Co-opted mechanism

Co-opted mechanism

cdm was designed to (a) help developing countries in achieving sustainable development and (b) "assist" industrialised countries meet emission reduction targets. The aim: industrialised countries would invest in 'clean' projects in developing countries; emissions reduced through such investment would be credited to the investor.

This simple idea today has become a mess, which can be easily exploited to lose sight of substantial policy goals. But as with any mess business finds is to its liking, a clear method exists. The process has been convoluted:

• To ensure cdm provides cheap emission reduction options to the rich world. Private companies are allowed to dominate the field. They make deals with others of their ilk. Deals are scrutinised by private consultants.cdm today is thus about creating a carbon trading market, outside the (very pale) pale of regulatory control. The path is thus open for short-term greed, and not policy, to drive the market; cdm has become yet another transaction between two willing partners in this sphere. An imperative to mitigate climate change using market a instrument, has reduced itself to using the worst tools of an unfair market. For instance, it thrives on non-transparency so that future sellers do not know the price of cers and are forced to sell cheaply in the face of competition.

• To ensure whatever is done is certified, so that each cer is backed up with proof that it reduces an actual tonne of carbon dioxide equivalent. It is important for carbon credits to figure in the balance sheets of the developed world. So, the role of host (national) governments has been minimised. The system depends on private audits.

• To ensure that each project is additional, so that only that project which would not have happened without cdm can qualify. This simply means whatever a government does to mitigate climate change -- as a matter of policy -- cannot qualify as cdm work. For instance, if the Indian government specifies tough emission norms for buses, the public transport sector does not get credits under cdm. The argument is: isn't that something they were mandated to do? If a country has standards for tighter emissions on all electric appliances, resulting in huge efficiency gains and lesser emissions, it cannot apply for cdm. These projects will not be seen as additional, but 'business as usual'. The current design provides countries with perverse incentives to keep polluting as long as they have the money to pick up carbon credits. In this respect, is not cdm actually against sustainable development?

In all this, the basic criterion -- cdm must "assist" developing countries for sustainable development -- has got lost. Poor countries, with financially-strapped governments, are forced into a mindless competition to facilitate the selling of credits, cheaply and as fast as possible. Woe betide a government if it interferes or makes regulations. The drive for 'cheap' reduction is reflected in the kind of projects currently registered or under validation. Wind energy projects constitute 7 per cent of all projects; they bring less than 3 per cent of cers being considered for sale. There are no afforestation projects on the anvil. No high-end energy efficiency projects, no urban public transportation projects.

Over 50 per cent of cers sold are to harvest fugitive gases -- hfc-23 and n₂o -- from industry. Another 26 per cent are for projects that harvest gases -- largely methane -- from landfills.

India's due diligence
India is even better than the rest of the world in selling itself cheap. As much as 74 per cent of its cdm portfolio is given to harvesting fugitive gases. It is also less diverse. There are no projects from public utilities -- say, public sector power companies that desperately need to invest in emission reduction, or city governments that need cleaner buses. There are no small scale projects from communities on renewable energy, or afforestation. "Small-scale" has become "private sector".

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