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Nepal Monitor: The National Online Journal

Fighting Poverty, Energy-Wise

Projects based on clean development mechanism (CDM), as provided for in the Kyoto Protocol, can help Nepalis fight the vicious cycle of poverty, writes HARI BANSHA DULAL

The poor do not create poverty. A combination of social, cultural, environmental, and economic factors traps them in an unbreakable vicious cycle of poverty.

And that cycle has been spinning fast. An estimated 800 million people are entangled into a vicious cycle of poverty and have been struggling to meet their basic food requirements on day-to-day basis. Out of these 800 million, approximately sixty percent are rural poor living in environmentally sensitive areas of low productivity in developing countries.

As climate change is inexorably tightening its grip. Like anywhere else in the world, Nepalis have started to feel the heat. Droughts have become much more frequent in Nepal. The recent devastating drought that occurred in far eastern Nepal is a stark warning of what to expect if the accelerating speed of climate change is not checked.

Unless we slow down that speed, it will make our fight against poverty even more complicated and elusive. The poor communities in developing countries such as Nepal are likely to become poorer, as incidents of drought and flooding become more common due to the climate change. Providing the poor with sacks of food every time a drought wipes out crops or a flood washes away their belonging is just not economically sound and sustainable.

In other words, charity hand-out is not the solution to the problem induced by climate change. We need a long-term solution to this long-standing problem.

One of the most promising ways to deal with the poverty linked to climate change is through clean development mechanism (CDM). As provided for in Article 12 of the Kyoto protocol, CDM allows government or organizations in developed countries to implement the project on Green House Gass (GHG) emission reduction in developing countries to gain the “certified emission reductions”(CERs). It allows public or private sector entities in developed countries to invest in GHG mitigation projects in developing countries. In return the investing parties receive credits or certified emission reductions (CERs) at costs lower than in their own countries, which they can use to meet their targets under the Kyoto Protocol targets.

The Clean Development Mechanism is purely a market-based mechanism that will help developing countries meet the challenges faced by the impending threat of climate change and achieve sustainable developmental goals at the same time. Thus, climate change has provided both crisis and opportunity for the developing countries that have so far failed to lift the status of their citizens that make less than a dollar a day.

There exists a tremendous potential opportunities for a poor country like Nepal under the Clean Development Mechanism. If Nepal is able to capture only 1 percent share of the global CDM market, we will be able to generate somewhere between 1 to 3 million dollars in revenues through annual CER sales. This figure is based on assumption that CDM is used to meet 10 to 50 percent of the global demand for green house gas reduction of roughly 1 billion tones of carbon dioxide. The price range used for this calculation range 1 to 6 dollars per tones of carbon dioxide.

Even if we are able to generate one million dollars, it is a big amount. For an aid dependent economy like ours, it is a big money. We can finance multiple development projects with this amount.

As the current energy systems has not been successful in addressing the basic needs of poor Nepalis that make less than one dollar a day, Nepal can benefit tremendously by attracting CDM projects. In Nepal, the poor have tough time meeting their energy needs. In some cases, they have to walk for hours to collect woods so that they can prepare their meals. So, as far as Nepal is concerned, one of the key issues for achieving poverty alleviation is ensuring that the poor have access to energy. This is where CDM projects can help Nepal and Nepalis fight vicious cycle of poverty. As CDM project activities in most cases are involved with energy generation and provision, the implementation of projects have tremendous potential of making a contribution towards poverty alleviation and meeting the UN millennium developmental goals.

Besides helping developed nations meet their emission reduction target and providing developing countries, such as Nepal, benefits via jobs creation, income improvement, and rural economy development, CDM projects can also provide much needed additional financial mechanism for achieving development and sustaining it over the long run. It can expedite the integration of developing countries into the global economy through enhanced influx of funding and cutting edge technology.

In addition, CDM also integrates developing countries for full participation in global action to mitigate climate change. This is important mainly because it will orient the future progress of developing countries along a more sustainable path and ensure de-carbonization of emerging economies.

In deed, with some environmental action, the poor do not have to always stay poor.

> Previous article by author: No Room for a New Junga Bahadur, June 12, 2006

The author is a doctoral candidate of Environmental Science and Public Policy at George Mason University, Virginia. He can be reached at

Posted by Editor on September 25, 2006 12:52 AM