What's with the Climate?

Voices of a Subcontinent grappling with Climate Change

Clean development or cool development?

3 Comments

A few days back, I had the opportunity to visit a large cement factory in Andhra Pradesh for a stakeholders meeting. The cement factory was in beginning stages of installing a heat recovery power project of 9 MW capacity, and was soliciting CDM financing for the coal and CO2 emissions offset because of the heat used as the energy source as a substitute for coal. The factory already had a 15 MW coal based captive power plant (where energy generated is normally supplied entirely to the factory in question, as opposed to a conventional power plant where power is supplied into the grid) to meet its energy needs, in addition to drawing 30 MW from the regional grid. It was planning to use the additional power generated from the heat recovering power project to reduce dependence on the grid supplied power. The concept of using hot gases for power generation, instead of venting them, causing acute changes in the microclimate, is undoubtedly admirable and ingenious when first thought of. However, what struck me as interesting in this context was how vigorously the company in question was courting CDM financing, and how this reflected what was happening across India. 

Now, I have my reservations regarding the efficacy of CDM and the other market based mechanisms of emissions reductions. I feel viewing emissions reductions as a business opportunity is akin to making a mockery of the gravity of climate change. However, while several Annex 1 parties may be accused of displaying reluctance, no such allegation can be leveled against India and Indian companies in particular. Indian companies are actively pursuing CDM projects, in many instances unilaterally putting forward a detailed project proposal to the CDM Executive Board before even courting an Annex 1 partner to sell the CERs to. Indian CDM projects are also extremely varied in nature. According to an independent review by the Institute of Global Environmental Strategies, a leading Japanese environmental research agency, Indian CDM projects straddle the entire strata of possible CDM collaboration areas, from heat recovery projects in cement plants, to HFC destruction units. This suggests not just the willingness of industry as a whole in embracing cleaner development, but also the heterogeneous nature of industry where emissions reductions are possible. While it is definitely commendable that India has taken up leadership in courting CDM financing, with over 300 projects accounting for nearly a third of all CDM projects, why can’t India take up leadership in voluntarily reducing emissions?

When India is displaying such willingness and even progressive interest in CDM financed emission reduction projects, why do we have to sit back and wait for the calamity to be upon us before we have to act? Why can’t we install emission reduction technologies in our industries by ourselves? Why do we have to help an Annex 1 party economically meet its insignificant Kyoto targets? If India is to be regarded seriously as an emerging global power, we cannot risk this blatant contradiction in our climate policy. We must begin emissions reduction domestically and must initiate the transition to a low carbon society, in accordance with our commitments to sustainable and equitable development. Coming back to the CDM project in the cement factory in question, the management is currently in the process of preparing a Project Design Document (PDD), a requirement for consulting a Designated Operational Entity (DOE) and for authorization from the CDM Executive Board. I have no doubt that the once approved, the project will reduce emissions and bring cleaner development alternatives to industry, but will it be effective enough in the fight against climate change? All this is still to be seen…

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3 thoughts on “Clean development or cool development?

  1. Hi Vikram – just stumbled on this post. The thing with CDM, as I’m sure you’re aware, is that any reduction that is awarded with CERs (CDM credits) that are subsequently sold to a statutory market like the EU ETS does not represent a net reduction at all, because it is used as an offset.

    So when the CDM awards credits to projects that would have happened anyway, you get a net increase in emissions! Do you think that the work being done to improve the efficiency of the captive coal generator would have happened anyway? Does it have a business case in the absence of the CDM?

    Best, Dan.

  2. Hi Dan,

    Thank you for your post. I agree that there is no overall net reduction, because the emissions that would be caused by the development projects are only offset. However, I am not so sure however if emissions necessarily increase because of issuance of CDM credits.

    In the absence of CDM financed technology, these projects would have gone ahead and established conventional fossil fuel based projects, which would have increased emissions. So in reality, the CDM financing is definitely helping to offset emissions.

    In the case of the cement plant that i visited, they were in requirement of another power plant to feel their energy requirements and would have gone in for a coal based captive power plant anyways, even in the absense of CDM. The availability of CDM funding only made more sense to them, as this would help offset their investment in the power plant, and get paid for it as well once the credits generated are put up on the ETS.

    Warm regards,

    Vikram aditya

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