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India is giving the Clean Development Mechanism, for fighting climate change, a new twist.[vi] The CDM allows companies and individuals in the rich world to obtain carbon credits by paying for emission reductions in the Third World. One key obstacle has been the high transaction costs of getting eligible projects approved.

India gives the mechanism more credibility by tying the CDM to a major government initiative: replacing incandescent light bulbs with compact fluorescent bulbs (CFL). Many jurisdictions, like Ontario, are simply banning the incandescent bulbs.[i] India, however, is reluctant to force poor people to pay the full cost of the more expensive bulbs. Instead, India will use funds from the CDM to subsidize the sale of 400 million incandescent lamps with CFLs – saving nearly 55 million tonnes of CO2[ii] and 6,000 MW[iii] per year.

India’s Bachat Lamp Yojana program, launched February 25, 2009 by the Union Minister of Power in New Delhi, is a collaborative effort between the Indian government, private sector CFL suppliers and State level Electricity Distribution Companies (DISCOMs). The goal is to sell high quality CFLs at Rs 15 ($0.33) per piece to every household[iv] – as opposed to the current Rs 100 ($2.22).[v]

In order to achieve such affordable pricings to encourage replacements of inefficient bulbs with CFLs, the scheme will rely on leveraging the sale of Certified Emission Reductions (CERs) under the Clean Development Mechanism (CDM) of the Kyoto Protocol In other words, as reduction in carbon emissions are achieved under this scheme, the private investors will be granted emission reduction credits through a CDM. The investors can then sell these credits to companies in the developed countries which fail to meet their emission targets.[vii]

Jessica Yuan and Dianne Saxe

[i] Greenpeace International. (March 24, 2008). “Argentina to ‘Ban the Bulb’,” At http://www.greenpeace.org/international/en/news/features/argentina-ban-the-bulb-140308/#table

[ii] Greenpeace International. (February 25, 2009). “India’s light bulb phase out: setting a smart example,” At http://www.greenpeace.org/international/en/news/features/india-light-bulb-phaseout-250209/

[iii] Mridual Chadha. (May 6, 2010). “India to Replace 400 Million Incandescent Lamps with CFLs,” Earth & Industry, At http://earthandindustry.com/2010/05/india-to-launch-worlds-largest-cdm-project-will-replace-400-million-incandescent-lamps-with-cfls/

[iv] Ibid.

[v] Mridual Chadha

[vi] Press Information Bureau. (February 25, 2009). “Bachat Lamp Yojana Launched,” At http://pib.nic.in/release/release.asp?relid=47970&kwd=

[vii] Mridual Chadha

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