Milton Catelin, Chief Executive, WCI
Last week, the Guardian newspaper ran an article entitled “Rich countries to pay energy giants to build new coal-fired power plants”. Given the nature of the title, the article unsurprisingly generated a lot of interest!
It opened up with: “The UN is set to channel billions of pounds of public money from rich countries to giant energy companies to build 20 heavily polluting coal-fired power plants on the basis that they will emit less carbon dioxide than older ones”. That sort of statement is always guaranteed to create a bit of a stir! But unfortunately it’s not accurate and the criticism is based on a flawed understanding of how a specific UN programme works.
The real focus of the article is the UN Clean Development Mechanism. The CDM is a mechanism included within the Kyoto Protocol to help countries meet their emissions targets and to encourage the private sector and developing countries to contribute to emission reduction efforts. The CDM has been operating since 2006 and allows emission reduction projects in developing countries to earn Certified Emission Reduction (CER) credits. These CER credits can be traded and sold, and used by industrialised countries to meet a part of their emission reduction targets under the Kyoto Protocol. The CDM is designed to stimulate sustainable development and emission reductions, while giving industrialised countries some flexibility in how they meet their emission reduction targets.
Public Funding?
The CDM does not provide a direct cash injection for projects and does not involve direct government or UN funding. The economic benefit of a CDM project arises from the issuing of CER credits which can be sold in emissions trading schemes under the Kyoto Protocol, thus enabling funds to be raised. The credits purchased can be used by Annex I Parties to the Kyoto Protocol (i.e. developed countries) in order to meet their emissions quotas and the funds from those sales support projects registered under the CDM – so there isn’t a cash injection from UN or public funds.
Rushing projects through?
The article also suggested there has been a ‘rush’ by companies to take advantage of the CDM ‘subsidies’ for coal. This is difficult to explain when the CDM has already been operating for four years and the approval process itself can take a number of years. Only one coal project to date has been registered under the CDM (in India) and two further Indian projects are under review. These are not ‘rushing’ timeframes or out of control numbers – it is a difficult and slow process. And this has actually been the criticism levied at the CDM to date – the speed at which projects get approved and the complexity of the process.
UN – fossil fuels part of energy mix for years to come
The UNFCCC states: “Fossil fuels will be part of the energy mix for many years to come. It makes sense that the CDM should be used to reduce the emissions associated with that fossil fuel use”. The CDM is not used to ‘subsidise’ any fossil fuel-fired power station that developers construct – it can only be used with fossil fuel-fired power stations that actually use technology that can significantly reduce CO2 emissions – technology that otherwise would not be deployed in that location.
The idea of technologies that improve the ‘efficiency’ of coal-fired power stations is something that is often derided – many people think ‘coal is coal’, and hence it is bad. But improving the amount of energy we can get out of each tonne of coal used is essential to meeting the challenge of climate change. Using these efficient technologies does make a significant difference in reducing emissions from coal-fired power plants. Replacing all older and smaller coal power stations with best available, most efficient technology and larger plants could globally reduce GHG emissions by 5.5%. To put this 5.5% global GHG emission reduction figure into context, the intended effect of all the measures included in the Kyoto Protocol on Climate Change is 5%.
This is not about taking money from renewable energy and putting it into coal. It’s about using all options open to us, including mechanisms set up under the Kyoto Protocol to achieve significant emissions reductions at a global level. India, South Africa, China, Indonesia…the list could go on…coal is critical to all these countries and projections show this role will continue. Reducing emissions from coal-fired power stations worldwide is a critical part of any effective response to climate change. Arguing that developing countries shouldn’t use coal and shouldn’t get any form of support, such as through the CDM, to actually clean up their coal burn is not helpful – either to the sustainable development of these countries, or to the global response to climate change.
AFRICA!
I will be in Johannesburg, South Africa, next month to talk at the ‘Coal Energy Africa’ event. The event, taking place 16-17 August, is a niche forum that addresses energy challenges facing Africa. Electricity demand in Southern Africa is increasing at a rate of 1000 MW per year. The abundant reserves and low cost of coal make it the preferred energy source to meet increasing electricity demand for the foreseeable future. The challenge is to enhance the efficiency and environmental acceptability of coal use. Full details on the event are available on the ‘Coal Energy Africa’ website.
