5 Towards low carbon development
102. In the Bali Action Plan agreed in December 2007,
developed countries were called upon to make "measurable,
reportable and verifiable" (MRV) mitigation commitments and
actions to reduce emissions. The parties also agreed that developing
countries should begin to consider appropriate national mitigation
actions in the context of sustainable development. Such action
on climate change should be supported by MRV "technology,
financing and capacity building" from developed countries.[125]
An important role for DFID, and other donors, is therefore to
ensure that there is sufficient financial and technical support
for developing countries to begin the desired mitigation actions.
103. It is estimated that in order to meet the EU
objective of restricting global temperature increases to below
2°C, developing country greenhouse gas emissions will need
to be reduced by 15-30% below baseline by 2020.[126]
Following the UNFCCC conference in Poznan in December 2008 the
Parties to the Convention have begun to put forward proposals
for achieving these mitigation objectives.
The impact of the economic downturn
104. Lord Stern identified three main goals for mitigating
greenhouse gas emissions: greater energy efficiency; low carbon
growth; and reduced deforestation.[127]
His view was that low carbon growth did not necessarily mean a
low growth economy. He believed that the current economic downturn
provided an important opportunity to make the transformation to
a low carbon economy because the costs of inputs, such as hydrocarbons,
were lower during a downturn and because such investments could
help to kick-start economic growth.[128]
He told us it was also important to lay the foundations for a
continued period of economic growth now as delaying action would
be more costly in the long term. [129]
105. David Woodward, an independent consultant, believed
that the current economic and financial crisis challenged the
traditional model of economic growth. He urged the Government
to use the opportunity to design a new development model based
on "the achievement of societal objectives: meeting basic
needs, increasing well-being, and ensuring environmental sustainability."[130]
This tension—between continued economic growth and seeing
climate change and the current economic downturn as an opportunity
to rethink the basis of economic development—is raised in
some of the submissions we received.[131]
It is most clearly evident in the debate about the type of development
that donors should be encouraging given that economic growth to
date has mainly come from industrialisation, which is associated
with increased greenhouse gas emissions. Accordingly this chapter
examines how DFID can help developing countries to achieve their
development goals without replicating the unsustainable aspects
of previous economic development.
What is low carbon development?
106. DFID defines low carbon development as patterns
of social and economic development which ensure reductions in
greenhouse gas emissions at a level consistent with stabilising
global emissions at safe levels.[132]
DFID notes that there is no blueprint for what this will look
like in developing countries—different countries will require
different models and economic growth opportunities should not
be constrained. DFID believes that growth can help developing
countries both to reduce poverty and adapt to climate change.
This growth should be low carbon and encourage greater resilience
to the impacts of climate change: "As a minimum low carbon
development should not leave countries more vulnerable to the
inevitable impacts of climate change and, ideally, should help
increase their resilience to these impacts."[133]
107. Others have questioned the inevitability of
a link between low carbon growth and development. Jodie Keane
of the ODI stated:
When you are making the link between low carbon
growth and development you have to bear in mind that many developing
countries—particularly the less developed countries—have
already struggled with existing growth strategies for years."[134]
Her colleague Leo Peskett pointed out that "green
growth" and poverty reduction were not always linked. While
the forestry sector offers developing countries significant opportunities
for low carbon growth, pursuing strong mitigation targets could
negatively impact on those groups of people who depend on the
forests for their livelihoods. [135]
108. There are ways to avoid this. Jodie Keane told
us about World Bank studies in sub-Saharan Africa and Latin America
which demonstrated "win-win" situations: the reduction
of emissions and the promotion of development.[136]
In Tanzania we heard about the Mpingo Conservation Project which
was seeking to ensure villages which depended on local forests
could earn an income from exploiting them sustainably. The Mpingo
or African blackwood tree is used to make musical instruments
such as clarinets, oboes and bagpipes. The project was seeking
to gain Forest Stewardship Council (FSC) certification of the
timber which could potentially increase the forest community's
income by 100 times. In order to achieve this certification the
whole forest had to be managed sustainably.[137]
Other areas where developing countries could pursue low carbon
growth are through changing land use patterns and through the
production of biofuels (which are discussed at paragraphs 136-138).
109. DFID has pointed out that some developing countries
may be reluctant to reduce emissions sooner than they need to
because of the costs associated with switching to new technologies
and the possible trade-off with economic growth. In addition it
is possible that delayed mitigation might provide an opportunity
to take advantage of cheaper and cleaner technologies which might
be developed in the future. However if in the process of waiting,
developing countries lock themselves into high carbon infrastructure,
it could prove more costly to convert or switch to low carbon
options in the future.[138]
Such decisions need to be made on the basis of knowledge and evidence
of the benefits and associated immediate and long term risks.
