CDM - Read Co-operative alibi against Developing Markets

CDM- Clean Development Mechanism as its reffered is one of the modes of addressing climate change as it is pressumed.CDM was an instant success in the developing market,obviuos reasons being access to funds and technology for the developing countries and yearly revenues for the credits sold.

CDM Basics
As mentioned earlier CDM is one of the methods for reducing carbon emissions as per the ratification under kyoto protocol.in this mechanism any organisation under of the obligation(mostly developed nations Annex-1 countries )of meeting its emission standards would buy carbon credits, so that it continues its present operation/process and the pollution thus generated would be compensated by the purchase of credits.

globally carbon credits are traded as good as stocks in the exchanges,the standard unit of trading is CER = Certified Emission Reductions

1 CER = 1 ton of carbon-di oxide

The cost of 1 CER in the global market is between 12-17 Euros, but the present Euro Crisis has resulted in crashing of the prices to as low as 3-4 Euros

sustainability- An abused term

The word ‘sustainability’ has been so misused in public debate as to be virtually meaningless. Rarely is a time frame considered in discussions of what is or is not ‘sustainable’. For example, human activities based on the combustion of fossil fuels are unsustainable when the frame of reference is a few hundred years. Cropping in the sheep-wheat belt of southwestern Western Australia has become unsustainable for a substantial number of farmers over a period of decades. A similar time frame for unsustainability applies to crop and pasture production that relies on flood irrigation in parts of the Murray-Darling Basin.
Because Earth’s climate has been changing over geological time, and has frequently been perturbed by major events such as meteorite impacts and huge volcanic eruptions, there is nothing static about its ecosystems. These ecosystems have adapted to change – species have been extinguished and new species have evolved that are better adapted to the changed conditions. Any concept of sustainability based on preserving the status quo, as we see it now, is an anthropocentric view. Also, given that change is the natural order, it is an unrealistic view, indicative of an attitude that underlies objections by conservationists to the logging of native timber, even though selective logging annually of a small proportion, about 1 per cent, allows time for regeneration and the growth of young trees to maturity.
An ecosystem that is experiencing slow change at a steady rate, either naturally or through human influence, is in ‘steady state’. Although in a state of flux, if the inputs of matter and energy balance the outputs under the prevailing climate, such a system is sustainable. A small segment of the system, rotated around, can be exploited for production provided that sufficient time is allowed in the whole cycle for regeneration of natural vegetation and soil fertility in each segment. An example is the system of ‘shifting cultivation’ that was practised successfully in the tropics for centuries, but is now derided as merely ‘subsistence agriculture’. A somewhat different example is described in F. H. King’s book ‘Farmers of Forty Centuries’. King wrote that before the modern era, for over 4000 years Chinese farmers had grown enough food to support large families by terracing sloping land, rotating their crops and returning all available human, animal and plant waste to the soil.
Subsistence agriculture has been replaced in most parts of the world by farming for profit. As a consequence, modern farmers tend to use the words ‘viable’ and ‘sustainable’ interchangeably. If farmers can extract sufficient production from their land for income to exceed expenditure, they are financially viable and consider they are farming sustainably. The time frame for making this judgement varies, depending on the enterprise. For example, in the grazing districts west of the Darling River in New South Wales the time frame may be 10 years of which nine years are years of loss, but enough money is made in the 10th year to cover all the losses and yield an overall net profit. The grazing enterprise is considered sustainable even though the land may have suffered irreversible degradation during the 10 year period. However, in the irrigated dairy region of northern Victoria, one bad year in which there is a minimal allocation of irrigation water may well put a heavily indebted producer out of business.
In Australia, the mismanagement of water has become a major impediment to sustainable farming. For many years, scientists have written about the encroachment of dryland salinity due to excessive clearing of native vegetation and its replacement by annual crops and pasture plants. Graphic images of the wheat-sheep belt of southwest Western Australia, one of the worst affected regions, are frequently shown in the media. However, an equally serious problem exists with the rivers of the Murray-Darling Basin where there are critical water shortages due to the over-extraction of water for an expanding irrigation industry.
Given the well-known variability of the Australian climate and predictions from climate-change modelling that parts of eastern Australia are likely to get warmer and drier in the next 50 years, it is understandable that farmers wish to ensure the viability of their cropping and pastoral enterprises through irrigation. However, the efficiency of water delivery through unlined channels and of water application in flood and furrow systems is poor, so the demand for water is greater than it would be if better irrigation infrastructure existed. Further, large amounts of water are used for crops such as rice and pastures for sheep production, for which the dollar return per megalitre of water is small compared with horticulture, viticulture and dairying. Because of this heavy demand for irrigation water, the natural flow in many of the rivers has been reduced to very low levels, a condition exacerbated by drought in eastern Australia. For example, the Darling River at the Wilcannia crossing in New South Wales is little more than a string of stagnant pools. The largest of the storage dams at Menindee near the Darling has not held water since 2001. Consequently, the health of these rivers, and of the aquatic ecosystems they support, has been declining. Such a decline not only affects agriculture, but also lessens the value of the services these ecosystems provide, such as clean water for towns, habitat for flora and fauna, recreation and opportunities for tourism.
The Council of Australian Governments has agreed on a National Water Initiative to try and remove some of the impediments to better management of the nation’s water resources, and a National Water Commission has been established in Canberra. But progress in resolving water problems, especially the one of creating an efficient national water market, has been slow, largely because water has always been a highly political issue and no Australian government has taken a long term view. The question is – will drought and climate change overtake us so that policy makers are left with even fewer options for solving the problems than they have now?

