Case Study Of Household Biogas Pits CDM Project In Rural Areas

Clean Develop Mechanism (CDM) is a mechanism under the Kyoto Protocol , which allow the Certificated Emission Reduction (CER) to be traded between the developing countries and developed countries. The Kyoto Protocol became effective in February 2005.The construction of biogas-pits can effectively treat the animal manure and the produced biogas will replace the firewood through tree-cutting and fossil fuels used for daily livelihood of low-income rural households mainly for cooking, thus will result in GHG emission reductions. But till now, there is no methodology can be applied to this kind of CDM project. After analyzing the key factors such as baseline, project boundary and so on, the emission reduction of the project has been calculated. Sampling method is used to collect the project specific numbers. And then, economic analysis of the project was made. The profit from selling the CERs can make theconstruction of biogas-pits become economically attractive, increasing the IRR from -17% to 9%, with the price of 7 dollars per-CO2eq. Also, at the interest of 7%, the cost of emission reduction is 6.6 dollar per-CO2eq, which made the CERs competitive in the carbon market. Still, there are risks for developers of the project. The biggest risk comes from the uncertainty of the policy of the treatment of the emission reductions related to the change of the forest. Because it will have impact on about 85% of the total emission reduction, it is necessary for the developers to have plans for the risk management.