110. DFID has begun to fund research and pilot projects
on low carbon options in a number of relatively high emitting
developing countries. This includes funding to: the US-based Centre
for Clean Air Policy; the World Bank Clean Energy Investment Framework
(CEIF); and the Regional Economics of Climate Change Studies.
However DFID acknowledges that low carbon development is a new
area about which little is known especially in relation to those
low-income countries which have negligible industrial sectors.[139]
The Sussex Energy Group made a similar point: "There is limited
empirical evidence available upon which to develop policy geared
towards low carbon development."[140]
The Group recommended greater collaboration in research with developing
countries arguing that only through early involvement in research
can poor countries develop the necessary technological capacity
to make low carbon growth sustainable.[141]
111. One low carbon option is geothermal energy.
We saw this in operation at the Oserian flower farm in Naivasha.
We were told that the highest proportion of the costs of geothermal
energy was in the exploration needed to locate appropriate sites
and putting in the infrastructure. Once this was in place, the
return was rapid and maintenance costs were low. The UN Environment
Programme told us that they were providing assistance in this
area to the Kenyan Government by underwriting exploration costs.
112. DFID's most significant investment in the development
of low carbon technology is through the World Bank's Climate Investment
Funds (CIFs) which will provide short term funding to help tackle
climate change and longer term funding to pilot new approaches.
These schemes were endorsed by the World Bank board in July 2008
and $6.1 billion has been pledged to them.[142]
As discussed in Chapter 3, DFID's contribution is half of the
£800 million Environmental Transformation Fund (ETF) which
is jointly managed by DFID and DECC.
113. DFID is planning a new Centre on Climate and
Development which will have demand-driven knowledge management
as part of its remit. The Minister told us that many developing
countries had expressed interest in the Centre.[143]
We are pleased that DFID has begun to engage in research on
low carbon development paths. There is a pressing need for more
research into options for low-income countries. We believe that
DFID should build this capacity in developing countries and facilitate
greater research collaboration between them. We welcome the establishment
of the Centre for Climate and Development and recommend that its
remit include development of knowledge which is relevant to, and
driven by demand from, low-income countries.
Carbon trading
114. According to DFID the most effective way to
drive investment in low carbon development is to create a global
carbon market in which carbon is traded between low and high emitters.[144]
This provides greater incentives for companies to invest in new
technologies:
By placing a price on carbon and reflecting the
true cost to society of greenhouse gases, emissions trading will
drive global emission reductions at lowest cost (key to making
ambitious goals politically acceptable), and stimulate business
to innovate and to invest in low carbon technology and energy
efficiency by rewarding those who take action.[145]
115. In the EU, carbon trading currently operates
primarily through the Emissions Trading Scheme (ETS). The ETS
sets a cap or ceiling on the total amount of CO2 which
can be emitted from large industries in Europe, such as power
stations and factories. Permits equal to this cap are then distributed
to companies which can buy or sell them, depending on their emissions
levels. The number of permits will be reduced over time.
[146]
THE CLEAN DEVELOPMENT MECHANISM
(CDM)
116. Developing country participation in carbon trading
occurs mainly through the Clean Development Mechanism (CDM). The
CDM was created under the Kyoto Protocol as one of three flexible
mechanisms to help reduce the cost of achieving greenhouse gas
emissions reduction targets. The CDM allows developed countries
to offset their emissions through the purchase of Certified Emissions
Reductions (CERs) from offset projects in developing countries.
It has thus provided a model for the carbon market through which
developed countries contribute to mitigation activities in developing
countries. A 2% levy on all CERs is used to help finance the Adaptation
Fund (see Chapter 3).
117. The ETS also allows companies to purchase credits
from companies operating in developing countries through the CDM.
This has led to the criticism that Europe is simply offsetting
its carbon in developing countries rather than making the necessary
and perhaps difficult cuts to emissions at home.[147]
ODI on the other hand has argued that the ETS has been critical
for the success of the CDM since, without it, European companies
would not have invested in emissions reductions projects in developing
countries.[148]
118. Most CERs have been generated in China (44%),
India (23%), South Korea (13%) and Brazil (11%).[149]
China has supplied the greatest number of CERs to the market every
year since 2005-06.[150]
This trend is likely to continue since most projects are in hydro
and biomass energy projects, typically associated with heavy industry.
