Climate change is currently creating discussions, as the yearly UNFCCC (United Nations Framework Convention on Climate Change) conference in December in Copenhagen is approaching. It is hoped that during the conference member states will reach an agreement to replace the Kyoto Protocol. A crucial part of the Kyoto protocol for developing nations is CDM, Clean Development Mechanisms.
The CDM is an arrangement under the Kyoto Protocol allowing industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. A crucial feature of an approved CDM carbon project is that it has established that the planned reductions would not occur without the additional incentive provided by emission reductions credits, a concept known as "additionality". The CDM allows net global greenhouse gas emissions to be reduced at a much lower global cost by financing emissions reduction projects in developing countries where costs are lower than in industrialised countries.
An industrialised country that wishes to get credits from a CDM project must obtain the consent of the developing country hosting the project that the project will contribute to sustainable development. Then, using methodologies approved by the CDM Executive Board (EB), the applicant (the industrialised country) must make the case that the carbon project would not have happened anyway (i.e. establishing additionality), and must establish a baseline estimating the future emissions in absence of the registered project. The case is then validated by a third party agency, called a Designated Operational Entity (DOE), to ensure the project results in real, measurable, and long-term emission reductions. The EB then decides whether or not to approve the project.
If a project is registered and implemented, the EB issues credits, called Certified Emission Reductions (CERs, commonly known as carbon credits, where each unit is equivalent to the reduction of one metric tonne of CO2e, e.g. CO2 or its equivalent), to project participants based on the monitored difference between the baseline and the actual emissions, verified by the DOE. As of 1 March 2009, 1431 projects have been approved by the CDM Executive Board. (source: Wikipedia)
Over 70% of the approved projects are in Asia and the Pacific (source: www.unfccc.int) which means that a continuing of the CDM is vital for the region. China is currently the top investment destination for projects under the UN's Clean Development Mechanism (CDM). (source: www.ieta.org) Priority areas for CDM projects in China are energy efficiency improvement, development and utilization of new and renewable energy, and methane recovery and utilization (source: www.easy-carbon.com).
Asian Career is keeping a close eye on the carbon credit and renewable energies sector as they are expected to increase in importance in the Chinese region. We are therefore awaiting decisions from the December conference with interest.
