Evaluvating the potenital of adopting clean development mecahanism for implementing renewable energy based projects in Sri Lanka

Abstract

Sri Lanka has had a hydropower dominated electricity generation for many years with relatively high rainfall mainly in the central hilly region. This factor has led to a greater dependence on hydropower for its power generation. However, at the same time, Sri Lanka is heavily dependent on imported fuel and for energy security it is imperative that we take steps to harness the renewable energy sources. The government is trying to respond to the energy supply issue by relying heavily on fossil fuel based electrical power, which may not be the correct energy option for Sri Lanka. Therefore, the large scale fossil based power plants are not environmentally friendly in comparison to other energy options. This will result in a gradual increase in greenhouse gas (GHG) and other environmental emissions in the power sector and, hence, there has been a lot of opposition from the people, especially environmentalists, civil society and residents in the locations where fossil based plants have been planned. The main intention of this study is to form an internationally consistent view to answer the question as to whether and to what extent the adoption of renewable based combustion technologies in projects could be economic and sustainable in, place of the nonrenewable based combustion dominant projects. The study will consider the appropriateness of existing perspectives and policy imperatives in the above regard also. Special emphasis will be given for the local environmental protection, mitigation of climate change, legislation and quality of service in a context of global competition. It is a fact as well as the general perception that adoption of renewable energy technology based projects and the Clean Development Mechanism (CDM) created under the Kyoto Protocol, are directly linked. The Clean Development Mechanism (CDM) act as a bridge to link the industrialized countries and developing countries. The CDM intends to assist developing countries achieve sustainable development by providing incentives for industrialized countries to invest cost-efficient GHG reduction projects in these countries. The developed countries can receive some credits by investing and implementing GHG emission reduction projects in the developing countries, then use the credits to fulfil their legally binding quantitative obligations laid down in the Kyoto Protocol. Although the Clean Development Mechanism (CDM) does not have an explicit technology transfer mandate, it may contribute to technology transfer by financing emission reduction projects using technologies currently not available in the host countries. The study presented in this thesis first analyse the potential technology possibility under the CDM in power generation. This study is a theoretical study focused on the survey of the current state of art of CDM and related issues. The results show that the potential of CDM opportunities in mini hydro, biomass including dendro power and wind energy , which can be identified as the leading, sustainable, non-conventional forms of renewable energy promoted in Sri Lanka for electricity generation to feed into the thermal grid. Also the main intention of this study is to investigate the technological and regulatory interventions on overall power sector emissions and economic and environmental benefits of such interventions. Based on the analysis it was found that present annual CO2 emission with respect to the thermal power electric generations in Sri Lanka is about 0.75 Million Metric Tons and Wind, mini-hydro and bio mass will be very attractive with CDM funding. Out of the selected CDM options, the Mini Hydro plant that Sri Lanka need to choose is particularly important. Considering that this is the option giving the highest carbon reduction within the planning horizon while having the highest profit. But when considering the local energy tariff structure, the tariff is highest for Biomass.