Many of us are apparently surprised why there are a number of micro hydro power plant projects, plan to develop a wind park and tidal power in Catanduanes. Why the sudden interest of investors in power generation on the island?
Obviously, they are banking on the future of carbon credits in the international trading.
Carbon credits are a key component of national and international emissions trading schemes that have been implemented to mitigate global warming. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price. Credits can be used to finance carbon reduction schemes between trading partners and around the world.If you were an investor, would you sink-in nearly a billion peso CAPEX in Catanduanes without any assurance or guarantee provided by the provincial government on the future of your investment?
There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. These carbon off setters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects. The quality of the credits is based in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project. This is reflected in their price; voluntary units typically have less value than the units sold through the rigorously-validated Clean Development Mechanism.
2 comments:
CDM is a big boost to push RE projects, anywhere in the country now - from hydro, wind, biomass and solar.
However, it is not for the long term. But it appears there will be a round 2 of the Kyoto Protocol. It's also a good news that the prospects for developing further carbon trading outside the Kyoto Protocol looks promising because the government is making way for policies in line with environment, in particular CDM and renewable energy. RP has also one of the best Clean Air Act law. Although it is allegedly patterned from the State of California in the US, it's still a good policy.
It is only normal to have private interest in RE because it is where the money is, as long as no public money are wasted and the projects are sustained.
During the Ramos administration, Independent Power Producers (IPP) were encouraged to invest in the Philippines. They were guaranteed a certain percentage on Rate of Return on Rase (RORB). Payment for their power produced were assured either they generate or not.
During that period, economy was uptrend and likewise NAPOCOR power projections were high. Then came the Asian Economic Crisis causing an economic slowdown... power demand was affected so there was too much excess power to be absorbed, passed on us end-consumers as Purchased Power Adjustment (PPA).
I am looking at this situation not only in Catanduanes, wherein the possibility of excess power could happen if there is no sustainable development plan laid by the provincial government in island economies.
If the investors's sole purpose is to monetize through carbon credits, then they should generate more power to gain more credits.
But what if there is a slack power demand? Reduce power rates to encourage households to use more power?
Post a Comment