IPS-English PERU: Clean Development as Business Opportunity
 
Date: Thu, 13 Sep 2007 14:46:23 -0700

 
Milagros Salazar

LIMA, Sep 13   (IPS)  - As part of Peru's focus on diversifying 
exports, it is looking at ”green” alternatives, and could take in 
around 400 million dollars between 2008 and 2012 through the sale 
of carbon credits to industrialised countries.

Trading of these credits, formally known as Certified Emission 
Reductions (CERs), emerged from the 1997 Kyoto Protocol to the 
United Nations Framework Convention on Climate Change (UNFCCC), 
which assigned mandatory emission cuts to reduce greenhouse gases 
to signatory nations in the developed world.

Clean Development Mechanism (CDM) investment can help 
industrialised nations meet the target of reducing emissions by 
5.2 percent from 1990 levels by 2012.

Through the CDM, rich nations can invest in projects in 
developing countries that reduce emissions, as an alternative to 
more expensive emission reductions in their own countries.

The 1,300 experts who met Sept. 5-7 in the Second Latin American 
Carbon Forum in Lima agreed that there are high expectations in 
the region regarding the business opportunities offered by the 
so-called flexibility mechanisms like emissions trading and the 
CDM.

Forty percent of CDM projects are located in Latin America.

According to the CDM Executive Board, which operates under the 
UNFCCC, 277 of the 633 projects registered so far are in Latin 
America, and will entail an annual reduction of carbon dioxide 
emissions of 33 million tons.

Peru is one of seven pioneers in the region in terms of CDM 
investment, reported Point Carbon, an independent provider of 
news and analysis of global power, gas and carbon markets. 

This country has 71 projects in the pipeline, which would reduce 
carbon emissions by more than 11 million tons a year and bring in 
three billion dollars in investment, nearly two times the amount 
going towards the controversial Camisea gas pipeline project, 
Julia Justos, executive director of the National Environment Fund 
(FONAM), told IPS.

She said this shows the importance of CDM investment for the 
region, as it will bring economic growth along with environmental 
benefits.

The head of FONAM -- the official CDM promotion office -- said 
the sale of carbon credits could bring Latin America revenues of 
1.2 billion dollars for the reduction of 33 million tons of 
carbon emissions.

A World Bank study reported that investment in CDM projects 
climbed from 11 billion dollars to 30 billion dollars between 
2005 and 2006. The price per ton of carbon also rose, from 5.00 
to 10.90 dollars in the same time period.

”We are headed in the right direction, but there are studies that 
say that if we really want to curb emissions and achieve 
sustainable development, the price should be 50 dollars a ton,” 
Eduardo Reyes, deputy director of Panama's National Environmental 
Authority, told IPS.

One of the six projects in Peru that have already been approved 
by the UNFCCC is the Poechos hydroelectric dam, which will 
replace thermal power plants fired by fossil fuels.

The hydropower plant will bring about a 32,000 ton annual 
reduction in carbon emissions, and will involve the country's 
first sale of carbon credits, to the Netherlands.

The company building the hydroelectric station will also provide 
electricity to the surrounding community, as well as other social 
benefits, such as university scholarships to local young people.

”This voluntary contribution has marked the way for other 
initiatives of this kind,” said Justos.

But Miriam Hinostroza, a representative of the U.N. Environment 
Programme's (UNEP) Risoe Centre on Energy, Climate and 
Sustainable Development, said that despite the advances in the 
carbon market in Latin America, one of the main hurdles was 
obtaining financing for CDM projects.

”Because of a lack of awareness of the opportunities offered by 
this business, banks have not set up credit lines. Peru has a 
conservative private sector,” said Hinostroza.

Latin America, said Peru's Deputy Minister of Energy Pedro Gamio, 
”should not limit itself to sales of carbon or methane credits to 
the highest bidder, but should foment cleaner, renewable energy 
sources, as national policy.”

Gamio added that African palm trees will be planted on seven 
million hectares that have been deforested in Peru's Amazon 
jungle region, not only as a business venture but also as a 
reforestation measure. 

Of the 71 CDM projects proposed by Peru, 11 are in the forestry 
sector and cover a total combined surface area of 50,000 
hectares.

The president of the National Environment Council, Manuel 
Bernales, said the projects would have to be carried out in 
strategic at-risk areas, such as the Andean highlands, where the 
glaciers are melting, or the Amazon jungle, the country's main 
source of biological diversity.


***** + Confronting Climate Change - More IPS News 
(http://ipsnews.net/new_focus/kyoto/index.asp) + CLIMATE CHANGE: 
China Takes Over Carbon Market 
(http://ipsnews.net/news.asp?idnews=35614)


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