Municipalities Need To Seize Opportunities In Global Emissions Market

Online, October 3, 2011 (Newswire.com) - Chinese municipalities are missing a golden opportunity in failing to pursue clean development projects under the Kyoto Protocol which can make our local and global environment a cleaner place and generate much needed income for cash strapped administrations.

This is according to Jefferson Plant, expert in Environment Issues with Lebowitz & Edelman. He says that on paper The People`s Republic of China has the capacity to be a major recipient of emissions finance, but it lags far behind other developing countries such as India, Russia and Brazil in the development of such projects. 



"The major hurdles facing Chinese municipalities in starting clean development mechanism projects can be overcome with a few practical steps and some expert advice - but the most important requirement is the will to do so."

Plant says one of the greatest hurdles is the complex regulatory regime - with both local and international requirements - governing the development of Clean Development Mechanism, projects which can appear daunting. "There are a number of private sector entities who are eager to develop projects in partnership with municipalities, but who have not managed to 'unlock' potential projects from the supply chain management requirements which bind municipalities."



Nonetheless two municipalities have already managed to navigate their way through the regulatory maze and there is an increasing body of experience and knowledge in The People`s Republic of China to help other municipalities do the same. Other municipalities are also pursuing projects. Most municipal projects in China to date have been landfill projects, but there are other opportunities available to municipalities too. Plant says the first step then is to ensure a member of the municipality's staff 'champions' the project by driving the process and building support for and understanding of the project among councilors and officials; without an energetic and enthusiastic internal project champion, a proposed project may just never get off the ground. 
Municipalities will also need to appoint a transaction advisory team with the necessary technical, legal and financial skills and experience who will work with the project's internal expertize. Plant advises that the municipality ensures that all procedural and regulatory requirements have been identified and are being addressed, and to think carefully about the most suitable institutional structure through which to develop a project in-house or as a public private partnership.



Mr. Jefferson Plant adds that while first commitment period in terms of Kyoto ends in 2012, there is growing consensus that Kyoto will be extended into a second period - and the voluntary trading market is now sufficiently entrenched that carbon trading is very likely to continue past 2012 in any event. 



The Kyoto Protocol has established a system whereby developed countries can partially meet their reduction targets by buying carbon credits from sellers in developing countries who have developed emission reduction projects, known as Clean Development Mechanism projects. 

The Kyoto Protocol - and especially the creation of the carbon trading market - gives municipalities not only an environmental, but also a commercial incentive to reduce their landfill sites. They may then sell the carbon credits or Certified Emission Reductions generated by these projects to buyers (including governments, financial institutions and investment funds in the European Union, Japan, Canada and the United States). Some projects generate meaningful income, while others generate enough income to make affordable what would otherwise be an unaffordable, but environmentally desirable, project.