Fate of Kyoto Protocol

It been almost 14 years since the Conference of Parties to UNFCCC met in Kyoto, Japan which gave birth to infamous Kyoto Protocol. It was the very first legal framework to combat climate change born out of the convention and as it is now the only one. Kyoto Protocol has been a source of controversy ever since it came into existence. Kyoto Protocol is based on the following principles:

• ·         Emission reduction commitments from Annex I countries (developed countries)
• ·         Implementations of supplementary mechanism that would help Annex I countries to achieve their commitments. These mechanisms is better known as Clean Development Mechanism (CDM), Joint Implementation (JI) and Emission Trading System (ETS)
• ·         Establishment of adaptation fund to assist developing countries to adapt to climate change
• ·         Accounting, Reporting, Reviewing and compliance of the commitments

Kyoto protocol has tried to address all aspects of the struggle against climate change, but it is far from complete. Especially when the biggest GHG emitter at the time refused to take part, i.e. America, in the protocol and forming an umbrella group with countries of similar mindset. In this context it is strange that in formulating the protocol Americans gave huge inputs. And over the period of last one and half decade all new sets of problem has cropped up like countries who championed Kyoto Protocol like Japan, Russia, Canada has expressed their disdain for the extension of protocol. And they have good reason to be so. That is;

• ·         The resources put into achieving the commitments have put huge burdens on their economy and in some cases economy has shrunk. And still could not achieve the targets
• ·         They are no longer the only large emitters with emergence of China, India, Brazil, Mexico, South Africa, Indonesia, Korea and etc who are non-Annex I as larger emitters and do not have a commitment.
• ·         And the fact that zero emission from Annex I would not have enough impact achieve the required levels of Global emissions.

Thus it is apparent there needs to be some major changes required. But there is some serious opposition to the changes to Annex I list to include all major emitters or to have legal commitments as before. Although, there are no provision that would enable the COP to punish a country for not adhering to their commitment under the protocol (making Kyoto protocol a toothless one).

The COP has been going back and forth about the improvement and extension of KP under the alias of AWG-KP. At the same time discussion is going on a separate negotiation track under the convention AWG-LCA to have a new agreement which could supplement or even replace the KP. AWG-KP now has a little over one year(deadline is 2012), to formulate a mutually agreeable terms for the KP extension (2^nd Commitment Period), endorse within the COP and give enough time for enough number of parties to ratify it within their government. Given the 7 year time frame taken by the parties from adoption of KP to enforcement of KP, it is widely agreed that one year might not be enough to adopt and enforce the extension of KP. And having a gap between CP1 and CP2 of KP is not acceptable to many parties. And the gap could a reason to kill the KP.

So, in conclusion, KP talks have been delayed too much and any more delay would lead to a gap between CP1 and CP2. And the COP has just one year and 2 COP meetings to resolve the issues and save the KP. There are still ambiguities about KP, but one thing is for sure the decision whether KP lives or dies will be decided in COP18 in Durban

Sea swell incident in Huvadhoo in 2011

 Path the wave took onto Hoadhehdhoo main road

 The reach of the wave on the main road of Hoadhehdhoo (roughly 500ft from beach)

 The dust lines mark the height of water on the flooded main road of Rathafandhoo

 Near southwest shore of rathafandhoo (this is where the wave came in most)

 The natural protection at rathafandhoo breached at western shoreline

 Waste washed off at Fares mathoda with the wave

 Protection build up by locals in anticipation of the wave in Fares mathoda

Fares maathoda bay (this is where the wave came in

Climate Change adaptation for Ministry

Picture taken on 13th April 2011 at the from gate of Ministry of Housing and Environment. Its pretty clear why Maldives needs to adapt to climate change as fast as possible.

CDM in Maldives

Agreement of Collaboration being signed between the Ministry of Housing and Environment and UNEP Risoe on development of CDM (clean development mechanism: if you dont know refer to http://unfccc.int/kyoto_protocol/mechanisms/clean_development_mechanism/items/2718.php)  and LCS (Low carbon strategy). This whole thing is funded by the Danish

Dhiffushi PV project

The signing of dhiffushi Solar PV project. 40kW PV to be installed and hybridized with the existing 140kW diesel generator sets. Installation work  to start early 2012 and finish by the end of 2012

Carbon Neutrality – Environmental Option or Economic Necessity for Maldives

Over two years ago, when Maldives announced their intent of becoming carbon neutral in 10 years, I was left pondering what it meant, what would have to be done and what would it achieve ultimately. Back then the news was met with huge criticisms both nationally and internationally. Two and half years later I find myself justifying and promoting that goal but not as a tool of environmental sustainability but as a tool for self sustaining the Maldivian economy.

I may not be an economic expert, but it’s not rocket science to understand the link between energy use and economy. They are proportional more or less. So I jot down some stats in this regard as my justification.

•          Since 2003 in Maldives annual GDP growth is 11% with 2004 tsunami and 2008 economic shocks
•          In comparison annual growth in energy demand is 9%.

Seems fair enough, but the problem is here,

•          99% of that energy demand is met fossil fuels and the
•          In 2010 price of fossil energy is more than 3X what it was at the start of this century.
•          Price of fossil fuel energy has been rising at an annual rate of about 20% with huge volatility between the years.
•          Maldives fossil fuel energy expenditure has been rising at roughly 30% annually

And ultimately as the above figures suggests, fossil fuel expenditure is gaining 1.4% every year in its share in the national expenditure. Now for country hard pressed for having expenditure greater than their income, this is bad news. And as a newly graduated Middle income country, there is an exceeding risk of regression back to a Least Developed Country. Not only that, but in long term if it continues the same the collapse of the economy is inevitable. But the solution is obvious, go low carbon. Exploiting energy conservation, energy efficiency and locally available renewable energy opportunities will definitely save a huge portion of the energy bill. Reducing the overall expenditure, and attaining better balance of payment. The new and emerging green industries like energy servicing companies, carbon auditing firms and climate financial institutes can take the economy to new heights.

