Black carbon emissions reductions (or soot) have limited or no value in the greenhouse markets set up under the Kyoto Protocol and the various trading markets. So many initiatives limp along with funding or support from regional venture capital initiatives and some organizations like the United Nations Foundation.
A breakthrough in Manila may be a catalyst to change all of this. “Rotec Design, an Australian company, has reached an agreement with the jeepney drivers’ association and environmental officials that could result in the retrofitting of as many as a half million jeepneys in metro Manila with cleaner-burning engines in exchange for carbon credits, driving new financing initiatives for Short Lived Climate Forcers, “– says, Ian Adlington, CEO of New Carbon Economics and an advisor to Rotec Design Australia. The devices will also produce a small improvement in fuel efficiency due to more complete combustion; their greatest appeal to drivers, however, is the potentially large reduction in health risk they would incur. They will reduce particulate emissions by about 70 percent with great health benefits to jeepney drivers and passengers and some to other residents of Metro Manila who will breathe cleaner air.
According to the World Bank, in Manila alone more than 4,000 Filipinos die each year because of air pollution. The mortality is the third highest for a city in the east Asian region after Beijing and Jakarta. Bangkok and Seoul were ranked 4th and 5th. Beside the deaths, 90,000 Filipinos in Manila also suffer from severe chronic bronchitis, costing the government 7 percent of its gross domestic product in terms of health costs, the Bank said.
New Carbon Economics and Rotec have designed a novel financing mechanism that would enable the Philippines government and Rotec to finance the retrofitting of the vehicles, retain nominal ownership of the emission reduction devices, rent them for a token annual amount to drivers and recoup their investment by harvesting emission credits. Such credits would come from a voluntary emission reduction credit group that has the latitude and foresight to allow credits for black carbon reductions in CO2 equivalent.
Rob Rutherford, CEO of Rotec Design Australia, says that conventional financing tools are outmoded in the quest to project finance carbon emissions reductions projects. Our partnership with New Carbon Economics allows us to not only move forward with capital raising initiatives, but also to consider longer term corporate financial strategies that will include accessing public markets, such as the Alternative Investment Market. It is a very successful progression for a company like ours.
Ian Adlington adds that New Carbon Economics and the Rotec initiative has received significant support from the Climate Institute, the Philippines government, and has brought awareness to many financial institutions on how to finance emissions reductions projects that are not part of the Kyoto Protocol.
Rotec envisions this voluntary emission credits model spreading throughout the ASEAN countries. They may not only have hit upon a winning business model, this might also transform global climate protection strategies. John Topping of the Climate Institute in Washington DC believes that the voluntary emission reduction credit system might produce more effective reductions than the trading markets that have arisen under the mandatory systems; in a few years, however, the official markets under the Kyoto Protocol or any successor regime might be expected to yield to the logic of crediting reductions that might both save lives and immediately help prevent climate change from spiraling out of control.
“New Carbon Economics is a driving force in the shift to develop these new emissions carbon credits as means to project finance, both small and large emissions reductions programs,” – says Ian Adlington.
To learn more about the Manila Jeepney Project visit http://manilajeepneyproject.com/