COLOMBO (Reuters) - Sri Lanka plans to start selling credits from greenhouse gas emission savings in projects such as hydropower and garbage management, joining other developing Asian countries in profiting from the Kyoto Protocol.
Environment Minister Patali Champika Ranawaka said on Wednesday, Sri Lanka aimed to create a fund of credits from projects including organic farming within three months, as it hopes to rake in billions of dollars in revenue over the next decade.
“We are a small country, our projects are very small... so we bundle our projects and are there to bargain as a country to have our own share from that carbon-trading process,” Ranawaka said in an interview as part of the Reuters Energy Summit.
“Now we have only 11 projects, worth around $800,000. We estimated within 10 years’ time, we would have at least $7.6 billion worth of carbon-trading projects here.”
Investors are flocking to Asian countries such as China, the developing world’s biggest supplier of credits under the Kyoto Protocol’s Clean Development Mechanism (CDM), which allows rich nation polluters to fund emission cuts in developing countries and then put them towards domestic quotas.
Sri Lanka does not produce oil and had to import $2.1 billion worth in 2006. High international prices are hammering the island’s budget deficit as the government keeps prices artificially low at pumps to curb the cost of living.
The country has, however, offset its reliance on oil with hydro and mini-hydro power projects in recent years, and the government is looking to increase the number of such projects, which would make more saleable emission credits available.
“We are actually buying carbon (emission savings) from the eco-friendly projects here and we are trying to sell those to the carbon funds overseas,” Ranawaka said.
A host of specialist funds and banks are hunting potential projects worldwide, buying credits to sell to firms such as Japanese and European Union utilities that have Kyoto targets to cut emissions (For a table of investors see <ID:nL11201328>.
The majority of credits so far have come from large projects to cut potent greenhouse gases from the chemical industry. But with easy pickings drying up, investors are looking further afield and at smaller projects from coal mines to waste management.
Ranawaka said the government aimed to start selling carbon credits within three months once the island’s cabinet has approved the plan.
But such projects require United Nations approval, which can take months to secure and require schemes that would not be profitable without selling emissions credits.