Royalties for carbon credits scheme unveiled

Mexico is to earn royalties for carbon credits generated from use of energy saving light bulbs in a move that may mean other developing countries could fund emissions cuts through similar ventures.

Fourty-five million energy efficient light bulbs are to be distributed in Mexico to low income households. The plan could help save 33,000 gigawatt hours of energy, accounting for 16 million tonnes of carbon emissions over a 10 year period. Carbon credits created from this will be sold to developed nations such as Australia which will imposes a $23 per tonne carbon tax from next year.

Carbon currently has a low price on Markets in Europe, where Certified Emissions Reduction’s (CER’s) are trading around $9, but come 2015 Australian firms will be able to buy carbon offsets from overseas projects, allowing the Mexican government to gain royalties. Schemes so far have been criticised due to over-abundance of carbon credits, creating a low price.

The problems with the scheme could arise from monitoring and tracking emissions reductions as a result of the project. Offsetting is a contentious topic with many sitting on the fence as to its ultimate effectiveness to create a least cost market based way to reduce emissions.