Why is the DPRK pursuing CDM carbon credits?

Benjamin Habib writes in the East Asia Forum:

North Korea is a curious case among Parties to the United Nations Framework Convention on Climate Change (UNFCCC). It is not an active member of any specific negotiating bloc and has been a sporadic attendee at UNFCCC Conference of Parties gatherings, where its delegates are generally silent participants. Why then does North Korea engage with the international climate change regime?

We do see a rhetorical commitment in reporting documentation, along with various capacity-building programs, which do have greenhouse gas mitigation as a spin-off effect. However, it is the capacity-building dimension that appears to be the primary motivation for North Korea’s UNFCCC engagement. We know that the DPRK has agricultural productivity problems independent of climate vulnerability in terms of soil infertility, land degradation and labour-intensive production in addition to its small arable land base.

North Korea’s reporting documents to the Rio Conventions (a regime made up of the UNFCCC, the UN Convention on Biological Diversity, and the UN Convention to Combat Desertification) strongly emphasise capacity-building to address these weaknesses. The documents refer to hillside land reclamation, seed propagation and selective breeding programs to produce crops with greater climate tolerance, as well as programs to improve the efficiency of pre- and post-harvest cultivation practices and soil fertility-building projects.

It is also evident that North Korea is using the UNFCCC as a vehicle to upgrade its energy sector. North Korea’s energy sector problems are well known, plagued by problems like liquid fuel shortages, bottlenecks in coal supply chains for electricity generation, and poor electricity generation and transmission infrastructure, all of which is a significant drag on the national economy.

The UNFCCC offers capacity-building opportunities for North Korea’s energy sector through the Clean Development Mechanism (CDM), which is one of the key mechanisms for cooperative greenhouse gas abatement embedded within the Kyoto Protocol. The CDM was designed with the dual purpose of assisting developed states to comply with their emission reduction commitments, and assisting developing countries with sustainable development.

North Korea has six verified CDM projects which consist of developing hydropower installations in partnership with Topič Energo, a Czech company. There are further projects under consideration in the CDM verification process. Indeed, the CDM contains a number of compelling possibilities for North Korea, including opportunities for foreign direct investment and technology transfer to upgrade the North Korean energy sector.

Some suggest that North Korea is milking the CDM as a source of foreign currency revenue through the sale of carbon credits. CDM projects create certified emission reduction credits that developing country parties can sell in international carbon markets. Yet a quick appraisal of the numbers indicates why revenue potential is unlikely to be North Korea’s primary motive for CDM participation: North Korea’s CDM projects have generated just under 200,000 carbon credits, which are worth just over US$1 million at the July 2013 EU carbon market spot price of between US$5–6 per ton. This is clearly not a large revenue source, though there is potential for revenues to increase as North Korea’s CDM portfolio expands.

Previous posts on the DPRK’s foray into the UN carbon market can be found here.

Read the full article here:
North Korea’s surprising status in the international climate change regime
East Asia Forum
Benjamin Habib
2013-11-9

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