Reducing greenhouse gases through emissions trading

German companies have contracted the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH – German Technical Cooperation – to facilitate their access to emissions credits. The basis for such transactions is an arrangement, agreed in the Kyoto Protocol and the European emissions trading system, that allows industrialised countries and companies operating in those countries to supplement their efforts to reduce greenhouse gas emissions through projects in developing and emergent countries. The emissions reductions achieved in this way are then quantified and documented in certificates that may be used as credits to enable the companies to meet their reduction obligations. What makes this possibility attractive is that greenhouse gas emissions can often be reduced in developing countries at less expense than in industrialised countries. Positive spin-offs of such projects are the technology transfer involved and the promotion of sustainable local or regional development.

Specifically for purposes of this private-sector contract, GTZ has created a central contact point, the "carbon procurement unit" or CPU, in Gurgaon near the Indian capital New Delhi. "The CPU is starting up at just the right time, because the market is growing by leaps and bounds. Together with China, India has the largest number of projects to generate emissions certificates," says Markus Kurdziel, a GTZ climate expert. At the start of 2008, 302 of 803 emissions-credit projects throughout the world were to be found in India. The first customer for the GTZ contact point was RWE Power AG in Essen, Germany, which will be permitted to expend 90 million of the certificates before 2012 to meet its greenhouse gas reduction obligations. A major proportion of these credits are to come from India.

"We use the CPU to form contacts between German customers and projects that reduce greenhouse gases and are eligible for the corresponding emissions credits," says project manager Kai Berndt. "The principle involved is simple. If RWE, for example, is obligated to reduce the CO2 emissions of a coal-fired power plant in Germany, the company can obtain certificates from a new hydroelectric power station in India," Berndt explains. It is a win-win situation. RWE can continue to operate its power plant in Germany, the Indian electric utility receives additional financing for its emissions-free hydroelectric plant, and globally speaking, the emission of greenhouse gases is reduced.

But hydroelectric plants are only one example. The CPU in India is currently pursuing some 100 projects of various magnitudes, one of which is the world's largest project for electric power from biogas and biomass. The project spans eight of the Indian states and will supply more than 700 megawatts of electric power when completed. Additional projects use renewable energy such as wind power or aim to avoid methane gas emissions. The CPU also works together with India's largest electric utility for private consumers on a programme promoting the exchange of old-fashioned light bulbs for modern energy-saving ones.
"The CPU is there for each step right up to final certification. We identify potential projects at an early stage, provide advisory services to the project owners and conduct economic and technical feasibility studies," explains Kurdziel. In addition, GTZ's own appraisers and independent assessors from certification organisations such as the TÜV – the German technical control boards – ensure that the projects do in fact bring about the anticipated reduction of carbon dioxide and other greenhouse gases.

As an international cooperation enterprise for sustainable development with worldwide operations, the federally owned Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH supports the German Government in achieving its development-policy objectives. It provides viable, forward-looking solutions for political, economic, ecological and social development in a globalised world. Often working under difficult conditions, GTZ promotes complex reforms and change processes. Its corporate objective is to improve people’s living conditions on a sustainable basis.