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