Carbon offsets with endogenous environmental policy

Interests in obtaining carbon offsets in host countries for CDM projects may serve as an obstacle to implementing more stringent general environmental policies in the same countries. A relatively lax environmental policy, whereby carbon emissions remain high, can be advantageous for such countries as it leaves them with a higher than otherwise scope for future emissions reductions through CDM and other offset projects. In this paper, the potential to affect the availability of future CDM projects is shown to distort environmental and energy policies of CDM host countries, in two ways. First, policies to reduce the use of fossil energy are weakened. This in turn weakens private sector incentives to switch to lower-carbon technology through CDM projects. CDM host governments then also find it attractive to subsidize this switch, in order to maximize the country's advantage from the CDM.     

CDM potential of bagasse cogeneration in India

 So far, the cumulative capacity of renewable energy systems such as bagasse cogeneration in India is far below their theoretical potential despite government subsidy programmes. One of the major barriers is the high investment cost of these systems. The Clean Development Mechanism (CDM) provides industrialized countries with an incentive to invest in emission reduction projects in developing countries to achieve a reduction in CO₂ emissions at lowest cost that also promotes sustainable development in the host country. Bagasse cogeneration projects could be of interest under the CDM because they directly displace greenhouse gas emissions while contributing to sustainable rural development.     

Progress in renewable energy under clean development mechanism in India

Kyoto protocol was the first agreement regarding control of climate change problems. Clean development mechanism (CDM) was included in the Kyoto protocol to promote sustainable development in developing countries (non-Annex I countries) and assist developed countries (Annex I countries) to achieve their emission reduction targets. CDM allows trading of emissions reductions and helps to increase sustainable development in a developing country and reduce global emissions in developed country. Renewable energy sources are the appropriate alternatives for sustainable development through CDM. India is one of the emerging nations in renewable energy sector. Government of India is trying to enhance energy generation through renewable and carbon trading. This paper shows the current status and progress of renewable energy through CDM in India.     

Employment impacts of CDM projects in China's power sector

There are continuous debates around the question of whether CDM really contributes to sustainable development (SD) in host countries. Employment impact is an essential indicator of SD. Based on an input-out approach this research builds a quantitative assessment model to evaluate the employment impacts of CDM. Both direct and indirect jobs creation and job losses of CDM projects in the power sector registered by the end of 2011 are calculated by project types and power grids where the project is located. Results of this study show that, although the above mentioned CDM projects causes about 99,000 net direct job losses, they also create about 3.08 million indirect jobs, resulting in the gross employment of CDM to be about 2.98 million. Thereof, hydro projects induce both direct and indirect job losses, which comes to approximately 0.89 million. Solar projects have the most potential since they own the highest indirect jobs created by one GWh generation, about 104 jobs/GWh.     

Analysis of the partnership network in the clean development mechanism

The clean development mechanism (CDM) is a global collaborative action proposed at the Kyoto Protocol in response to climate change issues. The CDM contributes to cost-efficient reduction of greenhouse gas emissions in industrialized countries and promotes sustainable development in developing countries. Its fundamental framework is based on partnerships between industrialized and developing countries. This study employs social network analysis to investigate the dynamics of the partnership networks observed in 3816 CDM projects registered in the database of the United Nations Framework Convention on Climate Change over the period of 2005 to 2011. Our three main findings can be summarized as follows. First, the CDM partnership network is a small world; however, its density tends to decrease as the number of participants for a CDM project decreases. Second, the partnership networks’ leading groups tend to shift from partner countries into host countries. Third, a host country that pursues more partnership-based projects takes better control of resources and knowledge-flow in the ego-network formed around that country, and can thus better utilize global resources for its CDM projects.     

On the contribution of labelled Certified Emission Reductions to sustainable development: A multi-criteria evaluation of CDM projects

The Clean Development Mechanism (CDM) has a twofold objective, to offset greenhouse gas emissions and to contribute to sustainable development in the host country. The contribution to the latter objective seems marginal in most CDM activities. Also, CDM activities are unevenly spread among developing countries. In response to these concerns, initiatives with the objective of promoting CDM projects with broad local sustainable development dividends have been launched, such as the Gold Standard and the Community Development Carbon Fund. The Gold Standard label rewards best-practice CDM projects while the Community Development Carbon Fund focuses on promoting CDM activities in underprivileged communities. Using a multi-criteria method, the potential contribution to local sustainable development of those CDM projects with particular attributes is compared with ordinary ones. This evaluation suggests that labelled CDM activities tend to slightly outperform comparable projects, although not unequivocally.     

