Approaches to scale-up CO2 emissions reduction in the energy supply sector in developing countries

Doctoral thesis, 2009

This thesis, which consists of five papers, addresses two themes related to the need for a scale-up of greenhouse gas (GHG) emissions reduction in the energy sector in developing countries: (1) approaches to support developing countries in scaling-up emissions reduction, and (2) an approach to scale-up emissions reduction --cultivation of fuel wood to replace fossil fuels in electricity generation. In the first paper, the potential volume of carbon dioxide (CO2) emissions reduction and reduction credits in the electricity sector under a sectoral crediting mechanism based on a sectoral no-lose, non-binding, target in the post-2012 period is assessed for seven high-emitting developing countries by means of different scenarios. To do this assessment, an approach for setting national emissions intensity baselines and targets in the sector is developed. The assessment shows that a significant scale-up of emissions reduction could be achieved in the sector by boosting the efficiency of coal power plants and decreasing the share of coal-based electricity in new generation capacity in the seven countries. Given the set crediting targets, substantial volumes of annual credits could be generated. In the second paper, a hypothesis that carbon credits sale is not a decisive factor for the development of biomass power projects under the Clean Development Mechanism (CDM) is tested by an empirical analysis using two objective indicators and by an econometric analysis. A decisive factor is also identified using the econometric analysis. The empirical analysis shows that there are indications that carbon credits sale is not a decisive factor for the development of a substantial share of registered CDM bagasse power projects in Brazil and India. The result from the econometric analysis supports the hypothesis. More important than crediting the emissions reduction is allowing access to the national electricity grid to sell electricity. This suggests that supporting developing countries in implementing policies and regulations which enable biomass power developers to sell electricity to the grid at an attractive price could greatly accelerate the development of biomass power projects. The third paper addresses a need for an approach to credit the national biofuel programs in developing countries for their benefit of reducing CO2 emissions rather than crediting just CDM biofuel projects. In this paper, the impact of achieving the target of the national ethanol program in Thailand of replacing all conventional gasoline with gasoline containing ethanol at 10% by volume (gasohol) by 2012 is assessed. The assessment shows that the program could lead to a significant increase in self-sufficiency of gasoline and a significant CO2 emissions reduction. The program could also entail a land-use change (i.e., displacement of areas of food crops). The annual average cost of substituting gasohol for gasoline per ton of CO2 emission reduction is estimated to be higher than the current carbon price. The fourth and fifth papers show that challenges for cultivation of fuel wood for electricity generation in Thailand involve land-use constraints and costs, respectively. In the fourth paper, the characteristics of farmers who commercially plant eucalyptus and the types of land where eucalyptus is planted are analyzed, based on a field survey carried out in Thailand. The factors that determine the farmers’ decision on whether to plant eucalyptus and the size of area to plant with it are identified, based on the survey using an econometric analysis. The analysis shows that farmers with a small farm do not and are not likely to plant eucalyptus wood. In addition, most eucalyptus growers plant eucalyptus on land used for food crops (mainly cassava area). In the fifth paper, the productivity of eucalyptus wood and the levelized cost of eucalyptus wood delivered to the factory gate in Thailand are estimated to be within the middle range of estimates in other developing countries. The cost of CO2 abatement by substituting eucalyptus wood for coal and gas in electricity generation in Thailand is estimated to be much higher than the current carbon price.