China and the Clean Development Mechanism

Abstract

Inter vi e w w i t h P h i l i p p e D e lh a i s e , D i r e c t o r o f C a r b o n M a n a g e m e n t C o ns u l t i n g (1)Q: In a few words, could you describe how the Clean Development Mechanism (CDM), as provi- ded for in the Kyoto Protocol, actually work s?The greenhouse gases that lead to climatic warming are in the atmosphere, so the effect they have is not restricted to the states that emit them. This makes them quite different from more local forms of pollution, such as water pollution. We are dealing here with the pol- lution of the global environment, which requires political solutions at the global level. Although the rich countries are the main polluters, their existing technology is less polluting than that available to the developing countries. In India, for one unit of production, four times the quantity of green- house gases are emitted on average than in the United States. Thus, the thinking behind the CDM is that we take money from the West and give it to the developing world. European, Canadian or Japanese firms can thus cut the emission of greenhouse gases, not in their own factories, but by buying pollution rights in Indian, Bolivian or Chinese factories while investing in technology projects designed to reduce their greenhouse gas emissions. The global effects of atmospheric pollution can thus be reduced more quickly.Q: Let's look at the details. How do countries share their responsibilities ?To participate in the Kyoto Protocol, naturally, countries must ratify the agreement. Most developing countries- known as "Non-Annex 1 Countries"-have signed up, of course, including North Korea: it's in their own interests that they should receive technological and financial transfers. Thailand is the only country to have refused, on the grounds that Kyoto allows rich countries to continue polluting while buying off the poor countries at negligible cost.So companies in "rich" countries-known as Annex 1 Countries-may buy polluting rights in the "poor" countries. This classification is open to criticism. Some countries could be considered "rich" and yet be listed as Non-Annex 1: South Korea, for example and, to a lesser extent, China.As for the rich countries, intergovernmental agreements impose quotas on greenhouse gas emissions, quotas that are shared out between the various economic sectors at the national level. Let's take as an example a French company that has to reduce its gas emissions. It has three options: cut down its volume of production, introduce new technology or seek out a firm in a developing country-a Non-Annex 1 country signed up to Kyoto. The reduction is estimated then certified by the Executive Board of the CDM (2). This cer- tificate can in due course be presented by the company in the industrialised country as justification for not having reduced its own emissions.Q: Can you give us some concrete examples of projects that you are working on with enterprises in developing countries?Let's take the typical case of a sugar refinery we're working with. At the end of the production process there remains a 37% residue of sugar cane waste, which is used as a fertiliss- er, dumped or burned. In all three cases, the CO2 contained within this residue is released into the atmosphere. This is where we come in, to arrange for a furnace to be built, one that will burn the residue and generate electricity for the sugar refinery. There'll even be an energy surplus that the refinery can sell. The reduction in greenhouse gases is meas- ured by the difference between the energy consumed before the furnace is installed and that consumed after the new technology is introduced. It's the same story with a paper mill where, as often happens in developing countries, the wood waste is dumped.Further examples are cement works and steel-making plants: with their blast furnaces, they consume large amounts of energy in producing high temperatures, around 1,200°C. …