CDM -the Scam & the Redemption

In the absence of any monitoring system under the UN’s Clean Development Mechanism or CDM (see box), DNA has found that several large projects in India that have been declared green and sustainable under the scheme are not only polluting the local environment but were also established by violating various environment laws. However, because of their status, these firms are permitted to sell carbon credits in the market, earning huge revenue in the process. These are the paragraphs from a superb investigative Journalism by DNA corespondent -Gangadhar S Patil.

In his article, Carbon Credit Fraud: How big firms faked green to mint gold he goes on to say – High cost and uncertainty ensure that many genuinely clean and sustainable projects fail to attain CDM status. These projects, handled by small-time developers, fail to attain CDM status because of the high cost involved in the application and verification process. Even if they manage to pass these hurdles, they don’t earn enough carbon credits to attract real traders in the market.

What Mr. Patil, infers is more horrifying than just the manipulation of the scheme to amass wealth, it is down-right criminal, if true.

Absorptions bands in the Earth’s atmosphere created by greenhouse gases and the resulting effects on transmitted radiation. (Photo credit: Wikipedia)

Are firms deliberately overproducing greenhouse gases (GHG) for the sole purpose of destroying them in order to earn revenue through the sale of carbon credits under the clean development mechanism or CDM scheme? The first indication is the fact that an analysis of the total carbon credits issued to projects across the globe, including India, shows that over 50 per cent of the total carbon credits issued until July 2012 were for the destruction of a deadly greenhouse gas called HFC-23 (Hydro Fluoro Carbons-23). It is 11,700 times more potent a greenhouse gas than carbon dioxide and is created during the manufacture of HCFC-22, a gas used in refrigerators and air conditioners.

In comparison, renewable energy projects like wind, solar and biomass, together, account for less than 30 per cent of the total carbon credits issued in India; the figure is 20 per cent for the world. The CDM scheme allows firms manufacturing HCFC-22 to earn huge carbon credits by destroying its by-product, HFC-23. Since the cost of producing HCFC-22 is lower than the revenue generated by the sale of carbon credits issued for destroying HFC-23, it is possible that HCFC-22 is being manufactured solely for the purpose of destroying its by-product and earning carbon credits instead.

English: Greenhouse Gases (Photo credit: Wikipedia)

The second red flag is the fact that despite a sharp fall in the price of HCFC-22 due to supply exceeding demand and steep global economic recession, the production of this GHG has continued to remain at the same level…….Experts are not clear about what is happening to the excess HCFC-22 produced. Some believe that companies could be stocking it; others believe it is being clandestinely released into the atmosphere. As a result, there is no actual reduction of greenhouse gases though the total number of carbon credits issued is huge.

The last sentence would and should give shivers to any right thinking person. However, with the Country governance is doldrums due to the impact of one scam to another, the latest being coal; the knee-jerk reaction the government took this week in boosting the economy would not only impact the rudimentary Sustainable practices, it can erode it completely, with some  corporates muscling in their agenda of “growth” at the cost to the ecosystem.

carbon-Credit-Card (Photo credit: charlesfettinger)

Today the greatest unrest is because of Energy requirement, which comes from fossil fuel and with Coal hitting the scam list, it would be difficult for the government to allow mining ( unless strong-arm tactic are used) and feed the critical requirement of the industries. Thus importing coal would gather steam. Which in no way helps in abating GHG, just reduces pollution at ones own door. The second being LPG, now it is well documented that Oil corporations are bleeding due to subsidy, but to stem the flow what is required is imagination not short-term solution.

Further, the increase in LPG price and the cap in its domestic use, would spawn another scam /corruption which now is a default setting among us.

And to stay in governance the Government would be very tempted to turn a blind eye on the misdeeds. So what must be done to balance “growth” and come out of the log-jam which is called “policy paralysis”?

As always, each problem has sustainable solutions; we only need to find them and in this article through the use of CDM.

In a recent debate, to the current situation at TIMES NOW TV, one of the guest in the Panel quoted – ” Darkness is not opposite of Light but the absence of light”.  Resonating the sentiment I would say that the failure of the CDM policy is not the failure of the idea, for the idea in itself is the original “Green Business Idea”  under which heading I have written many a blog and today I rest my arguments with the link to a series of those which directly point to a solution. What is required is to make the system a little more fool-proof. And to this extent the media, with its depth of reach should partner those who walk the path towards sustainability.

