The Bhutanese Leading the way.
During the recent Question Hour in Parliament, Naiten Wangchuk, the Member of Parliament (MP) from the Mongar Constituency, sought clarification from the Ministry of Energy and Natural Resources on the status of the country’s carbon trading initiatives.
The MP emphasized Bhutan’s Carbon Negative Status, Bhutan’s Entry into Carbon Markets and Future Renewable Energy Projects.
The MP said Bhutan is renowned globally for being a carbon-negative nation, that sequesters 8.5 million tons of CO2, which is ten times more than its annual emissions. However, the global threats of warming and climate change persist, prompting international actions such as the Kyoto Protocol (1997) and the Paris Agreement (2015).
These international frameworks have imposed binding emission reduction targets on industrialized nations and established platforms for trading carbon credits in voluntary or compliance markets. Bhutan has participated in these markets through the Kyoto Protocol’s Clean Development Mechanism, targeting large energy projects.
Bhutan has entered the carbon markets using the Kyoto Protocol’s Clean Development Mechanism (CDM), targeting large energy projects Notably, he said that the 126 MW Dagachu hydropower project, with 397,106 Certified Emission Reductions (CERs) per annum, and the Punatsangchu project, with 4,177,672 CERs per annum, were registered in 2010 and 2013, respectively.
CERs represent carbon credits earned by emission-reduction projects in developing countries, equivalent to one tonne of carbon dioxide. These credits can be sold to industrialized countries to help them meet their emission reduction targets
Looking ahead, Bhutan plans to construct a lot of hydropower, solar energy, and wind energy in its 13th and 14th Five-Year Plans (FYP). These renewable energy projects, both existing and planned, have the potential to generate substantial revenue from carbon trading under the Article 6.4 mechanism of the Paris Agreement.
In this regard during the question hour, MP Wangchuk posed three critical questions to the Ministry: How much revenue was generated from Dagachu and Punatsangchu? Is there a plan to register new renewable energy projects under the Article 6.4 mechanism of the Paris Agreement? What potential revenue could be generated from these registered and upcoming renewable energy projects?
In response to the MP’s questions, the Minister of Energy and Natural Resources Gem Tshering, provided key insights.
The Minister said, “ In terms of revenue from Carbon Credits from 2015 to 2023, the Dagachu hydropower project has traded nearly 700,081.653 Certified Emission Reduction (CER) credits. These credits, when converted to monetary value, amount to 7.77 million dollars earned solely from Dagachu. In contrast, the current situation of Punatsangchu 1 and 2 is widely known; they have not met their objectives and have not generated any earnings.”
Article 6.4 of the Paris Agreement allows countries to voluntarily cooperate in implementing their climate actions and supports the use of international carbon markets to achieve emission reductions.
The Minister also addressed plans for registering new renewable energy projects under Article 6.4 of the Paris Agreement. He said, “Although Bhutan is part of the Paris Agreement and the Kyoto Protocol for carbon trading, neither has been fully operational. This is why Druk Holding and Investments (DHI) is exploring carbon trading opportunities.”
The Minister highlighted that DHI is currently collaborating with Singapore to help Bhutan enter the carbon market. This partnership aims to capitalize on Bhutan’s renewable energy projects and secure significant revenue through international carbon markets.