CDM potential of solar water heating systems in India

The Clean Development Mechanism (CDM) provides industrialized countries with an incentive to invest in emission reduction projects in developing countries to achieve a reduction in CO₂ emissions at lowest cost that also promotes sustainable development in the host country. Solar water heating systems (SWHs) could be of interest under the CDM because they directly displace greenhouse gas emissions while contributing to sustainable development by reducing local pollutants. However, there are only three solar water heating projects under the CDM so far. An attempt has been made to estimate the CDM potential of SWHs in India in this study. Our estimates indicate that there is a vast theoretical potential of CO₂ mitigation by the use of SWHs in India. The annual CER potential of SWHs in India could theoretically reach 27 million tonnes. Under more realistic assumptions about diffusion of SWHs based on past experiences with the government-run programmes, annual CER volumes by 2012 could reach 4–9 million and 15–22 million by 2020. This would require that the government sets the subsidy level for SWHs at a level that allows them to become viable with the CER revenue. From a macro-economic point of view this makes sense if the sustainability benefits are deemed sufficiently high to warrant promotion of this project type.     

Small hydro power projects under clean development mechanism in India: A preliminary assessment

The clean development mechanism (CDM) of the Kyoto Protocol provides Annex-I countries with an incentive to invest in emission reduction projects in non-Annex-I countries to achieve a reduction in carbon dioxide (CO₂) emissions at lowest cost that also promotes sustainable development in the host country. Small hydro power (SHP) projects could be of interest under the CDM because they directly displace greenhouse gas emissions while contributing to sustainable rural development, if developed correctly. An attempt has been made to estimate the CDM potential of SHP projects in India. The preliminary estimates indicate that, there is a vast theoretical potential of CO₂ mitigation by the use of SHP projects in India. On the basis of available literature, the gross potential of SHP projects is more than 15 GW. The annual CER potential of technically feasible SHP projects in India could theoretically reach 24 million tons. Under more realistic assumptions about diffusion of SHP projects based on past experiences with the government-run programmes, annual CER volumes by 2012 could reach 7–20 and 13–24 million by 2020. CDM could help to achieve the maximum utilization potential of SHP projects more rapidly as compared with the current diffusion trend if supportive policies are introduced.     

Encouraging the implementation of small renewable electricity CDM projects: An economic analysis of different options

Apart from contributing to the mitigation of GHG emissions, the deployment of renewable electricity Clean Development Mechanism projects (RE-CDM) may provide substantial local economic, social and environmental sustainability benefits to host countries. However, in spite of these advantages, a wide array of barriers prevents the realisation of these projects. They compete with other CDM options which lead to cheaper GHG emissions reductions but which do not provide as much opportunities for sustainable development in developing countries. Taking into account that, in contrast to GHG benefits, sustainability benefits are not valued in the market place and that article 12 of the Kyoto Protocol envisages two objectives for the CDM (cost-effective emissions reductions and contribution to sustainability), this market mechanism might be leading to a “market failure” in RE-CDM projects. This paper explores the different barriers affecting the implementation of RE-CDM projects and proposes and analyses several policies and measures that could be implemented to encourage their deployment by tackling those obstacles.     

Carbon emission coefficient of power consumption in India: baseline determination from the demand side

Substantial investments are expected in the Indian power sector under the flexibility mechanisms (CDM/JI) laid down in Article 12 of the Kyoto Protocol. In this context it is important to evolve a detailed framework for baseline construction in the power sector so as to incorporate the major factors that would affect the baseline values directly or indirectly. It is also important to establish carbon coefficients from electricity generation to help consider accurate project boundaries for numerous electricity conservation and DSM schemes. The objective of this paper is to provide (i) time series estimates of indirect carbon emissions per unit of power consumption (which can also be thought of as emission coefficient of power consumption) and (ii) baseline emissions for the power sector till 2015. Annual time series data on Indian electricity generating industry, for 1974–1998, has been used to develop emission projections till 2015. The impacts of generation mix, fuel efficiency, transmission and distribution losses and auxiliary consumption are studied in a Divisia decomposition framework and their possible future impacts on baseline emissions are studied through three scenarios of growth in power consumption. The study also estimates and projects the carbon emission coefficient per unit of final consumption of electricity that can be used for conducting cost benefit of emission reduction potential for several electricity conserving technologies and benchmarking policy models.     

