Post-2012 CDM multi-criteria analysis of industries in six Asian countries: Iranian case study

Abstract

The prospects of the Clean Development Mechanism (CDM) and for carbon income, up to and beyond 2012, in the industrial sectors of Iran and five other Asian countries are investigated. The attractiveness and suitability of each host country, the status of their industrial sectors (based on four post-2012 scenarios), and the post-2012 potential of the CDM (or similar carbon projects) in these sectors are all examined. A multi-criteria analysis of Iran, Saudi Arabia, the UAE, Qatar, China, and India, based on seven sets of criteria (institutional, regulatory, economic, political, social, CDM experience, and energy production/consumption), is conducted, and the post-2012 potential carbon incomes of each country – based on CO₂e emissions of industrial processes – are calculated. Finally, the Iranian industrial sector and the impact of deregulation of energy prices are examined. The post-2012 potential savings in the Iranian industrial sector are calculated based on energy savings, carbon income, and environmental savings. The results indicate that there is strong demand for investment and new technology in this sector to combat several-fold energy price increases. Moreover, high-priced carbon credits could play a meaningful role in post-2012 energy policies in this sector.

Policy relevance

This research is the first study to quantify the carbon market potentials in the industrial sectors of the selected Organization of the Petroleum Exporting Countries (OPEC) members. The Kyoto Protocol is considered by most OPEC countries to be a mixed bag of threats and opportunities and they have shown ambivalence towards it, mainly due to the threat a reduction of fossil fuel consumption poses to their economies. On the other hand, energy efficiency is a desirable goal for their industrial sectors. Iran, as an OPEC member country with vast energy resources, has mostly ignored the CDM during the first commitment period of the Kyoto Protocol and has performed poorly on CDM implementation. However, the current deregulation of energy prices in Iran, with profound cuts in energy subsidies, would definitely alter the perspective of its industrial decision makers on the post-2012 carbon potentials.

Keywords:

• carbon
• Clean Development Mechanism
• emissions trading
• energy prices
• industrial emissions
• OPEC
• post-2012 architecture

Notes

These include the Chinese National Development and Reform Commission, the CDM Office of India, the Designated National Authority Office of the Kingdom of Saudi Arabia, the CDM–DNA Office of the United Arab Emirates, the Ministry of Environment of Qatar, and the Climate Change Office of Iran.

See UNFCCC (2012).

This was based on research conducted by ORBEO, a subsidiary of Societe Generale, in 2010: SG Orbeo Carbon Special, 2020 EUA Scenarios.

Mousavinik and Maleki (2009) indicate that basic metals, chemicals, textiles, paper, and food industries will cut their production most.