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ENVIRONMENT | Tim Charlton, Singapore
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Asian utilities losing incentives to go green

The environmental retrofitting of power plants in Asia is coming to an end as the CDM business dries up with no clear successor to the Kyoto protocol, warn analysts.

The CDM business is slowly dying as governments globally kick the can on emissions to at least 2015 or beyond.

The end of carbon reduction targets under the Kyoto protocol is brining a lot of uncertainty to the market for CDM’s.

The purpose of the CDM is to promote clean development in developing countries and the idea was that power plants could improve their environmental efficiency and the reduced carbon could be bought internationally, thus helping developing markets clean up their power plants. Unfortunately that market is now dying with end user demand drying up.

Speaking at Renewable Energy World Asia in Kuala Lumpur, Lars Karlborn of carbon aggregator Tricorona warns that ” we are in a phase where we are getting more picky with what kind of projects we are buying. We would not buy CERs from projects that have not been registered by end of 2012. If we don’t see some policy developments its going to be difficult."

He added that The EU said we will support Kyoto if China and the US take on targets, but the US will not take on internationally binding targets nor will China. “The good will we saw towards Copenhagen is diminishing. I do no think we are going to see an agreement with binding targets. It’s pessimistic but I think that’s realistic.”

Dan Wells of Sindicatum added: “A lot of these projects are physically difficult to implement. For example landfill gas to energy issuance rates are - broaldy speaking - much lower than forecast due to the challenge of actually capturing the greenhouse gases and successfully verifying emission reductions.  However, developrs which can make the implementation work clearly benefit from the constricted supply of credits due to these issues. “
 

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