1、BIOENERGY AND THE CDM IN THE EMERGING MARKET FOR CARBON CREDITS 1. Introduction Bioenergy is one of the most important potential sources of sustainable rural development for developing countries. Its potential to mitigate global climate change opens up a number of funding opportunities, e.g., throug
2、h mechanisms of the emerging carbon market. The international carbon markets today emerged from the Kyoto Protocol (KP) to the United Nations Framework Convention on Climate Change (UNFCCC). In the KP, agreed upon at the third Conference of the Parties to the UNFCCC (COP-3) in the city ofKyoto (Japa
3、n) in 1997, the Parties to the Convention agreed on emission limitations for greenhouse gases (GHG, a/o CO2, CH4 and N2O).1 These emission limitations were only set for countries listed in the Annex I to the KP, comprising all OECD (at the time of the Kyoto Protocol； e.g., Mexico is now an OECD memb
4、er but not an Annex I country) and a number of Central and Eastern European (CEE) countries.With regard to differences in their 1990 (per capita) emissions, different emission goals were defined for different countries, with some countries facing nominal emission reductions compared to 1990 levels a
5、nd others able to increase their emissions by a certain percentage. However, for most countries the targets mean a reduction compared to their “business as usual” emissions in 2010. To help achieve these goals, a set of so-called flexible mechanisms was introduced to bring down overall costs, namely
6、, Emissions Trading (ET), Joint Implementation (JI) and the Clean Development Mechanism (CDM). The Carbon market is characterized by a number of major actors. On the regulatory side, the UNFCCC is in charge of setting the rules related to transactions for compliance with obligations under the KP. Th
7、e Clean Development Mechanism (CDM) is the mechanism under the KP directly relevant for the developing world. It provides for industrialized countries to invest in emission-reducing projects in developing countries and to use (part of) the resulting “certified emissions reductions” towards their own
8、 compliance with the emission limitation targets set forth by the Kyoto Protocol. The CDM has two main objectives (as laid down in Article 12.2 of the KP): (1) to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Conventi
9、on, and (2) To assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments. One important initiative facilitating compliance with the KP is the Carbon Finance Business (CF) of theWorldbank Group. Through a number of funds the CF faci
10、litates transactions between project sellers in developing countries and project buyers in Annex I countries. Compliance with the regulatory CDM framework set up by the UNFCCC and its subsidiaries (the Executive Board (EB) and the Methodology Panel (Methpanel) is a prerequisite for participating in
11、the CF funds. On the buyer side, several OECD entities (governments, funds and companies) are active. The most important regulatory framework providing a cap on emissions,is the European Emissions Trading System (ETS), but other buyers, such as in Japan, are also contributing significantly to the de
12、mand for emission reductions. In order to give an overview of opportunities and requirements of the carbon market with regard to bioenergy, this paper is divided into four main sections. The first section (Chap. 2) briefly introduces bioenergy and its significance for climate change mitigation and t
13、he role of bioenergy in the Kyoto Protocol. The second part (Chap. 3) elaborates on the modalities and procedures of the CDM (set forth in the KP and the Marrakech Accords), with special regard to opportunities and in particular some serious limitations for bioenergy. Possible solutions to these are
14、 presented. The third part (Chap. 4) gives an overview of the Worldbank CF related funds. These four sections are followed by a final chapter concluding the discussions and an annex including key information about other major carbon funds. 2. Bioenergy for Mitigation of GHG Emissions and Sustainable
15、 Development 2.1. TRADITIONAL USE OF BIOMASS Bioenergy provides about 11% of total global primary energy supply, and approximately 35% in developing countries. The share of biomass in primary energy consumption in Africa is more than 70% (Kaltschmitt 2001). Some Sub-Saharan countries, and other coun
16、tries like Ethiopia and Haiti, obtain more than 90% of their energy needs from biomass (FAO 20043) and this situation is not expected to change in the near future. In terms of globalwood consumption fuelwood represents more than 50% (FAO 2003). One of the major problems of current patterns of biomas
17、s use for energy is the low conversion efficiency. In households, most biomass is burnt in so-called three stone stoves with an average conversion rate of 10% (Kaltschmitt 2001). In urban areas or larger settlements, larger biomass-fuelled plants are common, but due to maintenance problems, low tech
