Clean Development Mechanism (CDM) - Part 1
The Future of the Clean Development Mechanism
Proceedings of day 2 of the Renewable Solutions Conference - Part 1
Montreal, 2 December 2005
[Since the text of the proceedings is too long for our database, please click the link at the bottom of this text to continue from point 3.]
Contents
1. Introduction
2. Case descriptions of (possible) CDM projects
3. Discussion themes
3.1 portfolio and portfolio management of the CDM
3.2 carbon finance and the role of the CDM
3.3 climate justice
3.4 expanding the CDM: sectoral approaches
3.5 nuclear energy and the CDM
3.6 organic agriculture and the CDM
3.7 bureaucratic obstacles in the CDM
3.8 the post 2012 period
4. Draft conclusions
5. Annexes
5.1 detailed programme of the CDM day of Renewable Solutions
5.2 list of participants
5.3 background papers
The Clean Development Mechanism conference day of the two day Renewable Solutions Conference in Montreal (December 2005) was aimed at developing practical recommendations for the future of the Clean Development Mechanism (CDM). The CDM is an important financing mechanism for sustainable energy options in developing countries and is part of the Kyoto Protocol to the United Nations Framework Convention of Climate Change (UNFCCC).
The target audience for this second day coincided with the target audience of the conference as a whole, namely internationally oriented environmental and developmental organisations from both industrialised countries and the South. Of the total audience of 153 participants, about 100 participated in day two of the conference. This exceeded our expectations by 50%.
The objective of this second conference day was to define a vision on the future of the CDM that would be shared by both environmental and development NGOs. The prospect of stimulating renewable energy more effectively than can be achieved by the current CDM design resulted in a constructive debate between participants.
The Netherlands Society for Nature and Environment and Hivos (Humanist Institute for Co-operation with Developing Countries) from the Netherlands had the lead in organising this second conference day, but they could not have succeeded without the hospitality and support of the Canadian partners, the Canadian Renewable Energy Alliance (CanREA) and One Sky Canada, as well as Citizens United for Renewable Energy and Sustainability (CURES).
The Renewable Solutions Conference day was held during the 11th Conference of Parties/1st Meeting of the Patrties (CoP11/MoP1) of the UNFCCC , so some of the arguments and positions at our conference were directed at the participants of CoP11/MoP1. Also the conclusions of CoP11/MoP1 reflect on the results of the Renewable Solutions Conference. The matter of Carbon Capture and Storage finance via the CDM for instance, was referred to the SBSTA meeting in Bonn in may 2006. CoP11/MoP1 also took a decision about sectoral approaches in the CDM. It was decided that policies and standard setting do not qualify for CDM and programmes could qualify under certain conditions. This report however will reflect the discussions as they took place at the Renewable Solutions Conference.
The rationale of the programme of the CDM conference day (the detailed programme is attached to this report in annex 1) was to discuss practical examples and pros and cons of CDM projects in the morning, followed by a more policy-based approach of problems and solutions in the afternoon, ending with a strategic perspective for the long term on the future of the CDM in the closing debate. The conference day kick-off consisted of a session of poster presentations.
The scene of the day was set by a walk-through poster session with presentations of projects with CDM funding or projects trying to obtain CDM funding. The goal of this agenda item was to take stock of experiences in the field with the Clean Development Mechanism, be they good or bad.
All in all there were 13 project presentations about 11 different projects or technologies. Most of them came with background papers (see annex 1). These were the projects presented at the beginning of the CDM conference day.
2.1 Biogas projects in India, Nepal and China
Dr. Jason Yapp (Caleb Management Services Ltd.) and Adrianus Rijk (UN-APCAEM)
Domestic Biogas – Animal Husbandry Sector Nepal, Viet Nam, and in General in Asia
Felix ter Heege and Ivo Besselink, SNV (Dutch Development Organization)
Biogas production is considered GHG emissions neutral and it has the added benefit of helping to combat unsustainable fuel wood harvesting and inefficient use. An additional advantage of biogas plants is the residue left by the anaerobic fermentation process, the so-called bio-slurry, which can be used as a powerful organic fertilizer. This will lead to reduced chemical fertilizer use and save the considerable amounts of energy needed to produce it. Although this is difficult to measure, it should be taken into account somehow. There are a number of additional social, economic, environmental and health benefits, which all add up to considerable sustainable development gains.
