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Jamaica and other countries in the region are being urged to take advantage of opportunities under the United Nations Clean Development Mechanism (CDM), to build their renewable energy infrastructure and reduce the dependence on imported oil, while at the same time earning well-needed revenue.
Executive Board Member of the CDM, Dr. Hugh Sealy, said that the CDM is a critical component in steering countries away from the heavy use of oil, which values about 15 to 25 per cent of the import bills of many Caribbean states, and towards cleaner energies. “So it makes sense to transition towards renewable energy and energy efficiency and what the CDM does is help in that transition,” he said.
He was speaking at the Jamaica Carbon Market workshop held yesterday (December 14) at the Knutsford Court Hotel in Kingston under the theme: ‘Capacity Building for CDM Development, Carbon Trading and Renewable Energy Investment’.
The CDM is one of the mechanisms under the Kyoto Protocol, which aim to address the problem of climate change by reducing greenhouse gas emissions, and at the same time, promote technology transfer and investment in emission-reduction projects in developing countries.
Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one ton of CO2, which can be counted towards meeting Kyoto targets and include for example, a rural electrification project using solar panels, or the installation of more energy-efficient boilers.
“If you can choose a project where you can show that you are reducing the amount of gas by putting up a wind farm, changing out incandescent bulbs, any type of project that reduces your greenhouse gas emission, then you can earn carbon credits. Right now, carbon credits are worth about US$10 per ton of carbon dioxide,” Dr. Sealy informed.
The CDM Executive Board Member, who is also an Associate Professor at St. George’s University in Grenada, said that CDM has created a market to trade in these carbon credits and developing countries like Jamaica can sell the carbon credits that they generate from renewable energy projects to developed countries, like Holland, the United Kingdom, Austria, and Japan.
“(This) allows those developed countries to buy those credits and use those credits (to assist) in meeting their targets that they are obligated to meet under the Kyoto Protocol” he pointed out.
He noted that Jamaica’s development of the Wigton Wind Farm in Manchester is a critical move towards developing renewable energy projects, adding that the wind farm is the first CDM project to be registered in the English-speaking Caribbean. “Guyana has now followed suite with a cogeneration plant using bagasse as the fuel and there are tremendous potentials for CDM projects in the Caribbean,” he said.
Stating that there is “a lot of potential” in waste management, Dr. Sealy said: “anywhere you can capture methane and burn it, that reduces your overall greenhouse gas emissions.and puts us on along a path of true sustainable development. That’s what the CDM is there for, to assist developing countries to move along that path,” he said.
Highlighting the importance of the workshop Permanent Secretary in the Ministry of Energy and Mining, Hillary Alexander said that it ties in with Jamaica’s energy policy in the development of a “green economy.”
The objective of the two-day workshop, organised by the Ministry, the Petroleum Corporation of Jamaica (PCJ) and Miami-based renewable energy consulting firm, Smink Carbon and Business Consulting, aims to educate government and industry leaders how to enhance domestic policy on CDM and carbon markets to facilitate increased investment in the building of Jamaica’s renewable energy infrastructure.
Commodity Online, in an April 2010 article, said that regulatory efforts to mitigate climate change have spawned an emerging carbon market that was valued at $10.9 billion in 2005 and grew at a compound annual growth rate (CAGR) of 89 per cent to reach $138.3 billion in 2009.
The global carbon market doubled for two consecutive years from $31.2 billion in 2006 to $63 billion in 2007 and $126.3 billion in 2008 due to the expansion of allowance markets. The European Union (EU) Emission Trading System (ETS) experienced a robust growth during this period.
The article noted that while the demand for carbon allowances fell sharply in late 2008 and early 2009 as the global recession reduced economic output, resulting in much lower emissions than had been expected, it is anticipated that the global carbon trading market will experience a dramatic growth after 2012 and reach USD 1.2 trillion by 2020.
India and China are likely to emerge as the biggest sellers and Europe is going to be the biggest buyer of carbon credits.