Rupak D Sharma in Bangkok
Lately everyone seems to be fretting about the ills of climate change. Rising temperatures and sea level, melting glaciers, bigger floods and other natural disasters and further deterioration of the ecosystem are highlights of daily news reports.
But what is little told about this bane of humankind is its ability to create new jobs and fight poverty, especially in developing Asian countries. Thanks to the Kyoto Protocol, under which 37 industrialised nations are legally obliged to reduce five per cent greenhouse gas emissions from 1990s level by 2012.
In order to meet the emission target, the Kyoto Protocol has offered three mechanisms, which allow developed countries to either buy carbon credits, invest in projects in developing countries or invest in countries with economies in transition.
Of the three available mechanisms, the most popular to date is the clean development mechanism (CDM), under which developed countries set up clean-energy projects, such as hydroelectricity, wind power and natural-gas-fired power plants, in developing countries to meet their emissions cap.
The United Nations has said that 979 CDM projects worth US$18 billion are currently registered in the world. Of this, 62 per cent or 611 projects are registered in Asia, mostly in China and India.
Although there is no shortage of critics who question the effectiveness of these projects in preventing the Earth from overheating, many admire the role it has played in spurring green economic growth and the contribution it has made in helping developing countries mitigate adverse effects of climate change.
Besides, it is creating a win-win situation for both the developed and developing world. On one hand, more money and technology are flowing into developing countries, and, on the other, these projects are churning out carbon credits for industrialised countries—a must to meet the emission reduction target by the time the first commitment period of the Kyoto Protocol ends in 2012.
According to the UN, industrialised countries have acquired 128 million carbon credits through these projects to date. Each credit is equivalent to one tonne of carbon dioxide (CO2). Similar projects are estimated to generate more than 2.7 billion credits by 2012.
With more carbon credits flowing into the market and demand for carbon increasing every day on the run up to meet the Kyoto Protocol deadline, the size of carbon market is also increasing everyday.
Last year the carbon market was valued at $60 billion, up 80 per cent from 2006 and the volume of carbon trade increased by 64 per cent to 2.7 billion tonnes.
Point Carbon, a leading carbon consulting agency, estimates carbon transaction to reach 4.2 billion tonnes this year, inflating the size of the market to $92 billion. The inclusion of aviation and marine transport in emissions-cap regime—as agreed during Bangkok climate change talks—is expected to further expand its horizon, which will result in additional demand for CDM projects.
“This lays a huge opportunity for developing countries to draw investment,” said John Hay, chief communications officer of the UN Climate Change Secretariat.
In addition, it is said that a massive $20 trillion will be invested in energy sector until 2030. It is likely that most of these investments will go into low carbon sectors as various experts have warned that failure to do so could increase global greenhouse emissions by up to 50 per cent by 2050. Once again, large portion of this investment will go into developing Asian nations, particularly India and China, where hunger for energy is growing immensely everyday.
Another sector from which Asian countries is expected to benefit is carbon sinks. Under this technology, CO2 is removed from the source, say chimney, of a power plant using highly advanced filter. It is then put under pressure and turned into liquid, which is then pumped underground into sources, such as trees, which can absorb CO2.
“Although carbon capture and storage technologies are not something that can be applied on a large scale very soon, it is a promising technology and can reduce the cost of emissions reduction by one-third,” Hay said.
Once the technology comes into practical use, it will benefit large number of Asian nations with vast forested areas. It will also benefit countries like Indonesia which has embraced reforestation and afforestation programmes.
However, not all experts are in harmony over usage of trees in offsetting carbon emissions footprint.
Peter Holmgren, director of environment, climate change and bioenergy division of the Food and Agriculture Organisation told Asia News Network: “The trees store carbon as long as they grow and in managed forests, where you harvest wood, you have a continuous segregation of carbon. Thus, the losses from deforestation are in same order of magnitude as the gains from new forests.”
He also expressed doubts about carbon sinks technology reducing emissions “as there are possibilities of CO2 leaking back into the atmosphere”. “We should therefore to do a reality check before creating a market for forest and land use in achieving emissions reduction,” he said.
Although there are differences on which technologies to adopt to mitigate emissions, there is no disparity that the only way to fight global warming is by increasing investment in sectors that promote clean technology. This means there is still a huge market for CDM projects. But, one hurdle remains.
Developed countries, led by Japan, recently said that unlike 25-40 per cent legally binding emission reduction target as proposed last year, it favours a voluntary reduction target. If Japan is able to press the issue and convince others, we may not see as much money flowing into this sector as we are now.
“It is a catch-22 situation,” Hay said. “The international carbon market would not work without legally binding targets. You need to have targets in order to have an international carbon market.”Published in Asia News