It is well documented, that traditionally in India the debt of the Father is paid by the Son. Horrific tales of the Bonded Labour are known to many. But if it’s a sad tale, it also has an opposite side. The side which investors in CDM and the Banks need to see; the honesty of the grass-root citizens of India. Unlike corporate frauds, they pay their debts. At times with their lives.

The Indian as opposed to the pseudo (westernised) Indian, always has paid respect to Nature and if one takes any religious festival of India, Nature is given due importance. In my earlier article Disconnect from ones culture is the root cause of Global Warming & Disconnect from ones culture is the root cause of Global Warming;Part-II Killing Trees; I have tried to document this aspect within the limited knowledge I could gather.

Further, I believe that the concepts which I have attempted to project through many of the articles termed Green Business Ideas, and especially – Renewable Energy – Empowering Women & Saving Forests; Green Building Ideas:Using Solar panels as roofing sheet instead of asbestos. All have the potential to earn CDM benefits. We can call them CER or REC; the money can be international or national but it must be available at the grass-root level. And at the level where innovations make a difference.

Greenhouse gas intensity in 2000 including land-use change. (Photo credit: Wikipedia)

While we still need to rip the bowels of our Mother Earth, to feed our insatiable needs, we can actually limit them by creative thought; Green Business Ideas: Solar Panels can save water in the fields for farmers.This very act alone would save thousands of petro-dollars and improve the fiscal  deficit. While at the same time creating millions of jobs in the service and allied industries of the Solar market. While the above thoughts look at the Indian grass-roots, the middle class too can benefit and its mental outlook can be changed with Green Business Innovation : Offices can now print on a E-paper and save forest.;Green Business Ideas: Carbon Credits opportunities in Green Townships.But these too, need the support form the UNFCCC and the Banks which traditionally look at large caps and easy return; which lead to the fraud in the first place.

While the present Mumbai city many not have enough roof-space to generate its own electricity, by making laws for future re-developments and up-coming townships (Green Business Ideas: the missing LEED/GRIHA credits can help boost economy worldwide.) a great amount of job creation and by that default wealth can be generated. The crisis of energy can be tackled and that should be the goal.

Within a span of 10 years, should Sustainable building methods become norm, the government can further cut its fiscal deficit by increasing the energy tariff to what it should be, while encouraging CDM benefits for the common person. The concept is addressed somewhat in Green Business Ideas – Applying Solar OPEX model on Green Buildings will make Grid parity easy.

 The government in its first avatar of UPA-I started well in the path towards sustainability; but partisan politics and myopic views of both the political and corporate masters have not helped in boosting the concept which it came out with (Green Business Ideas : India should promote NSM & NMSH to make NMEEE a success)What it must do is lend its ear to the citizens, who always care for good governance and will stand as a solid wall of support if the benefits from CDM flows directly towards them, instead of becoming another profit-making tool for the unscrupulous corporate entities.

Related articles

• UN carbon scheme reaches milestone, flaws and all (eco-business.com)
• Global carbon trading system has ‘essentially collapsed’ (guardian.co.uk)
• The story of the Clean Development Mechanism in numbers (rtcc.org)
• Down the rabbit hole: REDD in the CDM? (climate-connections.org)
• In The ‘Crazy’ World Of Carbon Finance, Coal Now Qualifies For Emission Reduction Credits (thinkprogress.org)
• Surprise! Money Junkies exploit Carbon Credits – and raise output of harmful gas! (nytimes.com)
• Panel Seeks to Assure UN Clean Development Mechanism’s Future (triplepundit.com)

 

Green Business Ideas: Retail Carbon Credits is an Idea whose time has come.

The State of trend of Carbon Market 2011 prepared by the World Bank reads – While the international regulatory environment remains uncertain, national and local initiatives have noticeably picked up and may offer the potential to collectively overcome the international regulatory gap. The most prominent of these initiatives is California’s cap-and-trade scheme, which is expected to begin operating in 2012. Other low-carbon initiatives, including domestic emission reduction targets, clean energy certificate programs, voluntary and pre-compliance domestic offset trading programs, and carbon exchanges, have gained increasing traction in developing economies such as Brazil, China, India, and Mexico. These initiatives signal that, one way or another, solutions that address the climate challenge will emerge.

On April 13th 2012, The Mexican House of Representatives passed a climate law, which – when approved by the Mexican Senate – the government will make rules to phase out fossil fuel subsidies; make renewable power fully competitive with oil, gas and coal; cut dirty carbon emissions 30% by 2020 with international support; and ensure that 35% of Mexico’s electricity will come from clean sources by 2024. A recent article in the Economist – The World turned Upside Down states –“The emerging world, long a source of cheap labour, now rivals the rich countries for business innovation, says Adrian Wooldridge“. The Mexican model is indeed an innovation to be lauded and emulated.

