With the global carbon trade booming, environmental projects in developing countries have joined forces to finance their poverty reduction efforts by selling carbon credits collectively
Vandy Rattana
A man examines environmentally friendly cook stoves in Phnom Penh's O'Russey market Monday. But Cambodia is proving to be the exception by playing host to the first-ever carbon cooperative of NGOs and other small groups hoping to increase their clout over climate change reform.
It has taken more than three years for the French NGO Geres (Groupement Énergies Renouvelables, Environnement et Solidarité) to prove that it could be an actor on the carbon credit market.
At first, many observers thought it was impossible.
Yet today, various Geres projects offset approximately 140,000 tonnes of CO2 annually, the most of any NGO operating in the carbon market.
It is also the only NGO that funds its programs in their entirety by selling carbon credits, which they accumulate through their projects like low-carbon cook stoves - affordable clay grills that burn less charcoal and are popular among Cambodians.
The Geres Climate Change Unit says it is an example of how a small-scale, not-for-profit project can break into the carbon credit market.
It has won the backing of ethical buyers, public development agencies, academic institutions and governments, including that of Cambodia.
From these successes, the idea of a cooperative, Carbon Solidarity Asia (CSA), was born last year.
The CSA aims to provide the technical support needed by groups who want to develop carbon offset projects. This could include, for example, energy-efficient stoves, bio-gas or forest conservation.
The CSA will also work with individual projects to help them sell their carbon credits on the global carbon markets.
Why trade carbon credits?
For Geres, entering the carbon market and off-loading the carbon credits generated by their environmentally friendly projects was key to maintaining the funding that kept the group going.
We decided to be actors on [carbon] markets in order to have an impact on it.
"When we began in 2004, the carbon credit was estimated at US$3 per tonne. Today the same credit is worth around $30," said Minh Cuong Le Quan, manager of Geres' Climate Change Unit.
"This is a huge incentive for organisations that are traditionally reliant on donors and continually struggling to find funding for their successful projects."
Secondly, the global carbon trading market is a means for NGOs to gain the clout they need to influence international climate policy.
HENG CHIVOAN
Factory chimneys belch out smoke in Phnom Penh’s industrial zone, on the fringes of the city. "But the originality of our message makes our voice heard. It is no secret that the international carbon markets do not do enough for developing countries, [so] we decided to be actors on this market in order to have an impact on it and in order to finance clean development."
Moreover, she said runaway demand in Western countries far outstrips supply in the carbon credit market, giving NGOs a foot into an otherwise closed world of industrial dealings.
"Until now the supply of carbon credit is insufficient," Minh said.
"NGOs have to turn towards the carbon market," she added.
What is the carbon collective?
The idea of the carbon collective is to help small NGOs to better access the carbon credit market, its backers say.
"To break into this market there are many challenges. It would be difficult for one NGO alone to overcome the challenges," said Nanda Ram Baidya, director of the Centre for Rural Technology in Nepal, explaining why her organisation supports the coalition.
Feri Lumampao, director of the Asian Alliance of Appropriate Technology Practitioners Inc (APPROTECH ASIA), said the CSA will help small organisations to join the carbon market "with confidence and integrity".
Last April, the inaugural meeting of the coalition took place in Phnom Penh, where a dozen organisations adopted a founding charter and formally created the CSA.
Since then, they have decided to base the cooperative in Singapore, but both local or international NGOs from across the region can be accepted as members, as well as eco/social-enterprises or governmental projects if they accept the CSA's charter.
"The CSA will help projects which have a direct impact on employment, on living conditions and quality of life for people," Minh said.
"Industrial projects or those with no impact on the poor can find scores of consultants elsewhere to help them," he added.
In the interest of transparency, members commit themselves to channelling their carbon credits through a common gateway, operated by CSA.
This system guarantees that all carbon credits are registered and can be sold only once.
"We also want to follow up the value of the credits and to push them, not to let 80 percent of the value evaporate in the hands of intermediaries," said Minh.
The CSA also hopes to give members access to affordable consulting services that will equip them with the skills they need to negotiate the carbon market on their own, according to Minh.
Joining forces
Cooperative members say one of the unique aspects of the CSA is the wealth of internal expertise that they will be able to share in order to level the carbon market playing field.
"In the Philippines, I see that my experience will enrich the CSA," said APPROTECH's Lumampao.
"While the CSA helps me to help others ... move efficiently to the carbon market and make use of carbon finance to create greater impact in poverty reduction and climate change mitigation."
The next phase for the cooperative is to review all the projects that come under the group and identify best practices in Asia.
From this, the CSA will define standard procedures that similar cooperatives will be able to use elsewhere for more efficient, larger-scale projects.
The problems are the same for the Philippines, for Indonesia or Cambodia, cooperative members say.
CSA members said they are preparing to role out the same carbon market model in Africa.
Exactly What is a carbon credit?
A carbon credit is a financial instrument representing a reduction in greenhouse gas emissions. One carbon credit represents the reduction of one metric tonne of carbon dioxide. The Kyoto protocol obliges states and companies to reduce their emissions of carbon dioxide – or to “cap” their emissions. If they are below their authorised cap of emissions, they receive carbon credits which they can sell. There are two primary markets for carbon offsets. In the larger compliance market, companies, governments or other entities buy carbon offsets in order to comply with their emissions caps. In the smaller voluntary market companies sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint. Carbon offsetters purchase carbon credits from a carbon development company that has aggregated the credits from individual projects. The quality of the credits is based partly on the validation process of the company that acted as the sponsor to the carbon project.
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