Battle lines drawn up over the place of CDM in UN energy policy

The battle lines have been drawn up in negotiations to renew the Kyoto Protocol over the future shape of energy policy within future United Nations efforts to reduce greenhouse gas emissions. At December’s climate change summit, in Poznan, Poland, a key power industry issue has emerged as a primary focus of discord: whether or not carbon capture and storage technologies should be allowed in a revised Kyoto Clean Development Mechanism (CDM). The CDM gives developed countries carbon credits that allow them to release more of their own greenhouse gas emissions when they invest in projects that reduce such emissions in developing countries.

Few within the negotiations doubt that CCS technologies will be a centrepiece of efforts to reduce emissions of carbon dioxide and other greenhouse gases per se, however. The technology, of course, collects carbon dioxide emissions from large point sources such as traditional power plants, pumps it to suitable sites, usually underground, and stores it under pressure. Estimates predict that it could make oil, natural gas, or coal power plants as much as 90 % cleaner than they would be without the technology.

Big question

The question at the 14th Conference of the Parties to the UN Framework Convention on Climate Change (COP-14) in Poznan – and at future meetings to be held in 2009 – was, and will be, whether the technology should be allowed in the CDM and hence encourage developed country investment in these technologies. At Poznan, the final decision was tabled until a future meeting. And there will be plenty of them this year, as the process seeks to finalise terms for the successor to the Kyoto Protocol by COP-15 meetings planned for late 2009 in Copenhagen, Denmark. Already scheduled are two meetings hosted by the UN climate change secretariat in Bonn, Germany in March and June; another large-scale meeting at a location to be determined in October; another possible meeting in August; and a likely climate change summit of world leaders hosted by UN secretary general Ban Ki-moon during the UN general assembly in New York in September.

Brazil vs Saudi Arabia

In Poznan, the debate over carbon capture and storage technology in the CDM was highlighted by the camp lobbying for the move, headed by Saudi Arabia, and the camp that strongly opposes it, headed by Brazil.

The first large-scale CCS project started operations in September 2008 in Spremberg, Germany, very near that country's border with Poland. The plant's operators reported in Poznan that observers from both Saudi Arabia and Brazil are among those who had already visited the plant to monitor its progress.

Its success will be important to the carbon capture and storage decisions within these climate change negotiations. And environmental specialists at Poznan spoke privately to Modern Power Systems about their concerns over its potential impact. They stressed that CCS technology already makes it easier for governments to put off or abandon the notion of creating incentives for renewable energy sources because it makes traditional power generation much cleaner. Allowing the technology into the CDM could create an incentive for developing countries to abandon the clean technology path the UN has lobbied them to take and it creates an array of environmental bookkeeping issues, as carbon capture and storage projects require close monitoring.

The Saudi's interest in the issue goes deeper than simply supporting a technology that makes its vast oil reserves more attractive to consumers looking to reduce their emissions of greenhouse gases: like many companies, Saudi Aramco, Saudi Arabia's giant state-owned oil company, uses carbon dioxide to pump residual oil out of declining fields. If CCS became part of the CDM, it would allow each ton of carbon dioxide sequestered in an oil field to earn emissions reduction credits that can be sold to countries seeking credits to help meet their Kyoto-mandated emissions reduction targets.

Brazil's aims are just as complex. The country argues that the Kyoto Protocol was designed to move the world away from traditional fossil fuels. But they also worry that if it lowered the value of CDM credits that would make alternatives like the development of biomass power projects or credits for avoiding deforestation – both very important in Brazil – less attractive. Its diplomats also argue that carbon capture and storage technologies could represent future liability concerns, as the host country would ultimately be responsible if the carbon dioxide storage facility began to leak.

Nukes in the CDM

Some similar arguments are in play regarding the debate over whether or not nuclear power should be allowed in the CDM. Though less advanced than the discussions over carbon capture and storage technology -- there was never any speculation that a decision on nuclear power in the CDM could be reached in Poznan -- delegates said that it was sure to be a central issue in the future. Nuclear power is the most powerful energy source that is nearly carbon free. But with the risk of a nuclear meltdown like Three Mile Island or Chernobyl, coupled with the problem of how to safely dispose of toxic radioactive waste, it is a decidedly controversial option.

‘There are many scenarios regarding how the next several years should look in regard to climate change policy, but I have yet to see one where we can reach our goals without the use of both carbon capture and storage technology and nuclear power in the mix’, Yvo de Boer, the UN's top climate change official, said at one Poznan briefing. ‘The questions are how to best emphasise them without harming other technologies and whether or not they should be included in the CDM.’

GHG target

The goals de Boer mentioned all centre around keeping the level of greenhouse gas in the atmosphere to less than 450 parts per million, the level that the Intergovernmental Panel on Climate Change said would limit global warming to less than 2 degrees centigrade. The current level is 387 parts per million, according to the UN.

But a movement that gained a footing in Poznan is headed by the environmental lobby group 350, which calls for reducing gas levels to less than 350 parts per million – below current levels. The movement received a major boost in Poznan when environmental activist and former United States vice-president Al Gore endorsed the target, which would require a marked change in favour of clean renewable energy sources almost immediately. Though delegates in Poznan said the ‘350’ movement was unlikely to gain a footing in some national delegations it could help a push for new rules in the process that would require more use of renewable energy sooner rather than later.

Calls for fossil-free lending

Another movement that could have a similar result involves calls from campaign groups for multilateral lending organisations such as the European Investment Bank and the World Bank to stop investing in traditional fossil fuel projects.

The Prague-based Bankwatch said the EIB loaned some r17 billion (US$21.4 billion) for fossil fuel projects over the 10-year span ending in 2007 – including r3 billion (US$3.8 billion) last year alone. The organisation called for EIB loans for oil-related projects to be phased out by the end of 2009.

Similarly, the environmental lobby group Friends of the Earth made a similar case against the World Bank, noting that the organisation’s figures show some US$3 billion loaned for fossil fuel projects so far this year, a 94% jump from 2007 levels. Around half of all loans were for coal projects, which saw a 250% jump in funding in 2008 compared to 2007. As recently as 2005 and 2006, the World Bank had a moratorium on loans for coal projects. Friends of the Earth called for an end to World Bank funding for oil-related projects by the end of 2009 and for all fossil fuel projects by 2012.