What if India, takes the lead too ? As it has already committed through the National  Action Plan for Climate Change, searching  innovation for reducing its GHG as time passes by would be more of a necessity both in terms of international prestige as well as sound business sense. It is a fact that reverse innovation are already happening and both the BRICS and BASIC groups ( India counts on both) and  in time Mexico would be a part of one of these group is not in doubt.  So adapting what is best and improving upon the Program of Actions to suit domestic needs, is a sound idea.

If one takes the cue from a report by Carbon Finance  which says – Sentiment is more positive in the voluntary carbon markets than in their larger, mandatory equivalents, according to the winners of Environmental Finance and Carbon Finance’s annual survey of the voluntary carbon markets.  And add to that another report from the Economist which says -… Multinationals expect about 70% of the world’s growth over the next few years to come from emerging markets, with 40% coming from just two countries, China and India…. Companies in the Fortune 500 list have 98 R&D facilities in China and 63 in India…Both Western and emerging-country companies have also realised that they need to try harder if they are to prosper in these booming markets. It is not enough to concentrate on the Gucci and Mercedes crowd; they have to learn how to appeal to the billions of people who live outside Shanghai and Bangalore, from the rising middle classes in second-tier cities to the farmers in isolated villages. That means rethinking everything from products to distribution systems…The very nature of innovation is having to be rethought. Most people in the West equate it with technological breakthroughs, embodied in revolutionary new products that are taken up by the elites and eventually trickle down to the masses. But many of the most important innovations consist of incremental improvements to products and processes aimed at the middle or the bottom of the income pyramid…

Then another sobering report was published by PHYS  – In a submission to the UN climate organization, the United States said that its greenhouse gas emissions grew by 3.2 percent in 2010 compared with the previous year after two consecutive year-on-year falls…US greenhouse gas emissions hit 6.82 billion metric tons in 2010, up from 6.61 billion in 2009, it said. The total was still below the 7.25 billion recorded in 2007 before the onset of the global recession.  And then a report on the 16th April’12 in Business Green   –The London School of Economics‘ Grantham Research Institute on Climate Change will today launch a report suggesting green polices can stop the private sector from “squirreling away” record levels of savings into “risk-free” assets, such as solvent sovereign bonds.  Developed countries, including the UK and US, were urged to deliver clear and credible policies for stimulating green investments, as part of a major new report launched just days ahead of a crucial meeting of G20 finance ministers.

Further, a University of Queensland study involving supercomputer models has found that the burden of retail electricity price rises will vary considerably, depending on a household’s location in Australasia; where they are setting the carbon price to $23.  In an analysis by Manipadma Jena,of the Inter Press Service on 27th March’12, it was mentioned that India, like other Asian countries, has focused its climate change adaptation strategies on rural and urban areas while neglecting the urban fringes. The article warns that “Peri-urban” (habitation at the periphery of an Urban centre, the farthest suburb so to say) areas are characterised by haphazard, accelerated expansion and are farthest from basic urban services and infrastructure, according to United Nations-Habitat’s ‘The State of Asian Cities 2010-11′. The analysis  vindicates my articles on Urban development rules and  pollution. It goes on to say –“In India, while the municipality’s administration area is demarcated, responsibility for peri-urban areas is fragmented. Where are the policy levers for peri-urban areas, for example, in India’s policy?” Nassef asks. India is not alone in neglecting peri-urban areas. Last year’s devastating floods in Thailand provided a good example of such neglect.  I had covered in this other article
the reasons.

Although all the article are seemingly unrelated,they are all in fact, going to have a impact on the common person. Framing laws and publishing reports are good but what is most important is to engage the common person by bringing everything to the grass root level, should we want solutions faster. Be it Climate Change or Environmentally Sustainable Business ( is there any other? ). I always believe in common persons, especially because its the common person who does something extra ordinary through trails and tribulations to become the expert.

The most important factor is sustainability in Energy production and delivery. By delivery I mean the methods required to produce the energy in the first place, such as setting up an Oil rig or a Coal power plant etc. It in itself requires a process which is GHG intensive. Although Renewable Energy machinery too requires a process which is not as clean, and a “bridge solution” for now, which I have said in the previous article, it is the only bet. And if Mexico or even India wants to really stand true in there promise of reducing their GHG, innovative approach for delivering Green Energy at the common persons door step must be adopted.