Hence this new source of income and the reduction of old expenditure, can self sustain this troubled economy. And environmental benefits and carbon reductions looks nothing more than a simple byproduct in comparison to its long term economic gain. And for those who are wondering what the monetary value of all the above stats, in 2010 Maldives energy bill was a little over 245 million dollars against a GDP of 1.448 billion dollars.

Maldives Energy Policies and Strategies

Undoubtedly energy is one of the main driving factors of economies around the world. Energy sector in Maldives is highly dependent on imports and thus impedes on potential economic growth of the country. The policies and strategies to tackle energy situation has been evolving with the changing nature of the sector. At the end of last millennia the main priority of the government was the electrification of all inhabited islands. Prices of Renewable Energy at that time did not make it a feasible option in comparison with the conventional energy sources.

However, the situation has changed drastically over years with increasing oil price and continuously reducing price of renewable technologies. The high prices of fossil fuel in 2008 caused huge losses to the economy and showed a backward growth. The government ended up spending millions of dollars as bail out to the energy producing companies.

The realization of Maldives vulnerability to the fossil fuel prices world-wide, forced some major changes in policies towards renewable energy. Increase in the financial viability of the RE technology and its relevance of being environment friendly, the government decided to mainstream renewable energy in the Maldives. As such the renewable energy target was revised from 15% (energy policy 2005) to 50% renewable energy of total energy of the Maldives by 2015 (NSDS 2009) and to become carbon neutral by 2020 (energy policy 2009).

The declaration of carbon neutrality at UN General Assembly of 2009 boosted the works done on reduction of emissions in Maldives. As energy sector is the major contributor of emission (99% of emissions are from energy: First National Communication 2001) in the Maldives, the focus on renewable energy and energy efficiency was enhanced.

Current Policies and Strategies

The government views energy services as a basic human right. Policies and strategies are designed to provide these services at an affordable and sustainable manner, keeping in mind emission reduction and the carbon neutral goal. The newly formulated policies are as follows;

1. Provide all citizens with access to affordable and reliable electricity
2. Achieve carbon neutrality by 2020
3. Promote energy efficiency and energy conservation to reduce energy cost
4. Increase national energy security by diversifying sources of energy
5. Promote renewable energy technologies
6. Strengthen institutional and legal frame work for the energy sector.

Carbon Tax for Maldives – Food for thought

Carbon Tax for Maldives – Food for thought

Carbon tax is one of the few tools that are considered among experts as means to reduce GHG emissions. But it is been plagued by word tax at the end of it.  When a new tax is thought of, it would be natural that a person’s thought would interpret as increased cost of goods and living conditions. But Carbon Tax may be the most effective tool to accurately administer “common but differentiated responsibilities” principle within a country to reduce emissions. According to IPCC models a carbon tax of 56.8USD/ton of CO2 would reduce emissions of 35% from Business As Usual scenario[i]

Carbon Tax is essentially a tax levied on the amount of carbon-equivalent emission potential. In a country like Maldives such a tax could do miracles in terms of going low carbon. And it would be much easier to administer. Unlike Cap and Trade, to administer carbon tax we would not require additional capacity of carbon auditors, detailed MRV protocols. We would have to add Carbon tax alongside the existing import tax and all the required capacity needed would be catered within the same process. But unlike import tax which is a percentage of the price of the goods, carbon tax would be fixed based on the carbon content making this even simpler than import tax. 

Levying carbon tax should be limited to fossil fuels in case of Maldives to make it simpler and easily digestible. And should be started with a modest level of may be 25USD/ton of CO2 which could be increased as time goes on. That’s additional revenue of roughly 25.1 million USD for Maldives at current level of emissions. On the flipside, there would be an increase of fossil fuel price, for example diesel price would increase by roughly 95laari per liter, petrol price would rise by 80laari per liter and LPG 20kg tank price would rise by 20rf per tank. These laari amounts can easily add up to a sum which could be a real burden to the average citizens. Carbon tax revenue can be used to subsidize basic services (similar to NSPA program) like water services, public transport services and electricity services so that those prices would remain as in the normal condition and alleviate the burden on average citizen. And whatever fund remaining either could be used for public welfare spending and reap the benefits of double dividend or even setting up RE subsidy fund and other projects to reduce emission from other major sectors.

The domino effect of such a measure is many and below are some of them,

• ·         In tourism sector, increased price of fossil fuel based energy services would make RE technologies more economically viable and catalyze the transition to low carbon technologies
• ·         Energy efficient equipments and office appliances would become more popular.
• ·         Private sea transport would be reduced and ferry services would be utilized more making it efficient
• ·         Road transport would lessen as more and more car and motorcycle owners avoid unwanted rides/trips reducing traffic burden on capital making it a bit safer. It would also motivate more environmentally friendly and healthy transport methods like bicycle and walking.

·         And if the revenue used correctly could reduce the gap between the classes of rich and poor

There could be many more after effects and some may be even negative but it definitely looks like that  grass could be much greener in the future with Carbon Tax than without it.

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[i] Climate Change 2007, Mitigation of Climate Change, Page 237-238