Financial instruments that actually don’t mitigate(less severe) climate change rather they pass on the buck to someone else

Hedging strategy
A classic hedging strategy is to buy insurance. But insurance doesn't work very well as an adaptation strategy. Policies only last for one year, or at most two. The insurance companies don't need to charge higher rates now if they see big and nasty things happening to the global climate in 20 years' time—they can continue more or less as they are for the time being. It's easy to forget that if you're simply renewing an insurance policy every year: The existence of the insurance market gives companies a sense of false security that their risks are hedged.

THE POSITIVE SIDE OF CLIMATE CHANGE
All through the industrial revolution to digital world we are in today, the emphasis of business fraternity has been on increasing production through exploitation of resources; accelerate consumption to generate income
There has been no demarcation between wealth creation and revenue generation. However the beginning of the 22nd century we would be forced to think about wealth creation
Today there is a conflict between Nature and Human Life, and the former has been very considerate to buckle where ever it can, may it be over exploitation of resources, uncontrolled fishing, agriculture, deforestation etc. But it is evident that nature would restore the balance at the earliest and in a more violent way. Today businesses are looking forward for a short term strategy rather than a long term sustainable one.
The perils of this exploitation and myopic view of the world around us would make the events irreversible and can be actually lead to extinction of mankind.
The new trend in mitigating climate change today is use of renewable and clean sources of energy.
There is a clear difference between renewable and clean source of energy
Renewable – These sources of energy can be replenished and there is no depletion in source and they are necessarily clean
Clean – They offer a clean source of energy and definitely the energy supply is limited to the availability of the source
COMPANIES ENTERING THE GREEN BUSINESS
There are quite a few companies who has taken the cue and started entering the business of providing solutions in the space of renewable energy and climate change. These companies have developed products which claim to offer benefits like reduction in carbon emission, and reduced energy consumption compared to conventional systems, environmental friendly etc.
These companies have tasted little success except for a few the reasons for this low success rate is due to the fact that the demand for renewable sources of energy is not that appreciable, the reasons being the cost involved and there is no federal mandate for use of this form of energy.
As any other business entity the primary motive of these companies has been to capitalize on the market demand for clean and green products


The business for clean and sustainable energy exists for the segments of
1. Consultants for clean energy adaptation like, green consultant, CDM consultant for carbon emission reduction and trading
2. System integrators
3. OEM of clean energy products

PR GIMMICK OR CONCERN FOR THE ENVIRONMENT?

Environmentalists and scientists have time and again issued various warnings of the grave environmental perils that our planet will potentially face because of long-term changes in climatic patterns known as global climate changes. Global climatic changes occur due to a number of reasons, however an issue which has been in the limelight recently is that of ’carbon offsetting’ , with corporate firms worldwide racing to cut down their carbon emissions by supposedly ‘compensating‘ the environment for the same.
Offsetting is balancing the impact of emitting a quantity of greenhouse gas by avoiding an equal amount elsewhere, or removing an equal amount from the atmosphere. Although it appears to be an entirely positive approach , the ’carbon offsetting’ race has also been criticized by some, who argue that this approach to climate change has some major ‘fundamental flaws’. Instead of dealing with the basic problem of carbon emissions into the atmosphere, people are starting to believe that a small amount of money from their side is enough to reimburse the damage caused to the environment. An interesting example is that of Continental Airlines actually selling ‘carbon offsets’ for a nominal price of $10 on board. A recent report from Carbon Trade Watch , entitled ‘The Carbon Neutral Myth’, compares carbon offsetting to the practice of the medieval church selling ‘indulgences’ to absolve sinners.

