Carbon bazaar

The financial slowdown in recent years has caused ripples around the world. But there might be a silver lining to the crisis. A global economic downturn can actually benefit the environment since the volume of services and goods being traded fall, and that means fewer harmful emissions from both the industrial and transport sectors. 

Carbon emissions across the world did indeed decline for a short period of time in 2009, but just one year later, global emissions levels soared to record highs. According to the environmental journal Nature Climate Change, more than 10 billion tons of CO2 were released into the atmosphere in 2010 alone.

Booming growth in developing countries was a driving forced behind that trend. The International Energy Agency (IEA) reported that India has fast become the third largest polluter in the world, releasing more than 1.5 billion tons of CO2 into the atmosphere every year – despite ambitious goals to drastically slash its emissions.

Tech transfer from north to south

Rapidly expanding economies like those of China, India and Brazil need enormous amounts of energy to grow. Though China and India are leading the way in building new, high-tech wind turbines, there simply isn't enough installed renewable energy capacity in these countries to meet the spiraling demand.

That means coal gas and oil are the only options to address energy needs. The booming economies are working on ways to make the fossil-based fuels cleaner and more energy-efficient with the help of the "Clean Development Mechanism," or CDM. 

The CDM, created as part of the Kyoto Protocol, aims at achieving sustainable development and helping countries meet important emissions reductions targets. The aim is to get industrialized nations to transfer their know-how in low-carbon technologies to developing countries and thus help them lower their emissions.

CDM – a zero-sum game?

Here's how it works: some developed countries are bound to emissions targets in the Kyoto Protocol. Companies from these industrialized nations are encouraged to invest in sustainable development projects in emerging economies, and in return they receive carbon credits.

The buyers of CDM credits are usually companies in Europe, who use them to offset their own emissions. They are allowed to count the carbon credits towards targets they would otherwise have to meet by cutting emissions at their own factories and offices, which is usually much more expensive.

The system is intended to give western firms a low cost way of achieving emission targets while at the same time getting businesses in developing nations involved in tackling climate change.

The first CDM projects kicked off in 2006. Six years later, results have been mixed. Several climate projects have been funded and realized, contributing to the fight against global warming.

But Tina Löffelsend from BUND, the German chapter of Friends of the Earth International says a rethink is needed about how carbon credits are produced, traded and sold. The program, she says, often leads to CO2 emissions simply being transferred from one country to another, rather than reducing them.

“A huge amount of certificates were acquired from projects that would have been realized anyway,” Löffelsend says. Arguably, this defeats the whole point of the CDM scheme as these projects are getting money for nothing.

Collision of interests

Scientists too are critical of the CDM program. Martin Jänicke from the Environmental Policy Research Center at Berlin's Free University says the relationship between industry and climate protection is often a problematic one. Economic interests always win out, he says, because there aren't concerted efforts to push climate protection to the top of the political agenda.

“Climate politics was simply not strong enough faced with economic interests,” he says. But Jänicke also believes there can be no common effort to fight global warming if industry and government are not on board, saying the “political-economic interests have to be engaged.”

Countries, for example, that don't produce a large amount of CO2 offer little market potential to developed countries wanting to invest in clean energy projects.

“First, a country has to be a big emitter before it's really noticed,” said Joachim Betz from Hamburg's Giga Institute of Asian Studies.

Some critics go as far as to accuse companies of tacitly accepting massively rising pollution levels in developing regions before they offer a CDM project and rack up carbon credits. But Martin Jänicke doesn't believe that companies and industries have enough power to do so.

Instead, the reality is much simpler. For instance, German energy companies build coal-fired power plants in developing countries using local technology and pollution standards. That's because in countries like India, CO2 emissions from existing power plants are still high.

Asia helping itself

The Kyoto Protocol's “Clean Development Mechanism” was created in the hope that it would make a lasting difference in the race to reduce emissions. But expectations have dimmed, and one thing has become clear: without political will, climate protection is going nowhere. Many Asian countries have realized that it's better to work on a national or regional level rather than a global one to fight global warming.

“Asian countries already cooperate with each other on environmental issues much more than we think,” Jänicke says. 

In fact, the Asian-Pacific Network for Global Research is leading the way in that cooperation. With 22 member countries, the organization promotes research on global change and boosts interactions between the science community and policy-makers.

Sustainability and climate protection are among the network's most important issues, as countries in the region start to develop their own climate policies and invest in renewable energy sources.

India is going a step further and changing the rules of the game when it comes to international aid. The country has now started exporting its own high-tech wind turbines to industrialized countries – a win-win for all parties involved and the climate.

Author: Hannah Petersohn (ss)
Editor: Sonia Phalnikar