Small scale power generation technologies (distributed generation) have the potential to significantly contribute to solving the rural electricity access problem in the developing world. This paper presents results from case studies in Brazil (part of a larger three country study) and shows that differences in business models and the influence of institutions are important factors for understanding success and failure in rural electrification and the contribution rural electrification can play in rural development. 

Much existing literature champions renewables implementation on India’s Sagar Island as an unqualified rural electrification success story.  Photovoltaic (PV) and wind systems put in place by the West Bengal Renewable Energy Development Agency (WBREDA) have clearly brought benefits to many of the island’s residents.

The highly-touted community management system governing the projects has been successful at instilling local pride and overcoming the traditionally thorny problem of tariff non-collection.  At the same time, an on-the-ground look at the Sagar Island experience identifies some deeper liabilities of the business model guiding the renewables projects.  Two of the ostensible strengths of the Sagar Island implementation – the harmonious tariff collection associated with community management and the resources, competence, and assertiveness of WBREDA itself – can at the same time be considered weaknesses limiting the scope, sustainability, and replicability of the projects. 

This working paper considers these questions through a case study of a typical Sagar Island facility, the Mritunjoynagar PV power plant.  It finds that Mritunjoynagar’s inability to recoup its full operating and maintenance costs by providing appropriate incentives for profit maximization limits the expansion of the project and threatens its long-term sustainability, or at least the relevance of its business model in the absence of a highly-visible champion like WBREDA to ensure continued support.  For WBREDA and other agencies to sustain and replicate similar projects—and their attendant benefits—throughout India, they must adjust their economic model, as WBREDA is beginning to implicitly acknowledge in exploring a franchise model for future efforts.

Carbon Capture and Storage (CCS) technologies form a key piece of virtually all roadmaps for global carbon dioxide (CO2) emissions reductions---many studies predict that CCS will contribute 20-50% of the necessary CO2 emissions reductions by 2100. To assess actual progress of CCS projects towards fulfilling these expectations, the PESD Carbon Storage Project Database tracks all publicly announced CCS projects worldwide.

The first version of the PESD Carbon Storage Project Database, developed by PESD researchers Varun Rai, Ngai-Chi Chung, Mark C. Thurber, and David G. Victor, was released on June 30, 2008. Through careful examination of numerous information sources, the database groups all CCS projects into three categories according to the probability of their completion: currently operating (100% likelihood), possible (estimated 50-90% likelihood), and speculative (estimated 0-50% likelihood).

The authors observe that even under the aggressive scenario that all “possible” projects are indeed realized, this will result in about 60 Mt CO2/yr of reductions worldwide by 2025, far short of the 300 Mt CO2/yr of reductions that are projected as technologically feasible using CCS by 2030 in the U.S. alone.

The PESD Carbon Storage Project Database will be updated regularly. The authors welcome comments and feedback that will help improve the database, including identification of other projects which should be included or refinements to the probabilities and storage estimates for specific projects.

The Clean Development Mechanism (CDM) is a means for industrial nations, known as Annex 1 countries, to meet their greenhouse gas emissions reductions targets by taking credit for reductions from projects they fund in developing countries. The idea is that projects to reduce emissions will cost less to develop and implement in the developing countries where technology is further behind. Industrialized countries can achieve more reductions via investment in the developing countries, achieving greater emissions reductions for less sunk cost. At least this is the idea under the Kyoto Protocol. A researcher at the Program on Energy and Sustainable Development (PESD), Michael Wara says this, in fact, is not how the CDM is working.

Wara lectures at Stanford Law School, teaching the popular class International Environmental Law. A graduate of Stanford Law School, Wara also has a PhD in Ocean Sciences from the University of California, Santa Cruz. His doctoral work on the interaction between climate change and oceanatmosphere dynamics in the tropics echoes in his current research on the CDM. He understands the science of greenhouse gases and how they affect Earth and its climate. One of those greenhouse gases is HFC-23, a byproduct of manufacturing refrigerants. HFC-23 is one of the gases countries targeted to reduce under the CDM; it can be eliminated rather easily and has been seen as the “low hanging fruit” of the CDM. In fact, more than half the greenhouse gas reductions of CDMs to date have been reached via reducing HFC-23 in developing counties. For the reductions, the project sponsor countries receive credits to put toward meeting their own reductions targets. These credits are called Certified Emission Reductions or CERs.

This is where Wara noticed a big discrepancy between what was credited through the CDM and what was actually happening on the ground. The CERs are not just feel-good pieces of paper that countries collect as proof of their doing good but are certifications of equivalent reductions of one metric tonne CO2 emissions. Carbon is the standardizing greenhouse gas and so regardless of what greenhouse gas is reduced with the CDM the sponsoring country is credited with CERs. But these “carbon credits” have a value—carbon is a traded commodity on many global markets. Wara could directly compare the CDM effect versus the credits issued. Since the cost of implementing the reductions was known or could be calculated, and since the credits were standardized to a greenhouse gas being traded on an open market, Wara could quantitatively critique the CDM.

Wara’s finding showed a major flaw in the CDM design. Looking at the large percentage of greenhouse gas reductions met within the CDM by eliminating HFC-23, the value of the credits created by these reductions were more than four times as valuable as the cost of implementing the reductions. This is not small change, as billions of dollars worth of CERs have been credited for the projects. What is more, the credits for eliminating the HFC-23 byproduct of manufacturing refrigerant were far more valuable than the refrigerant itself, creating incentives to build these manufacturing plants in order to cash-in on the CERs. Exposing these loopholes has brought attention to Wara’s work. He has presented his findings at numerous conferences and published his report (Nature 445, 595-596 (8 February 2007) doi:10.1038/445595a) and derivatives broadly. Wara continues to study the CDM and the global market for greenhouse gases and the post-Kyoto regime for reducing their emissions.