The Potential of Major Hydro and Wind Energy Projects for Seeking Carbon Credits Under the Clean Development Mechanism and Voluntary Markets

Abstract

Climate change is recognized as one of the greatest environmental threats facing the world today. To tackle this problem, a protocol was adopted in Kyoto in 1997 which establishes legally binding commitments to developed countries to bring down the emissions of six major greenhouse gases by 5.2% compared to the year 1990. Three flexibility mechanisms have been provided to developed countries to achieve the target of emission reduction under this protocol and one of them is the Clean Development Mechanism (CDM), which allows industrialized nations or private entities therein to implement emission reduction projects in developing countries and receive credits in the form of Certified Emission Reduction (CERs), which may be counted against their national reduction targets. The fund channelled through the CDM by developed countries can assist developing countries to achieve objectives contributing to sustainable development and poverty alleviation. Against this background, the paper discusses about the scope of hydroelectric and wind projects in the CDM market in India and also looked at the options available other than the CDM market, namely the Voluntary Carbon Market. It also identifies to what extent the potential of these projects could be harnessed and also presents the key challenges to making full use of these opportunities.