18、nical standards and lack of knowledge about operating them, conversion efficiencies are of the same order of magnitude of roughly 1015%. In the case of many developing countries current patterns of energy production and use (i.e. the baseline scenario) are not fossil fuels, but some form of bioenerg
19、y, albeit mostly produced and utilized in an inefficient and environmentally harmful manner. Energy efficiency improvements often represent a straightforward option for emission reductions, as the existing fuel cycles do not have to be changed and thus non-financial barriers to adoption are more lik
20、ely to be rather low. On the other hand, investment in new equipment and up-front financing are usually not readily available. 2.2. THE SCOPE FOR EMISSION REDUCTION THROUGH BIOENERGY The assessment of potential carbon emission credits generated by a bioenergy project requires the comparison of green
21、house gas emissions over the entire life cycle of the energy chain, including the production of raw materials and their conversion to useful energy. Bioenergy projects may mitigate GHG emissions in two ways: (1) from the sequestration generated if carbon stocks in the terrestrial biosphere can be in
22、creased. (2) by lower emissions associated with the production and use of bioenergy, as compared with that of the fossil-based energy. In terms of reducing greenhouse gas emissions, results vary according to the emissions at each step in the production chain. Sequestration of CO2 of 60 to 87 GtC in
23、carbon sinks over a 50 year time span (1.2 to 1.7 GtC per year) could be achieved through land-use related activities, which is to 715% of average fossil fuel emissions estimated for the 2000 to 2050 period (IPCC 2000a,b). For the Brazilian sugar-cane agro-industry it was estimated, that after inclu
24、ding all emissions in the production process, it is through the substitution of gasoline by ethanol (65%) and fuel by bagasse ( 35%), that Carbon emissions are reduced by 12.74 Mt C/yr (Hall et al. 2000, p. 47). Generally, CO2 emissions in the conversion of biofuels to electricity and heat are lower
25、 by at least one order of magnitude than in reference cases using fossil fuels and constitute “an important option to reduce net emissions of CO2” (Groscurth et al. 2000, p. 1092). “The potential global contribution of bioenergy has been estimated to be between 95 and 280 EJ in the year 2050 (Hall a
26、nd Scrase 1998), leading to a potential reduction/avoidance in emissions of between 1.4 and 4.2 GtC per year, or between roughly 5% and 25% of projected fossil fuel emissions for the year 2050 (IPCC 2000b).” (IEA Bioenergy T38, 2002) Studies in Asia for example have shown that CO2 emissions could be
27、 significantly reduced if more efficient cooking stoves would be introduced, or biofuels (e.g. rice husks) would be used more efficiently, in power and electricity production. Kaltschmitt (2001) identifies large potentials for efficiency improvements in current bioenergy applications, on both indust
28、rial and household scales (see also Figure 1). At the same time, less need for fuel wood bears obvious potential for improving the livelihood of people. 2.3. HOW IS BIOENERGY CONSIDERED IN THE KYOTO PROTOCOL The Kyoto Protocol defines limitations on emissions of CO2, N2O, CH4 and three industrial ga
29、ses from the following sectors of Annex I countries: Energy Waste Industrial Processes Agriculture Bioenergy activities in Annex I countries have three distinct effects on the carbon balance: They substitute for fossil fuels (including the fossil fuels that are required to mine, transport, refine fo
30、ssil fuels) They can change the carbon balance of the terrestrial biosphere They may require the use of fossil fuels in their production, processing, transportation, and end-use conversion The first effect is implicitly considered in the Kyoto Protocol, because any reduction in the use of fossil fue
31、ls in the country of interest can be seen in the overall GHG emissions of the energy sector. The emissions from auxiliary fossilfuel use from producing fossil fuels will only be seen if they would have occurred in the same country. The third effect will also be covered by the Kyoto emissions invento
32、ry, to the extent that these emissions occur in the country of interest. The second effect can be achieved through either bioenergy efficiency improvements (i.e. biofuel saving) or through switching from non renewable biomass to renewable biomass resources (i.e. substitution. Both options will be di
33、scussed in more detail in the following section, as a proper understanding of these options is crucial for the following evaluation of their eligibility according to the existing modalities and procedures of the KP. 2.4. FUEL SAVING IMPROVING ENERGY EFFICIENCY Different categories of emission reduction through efficiency improvements can be