The CDM funds certified emission reductions once they are actually realized. This can be 5 years or up to even 20 years after the start of the project. On the other hand, people that want to construct a domestic biogas plant need money for the investment. The CDM cannot offer this money.
This problem could be remedied by providing targeted subsidy levels and funding for training. There is a huge potential for biogas plants in Viet Nam and Lao DR, as the successful program in Nepal (180.000 plants) demonstrates. In neighboring and other Asian countries, the potential seems huge as well, not only for domestic plants, but also for to organic waste from intensive animal husbandry projects and even for combined heat and power generation.
Other problems with the CDM are the considerable monitoring costs and the uncertainties surrounding the post 2012 mechanisms. Also additional sustainability benefits such as avoided fuel wood harvesting are not covered by CDM financing. The final blow to small biogas projects comes from the inflexible bundling rulings lately agreed upon by the EB. The maximum size imposed on the total amount of credits will force a project of 180.000 bio-gas digesters to fragment, which increases the costs 24-fold (!). A big drawback, especially considering the fact that the efforts required to complete documentation and meet with administrative requirements will be increased by a factor 24 as well.
Biogas projects are obvious examples of the kinds of CDM projects that can be beneficial in many ways: they promote local rural development and improve livelihoods and the surrounding environment. It is a shame that such projects cannot qualify or break even due to rigid accounting methodology, high administrative and monitoring costs, delayed payments and bundling rules. A possible way out may be a sectoral approach for large scale programmatic domestic biogas plant construction. The potential for millions of digesters has been proven in most Asian countries and at present feasibility research is being conducted to see whether larger scale approaches can indeed reduce costs and be agreed upon, particularly in the countries with a vast experience in biogas. For other countries, additional ODA funded programmes could be linked to the CDM activity providing training and support services. This is also very important if the CDM is to become accessible for bundled small-scale projects of any type.
Creating opportunities for the poor - poster
Domestic biogas and CDM financing by Felix ter Heegde SNV - background paper
2.2 Organic Agriculture and Climate Change
Ferko Bodnar (AgroEco)
Organic agriculture can provide an important contribution to climate change mitigation and adaptation. The transition from conventional agriculture to organic agriculture in particular can reduce GHG emissions and contribute to carbon sequestration in the form of organic material in the soil. Although variable according to soil type, climate and ecosystem, there is a positive balance in favor of organic agriculture in all cases. A pilot project in Tanzania was presented to illustrate the issue.
Emissions of most green house gases can be reduced through careful organic husbandry, particularly CO2 and methane in the case of livestock rearing. The percentage of organic matter in the soil can easily be brought up from a low percentage to something like 10 – 15 %. Several tons of CO2/ha can be sequestered annually, reaching a maximum after a period of 8 to 15 years. A concrete case study of improved farm practices in peanuts production in Tanzania shows a carbon effect from reduced emissions and carbon sequestrated of 26 t CO2 per ton of peanuts produced organically at farm level. Transport, processing and packaging results in 5 tons of CO2 emissions. This means that organic peanuts can be sold as carbon neutral.
The organic accreditation and certification can easily be adapted to include annual emission reductions and sequestration monitoring.
Furthermore, energy use in organic agriculture is far lower than in conventional agriculture, because no energy intensive chemical fertilizers are used.
Organic agriculture also results in better protection against droughts and excess water flow by improving the soil quality. Windbreaks also reduce soil loss and crop damage.
Carbon trading as incentive for conversion to organic agriculture by Ferko Bodnar - poster (very slow download)
2.3 The Efficiency and Impacts of Dams: A Case Study of the Challawa Gorge Dam
Etiosa UYIGUE M.Sc. (Society for Water and Public Health Protection Nigeria)
The debate on whether dams are sustainable or not is becoming interestingly complex. While many large corporations, international finance organizations like the World Bank and many governments (especially those in developing countries) still see dam construction and operation as developmental, many scientists, environmentalists, conservationists, and social activists take on a broader view. A study was carried out to determine the efficiency and the social and environmental impacts of the Challawa Gorge Dam (Latitude 110 50’ N and Longitude 80 01’ E), located in the Karaye Local Government Area of Kano State, Northern Nigeria.
