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 In this interview, CarbonFreeZone spoke with Halldor Thorgeirsson, Director of the Sustainable Development Mechanisms Programme in the United Nations Framework Convention on Climate Change Secretariat based in Bonn, Germany.
CFZ: Approx. 700 CDM projects registered with UNFCCC are expected to generate 920 million CERs. Do you believe we would be able to generate the required number of credits by 2012 to meet Kyoto targets?
Mr. Thorgeirsson: In addition to these approximately 700 registered projects, there are about another 1000 projects in the CDM registration pipeline. When these are taken into account, the number of CERs expected by the end of the first commitment period of the Kyoto Protocol rises to about 2 billion, each equivalent to one tonne of CO2. This might sound like a big number, but in fact it’s less than half of the emissions produced by the European Community in a single year. The countries that meet their commitments under the Protocol will do so by reducing their emissions at home, at the national level. The CDM offers industrialized countries some flexibility in how they meet their commitments and offers lower-cost opportunities for reducing emissions. More importantly, the CDM is generating billions of dollars in clean, green investment in developing countries. The CDM has proven the merit of market-based mechanisms to stimulate investment and reduce emissions. The challenge now is to greatly leverage the considerable potential of the mechanism – which means more projects, covering wider areas, generating more investment, and resulting in more emission reductions.
CFZ: Major share of investment in terms of CDM projects is concentrated in the South Asian and South American continents.
Investors are finding it hard to invest in least developed countries. Do you think we need to take extra steps to ensure that these countries can also benefit from Kyoto Protocol? Mr. Thorgeirsson: Some countries have been very active in spreading the word about the benefits of CDM. Others have built up the capacity to not only spread the word, but to help facilitate the development and financing of projects. The fact that some countries and regions have so far missed out on the benefits of CDM has been well recognized, and steps are being taken to help correct this. An initiative was launched by former Secretary-General of the United Nations, Kofi Annan, in Kenya in December 2006. Called the Nairobi Framework, the multi-agency effort will help developing countries, especially those in sub-Saharan Africa, to participate more actively in the CDM.
CFZ: What steps UNFCCC is taking to spread awareness and support among small CDM project developers and investors? Mr. Thorgeirsson: The UNFCCC secretariat works closely with the national agencies or offices set up to approve and facilitate projects. We also arrange a forum for them to meet and learn from each other and exchange experiences. The secretariat is also working with another agency to set up a website, a CDM bazaar, that can help potential project developers advertise their interests and link with potential partners. These are a few of the efforts under way.
CFZ: There has been some concern in the industry as to the time taken for approvals and proposing new methodologies is relatively long. What steps are being taken in this direction? Mr. Thorgeirsson: Yes, the approval process takes time, at least six months, and it takes a commitment of resources on the part of potential project participants. The process is rigorous. It has to be. The procedures were designed to ensure that each emission reduction produced by a registered project represents a real, measurable and verifiable emission reduction, additional to what would have occurred without the project. The challenge is to streamline the process, make it quicker and easier, while ensuring that emission reductions are real. The Executive Board that overseas the CDM is constantly looking for, and implementing, ways to do this. For example, this June, the Board is expected to adopt guidance on how project participants can develop programmes of activities, as opposed to projects. If you imagine a project designed to install efficient lighting in a single building, a programme of activities might cover an entire city, or an entire state. Now imagine the efficiency achieved, in terms of the CDM regulatory process, that is gained by following such an approach, and imagine the potential scaling up of the CDM that might result.
CFZ: Carbon market in its initial stage has already seen ups and downs (referring to instances where governments have distributed enormous amounts of carbon credits resulting in fall of prices for these credits). To ensure the demand is high and companies invest in initiatives like CDM in the future to meet the Kyoto targets, do you feel UNFCCC should play a bigger role in regulating such markets? Mr. Thorgeirsson: The carbon market was established to reduce emissions in a cost-effective way. The demand for emission reductions is determined by the level of ambition at the international level to address climate change. The market will need sound management and regulation at the national and international level, and the UNFCCC brings together virtually every country in the world in an effort to combat climate change. A big part of that effort will be facilitated through markets, but it is the commitments that countries and companies make to reduce emissions that in the end will result in emission reductions, and create and maintain a market value for greenhouse gases. Without commitments to reduce emissions there is no demand for emission reduction and there is no market.
CFZ: We have seen a huge voluntary market of individuals who are reducing their carbon footprint through various private companies claiming to do it for them through an unregulated "carbon offset" mechanism. (Referring to various private companies who offer to plant trees for individuals who want to offset their air travel emissions). There are no government policies to ensure the mechanism used by such companies is actually offering emission reductions. Do you think there should be a mechanism to regulate such companies and their methods of offsetting? Mr. Thorgeirsson: You are right, there is strong demand, even at the household level, for emission offsets. People are extremely concerned over climate change and they want to do something about it. To date, the CDM and another Kyoto Protocol mechanism, Joint Implementation, are the only regulated providers of certified offsets. There are calls for regulation, and rightly a lot of interest in the press on the issue. The United Kingdom has proposed that its offsetting companies be held to the quality standard of the CDM. This is one way for countries to quickly give quality guidance to industry and consumers.
In the End “I would like to thank Mr. Halldor Thorgeirsson, for giving us his valuable time and answering the questions.” – Yogesh Kumar, CarbonFreeZone Halldor Thorgeirsson is Director of the Sustainable Development Mechanisms Programme in the United Nations Framework Convention on Climate Change Secretariat based in Bonn, Germany.
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