Demand for More Carbon Credits Heats Up the Asian Market for CDM Projects, Finds Frost & Sullivan

SINGAPORE, Feb. 2 /PRNewswire/ -- The carbon development market is riding high, having achieved $126 billion worth of transactions in 2008, almost double its value in 2007. By the end of the first commitment phase in 2012, countries all over the world are expected to have reduced 2.7 billion tons of carbon emissions.

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New analysis from Frost & Sullivan (http://www.environmental.frost.com), CDM - Strategic Analysis for Growth Opportunities in Asia, finds that the market is likely to register carbon credits of about $26 million by 2012.

The Asia Pacific has been the global leader in CDM credit generation. In 2008-2009, most Asia Pacific countries did not have as much carbon emission debts as the developed countries, as the rate of growth and demand for low-cost energy sources had made Asia Pacific a significant participant in the drive to reduce greenhouse gas emissions.

South Korea, Indonesia, Thailand, and Malaysia (besides China and India) are the major carbon dioxide emitters in the Asia Pacific region. Therefore, participation in CDM projects in this region offers a huge potential for robust return of investments. These projects also provide sustainable development benefits, such as reductions in air and water pollution through reduced dependence on fossil fuel, to achieve economic and environment objectives.

"Theoretically, abatement costs in developing countries should be less than in developed countries because new technologies can be put in place through technology transfer," says Frost & Sullivan Consultant Melvin Leong. "This creates an efficient CDM market that leads to lower operation costs and better profitability from the carbon revenue."

CDM's significant ancillary benefits of addressing local and regional environmental problems, advancing social goals, and providing employment opportunities will be attractive to developing countries. Otherwise, these countries might give priority to immediate economic and environmental needs.

However, before they can take the plunge into the Asia Pacific market, participants will have to equip themselves to deal with the complex procedures and formalities involved in CDM. This is because the methodologies and baseline computation will vary from project to project. These challenges require participants to acquire the pertinent expertise to conduct and provide technical support for the project at all stages.

In Southeast Asia, there are inadequate local consultants to support the process and CDM evaluation, causing the markets to depend heavily on international assistance. The implementation of CDM projects requires proper technical, financial, and governmental support. Participants must carefully plan and conduct feasibility studies before investing in CDM projects.

"Making special financing available to medium enterprises and for medium-sized projects through local banks and other small financing institutions will boost the CDM market," notes Leong. "The financial instruments for CDM need to be studied and repackaged carefully in a way that will benefit the market participants and at the same time, meet the carbon reduction targets set by the CDM authorities."

If you are interested in more information on this study, please send an e-mail to Donna Jeremiah, Corporate Communications, at [email protected], with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country.

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CDM - Strategic Analysis for Growth Opportunities in Asia

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