has been poorly refined for the special considerations that African countries require.

What progress they made was acknowledged at the UNFCCC negotiations in Copenhagen in December 2009.  Regional distribution was only briefly discussed (mainly due to limitations of actual negotiating time) but it was agreed that the DNA registration requirements would be reduced in countries that have difficulty hosting projects.  The reforms are expected to come into force sometime in the second half of 2010.

A CDM concept that is expected to benefit Africa received little negotiating time also.  It is thought that the programmatic CDM (pCDM), or sometimes known as a programme of activities (PoA), could unlock the delivery potential of the CDM in Africa.

In an effort to reduce transaction costs and generating bigger revenues by facilitating larger economies of scale, the pCDM approach would gather a group of similar emission reduction schemes under the umbrella of one project.  Consequently, this could provide an opportunity to tackle small-scale project barriers.

The number of pCDM projects that have progressed is small, but there are some that have the opportunity to generate substantial emission savings in other developing countries.

The same opportunity exists in Africa.  The pCDM concept could resolve some challenges that currently bedevil the African CDM.  However, a large set of barriers still exist before the pCDM can really live up to expectations - including risks associated to the lack of administrative clarity of the pCDM, high upfront costs and lack of successful experience implementing these unique schemes.

So Africa’s CDM potential categorically exists, but toil is required before it can compete with the emission reductions that are possible in the cheaper and more accessible countries such as Brazil, India or China.   Once unlocked though, the CDM could evolve into the flexible mechanism that was anticipated from the very beginning.

(Image by: bslmmrs)

Founded in 1919, Société Générale de Surveillance, commonly known as SGS, are now potentially the world leading Designated Operational Entity (DOE) working within the remit of the United Nation’s Clean Development Mechanism (CDM).

But did they become so well established through raw business acumen, taking the ‘first mover’ advantage in a fledgling industry, or being at the right place at the right time with the right connections?

Experience Always Helps

SGS were fortunate to be in a position to possess all of the above.

The responsibilities of the DOEs are extensive: verifying the emission reductions of projects and ultimately ensuring that this verification leads to the all-important Certified Emissions Reduction (CER) issuance.

In many cases, CER issuance will be the principal income stream during a project’s lifetime, so the choice of DOE is an important one.  Historically however, this decision has been somewhat restricted, with the market taking on a distinct oligopolistic structure.

The most recent CDM performance data, supplied from the UNEP Risø centre, reveals that 93% of issued CERs came from five DOEs - from over 365 million CERs in total since 2005.  Interestingly, and rather poignantly, 49% of all issuances were verified by SGS, with the next largest holding only 23%.

The dominant share that SGS accounts for in terms of issuance volume can be partially explained by the fact that it holds most of the large industrial gas projects in the CDM as clients.  These sectors deliver around 75% of the total CER volume, and do so with relative frequency, i.e. once every 2-3 months.

Delving further into the CDM pipeline shows that SGS has projects operating in more countries than any other DOE.  Importantly, these are predominantly projects located in China and India, the two most productive locations in the CDM.

In the relatively short CDM lifetime, SGS picked up a wealth of experience in the right areas: sectorally and geographically.  It was a primary business aim to quickly establish themselves as the DOE of choice for any project in any location.  SGS were performing well and leaving many in their wake.

Does Experience Always = Best?

In September 2009 however, the legitimacy of the CDM suffered a severe shock following the CDM Executive Board’s decision to suspend SGS for three months, after it was unable to prove its staff had adhered to inspection rules or that they were qualified to do so in the first place.

During this time, SGS was not permitted to upload any further project reports to the UNFCCC website, or submit any further requests for issuances.  Despite this, it was only until 12 January 2010, after the suspension had finished, that issuances from SGS-verified projects ceased; such was the volume of their future issuance pipeline.