These countries have a number of existing industries with relatively
high emissions which can benefit from being "cleaned-up".
In contrast, with low levels of industry in Africa, there are
fewer emissions to off-set. Another problem in Africa is the lack
of pilot or demonstration CDM projects to encourage the local
business sector to become involved and provide finance. Accordingly
Africa accounts for only 2% of CDM projects, although there is
evidence to suggest increased participation.[151]
The UK Government is working with a private company, AfriCarbon,
to help attract greater foreign investment in African CDM projects.[152]
119. The CDM is seen as playing an important role
in linking sustainable development initiatives in developing countries
to finance from developed countries. In this way it enables developing
countries to tap into a growing carbon market. However the future
of the CDM after 2012 is uncertain. It may not be renewed at the
UNFCCC Copenhagen conference later this year, or it may be reconfigured.
There are a number of proposals on the table. One proposal includes
"enhancing" the CDM to go beyond its current project-based
approach to include sector-wide activities. For example, a base-line
could be set for a country's utility sector and reductions below
that base-line rewarded with CERs.
120. Another proposal is to expand the CDM so that
it also covers mitigation policies undertaken by developing country
governments who would be rewarded with CERs for emission reductions
achieved through policy interventions, such as energy efficiency
policies or new automobile standards. Others have suggested that
the structure of the CDM needs to be changed so that it includes
projects which improve energy efficiency or support renewable
energy, which are currently excluded.[153]
121. Witnesses highlighted weaknesses of the CDM.
WWF said that the fact that the CDM is also meant to deliver sustainable
development benefits to developing countries is often ignored.[154]
Leo Peskett of ODI commented that the nature of projects funded
under the CDM encouraged companies to compete for projects which
were not connected to poverty reduction objectives.[155]
122. There are also concerns about the "additionality"
criterion of the CDM which requires that all projects demonstrate
that they have been driven by the CDM and would not have happened
without it. Leo Peskett referred to studies which showed that
additionality was questionable in a high proportion of projects.[156]
WWF also commented on this saying that developers could be getting
credit under the CDM for projects which they had already completed
or planned.[157] We
were told that, as a result, the CDM had only had a small impact
on global emissions reductions.[158]
123. There is room to expand the CDM to ensure that
more developing countries, especially in Africa, can make use
of it. The World Bank has calculated the value of the global carbon
market at $64 billion of which only $7.5 billion goes through
the CDM.[159] According
to ODI, the ETS and CDM together are currently trading only around
0.5% of global greenhouse gas emissions which are in the region
of 49 billion tonnes of CO2 per annum.[160]
In addition key sectors in developing countries, such as forestry
and land use, are currently excluded (although concerns have been
expressed that their inclusion could cause the price of carbon
to collapse).[161]
124. We appreciate that the Clean Development
Mechanism is a relatively new mechanism and that there are bound
to be teething problems. However these need to be resolved urgently.
The CDM has the potential to make a significant contribution to
emissions reductions in developing countries but to date it has
had little impact in poorer developing countries and there are
few projects in Africa outside South Africa. The geographical
distribution of CDM projects needs to shift towards Africa in
any new iteration of the Mechanism. Proposals to reform the CDM
should have this as a primary objective. We recommend that DFID
consider funding appropriate demonstration projects in Africa
to encourage this. "Additionality" of projects also
needs to be properly defined to help provide confidence that the
Mechanism is achieving its objectives. We are also cautious about
a mechanism which could be seen purely as a technical solution
to harmful emissions. If developing countries are to benefit,
and if the sustainable development objectives of the UNFCCC are
to be met, the CDM should be more closely linked to poverty reduction
strategies in developing countries. We believe that DFID should
seek to address these issues at the Copenhagen conference.
Technology transfer
125. The requirement for developed countries to facilitate
the transfer of low carbon technologies to developing countries
is set out in the UN Framework Convention on Climate Change (UNFCCC).
According to the Sussex Energy Group it was this aspect of the
UNFCCC that provided the carrot to attract developing countries
to the Convention. It is also the aspect of the Convention which
has caused most controversy and made the least progress in negotiations
since it was agreed.[162]
126. The International Energy Agency has said that,
in order to restrict the rise in global temperatures to no more
than 2°C, new technologies which are not yet widely available
will need to become more widespread.[163]
Lord Stern thought that progress was being made in this regard:
"technical progress has been spectacularly rapid and the
number of new ideas coming forward on low carbon technologies
is quite remarkable, and that is moving at a very encouraging
rate."[164] Others
have however expressed concern that the scope for technology transfer
to developing countries has not been fully realised.[165]
In particular, technology for climate change adaptation is largely
unexplored terrain.