The Challawa Gorge Dam has a reservoir capacity of 930,000,000 m3. The dam was constructed across the river Challawa, which empties into Lake Chad in north-eastern Nigeria. About five communities were displaced and resettled to construct the reservoir. Farm lands and numerous trees were destroyed to build the dam. Although one of the major purposes of the dam was to irrigate local farmland, up to this present date the irrigation scheme is yet to be developed. The presence of the dam has greatly reduced the farmland available to farmers. Water is taken from the dam to supply water to Kano City, yet the communities around the dam do not have access to pipe-borne water. The presence of the dam has significantly affected the hydrology of the wetland. Changes in the flow regime of the river brought about by the dam have drastically reduced the area, depth and duration of annual floods, thus affecting the communities which depend on the wetland for cultivation of crops. Dam construction programmes will continue to radically alter the hydrological regimes downstream with negative effects on downstream users. Moreover, the emission of greenhouse gas from the dam reservoir has a significant impact on the ecosystem. It is recommended that environmental impact assessments should become a regular part of large dam proposals, in order to appraise the management, efficiency and impact of dams. Governments should try and exploit more renewable options than dams.
2.4 The FaL-G Brick Project in India. An example of a programmatic small-scale CDM project of the World Bank
The FaL-G project aims to promote fly ash bricks as an alternative to burnt clay brick within the construction sector in India. Fly ash is a waste product from thermal power plants and is abundantly available in India. Fly ash is mixed with two other industrial by products: lime from the acetylene industry and gypsum from chemical plants. Only a fraction of fossil energy is required in this process and consequently almost no greenhouse gases are emitted. The project aims to facilitate implementation of about 200-400 micro industrial plants in different parts of India by micro enterprises manufacturing fly ash bricks using the FaL-G technology. Expected carbon emission reductions will be about 100.000 tons CO2 annually.
The volume of emission rights generated by an individual plant is clearly not sufficient to treat an individual plant as a separate small-scale CDM project – the transaction costs largely outweigh the expected CDM benefits (revenues in case of a 2 million bricks/year operation are expected to be 3500-4000 US$). Only by bundling a large number of these tiny plants will it be possible to enable poor entrepreneurs in India to benefit from carbon finance. A bundle of small-scale CDM projects should be allowed to exceed the relevant threshold for its category. Each small-scale project in the bundle should not exceed the threshold.
The penetration of this low GHG intensive technology will most likely only be possible if the carbon benefits can be tapped efficiently and can be directed to the sector. The sponsors intend to follow a programmatic approach and play the role of intermediary for the carbon transactions. They will also play a role in training and marketing and organising the bundling through existing local companies and an institute (INSWAREB). The community Development Carbon Fund of the World Bank intends to purchase the emission rights generated from the bundled activity.
The FAL-G fly ash brick production project is a clear example of how new technologies can substitute more energy intensive ones with the help of the CDM, by making use of industrial by-products. This saves resources and creates small-scale entrepreneurial activity and jobs. A sectoral or programme-based CDM would improve the chances of fly ash brick projects in India.
Small-scale CDM project: the Fal-G Brick project India -poster
2.5 Usinaverde, Rio de Janeiro, Brazil, two case presentations
a. Emilio Lebre la Rovere (South South North Brazil)
The project is aimed at the combustion of refuse derived fuel (RDF) from urban solid wastes disposed of in landfills. It prevents methane formation from anaerobic decomposition of the waste and generates renewable power from biomass. A pilot plant has already been constructed. It processes 30 tons of waste a day and has an energy surplus production of 50%, daily producing a 220 kW surplus. This surplus can be increased to 530 kW. To illustrate: 30 tons is the average amount of waste a Brazilian city with 50.000 inhabitants produces every day. Obviously the potential for replication and scaling up in Brazil is huge.
The project qualifies for the CDM and has already been approved by the Brazilian DNA. The project is claimed to be eligible for the CDM Gold Standard (disputed by Vitae Civilis Institute).
The case of Usinaverde project - poster
b. Karen Suassune (Vitae Civilis Institute)
Vitae Civilis Institute is critical, however. One issue is that the upcoming small-scale recycling business, initiated to promote social inclusion and poverty alleviation, is put at risk. Organized waste pickers can earn an average of US$ 260 per month.
