The Clean Development Mechanism (CDM) of the Kyoto Protocol is driving the adoption of mitigation and adaptation strategies by local corporates and, while extensive commitment to the CDM has been less widespread than expected, 21 South African projects have been registered thus far with 145 notifications of intent to register.
The United Nations Frame-work Convention for Climate Change (UNFCCC) outlines the CDM as a mechanism that enables developing countries to earn saleable certified emissions reduction credits from appropriate projects.
These credits are then bought by developed countries with emissions limitation commitments under the Kyoto Protocol, and may count towards meeting defined Kyoto Protocol targets, which are aimed at stimulating sustainable development and emissions reductions.
Local carbon and climate change advisory firm Promethium Carbon director Harmke Immink asserts that half of the South African projects the company advises on are directly related to the CDM and, once a project has been registered as such, a successful verification is required for issuance of certified emissions reductions, or carbon credits.
“The CDM is essentially a funding scheme for real, measurable and long-term emissions reductions. As significant funding is involved, the process has become
fairly bureaucratic to ensure actual reductions to prevent double counting and to preserve the integrity of the system,” she explains.
Meanwhile, Immink points out that while only large emissions-reduction initiatives would benefit from the CDM in terms of the cost benefit, South African projects have the potential to take advantage of the funding mechanism, despite appearing slow to do so.
She notes that while climate change and emissions-reduction strategies have long existed in corporate consciousness, few companies have clearly defined the potential risks and opportunities of climate change for their specific business models and supply chains.
The majority of corporates are most concerned about costs and realise that carbon emissions will, through a looming carbon tax, become an additional cost, says Immink.
“A driver in support of mitigation and adaptation for big business is thus the reduction of operational costs, such as coal, gas and diesel consumption, as well as the lowering of the potential tax liability,” she notes.
In contrast, carbon credits can become an income stream.
Local projects that have demonstrated the feasibility of implementing CDM locally include those of mining company Gold Fields, which Immink says is furthest ahead on the path towards a low-carbon economy.
“Gold Fields has embedded its carbon footprint calculation to track progress internally, has set real emissions reduction targets and made available significant capital to achieve these targets at its various projects,” she notes.
Further, the company’s global climate change strategy and detailed carbon management plan are, according to Immink, being implemented well and incorporated into its business model.
“Gold Fields has actively participated in the carbon credit market, developed methodologies for use in South African mines and registered its pro- jects. “It is also in the process of developing three additional carbon credit projects under the CDM, which positions the company as a trailblazer in the South African mitigation arena,” she concludes.
Following the seventeenth UNFCCC Conference of the Parties in December, Mining Weekly reported that, under the CDM, procedures to allow carbon-capture and storage projects would be reviewed every five years to ensure environmental integrity.