But this was not the first time that a large project auditor has been found failing to follow Executive Board procedures.  SGS was the second such company to be suspended.  Norwegian-based Det Norske Veritas (DNV) was found wanting during a spot check in November 2008 for comparable reasons as the above, and was similarly suspended for approximately three months also.

With a reputation comes a pressure to sustain business demand.  During this suspension, a ‘gentlemen’s’ agreement was installed to help prevent other DOEs from poaching clients from DNV.

It is credible to assume that this approach was also adopted during the suspension of SGS, much to the relief of the company shareholders.  Any delay in CER issuances as a result, particularly involving large volumes, would likely test the patience of sizeable project owners and their clients, who may not be as forgiving should it happen again.

As such, critics were quick to conclude that the suspension only further highlights the inadequacies of the CDM, and that such actions do nothing to allay any fears that the CDM is a risky venture.  After all, project proponents already have many risks to deal with that span political, regulatory and eligibility boundaries.

Conversely, supporters of the flexible mechanisms suggest that these suspensions emphasize that the processes installed are working and that the credibility of the CDM is upheld because of it.  Contracting is a required part of the project process and goes some of the way to safeguard CER buyers and in some certain circumstances, sellers.

In any case, until competition in the DOE market begins to show signs of improvement, it appears that SGS may yet hold onto their place as the most experienced of the CDM verifiers.  And with project developers holding onto their mantra of ‘experience experience experience’, who can blame them?

Climatico has just released its latest report entitled, “Copenhagen De-briefing: An Analysis of COP15 for Long-term Cooperation”

This report analyses key issues under discussion in Copenhagen including: finance, technology transfer, REDD+, CDM and JI, as well as the ongoing conflicts between Annex I and Non Annex I countries. The Copenhagen Accord is also discussed along with its potential effect on future negotiations.

Download the report

Author: Natalie Antonowicz

CCS Plant in Germany (Image by: Vattenfall)

Saudi Arabia, and other oil exporters such as Norway have been negotiating for the inclusion of carbon capture and storage (CCS) as a means by which developed countries can offset their emissions through the Clean Development Mechanism.

Carbon capture and storage refers to the method by which carbon emissions are collected at the point of emission - or ‘at the pipe’ - and sequestered underground or in the seabed. CCS may be used for industrial processes such as power generation and the extraction and refinement of fossil fuels. This is not a means of reducing the total amount of emissions generated, but a means of preventing emissions from entering the atmosphere.

Norway’s Deputy Oil Minister Liv Monica Stubholt has been urging states to support her country, Saudi Arabia, and OPEC in pressing for CCS to be included in the CDM. The International Emissions Trading Association supports the states, and feels that CCS’ exclusion from the CDM is the result of “seemingly subjective and politicised reasons, rather than those drawn from any objective analysis”.

Despite the efforts of Norway and Saudi Arabia, it is almost impossible that the Copenhagen Conference will result in an amendment to the CDM which would allow CCS projects to qualify for emissions reduction under the mechanism.

During the Copenhagen Conference, the Subsidiary Body for Scientific and Technological Advances (SBSTA), which is one of two permanent bodies to the Conference of Parties (COP) formally pushed its decision regarding whether CCS will be incorporated into the CDM until either the 2010 conference in Mexico, or the 2011 conference in South Africa.

The Subsidiary Body for Scientific and Technological Advances is not seriously considering Saudi Arabia and Norway’s proposals due to concern registered by other states and stakeholders. The body’s  recent report cites concerns about “the long-term liability for the storage site, including liability for any seepage”.

Although incorporating CCS into the CDM was among the major negotiating goals of Middle Eastern and North Sea states, the SBSTA’s deferral of the issue suggests that it is not under serious consideration by the major organs of the COP. Additionally, the issue has been proposed at previous Conferences, such as COP14 in Poznan, Poland, where it was not considered by the Body.

Debate among environmentalists about CCS also hinders the chances of success for Saudi Arabia and Norway’s proposal. Many stakeholders argue that it is less expensive to develop renewable energy technologies than it is to develop CCS technologies. Additionally, CCS has not yet been deployed on a commercial scale, and remains a largely experimental technology.