Another, very serious issue is the fact that urban waste incineration is considered to be one of the main sources of persistent organic pollutants such as dioxins, furans and PCBs, heavy metals and several other toxic chemicals. Although values are low, they are still higher than the standards of the São Paulo state, and in the case of dioxins almost any additional emissions should be avoided because of their serious health effects.
According to the critics, a considerably higher proportion of the solid waste collected could be recycled (33% instead of the actual 0.36%). Increasing the lifecycle of these materials will diminish the need for further raw materials and reduce energy consumption, while at the same time serving as a source of income generation and citizenship improvement for the families involved in the recycling process.
The case of Usinaverde project - poster
Usinaverde incineration of urban solid waste - poster
2.6 Thermal Efficiency Upgrade in Low-income Housing in Kuyasa (SA)
Lester Malpas (South South North)
The City of Cape Town, in partnership with SouthSouthNorth1), has facilitated the development of the Kuyasa Low Income Urban Housing Energy Upgrade project. The successful implementation of this project will demonstrate a viable model for the use of international financing linked to the reduction of greenhouse gas emissions under the Clean Development Mechanism of the Kyoto Protocol, to leverage grant funding for energy upgrades to low income housing throughout South Africa.
An important notion in this project is that the methodology applied interprets the rules compiled through the United Framework Convention on Climate Change (UNFCCC) in a manner which allows for the crediting of Green House Gas (GHG) reductions against a baseline that is equivalent to a projected level of energy service (a warm house, sufficient warm water and light), rather than the current level of energy poverty – thus linking climate change to poverty alleviation. In accounting for suppressed demand, empirical models were used to show the amount of energy which would have been used (relating that to emissions) in energy poor households with and without suppressed demand.
This project has become South Africa’s first CDM project activity to be registered by the CDM Executive Board on 27 August 2005. This is the first CDM project that has gone through South Africa’s Designated National Authority approval procedures. This is also the first African CDM project to be registered by the UNFCCC CDM Executive Board and the first CDM project to be validated against the Gold Standard, an independent NGO standard that rewards projects that make significant contributions to sustainable development.
Thermal efficiency upgrade in low income housing in Kuyasa - background paper
Appendix A - Kuyasa low-cost urban housing energy upgrade project
Kuyasa low-income housing energy upgrade project - poster
1) The SouthSouthNorth Project (SSN) is a network of organizations, research institutions and consultants grouped into one developmental organisation with considerable expertise to help public and private stakeholders develop the necessary confidence for dealing effectively with the Clean Development Mechanism (CDM). SSN operates in Brazil, South Africa, Bangladesh and Indonesia.
2.7 Gas Flaring in Nigeria, the West African Gas Pipeline (WAGP)
Asume Osuaka (Environmental Rights Action Nigeria)
The West African Gas Pipeline (WAGP) is a 681 km onshore and offshore pipeline designated to transport natural gas from gas fields in the western Niger Delta of Nigeria to selected consumers in Benin Republic, Togo and Ghana. As one of the region’s largest trans-boundary investments, The WAGP is projected to cost 560 million USD. Project promoters, including Chevron and Shell, claim that WAGP will reduce carbon emissions, provide cheaper, more reliable and environmentally friendly energy, and foster economic development and integration in Ghana, Togo, Benin and Nigeria. They have made a case for the WAGP to be eligible as a Clean Development Mechanism project.
Environmental Rights Action Nigeria protests this eligibility. The project is not additional, for gas flaring is already prohibited in Nigeria. Oil and gas exploitation does not contribute to the economic development of communities in Nigeria. The GHG emission reductions are theoretical. Furthermore, the environmental impact assessment executed for the project was inadequate, as was public consultation.
