Sustainable Development within the Climate Context SouthSouthNorth and the Clean Development Mechanism

Sustainable development is an important requirement of the Clean Development Mechanism (CDM) set up under the Kyoto Protocol. It helps to maintain environmental integrity and should be assessed rigorously prior to any investment in a CDM project. The benefits include certainty in CDM application, reduction of risk to investors, developers and owners, and the provision of cost-free assistance to developing countries, which could reduce the enormous divide between the North and the South. The Kyoto Protocol leaves the assessment of sustainable development as a sovereign matter to its State parties, which unfortunately has led to a "race to the bottom" among developing countries keen for investment at any cost.

SouthSouthNorth (SSN) came into existence to help identify criteria for appraising sustainable development, precisely because the Protocol offered no definition and before any designated national authorities (DNAs) had been constituted. SSN efforts have been directed at maximizing southern interests, to build capacity and attract contributions for sustainable development in the South. SSN is a uniquely southern network of organizations and applied-research institutions operating in Brazil, South Africa, Mozambique, the United Republic of Tanzania, Bangladesh and Indonesia. Through the processes of sharing, peer review, self-monitoring and iteration, these countries seek to find workable solutions and new ways to benefit within the climate context.

SSN has always aimed at the transparent and open sharing of its learnings for the benefit of the global community. At the 10th Conference of Parties (COP) in 2004 in Buenos Aires, Argentina, the SSN Practitioners' Practical Toolkit was launched. At COP 5 in 1999 in Bonn, Germany, the Matrix Tool for the Appraisement of the Sustainable Development Contribution of CDM Projects was presented and the SSN network was formed to test the Matrix Tool through the design and facilitation of CDM projects. As a non-profit non-governmental organization, SSN aims to experiment through learning by actions, to build capacity and help ensure best practices in managing all aspects of the CDM.

The SSN Matrix Tool was accepted by the Gold Standard Board in Geneva for its sustainable development screening of projects. Instead of taking on the responsibility to push for sustainable development-since the CDM is a market-based tool and host country DNAs compete for international investment-it is doubtful that the CDM in itself can do much to reduce poverty or help to achieve the Millennium Development Goals. Where special efforts are made in the development of, or in the demand for, sustainable development projects, it is possible that these projects could make a difference in transforming business as usual. For example, developers could seek Gold Standard certification to attract a premium on sales of emissions reduction or purchasers could insist on emissions reduction from sustainable development projects as part of their social responsibility.

In seeking to develop approaches and tools, and also to build capacity to maximize sustainable development, SSN applied its Matrix Tool to a variety of projects that were ranked in terms of viability and contribution to sustainable development. In Bangladesh and Indonesia, 4 projects for each were rated and ranked, 5 in South Africa and 18 in Brazil; out of these 31 identified as potential CDM projects, the best two in each country were selected for development.

Kuyasa Low-income Urban Housing Energy Upgrade Project. This first SSN CDM project in Khayelitsha near Cape Town, South Africa, was registered on 29 October 2005. It was not only the first registered in Africa, but also the world's first Gold Standard certified CDM project. In seeking special CDM benefit to the South, the project seeks to apply the Kyoto Protocol to situations of suppressed demand. It entails retrofitting some 4,709 extremely modest houses built for disadvantaged citizens, with solar water heaters, insulated ceilings and compact fluorescent light bulbs. The project was developed in close consultation with the Kuyasa community, which is identified as representing a portion of the low-income population, which is increasing its consumption of goods and services, including energy services.

The methodology being applied interprets the rules compiled through the United Nations Framework Convention on Climate Change (UNFCCC) in a manner that allows for crediting of greenhouse gas (GHG) reductions against a baseline equivalent to a projected level of energy service, rather than the current level of energy poverty characterized by "suppressed demand". Instead of waiting for households to become "dirty" as a result of increased energy consumption, they are "leap-frogged" to cleaner technologies through the CDM process, thus linking climate change to poverty alleviation. This interpretation would allow for the crediting of other poverty alleviation projects under the CDM, both in South Africa and other developing countries, enabling them to access carbon finance, a potentially significant source of revenue.

Aside from the reduction of GHG emissions, the Kuyasa project offers employment possibilities, reduces reliance on indoor usage of fossil fuels that are associated with numerous fire-related dangers and negative respiratory health impacts and provides savings in energy services. The Cape Town City Council, owners of the project, sold the first 10,000 certified emissions reduction (CERs) to the United Kingdom to offset GHG emissions. Credits were sold for the highest CER price. The premium is acknowledged to be due to the project's "registered" status and Gold Standard. Over 110,000 credits are still available. The project opens the way for replication of housing upgrades throughout South Africa and in general for other poverty alleviation projects in the country and also internationally. It forms the basis for the current approach by SSN to develop programmatic CDM projects, which involve a variety of interventions in a number of localities.