Opposition to the inclusion of CCS into the CDM by states such as Brazil, and consultancies such as Point Carbon has not wavered during last week’s negotiations. Brazil has argued that delegating funding to CCS projects may reduce available monies for that state’s efforts at renewable energy deployment and forest protection. Brazil’s rainforests serve as a major carbon sink for the world’s emissions.

Ultimately, despite its rejection as an instrument of the Clean Development Mechanism, carbon capture and storage is gaining global popularity. The European Union plans to invest EUR 1 billion into six demonstration projects, and the United States Department of Energy has pledged almost USD 1 billion for three demonstration projects. Private firms have also been investing in CCS. This indicates that as more stakeholders become involved in the issue, the incorporation of CCS into the CDM may indeed be strongly considered at future COPs, however, it is virtually impossible that Saudi Arabia and Norway’s efforts will lead to any serious consideration of the issue at COP15, due to opposition by states and civil society, and a lack of consideration by international bodies. According to Mari Luomi of the Finish Institute of International Affairs, the proposal “is not likely to move anywhere” at COP15.

Author: Jennifer Helgeson

Betio village, Kiribati. 10 February 2005. ©Greenpeace / Jeremy Sutton-Hibbert

The Kiribati delegation made a powerful public presentation of the extreme risks faces by their atoll nation in the near future by climate change effects.  Climatico analyst Jennifer Helgeson had the opportunity to have a discussion with Kiribati’s Secretary of Foreign Affairs and Immigration, Tessie Eria Lambourne, as well as legal Solicitor-General, David Lambourne.

The presentation preceding this conversation combined scientific discussions alongside cultural themes and socio-economic projections to put what Mr. Lambourne notes as a “human face” on climate change.  This human face includes issues such as quickly disappearing corals, loss of infrastructure, lack of potable drinking water, and extensive health issues.

Sea level rise is so serious for this nation that it is described as “inundation risk” by the risk management specialists brought in by the Kiribati government to assess the nation’s environmental situation.  These specialists have described two options for changes to Kiribati in the coming century:  1) Temporary inundation; or 2) Permanent inundation, with many changes already triggered and slowly evolving.  In the most modest model proposals (following IPCC projections), there is major coastal loss to the nation by 2030 and by 2050 there is a proliferation of swampy area throughout the mid-lands of the country. Finally, by 2100, there will be major permanent inundation of areas throughout the islands.

Such a situation would necessitate major evacuation of Kiribati’s citizens to other nations.  But, Ms. Lambourne makes it clear that if evacuation and relocation becomes realistic, the people of Kiribati will not go as environmental refugees: “We are a proud people.  We want to offer skilled individuals to other nations; we have no interest in our people living off of welfare.”  In this spirit, the government is committed to merit-based relocations (e.g. agreements to train Kiribati women as nurses in order to fill employment gaps in developed countries).  The programs already in development with Australia and New Zealand ensure long-term Kiribati communities in those nations.  Mr. Lambourne explains that historically other Pacific Island nations have had migration due to socio-economic factors.  So, they have seed communities of their indigenous people in places like New Zealand and Australia.  We need to develop those kinds of seed communities to absorb Kiribati people if climate change forces it to be so.”

When asked why he and his wife are so knowledgeable on climate change, Mr. Lambourne states that all the heads of state know about climate change because it is pervasive in all issues faced by Kiribati.  Kiribati has ordered village by village risk assessments and the reported outlook is grim.  The only airway to the country is likely to be totally inundated by 2030.  There is a key data gap in how coral will react over time; the excellent records kept since the 1990s does not allow for accurate projections.  The most densely populated island of the atoll is Tarawa (45,000 people) and poverty as well as health issues will only be exacerbated by climate change.   The one fresh water lens for the community’s drinking water has also begun to see minor salination.  Ms. Lambourne shakes her head and asks rhetorically: “do you know how expensive it is to maintain a desalinization plant?”

