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Climate & Development

Climate & Development 1 (2009) 66–81

research article

Barriers to sugar mill cogeneration in India: Insights into the structure of post-2012 climate financing instruments

Barbara Haya, Malini Ranganathan and Sujit Kirpekar

The Indian government has set the challenging goal of increasing its electricity capacity six- to eight-fold in the next 30 years in the context of significant capacity shortfalls and a financially ailing electricity sector. The central and state governments are subsidizing renewable energy because of energy security concerns, to promote domestic resources and a diversity of fuel supply. International funds made available through the international climate change regime could potentially provide much needed support to pay the higher costs that most renewable energy requires. This article performs a case study analysis of the history of the development of one renewable energy technology in India – cogeneration of sugarcane waste – focusing on the barriers this technology has faced in the past and now faces, and how well international and domestic efforts have worked to overcome these barriers. The goal of this work is to lend insight into the effective structure of future international support mechanisms being discussed for inclusion under the post-2012 climate change regime. This study finds that bagasse cogeneration has faced layers of informational, technical, regulatory and financial barriers that have changed over time, and differed significantly between the private and cooperative sugar sectors. Each of the programmes designed to support bagasse cogeneration had a role to play in enabling the bagasse cogeneration currently installed, and no single programme would have been successful on its own. Some barriers to the technology needed directed efforts designed to address the specific context of the sugar sector in India; simply subsidizing the technology or putting a price on carbon was not enough. Where climate (global) and development (local) priorities differ, projects that bring about international goals risk running into conflict with other more pressing domestic goals. Interviews at mills attempting to access carbon financing through the Kyoto Protocol's Clean Development Mechanism (CDM) indicate that additionality-testing is a challenge to the effectiveness of this mechanism. Any effort to exploit the remaining 86% of the estimated national potential for high efficiency bagasse cogeneration will need to address the special financial and political conditions facing cooperative mills.

Keywords: bagasse cogeneration; Clean Development Mechanism; CDM; climate change; post-2012; sugar cooperatives; USAID

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