C for clean

  • 29/11/2005

I remember many years ago receiving a call from a bbc journalist asking which villages in India should they visit to see the impacts of climate change. This was the early 1990s. I was puzzled and asked "is climate change here?" Finally the television crew decided to shoot urban fires in Delhi and drought in Rajasthan to tell their viewers about how India was reeling under the impact of changing climate because of increased greenhouse gas emissions.

I wonder what I'd say if I got a similar call today. Would I point to recent cloudbursts and cyclonic events, which have more or less drowned several major metropolitan cities in the country? Would I point to the obvious variations and extreme weather events - from heat waves to freak snow episodes - to say that our climate has changed?

Clearly the answer isn't simple. It is true every Indian city that has drowned under the weight of its rain has suffered because of the progressive mismanagement at the hands of its city managers. It is true also that the intensity of floods and drought has increased because we have made the poor even more vulnerable to weather events - either by destroying the wetlands that absorbed the water or by simply ruining the land economies of people, which would sustain them in times of stress.

It is also true that our weather is changing. In other words, we have a double-whammy - already stressed regions and people who will be further hit. It is imperative that we reduce our vulnerabilities by doing 'good' development - investing in the natural resource base of people to mitigate against drought and floods. Simultaneous it is also imperative that we reduce global emissions so that the threat of climate change is contained.

It is for this reason that the world governments party to the convention on climate change came up with the Clean Development Mechanism (cdm). The idea was simple: the industrialised north had to reduce its emissions, partly because its emissions were already leading to the threats of climate change and partly because to provide economic and ecological space for the South to increase its emissions.

Two facts were clear: one the North could really not reduce its emissions substantially as it could not de-link from the fossil fuel economy that drives growth. Two, the South did not have to make the mistakes of the emission-flatulent parts of the world. It could re-engineer its growth trajectory so that it would be more efficient or less dependent on fossil fuels. It was this reasoning that lead to cdm - so that the North could pay for the cleaner development in the South and get credits in its own carbon balance sheet. It was to be a win-win situation.

This was not to be. In our study of the working of cdm (see 'Newest, Biggest Deal', Down To Earth, November 15, 2005) we find that it has become a market mechanism simply - an agreement between private parties looking to make a fast buck. It is, as we show, not just the complicated development mechanism but also the corrupt development mechanism, which is leading to poor quality projects.

It is important to consider why this is so. It will be easy for commentators in the developed world to blame these transgressions - corruption or poor project design - on the governments and industries of the South. But the answer is not so simple.

The fact is that governments (rich) have worked overtime on the design of cdm so that it is what it is today. For instance, the rules and procedures that have been developed for cdm are extremely convoluted and cumbersome and are leading to ineffective projects at the country level. Take the criterion for "additionality" - what can be done without a cdm project - which is in turn leading to really creative carbon accounting and poor quality projects. In fact the current rules create perverse incentives for governments to do little to combat climate change.

These over-developed criteria are purportedly the response of the rich governments and their ngos to protect against "business-as-usual" dirty projects, which they believe Southern government would want to push through in the garb of cdm. They don't trust the poor country governments. The result is bad rules made for bad projects.

The second problem concerns high transaction cost (and procedures) - because of the compulsory involvement of private auditors and their procedures, which in turn negates the involvement of community and small projects in cdm. This was done by rich governments and their ngos to protect against the lack of credible procedures in the South.

But look at the end result. The procedure stipulates that the project proponent hires the consultant to do the project design and then hires the authorised validator to certify the project, based on the consultant's report. In other words, the entire process is regulated by mutual self-interest. It is no wonder that Down To Earth indicted two internationally acclaimed auditors - namely, PricewaterhouseCoopers and Ernst & Young - for fraudulent project design documents.

I could go on. But the moot point is that the design of cdm is flawed. It keeps prices low; it forces the South to discount its advantage in reducing emissions. It does little for combating climate change. If the threat of climate change is real, then the answers to it must also get real. cdm is a half-way house because it does not build a global climate regime based on entitlements for all. But it can deliver the building blocks of a

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