Kiribati is asking the world for help, but at the same time, Ms. Lambourne is quick to point out that they are taking hold of their own fate.  The Clean Development Mechanism hasn’t really made it into Kiribati because of the costs involved in setting-up the process.  “Who would do a single project in Kiribati when economies of scale let them do thousands cheaply in China?” asks Mr. Lambourne.  “We don’t have the technology to promise specific targets but we are working hard to get towards the use of more sustainable fuel types and seriously reducing the atoll’s carbon footprint.”

Kiribati is tackling the hard issues.  Mr. Lambourne admits that “relocation at all is not a comfortable topic, but we have to be realistic.”  He looks at me and jokes that, after all, our President is an economist; he is practical.”  Asked about how other Pacific Island nations feel about the merit-based migration program Kiribati is striving towards, the answer is that not all nations think it is the best way.  “Of course, it takes work on our part and on the part of our people.  But we are part of the AOSIS [Association of Small Island States], and we agree with the common message.  Each nation might choose to get there differently, but we agree.”

Complemented on the lovely Kiribati bird song shared during the initial presentation, Ms. Lambourne smiles and says that “the frigate bird is a prime example of national identity; that is why it is so hard to think about moving our people; the spiritual connection to the land is so intense.  The suggestion guides to adaptation all say that the easiest thing for individuals’ to do is to move away from coastal areas, but what happens when your entire nation is a coastal area?”

For more on Kiribati’s climate change plan for adaptation and potential evacuation, see: www.climate.gov.ki

The Context of Bonn

On Monday the interim meetings of the UNFCCC began in Bonn, Germany. The negotiations, which are scheduled to last for the next two weeks, are both a legal and political forerunner to now infamous ‘Copenhagen Meeting’ in December this year.

Legally, the parties to the Framework Convention on Climate Change were slightly caught unawares back in March when it emerged that, under the details of the Kyoto Protocol, any new negotiating texts and amendments must be agreed six months prior to their intended signature and final agreement.  Far from giving a full twelve months of negotiations between Poznan in late 2008 and Copenhagen, then, negotiators now find themselves in something of a scramble to agree to at least a skeleton document by the end of the next week.

Politically, there is such pressure on parties for Copenhagen that there is little scope for delaying agreement, thus making Bonn an unavoidable cram.  While much of this pressure is coming from NGOs and outside observers, a significant portion is also from the parties themselves.  Since the G8 Summit in Hokkaido, Japan, in July 2008, the major developed countries have constantly deflected difficult questions about meeting agreement to Copenhagen.  Indeed, in his press conference at the G20 in April 2009, UK Climate Change Minister Ed Miliband redirected almost all questions to the UNFCCC process.  As a result, then, the importance of Copenhagen has grown significantly, and so, because of the legal issues above, has that of Bonn.

Opening Days

Signs, at present at least, look positive.  The UNFCCC released draft texts in mid-May into which targets, mechanisms, and implementation details can now be slotted.  Moreover, Monday and Tuesday appear to be ‘off to a good start’, according to one UK negotiator speaking with me yesterday.

Of most interest are the two Bali Action Plan working groups–one (the KP) working out what can be taken forward from Kyoto and the second (the LCA) drafting a new text on ‘long-term, cooperative action’.  In practice this division breaks down to a discussion of targets and mechanisms under the KP and discussion of who should take on commitments and ‘new’ issues like adaptation under the LCA.  So far, both groups have hosted their opening sessions in Bonn.

Post-Kyoto Discussions

The LCA–traditionally the more contentious forum–has opened with a frank discussion on the plethora of proposals submitted by parties over the past few months.  The African Group, for example, expressed concern about a number of the more ‘radical’ proposals–especially the suggestion of a more fluid boundary between developed and developing countries in terms of emissions targets.  Indeed, the classic divisions that tend to emerge at UNFCCC meetings, such as the African Group’s position, do not appear to have been put aside completely in the effort to reach a deal.  Indeed, some of the major middle income countries, including China, India, Saudi Arabia, and the Philippines, all expressed concern about the suggestion of developing country targets–an issue for which there are many many options outlined in developed party submissions.

