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Beyond the baseline: large scale climate friendly development

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M. Howells
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This article investigates two cases of large scale, development-neutral projects in China and South Africa that reduce greenhouse gas (GHG) emissions. The authors argue that GHG can be reduced in a manner that does not retard development.The two case studies demonstrate that there are significant quantities of emissions to be saved and that implementing strategies to reduce emissions does little harm to, and can even encourage, economic development. The case study from China considers the effect of accelerating development of natural gas infrastructure and its effects on emissions from the power generation sector. The South African case study looks at the effects of a rigorously pursued energy efficiency strategy. Implications for the effort to mitigate greenhouse gas emissions in developing countries are presented. It is argued that the Kyoto Protocol may miss important opportunities to reduce emissions and promote development. In the context of the case studies, the Clean Development Mechanism (CDM) of the Kyoto agreement did not provide the incentives required to stimulate such large-scale projects.There is also a danger of donors creating harmful incentives. If it is a precondition of donor support for climate change projects that they must create discrete, identifiable emissions reductions, then there is little incentive for investments that fundamentally shift the emission baseline and lock-in lower carbon growth paths.The authors suggest other incentives for these types of projects, including: the World Bank, or a similar institution like the Asian Development Bank could provide subsidized loans for the capital costs of lowcarbon infrastructure, efficient appliances or policy supportthe export credit agencies of developed countries (U.S. Export-Import Bank, etc.) could subsidize export of low carbon energy and infrastructure technology. If emissions baselines are altered by foreign assistance, perhaps approximate savings may be used as “soft” credits. These credits would have limited application. Perhaps they could be used for setting mitigation targets, or as a “safety valve” to reduce the excessive pressure exerted by meeting mitigation targets.The authors emphasise that there is an urgent need to review CDM or develop new mechanisms to accommodate large scale, development friendly mitigation.