Rent extraction with a type-by-type scheme: An instrument to incorporate sustainable development into the CDM

Although the CDM is supposed to assist developing countries in achieving sustainable development, sustainable development is not incorporated into the market aspect of the CDM. By participating in the CDM, developing countries may end up losing all cheap emissions reduction possibilities, while obtaining little sustainability benefits. This paper proposes rent extraction with a type-by-type scheme as an instrument to incorporate sustainable development into the CDM. The rent extraction with a type-by-type scheme makes it possible for the CDM host country government to discourage the low-cost projects that have little sustainability benefits, and to extract more rent from the projects that are developed. The main challenge of implementing this instrument is the uncertainty of the opportunity cost, but the host country government can adjust the scheme for the uncertainty to achieve its goal. Therefore, the type-by-type scheme will better assist the host country in achieving sustainable development than a single-rate scheme.     

The importance of clean development mechanism for small hydro power plants

The present study sought to examine the importance of CDM for the implementation of small hydro in Brazil, assessing its advantages, disadvantages and limitations. An analysis of official documents of all SHPs in activity, under construction, and approved in Brazil was performed, including all existing CDM projects for small hydro in the country. A sensitivity analysis was performed to determine the point of zero net loss for CDM SHP projects, considering: minimum, maximum, and average Certified Emission Reduction (CER) values; minimum, maximum, and average costs of CDM project development, both for small and large scale activity; and variations in the internal rate of return (IRR). The main conclusion was that CDM for SHP in Brazil cannot be considered a subsidy for implementation of these projects, but may increase their revenue. It was found that, among the 431 SHPs which became active in the country since 2001, 339 did not implement CDM projects, suggesting that the importance of this mechanism as an incentive was uncertain. It was also found, under the investigated conditions, that investment in a CDM project requires a minimum installed capacity of approximately 11 MW to minimize the risks related to economic return. The variation in the value of the CER is more important than the variation of the Weighted Average Cost of Capital (WACC), as verified through sensitivity analysis. It was also found that CDM projects of large-scale activity, as well as small hydro projects in isolated systems, have a lower risk compared to small-scale projects which belong to the NIS (National Interconnected System).     

Renewable energy technologies for the Indian power sector: mitigation potential and operational strategies

The future economic development trajectory for India is likely to result in rapid and accelerated growth in energy demand, with attendant shortages and problems. Due to the predominance of fossil fuels in the generation mix, there are large negative environmental externalities caused by electricity generation. The power sector alone has a 40 percent contribution to the total carbon emissions. In this context, it is imperative to develop and promote alternative energy sources that can lead to sustainability of the energy–environment system. There are opportunities for renewable energy technologies under the new climate change regime as they meet the two basic conditions to be eligible for assistance under UNFCCC mechanisms: they contribute to global sustainability through GHG mitigation; and, they conform to national priorities by leading to the development of local capacities and infrastructure. This increases the importance of electricity generation from renewables. Considerable experience and capabilities exist in the country on renewable electricity technologies. But a number of techno–economic, market-related, and institutional barriers impede technology development and penetration. Although at present the contribution of renewable electricity is small, the capabilities promise the flexibility for responding to emerging economic, socio–environmental and sustainable development needs. This paper discusses the renewable and carbon market linkages and assesses mitigation potential of power sector renewable energy technologies under global environmental intervention scenarios for GHG emissions reduction. An overall energy system framework is used for assessing the future role of renewable energy in the power sector under baseline and different mitigation scenarios over a time frame of 35 years, between 2000 to 2035. The methodology uses an integrated bottom-up modelling framework. Looking into past performance trends and likely future developments, analysis results are compared with officially set targets for renewable energy. The paper also assesses the CDM investment potential for power sector renewables. It outlines specific policy interventions for overcoming the barriers and enhancing deployment of renewables for the future.     

Towards a private–public synergy in financing climate change mitigation projects

Funding for greenhouse gas mitigation projects in developing countries is crucial for addressing the global climate change problem. By examining current climate change-related financial mechanisms and their limitations, this paper indicates that their roles are limited in affecting developing countries’ future emissions, and argues for the necessity of stronger private sector engagement in financing mitigation projects. In this regard, the clean development mechanism (CDM), one of the flexibility mechanisms incorporated into the Kyoto Protocol, could offer great potential in helping mobilize foreign direct investment towards climate mitigation, by providing commercial incentives for the private sector to invest in mitigation projects and internalizing externalities associated with mitigation projects. However, due to additional risks and barriers involved in CDM projects, we believe that appropriate public–private linkage would be necessary in order to bring the CDM into full play. To this end, we suggest that public funds could be used to complement private investment via the CDM, thus enhancing market functions of such an investment. Moreover, in so doing, we think that it would be necessary to examine a host of factors, such as risk sharing, private sector investment behaviour, types of technologies to be transferred, and co-ordination with the commonly practiced trade and investment rules.     