A particular problem here is the structure of the UNFCCC treaty under which the Kyoto Protocol falls.  The treaty document clearly preserves the common but differentiated responsibility and right to develop of developing countries.  While clearly important provisions, these principles hold the UNFCCC in something of a permanent tension between extending global mitigation action as the economic situation in middle income countries changes and abiding by the treaty text.  Indeed, during Tuesday open session of the LCA group, both China and India suggested that possibilities for compulsory developing country action–either with targets or not–were not in line with the Framework Convention itself, and so could not be included.  This continues to grate with the USA’s on-going position (see the Luagr-Biden Resolution) that such countries should take on some commitments.  Japan has also added to the chorus, suggesting that a simply continuation of Kyoto divisions is not acceptable.

Reform and Reuse of Current Kyoto Provisions

Within the KP group of the Bali Action Plan discussion is largely focussed around the level of targets in an amended protocol.  Regardless of who takes these commitments on (something discussed by the LCA, above), the actual numbers are always a point of contention.  As per the usual for an opening meeting, non-Annex I countries were highly critical of ballpark figures for Annex I in 2020; the Assoc. of Small Island States (AOSIS) argued that major Annex I cuts were need immediately, suggesting that the UNFCCC was on the verge of missing the 2 C target.

The Weeks Ahead

It is my expectation that the focus on these two groups will shift as the Bonn talks progress.  While the LCA currently seems to be where most of the action is taking place, it is the KP that brings the fireworks when it comes to agreeing numbers.

What is clear from the opening two days is that party lines remain firmly inscribed in the process.  This gives all the more importance to the various adjunct issues that are also to be finalised during Bonn: REDD+, CDM, No-lose targets (if not in the CDM), technology transfer, and so on.  I think it is likely that these issues will not only grow in importance in their own right but will become the major system of bartering and ‘horse trading’ by which the larger disagreements are overcome.  Thinking back to 1997 and the Kyoto Negotiations, it was the inclusion of the CDM in the closing hours that sealed the deal rather than a substantial shift in existing policy.  Watch these newer issues, then, as they are the currency in which old, stock UNFCCC disputes are traded off.

The American Clean Energy and Security Act of 2009, commonly referred to as the Waxman-Markey Bill, is moving through the U.S. House of Representatives, after passing a vote in the House Energy and Commerce Committee 33 to 25 in late May. 

It must pass through a series of difficult legislative hurdles before a final vote in the House—approval here will enable the bill to move forward to the Senate, which may prove to be an even more challenging feat.

But if this first “victory” is to be any indication of what is to come, it might be fair to speculate that the Waxman-Markey Bill will clear its hurdles by incrementally lowering the bar.  Early review of the most recent version of the bill reveal the compromises made to move the bill forward: a diluted midterm reductions target, from a 20% reduction from 2005 levels by 2020 to a 17% reduction; an altered distribution of allowances, initially proposed by the White House to be fully auctioned, now moved to 85% allocation.  Furthermore, the role of offsets has been significantly increased.  Waxman-Markey includes provisions for offsets of 2 billion tons of CO2/yr, of which up to 1.5 billion may come from international sources.  A proposed 1.25:1 offsets to allowances ratio has been softened to a 1:1 ratio until 2017.  This decreases the maximum number of international credits that the use could absorb from 1.875bn to 1.650bn tCO2/y.  Although this sounds small, when you consider that there have only been 289m credits issued under the CDM to date, the cut of 225m comes into perspective. Defining the criteria for which offset programs will be considered appropriate also appears to have been broadened.