127. There are two separate issues regarding technology
transfer. One is that of intellectual property rights (IPR), which
are protected under international law. The other is sharing "know
how". In Kenya, Professor Odingo, former Vice Chairman of
the IPCC, told us that the IPR issue was overstated: it was not
necessary to share trade secrets in order to give developing countries
the benefits of climate friendly technologies.
128. DFID's view is that much of the technology needed
to decouple emissions from economic growth already exists.[166]
The Sussex Energy Group highlighted the importance of technology
transfer from research through to commercialisation as well as
ensuring technology transfer between countries. This included
transfer between developing countries, where the most appropriate
technology may be located, as well as from rich to poor countries.[167]
129. One way of supporting this process would be
for the UK Government to work with British companies operating
in developing countries not only to encourage them to reduce their
contributions to greenhouse gas emissions, but also to create
the potential for technology transfer, and to develop appropriate
technology solutions.[168]
This might then provide scope for programmes which helped non-UK
private companies in developing countries to understand and adapt
technologies to local conditions.[169]
130. The transfer of low carbon technologies to
developing countries is essential if they are to avoid high carbon
growth. Greater effort is required to ensure that the benefits
of rapid technical progress in developed countries are shared
with developing countries, where such technologies are appropriate.
Facilitating appropriate low carbon technology in developing countries
is an initiative which offers potential for a joined up UK development
and trade policy approach and is one which the Government should
explore. The private sector has an important role to play and
should be encouraged to participate. We recommend that DFID examine
how it can work with the Department for Business, Enterprise and
Regulatory Reform to establish a programme to facilitate UK private
sector involvement in low carbon technology transfer to poor
countries.
Meeting the energy needs of the
poorest
131. It is important that, in least developed countries
which have negligible emissions, low carbon options are not pursued
at the expense of ensuring that people's basic energy needs are
met. As WWF said, "we must remember that the point here is
reducing poverty and the long term development, not necessarily
contributing to the global carbon emission reduction."[170]
Any international agreement which seeks to chart a new, more sustainable
global energy regime should take into account the energy needs
of the poorest.
132. In many developing countries, access to domestic
electricity is severely limited. In Tanzania for example we were
told than less that 10% of the population was connected to the
national grid. In Kenya only 15% of the population has access
to electricity. Limited resources mean that the poorest often
choose the cheapest energy options rather than the ones which
will deliver environmental benefits. In Kenya and Tanzania, we
saw how most people still relied on burning wood and charcoal
for their domestic needs which depleted forests and contributed
to carbon emissions. A World Bank Study found that connecting
all households in developing countries to an electricity source
would have almost no impact on global greenhouse gas emissions.
This would effectively mean there was a negligible trade-off to
be made between meeting basic energy needs and reducing emissions.[171]
133. Cheap and environmentally sustainable energy
sources are already being developed. In Kenya we learned about
a pilot project aimed at using the seed from the jatropha plant
to make oil. The oil costs half as much as diesel and can help
support livelihoods. It can be used in lamps, to operate water
pumps and to run small engines and generators. The affordability
of jatropha meant that villagers were able to run small vehicles
to take their produce to town and sell it for a higher price and
to fuel generators to power ice-making machines so that the fish
and seafood that they caught could be chilled and transported
to markets. The jatropha plant grows quickly, is suitable for
arid and semi-arid lands and it can be grown as hedging or intercropped
so it does not impinge on production of food crops. This type
of pilot project demonstrates how communities can be assisted
to gain access to affordable and sustainable energy to meet their
needs.
134. DFID told us about its support for a number
of initiatives which promoted practical energy options in developing
countries, including the Sustainable Renewable Energy Programme
being developed under the Climate Investment Funds; the Global
Village Energy Partnership, a UK NGO which provides support to
small businesses investing in energy products, and the World Bank
Energy Sector Management Assistance Programme (ESMAP) which provides
support at country level.[172]
135. It is inevitable that many developing countries
will continue to rely on fossil fuels and biomass for their energy
requirements for some time to come. However these countries are
historically low emitters and equity demands that they should
be permitted to ensure that the poorest people are able to meet
their basic energy needs even where this relies on high carbon
methods. Emphasis on low carbon growth should not take precedence
over ensuring developing countries can tackle more immediate social
needs. Small-scale initiatives such as the jatropha fuel project
we saw in Kenya provide innovative opportunities to improve the
livelihoods of the poorest whilst meeting their energy needs in
a sustainable manner. Scaling up such small-scale projects and
replicating them across developing countries is the next essential
stage and requires the support of donors, including DFID.