The public must want to go ‘clean and green’ and as one would find in the peri-urban areas people who are economically weak, and even the middle class who live in tier-II & III cities and low income suburban areas, the direct method of influence is monetary gain. It stimulates the rich too, but they do not form the bulk of the population and as pointed in the articles above, the focus is on the middle and bottom of the pyramid. I will address the rich too but more ‘innovatively’ later in the article.

So let us begin with  a Green Business Idea which may be an innovative solution of going Green faster. Giving Carbon credits to polluting Industries was fine with KP1 but how about giving Carbon credit to a common person, in KP2?

What if, say one installs a solar panel on the roof top or a small wind+solar hybrid in wind positive localities. The Banks not only gives them loan but also pays them a carbon offset price ? Be it an individual or a small business. Similar to what we find in this article World’s first personal carbon credit earns $17 cash back.

In the USA, outraged by a threatened 30% price hike by their local electricity provider, the Wilson’s of Harrisburg, Pennsylvania, hired a contractor to install 36 solar panels on their roof. A company in Middlefield, Ohio, Molten Metal Equipment, bought the Wilson’s carbon credit, representing a tonne of carbon dioxide, for $21.50. The website earned $4.30 in commission, and the Wilson took home $17.20.
But this modest cash reward was not the only reason for the Wilson’s solar conversion. The website’s existence suggests that while the US Congress may have given up on creating a national scheme for trading carbon emissions, there are ordinary Americans willing to play the voluntary market. The company says it has signed up 1,800 households since going into business last autumn.

With Indian Oil companies threatening to increase Petrol price to 8 Indian Rupees and coal supply an all time low in many states, especially Maharashtra. The story is simple, we have a huge problem of energy shortage at hand and for India, its best to take the cue now form it and innovate.  While in the above USA story  the carbon credits accrued could be substantial even from small number of house holds (1800) because the per capita carbon foot print stands at 20 tonnes, for India the reverse is true, we have per capita 2 tonnes of emission and can easily have 1800,000 house-holds to sign up !

Question may be raised as how to continue financing this which the banks and private investors may find difficult, especially for rural settings or scattered small requirements. Well, in the Indian scenario it could need a simple ‘innovation’ in the Parliament.  Ask the rich to pay up.

Years ago, when India was opening up to become the financial hub it is today, the then Finance Minister had declared Amnesty to those who would pay-up taxes and convert their ‘black money’ to ‘white’. Now we have a list which tells us that there is enough black money, stashed in foreign Banks, to buy every Indian 1KW worth of solar panel. That their names would be revealed and the money repatriated is a pipe dream at best. But letting them atone for there sins, by making India clean and green is a ‘innovation’ which should be thought upon.

Courtesy: to all the articles and there authors who have helped me make this article.

 

Green Business Ideas: Carbon Credits opportunities in Green Townships.

Most women & men have an emotional connect with the home they have lived as a child. In India families often live their entire life in one abode for generations. Even as India grows from its rural to more urban setting, the people still like to retain their “ancestral” home while moving into the swanky new home. There are some emotions which no one likes to part with; and childhood memories are perhaps the most important.

Perhaps many around the world  would share similar sentiments. Some want to make a retirement home, some would want a second home. Given a choice nearly every human would want to identify her/himself with something that is familiar.

This gives rise to a super Green Business Idea, which has manifold potential in rescuing Gaia from Global Warming.What if, future towns and cities are made as replicas ? Modern India has done that and, unfortunately forgotten about it. Cities like Rourkela, Bokaro, Durgapur & Bhilai which have almost similar design created by the master architect. If one pauses to think we have in almost all large cities, the state / city development authority housing board, which make ” affordable ” housing blocks. The typology remains the same over different locations. I think its time for a revisit and see it with new light in the context of abatement of climate change. Imagine High rises, commercial districts, row-houses and bungalows all having same or similar design ? Developed by private entities based on market demand, but following Development Rules which have been strictly adhered to. What would be the advantages, lets examine  in brief and re-kindle the thoughts which are perhaps lost in time.