In an interview on Monday, Steven Chu acknowledged the draft legislation fell short of White House aspirations, but went on to recognize the role of the climate change bill as a positive step in the right direction.  As reported by Reuters, “This is the really the arc of what really can be done,” Chu said. “I personally believe strongly that we have to get started and so a comprehensive energy and climate change change bill, which has to recognize certain compromises, is really the issue.”

One might consider Chu’s remarks and the revision to the bill thus far in the context of an axiom of political compromise—to not let the perfect be the enemy of the good.  But the nature of climate change and climate change policy means that there are limits to this conventional political wisdom, for two important reasons: without sufficiently robust targets, the effectiveness of the legislation in resulting in emissions reductions is severely compromised, and, perhaps of more immediate relevance, so too is the ability of the United States to play a strategic role in international negotiations on climate change.  A watered down U.S. domestic policy will dramatically constrain the U.S. position in both Bonn and Copenhagen, to the potential outcome of lowering the bar at the international level as well.  The EU has promised to commit to a 30% in reductions by 2020 from 1990 levels, rather than a guaranteed 20%, provided other key players play ball.  Comparing like for like, US reductions of 17% by 2020 from 2005 levels equate to merely a 3% reduction from 1990 levels. A question remains as to how the EU will respond to such levels.

The Waxman-Markey Bill, diluted at present, will surely be subject to further compromise as it makes its arduous journey through the U.S. Congress.  Will the (hopeful) resulting legislation suffice as evidence to the EU that the U.S. is indeed playing ball?  Will it signal to non-Annex 1 emitters, such as China and India, that they will need to consider significant reductions in emissions?  While it is true that the U.S. indeed must act quickly to rectify the delay in legislation on climate change of the past 8 years, it must do so with the understanding that the outcome of this legislation stands to shape the trajectory for climate change action at the international scale as well.  In doing so, the U.S. should calibrate the height of this bar very, very carefully. 

Simon Billett also contributed to this post.

The 45^th meeting of the Executive Board of the Clean Development Mechanism was carried between Feb.12^th and 13^th.

New EB Chair and Vice-Chair

The EB elected Mr. Lex de Jonge and Mr. Clifford Mahlung as Chair and Vice-Chair, respectively, of the Executive Board until the first meeting of the Board in 2010. Mr. De Jonge was previously Director of the CDM Division in the Netherlands. Mr. Mahlung was Jamaica’s chief negotiator to the recent United Nations climate change conference in Bali.

Business as usual

The approbation/refusal of registration of projects as well as the issuance of CERs was conducted without extended discussions. The Board however discussed situations in which the implementation of registered CDM projects may differ from description of the project in the registered Project Description Document. With regards to large-scale projects, it is in fact frequent to have a PDD which differs significantly from the implemented project. This is due, in part, to the delay in the approbation of the project. From the time the PDD is tunnelled in the CDM pipeline to the time it is verified and approved, there can be significant contingencies in the actual implementation of the project. The EB mandated studies on the matter.

Those expecting more debates will have to wait at the end of March for Bonn’s meeting of the AWG-LCA and AWG-KP, the two working groups responsible for preparing the table for Copenhagen. This will be the first real test for the Obama administration.

Challenges

Of particular interest were discussions on the management plan of the CDM. It highlighted the main challenges and strategic objectives of Kyoto’s flagship flexibility mechanism (see http://cdm.unfccc.int/EB/045/eb45_repan71.pdf). These challenges pertain mainly to the stunning increase in workload the CDM governance structure had to digest in the last years. Since the CDM is a bottom-up, voluntary mechanism, this workload is difficult to predict from year to year. This also raises the capacity constraints of the CDM-related processes in the market: Firms qualified enough and willing to act as Designated Operational Entities (DOEs) are not simply available on demand. More globally, there is a need for the CDM to surpass its “learning-by-doing” approach and enter a more mature, efficient and responsive phase.