Explaining the differential distribution of Clean Development Mechanism projects across host countries

The Clean Development Mechanism (CDM) of the Kyoto Protocol represents an opportunity to involve all developing countries in the effort to reduce greenhouse gas emissions while also promoting sustainable development. To date, however, the majority of CDM projects have gone to emerging markets such as China, India, Brazil, and Mexico, while very few least developed countries have hosted projects. This paper investigates the differential distribution of CDM activities across countries. We develop a conceptual model for project profitability, which helps to identify potential country-level determinants of CDM activity. These potential determinants are employed as explanatory variables in regression analysis to explain the actual distribution of projects. Human capital and greenhouse gas emission levels influenced which countries have hosted projects and the amount of certified emission reductions (CER) created. Countries that offered growing markets for CDM co-products, such as electricity, were more likely to be CDM hosts, while economies with higher carbon intensity levels had greater CER production. These findings work against the least developed countries and help to explain their lack of CDM activity.     

全球清洁发展机制发展动向

《京都议定书》第12条“清洁发展机制(CDM)”中规定发展中国家可以帮助发达国家实施减排项目,并为自身的可持续发展服务。1997～2002年间,随着CDM的原则、规则和实施程序、机构等逐步确定下来,一些国际机构和国家开始积极运作CDM项目。首轮CDM项目是可再生能源的天下,以规模较小的水电和风电项目为主,而主角是PCF、荷兰CERUPT、巴西、印度、哥斯达黎加等参与者。这些CDM项目如同一个基础产业,不仅自身在发展,还带动了关联产业,如核实、认证、中介服务、咨询等一系列的商业活动。先行的CDM项目在开发、准备、谈判、额外性评价、基准线确定、价格、融资方式、核实等各方面为中国实施CDM提供了丰富的信息和经验。     

Linking renewable energy CDM projects and TGC schemes: An analysis of different options

Renewable energy CDM (RE-CDM) projects encourage cost-effective GHG mitigation and enhanced sustainable development opportunities for the host countries. CERs from CDM projects include the value of the former benefits (i.e., “climate change benefits”), whereas the second can be given value through the issuing and trading of tradable green certificates (TGCs). Countries could agree to trade these TGCs, leading to additional revenues for the investors in renewable energy projects and, therefore, further encouraging the deployment of CDM projects, currently facing significant barriers. However, the design of a combination of CDM projects and TGC schemes raises several conflicting issues and leads to trade-offs. This paper analyses these issues, identifies the alternatives that may exist to link TGC schemes with RE-CDM projects and analyses the impacts of those options on different variables and actors.     

Energy, economics and environmental impacts of renewable energy systems

The renewable based electricity generation technologies were assessed against a range of sustainability indicators using data obtained from the literature. These indicators are cost of electricity generation, greenhouse gas emissions and energy pay-back time. All the three parameters were found to have a very wide range for each technology. For grading different renewable energy sources a new figure of merit has been proposed, linking greenhouse gas emissions, energy pay-back time and cost of electricity generated by these renewable energy sources. It has been found out that wind and small hydro are the most sustainable source for the electricity generation.     

我国CDM项目的现状与思考

本文回顾了截止到2006年12月中国CDM项目合作在全球碳市场的现状,对比分析了中国、印度、巴西、墨西哥的CDM项目开展情况。分析表明:我国目前已注册成功的CDM项目产生CERs的93.86%来自非二氧化碳、非甲烷气体减排项目,而来自提高能源效率、发展新能源和可再生能源及回收利用甲烷和煤层气项目的CERs仅占6.14%。实施非二氧化碳、非甲烷气体减排项目只能带来减排量上的收益,很难带来先进的技术,对促进本国的经济、社会、环境实现可持续发展的作用不明显,所以我国未来CDM项目合作还需政策的进一步引导,以提高CDM项目对促进可持续发展的作用。本文最后提出了进一步开发我国CDM项目合作的一些建议。     

Optimal installation of small hydropower plant—A review

Most of the countries have access to large amounts of water through rivers and canal. With this renewable resource, electricity can be generated without polluting the environment. Because of the increasing in electricity demand, it is important to estimate the future potential of hydropower. It would then be possible to plan development through mix of energy and implement measures to control the development of the electricity market by the use of sustainable small hydropower projects.In the present paper attempt has been made to review the different types of model developed to evaluate the cost of the small hydropower projects. A review on the different types of correlations developed by earlier investigators has also been presented. The present review attempts to cover the benefits such as clean development mechanism (CDM), internal rate of return (IRR) for financial viability of such projects. A review on the different types of optimization techniques is also been presented to minimize the cost of the installation of SHP projects.