Biofuels
136. One low carbon energy option for developing
countries is to grow crops for biofuels. ODI told us that scepticism
about biofuels and their impact on food production had gone too
far and failed to distinguish between biofuels which were good
for development and those which were not. While emerging economies
such as Brazil have enormous capacity to produce biofuels efficiently,
many poor countries do not have enough land to produce both biofuels
and food without having an adverse impact on food prices.[173]
Jodie Keane and Leo Peskett of ODI pointed out that more use of
biofuels would mean less use of fossil fuels and biofuel production
should therefore be viewed as part of a solution to reducing greenhouse
gas emissions. They gave the example of Malawi which had sufficient
land to grow more sugar cane for producing bioethanol, without
affecting food production, which could be substituted for more
expensive petroleum imports. India also had significant potential
in this regard.[174]
137. DFID told us that the UK is encouraging the
commercial development of new technologies which would allow the
production of biofuels from non-food sources—known as "second
generation" biofuels.[175]
The Government sees this as part of its strategy to help ensure
food security. Others have warned that biofuels pose risks to
forestry and land use patterns and consequently should be encouraged
with caution.[176]
Current EU policy fails to distinguish between different groups
of developing country producers and continues to protect European
producers of biofuels. ODI recommends the removal of import barriers
from countries such as Brazil which can produce biofuels in an
efficient manner, and that the EU should seek to encourage the
production of biofuels in sugar-exporting developing countries
in the African, Caribbean and Pacific (ACP) group of states through
technology and knowledge transfer.[177]
138. Meeting the energy needs of the poorest in
a sustainable way means that low carbon technologies must be made
available, free or at a low cost with high incentives, to the
poorest and most vulnerable. This includes biofuel technologies
where opportunities exist to develop these sustainably and without
negative repercussions on food security. We understand that more
research is needed into how best to ensure low carbon technology
and know-how is transferred from developed to developing countries,
and between developing countries. Methods of scaling-up from pilot
projects to commercialisation also needs examination. This research
should form part of the remit for DFID's new Centre for Climate
and Development and where possible should be undertaken in developing
countries. While many developing countries are currently low emitters
it is important that research is carried out quickly so that it
is available as they begin to move towards increased industrialisation.
125 UNFCCC, Bali Action Plan, 2007, Para 1bii Back
126
Climate Change: Commission sets out proposals for global pact
on climate change at Copenhagen, European Commission Press
Release, 28 January 2009. This should exclude reductions achieved
to generate offsets for developed countries, for example through
the CDM, to ensure emissions reductions are not double-counted. Back
127
Q 193 Back
128
Q 192 Back
129
Qq 195-200 Back
130
Ev 172 Back
131
Ev 117, 173, 186 Back
132
Ev 80 Back
133
Ev 80 Back
134
Q 139 Back
135
Q 146 Back
136
Q 151 Back
137
As the Environmental Audit Committee is conducting an inquiry
into how best to reduce emissions from deforestation and land
degradation we have not sought to duplicate that work in this
report. Back
138
Ev 81 Back
139
Ev 81 Back
140
Ev 156 Back
141
Ev 159 Back
142
Ev 83 Back
143
Q 227 Back
144
Ev 78 Back
145
Ev 79 Back
146
Ev 180 Back
147
Ev 180 Back
148
Ev 131 Back
149
http://cdm.unfccc.int/Statistics/Issuance/CERsIssuedByHostPartyPieChart.html Back
150
J Keane, Achieving green growth, ODI background paper,
October 2008 Back
151
Ev 80; Q 157 Back
152
Ev 80 Back
153
Ev 181-182 Back
154
Q 167 Back
155
Q 150 Back
156
Q 156 Back
157
Q 167 Back
158
Q 160 Back
159
Ev 79 Back
160
Ev 131 Back
161
Q 159 Back
162
Ev 157 Back
163
"Watchdog in place to avert 'shocking' climate change",
Financial Times, 13 November 2008 Back
164
Q 192 Back
165
Ev 156-157 Back
166
Ev 81 Back
167
Ev 83 Back
168
Ev 146 Back
169
Ev 157 Back
170
Q 180 Back
171
Q 179 Back
172
Q 286 Back
173
Ev 130 Back
174
Qq 152-153 Back
175
Ev 90 Back
176
Ev 103 Back
177
Ev 130-131 Back
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