Kyoto Revisited – The Clean Development Mechanism

Posted on Tue 10/04/2011 by TonyfromOz

When I started to contribute at this site in March of 2008, the first Posts I submitted were about the Kyoto Protocol. It was meant to be a short Series, but it morphed into more than 50 separate Posts over 15 weeks, and that started me off here. I was concerned that this might ‘tap me out’ so to speak, but since then, I have just continued to contribute Posts on mainly related matters, that of all forms of electrical power generation.

That original Kyoto Series is at the following Link

The Kyoto Series

Since that time, I have also revisited Kyoto and its many related matters. This latest Post also deals with something that arose from that Kyoto protocol, the Clean Development Mechanism. (CDM)

While this Post may directly reference Australia, be aware that the same now applies across the World. Only one Country failed to add that second all important ratifying signature, the U.S. The Protocol was hoped to be adopted by the U.S. and under the Clinton Administration, with Al Gore as his Vice President, the Protocol was presented to the Senate for adoption. While that Clinton Administration may have seemed to be hamstrung by a Republican controlled Senate, the Protocol was voted down by a majority of 95-0. It did not get even one vote. To this date, the U.S. is the only Country not to ratify Kyoto.

It seems that everything that is happening now in the (lack of a) debate on Climate Change can be directly traced back to that Kyoto Protocol, which was adopted by the UNFCCC (UN Framework Convention on Climate Change) and adopted at the COP-3 meeting in 1997.

Of the 192 Countries, the UN split off 40 of those Countries as Developed Countries, and from this short list, then culled 23 Countries. (Australia included)

All Countries were ordered to reduce their CO2 emissions (the main gas aimed at) to levels 5% lower than they were in 1990.

Those 23 Countries then had to introduce a mechanism to place a cost on Greenhouse Gases, the main one of those 24 gases being CO2. This costing was to be in the form of an ETS. Those 23 Countries were also to move away from CO2 intensive power plants, and into renewable power plants, all this at their own cost.

Those 23 Countries were also to pay ALL the costs of the other 152 Countries in their efforts to introduce a move to renewable power, and to supply, at no cost, the technology for that move to renewable power, but the largest part was to pay all the costs.

The mechanism devised to pay all those costs is this CDM, which is part of the Kyoto protocol.

What this effectively provides is a hoped for monumentally huge ‘piggy bank’ of money for those 152 Countries in their efforts to construct electrical power plants to bring power to their people.

Those 23 Countries can contribute to this fund, as can, also, CO2 intensive Companies in those 23 Countries. In return, they do not get ownership of anything they contribute their dollars to. All they get are International Credits to abate either the Country’s CO2 emissions, or the Company’s emissions.

These International Credits are valued at a cost lower than the home grown Credits in their own Country.

Do not ever try to even consider convincing me that this scheme will not be rorted, and rorted big time, either by Countries, Companies, Brokers, or even the UN itself.

The upshot of it is this, from an Australian perspective.

Let’s say a large scale coal fired power plant here in Australia, say one of the recent ones constructed in the late 70’s. At the time of construction, it was an state of the art, but now, more than 30 years later, it is an old technology pant, and a large emitter of CO2.

Let’s pretend that the Company wants to upgrade the plant to the newer technology ultrasupercritical technology with a larger and more efficient generator. This plant, while having a larger power output, will burn a lot less coal, will do that more efficiently, and will emit considerably less CO2.

The cost of that plant is quite large, and in the current Political ‘Climate’, every impediment will be placed in the way of that Company actually constructing that new plant. At the end, if it ever does get approval, that Company will still have to purchase Credits for the CO2 it emits.

However, let’s then look at an attractive option for that Company.

This type of plant is in fact approved by the UN, as it in fact does abate CO2 emissions in a lesser amount than a similar older technology plant. The UN in fact, through its subsidiary organisation, The World Bank is in fact directing huge sums of money for the construction of these plants in those Developing Countries.

So, instead of constructing that new tech plant here in Australia, the Company sinks its money instead into the construction of one of these plants in the Developing World. In return, they do not get ownership or control of that plant. They do however get those CDM International Credits to offset their own emissions from their old technology plant here in Australia.

Those International Credits are not the same value as the ‘home grown’ Credits but they can however be used to offset their own emissions here in Australia.

See how this now becomes an attractive option if the Company desires to sink its money into something of this nature.

The big loser of course is Australia in fact, which loses out on this technology, but in point of fact, something of this nature would probably not gain approval here at home anyway.

So, while somewhere in a Developing Country, new consumers will have access to electrical power, probably for the first time, while here in Australia, consumers will be using power from an aging plant closing in rapidly on its use by date.

See how this CDM is in fact a sword being used against us here in the already Developed World.

All that we are going to have access to is aging coal fired power which has become a quantum level more expensive, and also access to the only power plants that are being approved, renewables, Wind and Solar power, patently proved to not deliver the levels of power required absolutely, and power that is delivered on a much decreased time frame, literally around 6 hours a day at best.

Meanwhile that curious Kyoto protocol.

Not one Country on the Planet has even got close to the reduction level required of Kyoto, a level of emissions 5% lower than 1990 levels.

NOT ONE COUNTRY.

In fact the new level for Australia is nowhere near that level. In fact is is almost a quantum level higher than what Kyoto called for.

This in fact was negotiated away at the Cancun Conference by the Australian Labor Government in return for, well, let’s not actually say, but huge amounts of money were promised to the UN from Australia at that Conference.

So, Kyoto was ratified with that all important second signature from the (then) Prime Minister Kevin Rudd in a wonderful photo shoot at the Bali Conference in 1997, not long after his Government was elected.

I seriously wonder if anybody read the fine print on this one.

This CDM is in fact a huge money go round, and all we get out of it is pieces of paper.

Oh, those 152 Countries that will benefit from this, well, what is their commitment as part of Kyoto.

All they need do is report their emissions, nothing more.

No wonder they’re happy with Kyoto. They get all the benefits.

We just have to pay for them.

KPPSTony