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Cane-Cogen
The feasibility of CDM Projects in Asia
The Asia-Pacific is the fastest growing global region in
terms of population and energy use. One of the biggest
challenges facing Asian countries will be dealing with
the international community's concern over the increase
in greenhouse gas (GHG) emissions as a result of their
economic growth. One avenue that would both promote
the adoption of reduction strategies by developing
countries and benefit energy companies with high emission
risk profiles is the Clean Development Mechanism (CDM).
Since many issues concerning the institutional design of
the CDM are still unresolved, establishing regional
programs may be a way to quicken the implementation
of CDM projects in Asia.
Based on trends in 1995, the Asia Pacific
Economic Cooperation (APEC) forecasts expect
electricity output in the Asia Pacific for 2010 to
increase by 138%, and coal consumption to increase by up
to 180% as a consequence. Coal is the dominant energy
source in India and China. Plans by these and other Asia
Pacific countries to increase the utilization of coal require
cost effective ways to manage the associated large increase
in GHG emissions. Options include the adoption of clean
coal technologies, the use of alternative energy sources,
forestry development, and CO 2 capture and disposal.
CDM Potential
In 2000, at a round-table meeting between the World Energy
Council (WEC) and the Asian Development Bank (ADB),
the topic of CDM and its use was discussed in depth. Both
organizations explored the challenges climate change may
bring to the energy sector and the options available to
mitigate risk, one option being the CDM.
An ADB study presented to the meeting estimates the total
annual demand for GHG credits during the first commitment
period of 2000-2012 at 600-1,300 MT Carbon (C). Other
studies indicate that globally the marginal GHG abatement
cost ranges from US $27.50-37 per ton of Carbon-equivalent
(C-eq). The estimated potential supply of GHG credits in
developing countries by the energy sector alone is estimated
to be in the region of 400-520 MT of C-eq. annually.
The Asia Least-Cost Greenhouse Gas Abatement Strategy
(ALGAS) Project undertaken by ADB between 1995-1998
identified many potential CDM projects. The projects
involved the participation of twelve Asian countries.
The results of the ALGAS Project are a series of eleven ALGAS
National Reports and an ALGAS Summary Report published
by ADB. A total of 80 potential project briefs are outlined in
the ALGAS reports. The projects include power generation
using coal gas from a blast furnace, wind power, biogas-solar
utilization, bio-electricity, small hydropower
development, fuel-efficient cooking stoves and fuel switching
for buses. The challenge now is to implement these projects
and promote the use of CDM in reducing poverty and
encouraging the development of sustainable energy systems
in Asia. There are many issues still to be resolved in the
institutional design of the CDM and of other Kyoto mechanisms.
Regional Initiatives
The likelihood of the Kyoto Protocol being ratified in its
current form may be small. Nevertheless, most countries
are likely to take some GHG emission reduction initiatives
anyway. A way forward may be for regional initiatives to
reduce GHG emissions, as it is far simpler to establish a
consensus between a few neighboring countries than to
establish an international trading system trying to satisfy all
countries. It makes more sense to establish regional programs
with projects today, rather than to try and develop a globally
accepted regime, which would be years away. The European
Union, for example, will probably proceed with mitigation
initiatives with or without the Kyoto Protocol.
There is potential value in the role of CDM in bringing
regional programs together and encouraging mitigation of
emissions. A prime example of the regional possibilities is
ADB's efforts in identifying abatement opportunities in the
Asian region. ADB's ALGAS report lists many projects that
are well-defined, use established technology and are cost-efficient.
Additionally, they have positive environmental
benefits at a local and regional level to justify their
implementation regardless of climate change considerations.
Outlook
At the sixth Conference of Parties (CoP6) no decision was
reached regarding the rules and modalities needed for CDM.
This year the rules for CDM projects may be finalized, and
it will mean projects fitting those rules will be eligible for
Certified Emission Reductions (CERs). Therefore, companies
that make a decision to start a project now are likely to gain
CERs for offsetting emissions in the first commitment period
of 2008-2012. These companies could benefit by using
reductions gained from CDM projects to offset their domestic
climate change policy requirements.
Courtesy: Mr John Kessels, CRL Energy, 68 Gracefield Road
PO Box 31-244, Lower Hutt, New Zealand
Tel: (4) 5703700; Fax: (4) 570370; Email: j.kessels@crl.co.nz
(from an article in the Joint Implementation Quarterly April 2001)
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