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Tuesday April 1, 2008
By HILARY CHIEW
To cut down their greenhouse gas emissions, rich nations are investing in clean energy projects in poorer countries.
ALTHOUGH not required to slash their greenhouse gases (GHG) emissions in the face of global warming, developing countries have been playing a mitigating role through the Clean Development Mechanism (CDM).
Under CDM, one of three mitigating mechanisms of the United Nations-led Kyoto Protocol agreement, developing countries are helping developed economies (grouped as Annex I countries) lower their emissions by 5.2% from 1990 level between 2008 and 2012.
CDM enables developed nations to purchase carbon credits by investing, in developing countries, projects that avoid or reduce emissions. In return, CDM projects are supposed to assist non-Annex I nations achieve sustainable development by providing them with climate-friendly technologies.
A total of 945 CDM projects in 48 countries have been registered with the UN Framework Convention for Climate Change (UNFCCC) since 2005, the year Kyoto Protocol was implemented. Most projects are in India and China. To date, 1.17 billion carbon credits called Certified Emission Reduction (CER) units, worth US$12bil (RM42bil) at an average of US$10 (RM35) per unit, have been issued. Each unit is equivalent to one tonne of carbon dioxide.
In Malaysia, the National Committee on CDM was established in 2002 and three technical committees were set up to guide the development of CDM in the sectors of energy, forestry and agriculture. The energy sector is the most active, accounting for the bulk of the 26 registered projects that have generated 14 million CERs. As of January, 97 other projects have been mooted and are in various stages of implementation. There is no project from the forestry sector yet although Malaysia is trying to sell credits from its plantation forest schemes pending the finalisation of the definition of forests according to the CDM criteria.
CDM consultant and carbon trading broker Soeren Varming of SV Carbon says Malaysian projects fulfil the two objectives of CDM: assisting developing countries to attain sustainable development and developed countries to meet their emission reduction targets.
“It results in improvement in management of palm oil waste in the empty fruit bunches (EFB) and palm oil mill effluents (POME),” he says. For example, composting EFB and other biomass from plantations into fertiliser also prevents methane build-up.
CDM also saw the emergence of renewable energy from oil palm biomass and biogas from landfill. EFBs are used as feedstock for power generation and methane captured from palm oil mill effluent and landfills is channelled into boilers and converted into heat or electricity.
Critics of CDM say developed countries are enjoying the cheap options of offsetting their emissions while delaying the costly transition to low-carbon technologies that they have to take to curb emissions at home. Many feel the aim of reducing emission has been perverted by the market mechanism approach that is more concerned about cost-effectiveness than promoting clean development technology.
“What happens when our turn comes to cap emissions in the near future (and) we have forfeited the cheap options? Who will pay for the expensive solutions?” asks Gurmit Singh, chairman of Centre for Environmental Technology Development of Malaysia in a paper titled CDM - Shifting the burden to developing countries?
Varming argues that to achieve deep cuts, cheap solutions are needed. “One good thing about market instrument is that it is able to identify cheap solutions and roll them out in a large scale but that doesn’t mean that we don’t do the expensive ones.”
Kevin Smith of Carbon Trade Watch warns that such schemes allow developed countries to sidestep the most effective response to climate change – which is to leave fossil fuels in the ground. “What incentive is there to start making these costly long-term changes when you can simply purchase cheaper short-term carbon credits?” he asks.
Another criticism is the lack of technology transfer from developed nations to CDM host countries. Chow Kok Kee, who chairs the UNFCCC Technology Transfer Expert Group, says developing countries should be pragmatic in demanding technology transfer.
“What is important is that the technology is not obsolete, is applicable to local needs and address local environmental problems,” he says in reference to the technologies in converting the boilers in many palm oil mills that participated in the CDM projects.
Earnings from the sale of carbon credits, he argues, enable the oil palm sector to pay the costs of conversion and installations which otherwise would take a longer time to materialise. The former Meteorological Department director-general and chief negotiator of Malaysia at UNFCCC meetings dismisses concerns that Malaysia could have exhausted its own cheap options of emission reductions. “Another 80% of palm oil mills are outside the CDM scheme and there are other sectors that remain unexplored.”
Carbon trading firm EcoSecurities client manager Dr B.G. Yeoh cautions that CDM supply has exceeded demand with the cap on the volume of CDM credits that Annex I countries could utilise to offset their emission level. He says CDM projects face an uncertain future as the fate of the carbon market hinges on the second phase of the Kyoto Protocol that is to be decided in 2010.
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