The list of companies who have decided to go ’carbon neutral’ includes biggies like Google, HSBC, Yahoo!, General Motors, Barclays and many others. The question however is whether or not these firms are genuinely working towards a better environment or is it just a carefully planned PR stint. With ‘carbon offsetting companies’ coming into the picture to help other companies ‘offset’ by funding environmentally friendly projects in developing countries, the issue seems to be getting more commercialized than it was meant to be.

What is amusing is the fact that this important ‘environmental issue’ is turning into a ‘fashionable trend’ for the ‘crème de la crème’ with luxurious resorts putting on offer ‘carbon-free’ spa vacations. Just about a month ago the Six Senses Resorts and Spas, a Bangkok based luxury hotel chain announced that it would make its flagship property in the Maldives- the Soneva Fushi- into a carbon neutral resort by 2008 and go completely carbon free by 2010.

With a large number of countries ratifying the Kyoto Protocol (a climate change treaty assigning mandatory emission limitations for the reduction of greenhouse gas emissions to the signatory nations), there seems to be some hope. The real question however, is the approach which is being used to go ‘carbon neutral’. The actual emissions are hardly being affected, they are only being ‘neutralized’ by investments made by large corporations in ‘carbon sinks’ or renewable energy generation projects. Whether this is going to be beneficial in the long run, is a question which still remains unanswered.


ALL ABOUT CARBON TRADING


UNFCCC (UNITED NATIONS FRAMEWORK CONVENTION FOR CLIMATE CHANGE) has developed three flexible mechanisms to help countries with binding greenhouse gas emissions targets meet their obligations (should nt it be read as responsibility) as per kyoto protocol
There are about 187 countries which have signed and ratified for the protocol and 8 other nations which occupy no position status on the treaty.
Countries that ratify the Kyoto Protocol agree to reduce emissions of six greenhouse gases that contribute to global warming: carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, HFCs and PFCs.
USA is the only nation which has signed but not ratified for the protocol (Wondering Why)
1. EMISSION TRADING
 Trading between two nations of their carbon credits
2. JOINT IMPLEMENTATION
 The implementation of project in either of the two countries with technology transfer and financial support and ultimately both claiming the benefits
3. CDM ( CLEAN DEVELOPMENT MECHANISM )
 This model was created so that the developing nations/LDCs can adopt to efficient technology and the carbon credits thus obtained would be claimed by the sponsoring Nation

Wondering Why
The U.S. Senate passed a resolution saying the U.S. should not sign any protocol that failed to include binding targets and timetables for both developing and industrialized nations and that "would result in serious harm to the economy of the United States.”
Ironically Un•cle Sam releases more greenhouse gases than any other nation and accounts for more than 25 percent of those generated by humans worldwide. Because the United States accounts for so many of the world’s greenhouse gases and contributes so much to the problem of global warming, some experts have suggested that the Kyoto Protocol cannot succeed without U.S. participation.
In rejecting the Kyoto Protocol, which other nations had accepted, President Bush claimed that the treaty requirements would harm the U.S. economy, leading to economic losses of $400 billion and costing 4.9 million jobs. Bush also objected to the exemption for developing nations. The president’s decision brought heavy criticism from U.S. allies and environmental groups in the U.S. and around the world
Meanwhile, the Bush Administration continues to seek alternatives. The U.S. was a leader in forming the Asia-Pacific Partnership for Clean Development and Climate, an international agreement announced July 28, 2005 at meeting of the Association of South East Asian Nations (ASEAN).
The United States, Australia, India, Japan, South Korea, and the People’s Republic of China agreed to collaborate on strategies to cut greenhouse gas emissions in half by the end of the 21st century. ASEAN nations account for 50 percent of the world’s greenhouse gas emissions, energy consumption, population and GDP. Unlike the Kyoto Protocol, which imposes mandatory targets, the new agreement allows countries to set their own emissions goals, but with no enforcement.
A series of local partnership with the above mentioned nations was formed, but these remain just agreements and thus there seems to be no improvement in the reduction of the GHG emissions.