Aboitiz Power may engage in carbon trading

Aboitiz Power is exploring the possibility of registering more of its power projects under the Clean Development Mechanism (CDM) and eventually engaging in carbon trading.

This was disclosed by Marge Gravador of Aboitiz Power who is currently undertaking a study for the power firm to establish initially its carbon accounting process and eventually engage in carbon trading.

Out of the 20 companies under Aboitiz Power at present, Gravador said, only one project so far has been accredited as a CDM project.

The CDM registered Hedcor Sibulan, Gravador said, is a 42.5-megawatt (MW) hydroelectric power project built at a cost of P5 B.

The Hedcor Sibulan project is part of Aboitiz Power’s vision of making clean energy available to every Filipino, Gravador said.

The project is estimated to reduce emissions by 95,000 tons of carbon dioxide (CO2).

The CDM is a central feature of the Kyoto Protocol which was agreed at by participants of the United Nations Framework Convention on Climate Change (UNFCCC).

The Kyoto Protocol is an agreement among participating countries to limit or reduce their greenhouse gas emissions which has led to dramatic climate change.

To help countries meet their emission targets, and to encourage the private sector and developing countries to contribute to emission reduction efforts, negotiators of the Protocol included three market-based mechanisms - emissions trading, the CDM and joint implementation.

The CDM allows emission-reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one ton of CO2. The CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.

The CER or carbon trading, in fact, has now become financially profitable.

The mechanism is intended to stimulate sustainable development and emission reductions, while giving industrialized countries some flexibility meeting  their emission reduction limitation targets.

Developed countries which cannot or do not want to reduce their own emissions, thus, offer to finance less developed countries to undertake CDM projects in exchange for the CER credits.

CDM projects must qualify through a rigorous and public registration and issuance process designed to ensure real, measurable and verifiable emission reductions that are additional to what would have occurred without the project. The mechanism is overseen by the CDM Executive Board.

To be considered for registration, a project must first be approved by the Designated National Authorities (DNA).

Operational since the beginning of 2006, the mechanism has already registered more than 1,000 projects and is anticipated to produce CERs amounting to more than 2.7 billion tons of CO2 equivalent in the first commitment period of the Kyoto Protocol, 2008-2012.

It is the first global, environmental investment and credit scheme of its kind, providing a standardized emissions offset instrument or  CERs.