Usina Verde Project. Validated and DNA-approved in October 2005, the project was designed to deal more efficiently with waste in the city of Rio de Janeiro, Brazil. Although sustainable development was considered important, it is not the main goal of the project, which involves construction of a power plant fuelled by urban solid wastes produced in Ilha do Fundão Campus of the Federal University of Rio de Janeiro. It generates electricity for the campus and reduces the amount of garbage that the University sends to sanitary landfills. Thanks to the CDM, the pilot plant represents a new technology that has been tested in the South, as without this mechanism this technology may have languished as academic, but has been developed as commercially viable. Prior to the project, garbage pickers were working as scavengers, but have now been offered permanent employment, with the security of benefits and improved working conditions.

SSN Mondi Richards Bay Biomass Project. The UNFCCC Executive Board registered the first regular-sized SSN project on 20 May 2007. The Mondi Richards Bay Biomass Project is a good example of building capacity within a large industrial company. It now has capacity to assess CDM potential and sustainable development, thanks to the involvement of SSN, which trained its development facilitator. The project also passes the Matrix Tool assessment for sustainable development contributions. It could contribute indirectly towards local job opportunities in small- and medium-sized enterprises while significantly enhancing the mitigation of global climate change and supporting local environmental sustainability, cost effectiveness and the sustainable use of natural resources.

Aside from facilitating those projects, SSN has helped to develop the necessary capacity for host Governments, the wider public, technical intermediaries, and project owners and beneficiaries. It has helped decision makers and their agents to handle, with objectivity, applications for CDM scheme approval, while seeking to promote southern benefits. SSN has also fostered capacity by providing training on the project cycle, as well as development facilitation skills and information, including forging links between the countries in which it operates.

New phase of mitigation. With its commitment to sustainable development, in 2005 SSN began a second phase, known as SSN 2, with programmes for mitigation and adaptation, to facilitate the development of projects with high sustainable development value and to positively reduce poverty. In designing the mitigation programme, CDM was considered an unlikely course. Small-scale projects with high sustainable development contributions are poorly placed to compete with large projects that harvest the low-hanging fruit of CDM-project potential. The transaction costs are considered too high for most community-based projects.

SSN specializes in projects that are more suited to the non-compliance offset market that was spawned as a result of the CDM market. A market premium is attached to projects with high sustainable development value, particularly those with high social sustainability, where human interest stories provide a colourful backdrop to GHG mitigation. In these instances, emissions reduction are better sold to those that require them for purposes other than compliance with reduction targets. For this reason, SSN mitigation projects must reduce GHG emissions and poverty, and be conservative and robust, without necessarily being registered under the CDM.

AdMit Project. In seeking to develop mitigation approaches for project development outside of the normal run of CDM, SSN is experimenting with the development of approaches for adaptation projects with high community involvement and mitigation elements. These "AdMit" projects are best illustrated by the Pintadas project in Brazil, which aims to improve agricultural productivity and income generation through the use of photovoltaic water pumps in the poor, drought-threatened, northwest part of the country. This is a women-led initiative for addressing key sustainability and feasibility aspects for small-scale adaptation projects in semi-arid environment. It involves dissemination of renewable energy water pumping systems, especially biodiesel and solar photovoltaic water pumps, combined with drip irrigation. These systems allow farmers to improve agricultural production and decrease local water usage. The project focuses on standardization of specific kits that can be adapted to environmental conditions and enable feasible development of feedstock for a small-scale production of biodiesel. Dissemination of the systems-based on a specific microcredit scheme with a local bank, close partnerships with technological providers and the creation of a cooperative of farmers-is planned to enable poor farmers to benefit from government incentives by fostering small-scale production of biodiesel feedstock.

Other projects being facilitated by SSN that are highly suitable for replication include the micro-hydro projects in Indonesia and the United Republic of Tanzania, and the harnessing of small-scale hydro potential in Mozambique. In Indonesia, the Krueng Kalla Micro Hydro Power projects aim to provide electricity at affordable prices to poor households and refugees who are attempting to reconstruct their lives after the tsunami disaster. The project involves the installation of 30-40 kilowatt micro-hydropower to supply electricity in Krueng Kalla and two other villages nearby. A cooperative established by the villagers will sell the electricity, and the profits generated will be used to improve the welfare of the villagers by providing, for example, scholarships for underprivileged children or low-interest credits for local farmers and entrepreneurs. The Bungin Micro Hydro Project, also in Indonesia, generates 85 to 90 kilowatts, providing affordable electricity to around 265 households. A cooperative manages the sale of electricity, with the profit to be used as a "pay back" to the Ministry of Cooperative, Small and Medium Enterprises, for maintenance and other purposes that will be decided by the villagers.

Beside the many projects that SSN is involved in, it will continue to publish the results of its experiences in the interest of sustainable development and capacity-building within the context of climate change. By the end of 2008, a curriculum will be published to help practitioners build capacity for climate change adaptation and mitigation, poverty reduction and technological receptivity.

For more information on SSN projects and methodologies, please visit www.southsouthnorth.org