The report however is silent about the global economic context. Yet, one might think that because of the economic crisis (and correlated diminution in industrial activity), the increase in demand for registration of CDM projects as well as pressure on the DOE market will be more modest than expected.

Who should be bailed out - him, or Bangladeshis? (source: autocar.co.uk)

Low-lying Bangladesh is often cited as one of the countries likely to be worst hit by climate change, particularly due to sea-level rise. Urgent measures in Bangladesh’s 10-year action plan are predicted to cost $5 billion in the first five years.They’ve already raised $45 million from donors, but now there are fears that support will dry up as the financial crisis bites in rich countries, which one of their negotiators for Copenhagen has already expressed. Such fears are echoed by the likes of UNDP and WWF, who fear it is unlikely rich countries will step up to the plate.

Given the UN Adaptation Fund (see previous posts) depends on CERs for its financing, the recent fall in the carbon price is bad news for adaptation. Some estimates suggest nearly 20% of the fund’s worth has been lost. The GEF has indicated that it may start being more vocal about pushing donor countries to finance adaptation.

In any case, it certainly looks bad if the US, Britain and others are pumping billions into their banks and car manufacturers (high carbon emitters and lazy good-for-nothings who have dragged their heels on fuel efficiency) whilst leaving developing countries to face the music. This is the height of climate injustice, and you can expect a lot of noise to be made if things haven’t improved by the time Copenhagen comes along…

*update* 23/2/09 - this Guardian story follows a similar theme

Recently, the Indian government signed a MoU with the United States aimed at strengthening development of bio fuels in India. Focused on advancing first and generation fuel crops, conversion technologies, and decentralized production processes the MoU suggests a promising outlook in India. But bio fuels in India has had a bumpy path. Indian officials have sought bio fuel avenues in their pursuit to reach energy security and strengthen its agriculture sector role yet there have also been significant policy setbacks which have prevented a unified national policy.

Lack of political unity and regulation towards bio fuel mission
Poorly structured regulations and politics have limited the bio fuel potential in India. Despite regulations in place to promote blended fuels, problems with state to state tariffs have made this regulation more of a hindrancethan a catalyst for bio fuels producers. In the past two years, the Government sought to establish a national bio fuel policy with an ambitious agenda such as requiring a 20% ethanol blend in petrol and diesel by 2017. The policy faced significant struggles in the political arena over the policy’s handling of commercialization of bio fuels. Since then, the mission has reportedly been shelved.

Windows of opportunity for bio fuels in India

Photo credit: Centre for Jatropha Promotion & Biodiesel.

To add, there is broader debate over promoting bio fuels as alternative energy sources in general. While biofuels can provide an avenue of energy security, reducing energy dependency on imported oil, they place significant pressures on natural resources (land, water, etc). Currently, bio fuels (predominantly ethanol-based) in India is mainly sourced from water intensive sugar cane crops. Proposals to encourage food crops for fuel production have been viewed negativelyby the Indian officials, yet the promotion of non edible crops such as jatropha have gained considerable favorable attention.
India’s government-owned railway system has encouraged the cultivation of jatropha on railway wastelands
through leasing schemes. Such a scheme has been viewed positively by some who believe making bio fuels work in India is a matter of thinking innovatively on various aspects of bio fuels policy: type of crop, land usage, and appropriate regulations including inclusion in CDM schemes. This is the view sought after private enterprise, Mission Biofuel India, which is seeking government approval for a jatropha-sourced biofuel refinery in the state of Orissa.

Indian officials need to better articulate the potential of bio fuels in India. This is no easy task as the debate over biofuels continues to be heated in scientific and political arenas. In this way the promotion of collaborative research and technical over bio fuels is welcoming. On another front, Indian officials must seriously review current policies including subsidy and tariff mechanisms at the national and state level that cover current/future bio fuel crops. This evaluation is needed because India has the opportunity to make certain bio fuel crops and processes advantageous but only through proper regulation which will ensure environmental safeguards and social benefits which currently is lacking.