The most exciting part is the CDM ( clean development mechanism ) potential. Every building has potentially two methods for adoption, to earn Carbon Credits. One is to reduce its embodied energy through better management of building materials. And the other is to reduce its Water and Electrical energy consumption. While the latter is comparatively easy and ‘meth’ AMS-III AE is recognised by the CDM Board. It is the embodied energy reduction that  has greater potential in terms of actually reducing GHG  as building related activities account for 40% of the Emission and 60% of waste is construction related.  However it is difficult to map it  and manage the MRV.( Monitoring – Reporting -Verification.) especially in the Building industry within the Construction sector in India. And this is precisely where I see a solution, should we make ‘replica townships’. We already have the datum to compare. The planned steel townships were made just after Indian independence. It has as any township should have – residential blocks, commercial blocks and infrastructural blocks such as schools, hospitals, cinemas,  police station, post-office , bus and railway terminals. So a major portion of the township plans would be available along with records of construction process; which would be archaic as per today’s construction methods (barring the A- centres of India, tier -II & III along with most rural setting still follow the old method of construction) but the layout plan is excellent. So with foresight and statesmanship, ( wishful thinking does not attract punitive punishment under any law ) should the Indian government both at Union and State level want to pursue its own stated Nation Mission for Sustainable Habitat under NAPCC; they should pass laws under Urban Planning which can make this thought into reality. As the Union government has already created the fantastic Mission, all it needs is to rise above political compulsions and address the issues at the Federal level, by becoming the facilitator in creating sound policies for the States, which then follows the path towards sustainable development.  And the benefits would be several.

First the  Urban Planning will be made easy – The biggest challenge the Urban planners face is the assumptions one needs to take into account, while proposing a new township. What would be the population density? What would be  the amount of water and energy requirement ? How will the municipal requirements met?  How best to accurately calculate cost of development. Where-all would the failure of oversight be, causing unplanned growth or breed corruption? Because post the master layout plan, the State development authority has no control { which is correct to an extent } over what would be the look and size of the building which would come up within the designated zone of the master plan. All such issues would become more streamlined and thus decision making more easy as the learning process gets more refined with each replica township coming up every-time.

The master-plan need not be a monotonous one. India has 5 – climatic conditions and design guidelines based on these are already incorporated in the National Green Building certification program – GRIHA. Therefore Master planners can create guidelines which conform to region and state specifically. However, within that area the designs can remain similar. Further, the best practices followed in other climatic zones and states would be available for record to plan better Climate Resilient cities, which is the underlying purpose of this article too. Imagine the potential, should a developer choose three typical design and develop different projects, in 3 different cities within one climatic zone. While the town-planing would differ in layout and scale, the buildings built therein being the same, would reduce cost of construction to a great extent. Design inputs required would reduce, while scope of improvement increase with every project thus designed. As every project has some amount of wastage, knowing the quantity to a more sure approximation, would help in planning for Reduce – Reuse -Recycle as enshrined within the Green Building methods both LEED & GRIHA.

Further a brand identity would be built. A building design can be copy-righted so to speak. And what an emotional connect it would be for the newly wed Bride, who has sadness in her heart for having left her ‘Babul ka aangan’,(fathers home) finds that her ‘Pia’ (husband) has the same bungalow she grew up in. Familiar setting instils confidence and a confident and happy new Bride can do wonders in settling herself well into the new life, she would be beginning.  That it would earn the builder/developer a permanent costumer (extremely difficult in this era of multiple choices), is another happy story. And if we speak of men,  I’m a member of an on-line group which was created by my childhood school mates and friends. We all lived in a gated township of a multinational company, where our fathers worked. Today of the 300 odd members, 51% would surely buy a home, should I design the replica of the town we all grew up in !

And the final winner would be my Countrymen, most are laymen when it comes to understand the importance of town-planning and Sustainable Urban development.  By providing them with standardized product, they would have more informed choice to take the right decision, as they do while buying their refrigerator or car. And most importantly it perhaps would become easier to decongest the future Megalopolis. For why would one not move into a newer town for better prospects while still be able to live within similar surroundings ? And why would people migrate to a particular city when similar ones are next door offering similar opportunities ?

And the final thought would be, the Urban planners should consider bio-mimiciry in their town planning. As technology would allow us to make higher sky-scrapers, rules must define low rise zones to be closer to coast and high rise more inland, this simple thought would allow for more natural wind flow pattern, which will help limiting air  pollution.

While no one can make another New York, Hong Kong  or Mumbai in similar form, potential or opportunities the new ones at least would have a future of their own making and who knows better the best that is in offer today.

Moreover Climate Resilient Cities which I am proposing would be offering a more prettier skyline than what any present day modern megalopolis has to offer. To underscore my point, which from all the above images posted in this article would you choose first for a postcard ?

I rest my argument !