Carbon Credits / CDM

Carbon Credits/ Clean Development Mechanism (CDM)

The CO2 emitted by human beings has a negative effect on Climate Change, so if one can reduce their CO2 emissions then one can sell the ‘saved’ CO2 in the market place by way of Carbon Credits. However determining the amount of CO2 that is emitted annually by, e.g. all the kerosene lamps in remote villages is not a trivial task.

The Clean Development Mechanism (CDM) requires application of a baseline and monitoring methodology in order to determine the amount of Certified Emission Reductions (CERs) generated by a mitigation project in a project host country.

Under the historical methodology, in order to claim emission reductions for more than 2 years, monitoring must be done and it is necessary to explicitly identify the end user of the lamp, which is something that is nearly impossible to do in, e.g. remote, rural Sub-Saharan Africa and India. First and foremost are the difficulties in identifying the end beneficiaries since families in remote rural areas typically have no address, little or no form of identification, possibly no phone (though is decreasingly unlikely) and there is the reasonable probability that they will no longer be living at the same location after 3 years. Monitoring the families would be inefficient and there is the distinct possibility that in the non-electrified rural areas of the projects the end users would be spread over a large area, which would increase the expense and time investment needed to carry out the monitoring.

To overcome the difficulty of tracking the end user it has been proposed that a village or a zone be used for monitoring purposes in lieu of an unambiguous individual. Under this system lamps would be distributed and a signatory who is the person in charge of the area, perhaps a chief or mayor, would indicate the receipt of the lamps and distribute them. The lamps will each be uniquely identified with a permanent marking in order to connect them with their individual project. For monitoring, the area would be checked for lamps at regular intervals to determine the  number that are working. It could reasonably be assumed that if the lamp is working then it is being used because of the benefits that come from using the lamps.

There are a number of methodologies being considered for determining the amount of Carbon Credits from Fuel based lighting in the developing world and one of the most accepted is the:

UNFCCC/CCNUCC,  AMS-III.AR  “Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories III.AR. Substituting fuel based lighting with LED/CFL lighting systems”.

It is generally accepted that the amount of CO2 emissions, resulting from the use of fuel based lighting globally, is around 250 Million tonnes per year. The following calculation determines the (approximate) potential economics resulting from the sale of such Carbon Credits.

Global usage of kerosene for lighting = 100 B liters/year [Cost (approx)  =  $100 B]

Resulting CO2 produced from kerosene  =  250 M tonnes/year

Potential Carbon Credits from Kerosene CO2  =  $2.5 B/year (at $10/Tonne)
It is important to note that the Carbon Credit market has been highly volatile in recent years and has yet to ‘settle down’.

VLE plans on utilizing every possible opportunity to claim Carbon Credits and pass the savings onto the clients.