Financing Climate Projects
Climate Mitigation Projects are, by definition, large scale and long term. The minimum for a viable domestic Biogas CDM is, for example, 5,000 units.
- Demographic survey of End User families, Host Country Approval from the MoEF, consultancy fees to write the Project Design Document (PDD), validating with a UNFCCC certified quality assurance firm, and registration with the UNFCCC are called “Transaction Costs”.
These range from ₹ 35-40 lakh per CDM Project. A few established NGOs are able to meet these expenses by themselves. For the vast majority who find them prohibitively high, FCN assists in finding grant money.
- The cost of constructing 5,000 Biogas units, repair and maintenance, and annual verification of Carbon Offsets generated over a period of 7-8 years is about ₹ 11 crore.
FCN Marketing Mechanism
In order to address the second problem, the Fair Climate Network has developed a “marketing mechanism”. Emission Reduction Purchase Agreements (ERPA's) are entered into with corporate bodies who wish to offset a part of their GHG Emissions with valuable Carbon Offsets (CERs and VERs) that have powerful stories behind them. Under an ERPA, a corporate agrees to purchase “yet-to-be-generated” CERs/VERs at the “actual-cost-of-generation”, over a period of 7-8 years.
These Offsets are publicly retired in the UNFCCC Registry to compensate for a part of their GHG Emissions and demonstrate their commitment to maintaining Climate integrity. When done in a non-Annex I country like India, where there is no compliance regulation, the message is even more powerful!
Rural Women provide an Environmental Service
Rural women are able to construct Biogas units or install fuel efficient Woodstoves since they already receive the cost of construction/installation, repair, maintenance and monitoring in advance. They become mini entrepreneurs who provide an Environmental Service to the planet at large. During the ERPA period of 7-8 years, CERs or VERs are delivered along with powerful stories of personal valour and empowerment that went behind the generation of these Carbon Offsets.
As of today, 16 climate projects are being implemented under forward purchase ERPA's signed with, among others, an energy company in France, social entrepreneurs in the Netherlands and Germany, InterGlobe Aviation, Infosys, and a Bangalore based IT company. Together, these projects target a reduction of 57,50,001 tonnes of Greenhouse Gases, of which 6,98,906 tCO2-e (12%) have been generated and third party verified by UFCCC accredited carbon auditors.
FCN is negotiating with several other Indian companies who have shown a keen interest in “Corporate Climate Responsibility”.