Environmental Engineering Reference
In-Depth Information
and methodology to assess the CERs produced. As
the energy supply and demand of each region is
different, so are the benchmarks of the emissions
produced along a business-as-usual trajectory,
meaning the amount of greenhouse gases that are
produced in the absence of emissions reducing
technologies implemented in the region. Compar-
ing business-as-usual emissions with emissions
savings based on the implemented projects gives
the number of CERs expected and the indicator of
financial performance with the cashflow analysis.
The other important benchmark is a comparison
across similar projects in the region and in the
CDM project pipeline to see what kind of project
performance can be expected, measured by the
expected versus actual issuance of CERs. The
carbon industry has developed good benchmarks
for comparison across methodologies—for a
wastewater treatment project performance ranges
from 75-85% of CERs issued versus expected on
average taking across methodologies and geogra-
phies. Elements of uncertainty govern however—
variances in the amount of wastewater produced,
changes in temperature, plant breakdowns and
uncontrolled shifts in the market affecting demand
for the end product will all impact CER output
and need to be monitored.
ment in a way that will not pollute unnecessarily.
Are the project participant's concerned with their
environmental record and community impact?
How do local stakeholders feel about the project?
These types of questions must be considered to
be labelled a high sustainability project. If, on
the other hand, the project has been unfavour-
ably viewed, whether for producing nothing but
cash for the project owners or producing negative
externalities such as excessive noise or taking
jobs away from locals, the project's success is
less likely.
In sum, these risk aspects across the CDM
project development pathway clearly show that
carbon as a carrot or stick can be used to assess a
variety of criteria applicable beyond the project.
The skillsets learned to manage a project from
start to finish are the same that can be used in
most other sectors by most business models as a
part of day to day activities in dealing with new
deals, counterparties, and unfamiliar undertakings.
The next section looks at national and sectoral
examples of carbon as risk management tool,
beyond an individual project.
National and Regional
Enterprise Examples
V. Examining Externalities
In China, similar to other rapidly developing
countries, carbon as an instrument for risk man-
agement is exceptionally relevant. In early June
the NDRC announced that northern, eastern and
southern parts of China would experience power
shortages and even blackouts during the summer.
The NDRC urged local governments not to impose
curbs on the transport of coal, which generates
more than 70% of the country's power. Oddly, in
a statement on its website according to Thomson
Reuters, China's economic planning agency said
“the likely shortages were a reflection of the
strength of the economy and the government's
drive to reduce emissions and pollution” (Chiang,
2010). To mitigate this risk the CDM has been suc-
cessful in implementing alternative energy sources
Another key to success of the CDM as a market
mechanism globally accepted is its advocacy of
positive externalities of the project. This often
comes in the form of employment opportunities
and new training but overall identifies sustain-
able development aspects. For various additional
accreditations that the project may want to ap-
ply for i.e. the Gold Standard representing high
sustainability criteria, additional co-benefits are
necessary. The ideal project will improve the
area in which it is built—cleaning up bad odours,
hazardous waste, and unattractive landscapes in
biogas, wastewater and landfill projects—or take
action without legislation to improve the environ-
