My first assignment after coming back to serve the Co. was to find out more and share about CDM. What is CDM? CDM, defined as Clean Development Mechanism is a flexible financing tool to support climate change initiatives that reduce CO2 and other gas emissions in the developing countries (Non-Annex 1 countries), which was set in the Kyoto Protocol.
The emission of CO2 and other Greenhouse gases (GHG) are mainly resulted from human’s activities around the world. We built coal power plants in order to give electricity and kept up to the demand, we planted up more and more factories to meet the supply-demand & to get the status of industrialized country, we enjoyed the ride in our own cars, trains, buses to work, shop and many-many more activities. Everybody contributed to this problem. Seriously speaking, none of us did such activities with the intention to ruin today’s world but things have happened and we need to mend it NOW!
To restore climatic stability, the CDM aims to help countries promote sustainable development by shifting to renewable energy resources.
The CDM facilitates co-operative projects between developed and developing countries for the reduction of GHG emissions, with the opportunity for additional financial and technological investment. These GHG reductions are quantified in standard units, known as Certified Emission Reductions (CER). The CDM involves the trading of emission reductions via CERs that result from a specific project. Other countries then use these CERs to meet their own reduction targets. In return, money is transferred to the project that actually reduces the greenhouse gases.
The following types of projects have potential for CDM in Malaysia. Two possible revenue streams exist for CDM projects: via traditional cashflows (e.g. electricity sales) and via environmental value of the investment (e.g. CERs). But not all projects qualify for CDM assistance. To be eligible, projects need to demonstrate that the proposed activity is an additional benefit resulting from a normal business venture:
- Renewable energy projects, including PV, hydro and biomass;
- Industrial energy efficiency;
- Supply and demand side energy efficiency in domestic and commercial sector;
- Landfill management (flaring or landfill gas to energy);
- Combined heat and power projects;
- Fuel switch to less carbon intensive fuels (e.g. from coal to gas or biomass);
- Biogas to energy (from POME or other sources);
- Reduced flaring and venting in the oil and gas sector;
- Land-use, land-use change and forestry projects (afforestation, reforestation, forest management, cropland management, grazing land management and re-vegetation)
Malaysia is one of several developing countries promoting the use of renewable energy. Developers in Malaysia are already starting to utilize the CDM to initiate energy projects for biogas wastewater, biomass, compost, landfill gas, and mini-hydro. There are eleven energy projects which will produce a total of 73 MW of new renewable electric power. The waste sector offers tremendous potential for CDM, such as recovering emissions from methane sources. Palm oil mills using gas turbines become attractive with CDM financing, as well as small-scale power production projects using gas engines.
More to come in next publication…
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