While participants at last year's climate meeting in Durban agreed on an extension of the troubled Kyoto Protocol, it is at this year's meeting in Doha that policy makers have to agree on the pesky details, including long-term emission reduction goals.
As my colleague John Broder reported last week, the outlook is not entirely rosy. And the stakes have grown even greater as scientists report record CO2 emissions in 2011 that are growing so rapidly that an international goal of limiting the ultimate warming of the planet, established three years ago, is on the verge of becoming unattainable.
Some of the major industrial players - and heaviest polluters - such as Russia, Canada and Japan have already made known that they will not re-up on the climate deal. The United States never ratified the protocol and China -Â currently holding the title as world's number one climate polluter - is listed as a developing country and therefore not yet subject to binding emissi on caps. (Our colleagues at India Ink reported on India's role in current and the Kyoto Protocol negotiations).
But activists and some green business people are calling attention to an oft-forgotten mechanism that allows emission-reducing development projects in non-Kyoto compliant countries to earn carbon credits.
The so-called Clean Development Mechanism (or CDM for the initiated) can benefit projects from the development of clean-burning ethanol stoves in Mozambique to wind farms in China. Because credits earned by building these green projects in the developing world can be sold on the open market, it is often the very thing that allows such projects to exist.
“It's selling those offset credits that balances the books,†said Assaad Razzouk
, CEO of Sindicatum Sustainable Resources, one a group of green energy companies lobbying to keep the Clean Development Mechanism on the agenda in Doha.
At its Deurping project in Shanxi Province in China, Sindicatum has invested some $60 million to help convert methane gas - the very polluting byproduct of coal mining - into electricity. While the electricity itself can be sold back to the grid, it isn't enough to cover the cost of the investment, according to Mr. Razzouk.
Under the UN-supervised CDM system, projects are awarded Certified Emission Reductions (or CERs), which can then be sold to the European Emissions Trading System, for example, to offset, say, airline pollution in Europe.
The UNFCCC claims that the system has helped offset over one billion tons of CO2 pollution since it was put into place in 2004 by accrediting CERs produced by more than 5,000 development projects worldwide that range from reforestation in the Guangxi watershed in China to waste-to-energy projects in Cote d'Ivoire ( see some compelling projects - for a map of the registered projects receiving CERs go here - for extensive stats on the CDM click here).
“It has created the first global environmental currency,†said David Abbass of the United Nations Framework Convention on Climate Change secretariat in a telephone interview from Doha.
For Sindicatum's methane-converting venture in Duerping, the certified CERs generates some 40 percent of the revenue, which helps to make the sustainable project financially viable too, explained Mr. Razzouk.
However, this month the price of a single CER has dropped well below 1 euro, or $1.3, from one-time high of nearly 14 euros in early 2010 (for more market numbers, check here). There are myriad reasons for the precipitous drop in price. Corporate buyers, for example, can only use a certain percentage of CDM-generated carbon offsets to balance their pollution, limiting the demand for CERs. With Russia and other eastern European countries possibly being able to sell their overstock of old carbon-offset credits, they are available cheaply elsewhere, increasing the supply.
However, the fact that the future of a global emissions cap-and-trade system is at a crucial point in negotiation is perhaps the most responsible for bringing down the price of CERs, say experts. But the growing need to offset carbon emissions may ensure a future for this “environmental currency†and work for sustainable development projects.
