Carbon trading seems to be a very promising mechanism for effecting climate change



Almost everyone present at the United Nations Climate Change Conference (UNFCCC)
held in Bali, late last year, was in a state of nervous excitement. The constant
bickering and political deal-making had nearly extinguished the hope for a real
and constructive roadmap. At the center of it all, Yvo de Boer, executive
secretary, UNFCC was said to be close to crying when it seemed that the
parties were not able to come to an agreement on the substance of future
negotiations.

Bali was a very emotional moment for everyone at the conference. It was
supposed to finish at 5 pm on Friday and at noon on Saturday… we were still
not done and that was a very tense moment. People were wondering, including me,
whether we would be able to reach agreement on the Bali roadmap before time ran
out. I was tired and hadnt slept personally for the past two nights. But I am
glad that we made it in the end, he recalls. And that was indeed a moment of
triumph for the newly elected executive secretary of UNFCCC.

Recently, when you had visited India to attend the Sustainable Development
Summit, you had stated that you wanted to find out how India wanted to combat
climate change. Were you able to get the answer you had desired?

To a large extent yes, in the sense that I had some rather interesting
conversations while I was last in India. I believe that India is working on a
national climate change strategy, which the prime minister told me would be
ready in June 2008. The intention of this strategy is to develop a sectoral
focus on different sectors of the economy and different parts of the country. So
that the myriad challenges (climate change) can be broken down in manageable
pieces. India is also in the process of assessing its greenhouse gas (GHG)
emissions while at the same time searching for a way to forward itself in terms
of cleaner development and in June of last year the Government of India had also
commissioned a study from TERI on the possibility of introducing carbon tax to
reduce emissions caused by the usage of fossil fuels. Last year, Indias
president suggested also that 25% of the countrys power should come from
renewable sources by 2030.

Lets start with the role played by developing countries in combating
climate change. How can they match the needs for growth and poverty eradication
with those of environmental concerns?
I guess this is a challenge that all of the developing world faces, on one
hand there are clear overriding goals, economic growth and poverty eradication.
But at the same time while they are experiencing the impacts of climate change,
they are also confronted with issues of energy security, concerns over energy
prices. In many countries, specially the ones that use coal on a large scale,
there have been concerns over air quality as well. In all, there are really a
number of drivers that are inspiring developing countries to engage on this
issue, and I suppose, the overall challenge is, if you can achieve economic
growth and eradicate poverty without making the same mistakes that many
countries in the West have made.

Do you perceive the same change as China in India as well when you
interact with government officials and corporate companies here, as India
happens to be the fifth largest emitter of greenhouse gases in the world?
As a country, yes, India is the 5th largest emitter of green house gases but
that is because of a specific border that was drawn many years ago and probably
if Pakistan and Bangladesh would have still been part of the country then, India
would be even higher on the ladder of emitters. Partly, it is a matter of how
borders are drawn, and that I think is an injustice that is often rightly
pointed to India as maybe the 5th largest emitter, but if you look at the per
capita emissions, then India is one of the lowest in the world. But I also think
that India is confronted in many interesting challenges, if I am not wrong, I
think close to 400 mn people in India do not have access to electricity at all.
That then poses the question, if part of your economic growth and poverty
eradication challenge is to provide these people with access to modern energy
sources, how are you going to do that. Are you going to do that by extending the
electricity grid, relying more on coal as a base for power generation or are you
going to rely more on decentralized networks, solar energy, wind energy, biomass
energy, etc. That is one example of the challenge that I think this country is
facing.

You have ardently supported carbon trading, through the CDM, how would you
rate its success thus far?
Carbon trading really has taken off in a big way, as the market was
estimated last year to be of the value of around $60 bn and the clean
development mechanism within that had a value last year of around $5 bn. So if
you look at the pipeline of projects, then there are 316 Indian projects in the
pipeline at the moment, which gives India the largest overall share of around
33% of all registered CDM projects. So thats a mechanism that has really taken
off, and has dual benefits. On one hand it allows countries to achieve emission
reductions quite cheaply while for the developing countries the benefit is that
they receive injection of technology and allows them to change the direction of
their economic growth.

Yvo de Boer
executive secretary, UNFCCC

You have also spoken actively about private investments: They will have
to go where it has not gone before. Intelligent financial engineering will be
the key. But considering the fluctuations in the carbon market and little
uptake by consumers of low carbon footprint (high cost) products, what is going
to drive these investments?

What you refer to is fast changing, if I look at the way petrol prices are
rising in Europe then I sense that people are very conscious of what it costs
them to fill up their tank and that is already influencing the choice that they
make when buying a car and how much they drive. I also have a feeling that
electricity prices are influencing the sort of appliances that people are
purchasing and that the purchasing behavior is changing. We know that in order
to provide the energy that is necessary to propel this change and an economic
growth to take place, about $20 tn will be invested in the energy sector over
the next 25 years and part of the climate change challenge is to ensure that the
$20 tn is invested in clean technology rather than polluting ones.

What is your message to non-polluting industries like the IT services
sector? How can they benefit or survive in the new world? What strategies should
they employ?
These are the companies that by and large have a low carbon footprint if you
compare them to energy intensive companies. So I think that the growth in the
economy that is trying to constrain its carbon emissions in the IT sector is
much better positioned than many energy intensive industries and if you have
seen a recent UNEP report issued last week, that the market for new and clean
technology is growing enormously and in that sense I think the IT industry is
very well positioned to profit from many of the opportunities that are emerging.

Shashwat DC
shashwatc@cybermedia.co.in

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