The CDM, Kyoto Protocol and the sugar, ethanol and bio-fuels industry

The United Nations Framework Convention on Climate Change (UNFCCC) and the associated Kyoto Protocol set in place a structure for the stabilisation of global greenhouse gas (GHG) emissions. The Kyoto Protocol commits participating industrialised countries to binding emission reduction commitments and introduces flexibility mechanisms, including emissions trading and the CDM. Under the CDM, emission reductions from project activities undertaken in developing (or non-Annex 1) countries may be utilised by industrialised countries to help meet their emission reduction commitments. Rules, procedures and methodologies for the implementation of CDM projects are emerging, and the market for emission reduction certificates or "carbon credits" is rapidly expanding. The sugar industry is well placed to beneflt from carbon finance under the CDM, and to date a number of bagasse cogeneration CDM projects have been implemented. The role of fuel ethanol and other liquid bio-fuels in the CDM is less advanced, but the CDM will play an important role in the development and diffusion of renewable transport fuels.