Can Sustainable Development Be Clean AND Cheap? A Promising 'Carbon Credits' Case Study

Must the costs of clean development necessarilyFor a better understanding of the mechanism and
be prohibitive for developing nations?the championing role played by the intermediary,
Let's take a closer look at exactly how this islet's take a look at an EcoSecurities case study.
called into question.The process begins with an assessment of a
There is a common belief that the most efficientcompany's assets to determine the emission
way to rein in greenhouse gas emissions is toreduction that can be achieved. In the project
implement a two-tiered regime in which developeddevelopment phase, the necessary "green
nations will shoulder a much greater burden. Theinvestment" is implemented with zero capital
justification for this belief is that because it isinvestment by the contracting company. Finally,
wealthier, the necessary foregoing of presentEcoSecurities guarantees that it will purchase the
consumption will be much less as a proportion ofcarbon credits generated after implementation.
national income. The hardship endured willThe Celulose Irani biomass-to-electricity project in
therefore be substantially less.Brazil is an exemplary case. With the help of
There are a number of arguments as to why theEcoSecurities, this paper producer was able to find
nominal costs of developing green infrastructurea clean and renewable source of energy by
and power generation should be greater or lesserutilizing the biomass that is a by-product of its
in developing countries. Those who suggest theproduction process. EcoSecurities provided
costs are greater point to the need to importfinancing for the project, and lent its technical
(often expensive) hardware and foreign technicalknow-how of biomass energy production to Irani
expertise. Those who argue that it can in fact bethrough the implementation of the project. After
less costly point to lower labor costs in developingcompletion, EcoSecurities purchased Irani's new
countries and, sometimes, cheaper domesticcarbon credits for resale. Without this
inputs. The true answer of course is case- andinvolvement, Irani's expanding production would
industry-specific. For simplicity, let's assume thathave continued to apply pressure to the traditional
the costs are broadly the same at the aggregatefossil fuel-derived grid.
level.There are currently more than 900 registered
But what if the costs of "green investment" inCDM projects underway around the world, about
developing countries could be defrayed or even60% of which are to be found in Asia and the
offset entirely, and this without increasing taxPacific. The viability of these projects is, of
strains or calling for foreign donors to foot the bill?course, dependent upon the continuing ability to
Innovating intermediaries such as UK-basedsell the acquired carbon credits. This means that
EcoSecurities have been so bold as to make thisthe project would become unsustainable if the
seemingly improbable end a reality. The concept ismarket for those credits were ever to dry up
delightfully simple; as allowed for under the Kyoto(for example if developed nations, pursuing their
Protocol's Clean Development Mechanism (CDM),own green projects, no longer needed to
developing nations which reduce their greenhousepurchase carbon credits to comply with emissions
gas emissions are entitled to carbon credits whichcaps).
can in turn be sold on an open market. TheseIn a world where the United States alone
credits are readily purchased by developed-worldaccounts for a quarter of greenhouse gas
producers that need them to be in complianceemissions, provided that some permutation of the
with emissions caps. And the developing-nationtwo-tiered international agreement can be
party has found an essentially zero-cost avenuereached, this seems rather a distant scenario.
to sustainability.