Power Paradox: The Algorithm of Carbon and International Development

Abstract

The world is increasingly becoming smaller -- and hotter. The Kyoto Protocol Clean Development Mechanism, designed to reduce carbon emissions in developing nations and provide tradable Carbon Emission Reduction credits, has not motivated significant renewable energy investments in developing nations. Without such investments, especially in Asia which is expected to account for more than half of future growth in carbon emissions, world efforts to significantly reduce global warming have zero chance of success. The problem is not technological, but rather an institutional challenge to develop the correct laws, incentives and contract documents and tariffs to succeed in developing countries. This shortcoming calls for a model of successful renewable energy development in that three-quarters of world nations that are still developing. The author has served over the past 15 years as legal advisor to the World Bank and the United Nations on renewable energy and GHG reduction programs in developing nations in Asia and Africa. This article draws on this experience to highlight what legal and regulatory mechanisms to promote renewable energy projects in developing countries will and will not work. Highlighting projects in 5 developing nations, the article compares the legal, contractual and economic elements that will prove successful, and highlights why certain initiatives fail. Using the essential "best practices" drawn forth from this analysis, the world has limited time to either develop a successful regulatory approach, or suffer world temperature ratcheting out of control.