Court orders Nigerian flaring to stop - background paper
No cdm credits for West African gas pipeline - poster
No cdm credits for West African gas pipeline - background paper
2.8 Community Struggles and Impacts of the Uganda Wildlife Authority –FACE Foundation Carbon Sequestration Forest Project around Mt. Elgon National Park
Timothy Byakola (Climate and Development Initiative, Uganda)
In 1994, the former Uganda National Parks (UNP) entered into an agreement with the Dutch based Forests Absorbing Carbon-dioxide Emissions (FACE) Foundation2) to plant trees inside the boundaries of Mt Elgon National Park. The project started in 1994 and in the first phase (1994 - 1997), a total of 3,320 hectares were restored in MENP. A second phase lasting up to the year 2000 was approved for continuation of project activities. In all, a total of approximately 8,800 hectares were planted between July 1994 and December 2002.
In the agreement, FACE undertook the planting of trees inside the boundaries of Mt Elgon National Park and was entitled to carbon benefits arising from these actions. UWA is responsible for the management of the plantations.
The Climate and Development Initiative opposes the project because it entails land conflicts and forced evictions without compensation. There are signs of environmental degradation and there is a lack of transparency regarding the international carbon trade benefits to the FACE Foundation from this project.
Carbon sequestration plantation forests - background paper
Carbon forests - poster (very slow download)
2) FACE Foundation was established in 1991 with financing from SEP, the Dutch Electricity Generating Board.
2.9 Micro-hydro and upstream forestation in Guatemala
Ivan Azurdia (Fundacion Solar, Gualtemala)
The experience of Fundación Solar in Guatemala shows that emission reduction certificates can help small projects to develop innovative ways for watershed management by creating local jobs and inducing payment for environmental services. The market value of the energy produced by run-of-the-river micro-hydro plants can compensate the labour required for integrated watershed management. The Productive Uses of Renewable Energy or PURE project was initiated by Fundación Solar within the context of GVEP and is complementary to ongoing governmental efforts. The total budget is 14.3 million US$. The GEF covers 2.6 million incremental costs and the Dutch Foundation Hivos provides 0.4 million through Fundación Solar. The remainder is provided by several governmental institutions.
The project will generate at least 10 MW grid connected renewable energy, provide integrated watershed management across 15 regions (creating jobs and guaranteeing future water availability) and create conditions for further decentralized, independent power production bringing energy to the poor. Particularly interesting is the productive uses component which will create jobs and income through high added value processing (solar dryers), locally generated power for existing processing plants (coffee, sugar) and for all kinds of machinery (pumps and mills and shaft powered devices). Along the way social organization is reinforced and grass-root organizations collaborate alongside political authorities in watershed management committees.
On the adaptation side, particular emphasis is put on vulnerability reduction through detailed risk assessment and improved environmental and resource management.
This project is considered an example of the possibilities of the CDM or CDM-like mechanisms, particularly if linked to complementary policies. Renewable energy supply can frequently meet the energy needs of remote populations at a lower cost than conventional supply. When tailored to local demand and development potential and creatively designed, local renewable energy supply can make an important contribution to local development. The sustainable development objective of the CDM can be realised if it is capable of responding to poverty reduction and activities generating CERs can be further complemented with payments for environmetal services.
We challenge all actors to support such projects, because they are the very example of what the CDM was intended to do.
Micro-hydro and upstream forestation in guatemala - background paper
2.10 Solar electrification and installation of solar lanterns by technicians of the Barefoot College Tilonia
Bunker Roy (Barefoot College)
The Barefoot College Tilonia stands for learning from doing and mutual interaction. Emphasis is on practical experience, rather than paper qualifications. The Barefoot College has trained 20 – 30 solar engineers, who have installed of grid solar power stations and solar lanterns throughout India. Results of these projects were presented with a poster and a video movie.
Barefoot College projects have difficulty accessing CDM finance. Upfront financing and bundling rules are the main barriers against CDM access.
Background information to be found at: http://www.barefootcollege.org/
Kamla, barefoot solar engineer – video (not online)
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Publicatiedatum: 11-04-2006
- 02-12-2009 - Kopenhagen: de klimaatdossiers
- 05-03-2009 - Klimaatbeleid
- 09-03-2009 - Green New Deal
- 26-06-2007 - Effecten van klimaatverandering
- 09-10-2008 - Klimaatbeleid Europa
- 01-07-2008 - Klimaatwet
- 15-01-2008 - Biomassa
- 05-07-2007 - Oplossingen voor klimaatverandering
- 11-09-2008 - Kernenergie
- 11-09-2009 - Test je eigen CO2-voetafdruk