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"Technology Needs Assessments should be Integrated into the CDM"
At COP/MOP 2, concerns were expressed about the equitable distribution of CDM projects and about whether the CDM is really able to address the sustainable development needs of host countries. This topic is discussed elsewhere in this issue through a report of the COP/MOP 2 (pp. 1-2) and a study summary on the Development Dividend of CDM projects (pp. 6-7). In addition, JIQ spoke with Mr Malik Amin Aslam, who is the Minister of State for the Environment in Pakistan, about the CDM in general, Pakistan’s CDM policy and the opportunities for CDM in the country as well as ways to improve the CDM to better reflect the needs and priorities of developing countries.
JIQ: Recently, there has been an increased focus on the technology needs of developing countries. In the SBSTA context, technology needs assessments have been carried out for non-Annex I Parties, and also in the CDM context such assessments are being carried out to see which sustainable energy technologies are most needed in developing countries. What would an energy technology needs assessment for Pakistan look like?
Mr Malik Amin Aslam: Pakistan is a developing country with growing energy needs. Therefore, logical CDM projects are in the area of enhancing sustainable energy production capacity. We see the CDM as a tool to assist us in transferring our development on to a low-carbon and environmentally sustainable trajectory. In this respect, the particular areas of focus are: off-grid electricity generation through renewable sources, such as wind and small hydro, waste to energy projects, run-of-the-river hydro projects and flare gas capture projects. Pakistan has an identified wind energy potential of about 40,000 MW and a small hydro potential of about 20,000 MW which remains untapped. Both can now be capitalised through the CDM.
In addition, the CDM is also an effective tool for encouraging the shift towards more efficient industrial technologies. In this regard, the large textile and fertiliser industry in Pakistan are looking for various efficiency enhancement processes and technologies such as waste heat recovery or solar thermal heating.
JIQ: The UNEP Risø CDM Pipeline presently contains one project from Pakistan in the area of N2O emission reduction. What do you expect to be Pakistan’s CDM potential in terms of number of projects, abatement potential, and sector? Could you also elaborate on Pakistan’s measures to attract CDM projects?
Mr Malik Amin Aslam: The N20 project is the first project that has been approved by our Government and, subsequently, by the CDM EB. It is going to save over a million of tonnes of carbon a year and is being commissioned for operation in early 2007, which is a record time. This project exemplifies the various incentives provided by the Pakistan Government to facilitate CDM investments in the country.
Pakistan is the only country with a very active Task Force on Climate Change, which is headed by the country’s Prime Minister. Its meetings take place on a regular basis. The Prime Minister’s involvement shows the Government’s commitment to the issue of climate change at the highest level. The Inter-Ministerial Task Force has also approved our national CDM strategy, which is focussed on providing an investor friendly, one-window operation for the ‘host country’ approval of CDM projects. The approval process, which includes an assessment of a project’s sustainable development contribution, is a timed one with approvals to be provided within one month. This was done to cut any bureaucratic red tape from the approval process. It was successfully demonstrated by the first CDM project which got approval in less than 20 days!
In addition, as further incentives, investors in Pakistan CDM projects can get 100% of the emission reductions as credits, and have the possibility of bilateral/unilateral and multilateral CDM project co-operation. Moreover, and this is probably the most important incentive, proceeds attained from CDM credit sales will be totally income tax free. I believe we have the most transparent, efficient and incentivised CDM operational strategy which is now beginning to show very encouraging results. At the moment, we have about 10 active projects in the pipeline and another few coming up for approval.
Along with this policy framework, we have also established parallel activities to create a conducive enabling environment for the CDM. In this regard, the World Bank is assisting us in creating in-country awareness and capacity building. This exercise will lead to the formulation of about 20 project proposal concepts and the financial closure of four sectoral CDM projects. In addition, the Government has committed budgetary funds for establishing a CDM cell within the Ministry of Environment, which is being staffed with technocrats to cater to the CDM approval process, as well as to raise awareness about the CDM within the country.
I am very confident that the framework just described, with its focus on efficiency and carried out by proper human and technical capacity, will allow Pakistan to be well poised to reap the benefits of the CDM.
JIQ: You have already mentioned the different forms of CDM co-operation between investors and hosts: bilateral, multilateral and unilateral CDM. Unilateral CDM is seen by many as an important instrument for developing countries to steer project investments towards their sustainable development priorities. How important do you think unilateral CDM could be(come) for developing countries in general and Pakistan in particular?
Mr Malik Amin Aslam: I believe that unilateral CDM is an extremely effective tool for developing countries. Let me quote an example. In Pakistan, the Ministry of Planning at the provincial, as well as the federal level establishes carbon accounting cells, which will estimate the carbon reduction potential of various projects prior to their inclusion in the CDM planning process. The capitalisation of this latent carbon potential through the CDM is going to be a major financial factor in enhancing projects’ attractiveness and in overcoming the approval hurdle. What this means is that a number of Government funds will be directed towards sustainable and low-carbon investment options, earmarked as potential CDM activities. We are at the early stages of this process, but without unilateral CDM, this sustainable transition would not be possible.
JIQ: At ‘Nairobi’ many observers called for a modification of the CDM to be better able to address the needs and priorities of developing countries. To what extent do you think the CDM could/should be improved to address the needs and priorities of developing countries?
Mr Malik Amin Aslam: I think what is most important is to simplify the approval process for CDM projects and to increase access to the right technologies. Unnecessary bureaucratisation of the CDM approval process is the worst thing that can happen to this market instrument. For projects with approved methodologies the process should be kept efficient and timed.
Moreover, the programme or policy CDM can extend a very encouraging incentive but I think this needs a lot more research to plug the loopholes for abuse. Finally, as you mentioned earlier, several technology needs assessment exercises have been done in developing countries (for instance through the GEF). This information needs to be integrated with the CDM process in an institutionalised manner. This may sound logical but as they say “common sense is often the most uncommon.”
Interviews in JIQ Issue April 2006
Ms Sascha Bloemhoff on ACX-Climex
Interviews in JIQ Issue December 2005
Ms Iemy Brand on ERUPT New Style
Interviews in JIQ Issue October 2005
Mr Ash Sharma on the Testing Ground Facility
Interviews in JIQ Issue July 2005
Ms Tine Heyse on the first Belgian JI/CDM Tender Programme
Interviews in JIQ Issue April 2005
Mr Nikolaus Müllebner on the Austrian JI/CDM Tender Programme
Interviews in JIQ Issue October 2004
Ms Ulla Blatt Bendtsen on the Danish - Russian cooperation
Mr Sünnen on the KfW Carbon Facility
Interviews in previous JIQ Issues
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