A leading Cambodian rice exporter is planning a $3.5 million renewable energy project
that will earn credits under the global carbon-dioxide reduction scheme of the Kyoto
Pending approval by the Phnom Penh municipal government, Angkor Rice will begin construction
of the Angkor BioCogen (ABC) power plant in early 2006, with operations expected
to begin by mid-2007,
The plant will produce clean energy by using rice husks to fuel a biomass generator.
As a waste product of its milling operations, Angkor Rice is left with about 26,000
metric tons of rice husk each year. Energy produced by the plant would be used by
the company and surrounding villages in Kandal province.
Adisom Chieu, the managing director of Angkor Rice's ABC venture, said he hopes the
company will be the first in Cambodia to benefit from the financial incentives of
the Clean Development Mechanism (CDM).
CDM is part of an effort to reduce greenhouse gas emissions by allowing developed
nations to achieve part of their carbon-dioxide reduction obligations set out by
the Kyoto Protocol through projects in developing countries.
"CDM is making this project possible," Chieu said. "Although the money
we will earn from selling carbon credits to other countries only equals 3 to 5 percent
of the projected revenue, it makes the venture economically viable."
Under the Kyoto Protocol, signatory countries must limit carbon-dioxide emissions
caused by the burning of fossil fuels. Because Cambodia already has low carbon-dioxide
levels, it can afford to sell off carbon credits to developing countries, while still
adhering to Kyoto Protocol standards.
A country earns carbon credits by reducing emissions into the atmosphere. One credit
is equivalent to the reduction of one metric ton of carbon, which translates to between
$5 and $10 depending on the company buying the credit.
Arul Joe Mathias, a biomass and CDM advisor for the EC-ASEAN COGEN Programme and
also for the ABC project, is enthusiastic about the new power plant.
Mathias estimates that Angkor Rice will produce approximately 40,000 carbon credits
per year, which the company can sell, potentially earning between $200,000 and $400,000
He has already been contacted by several multinational organizations that want to
finance the environmentally friendly power plant and expects more interest as the
"People always say that Cambodia is not a good country to do business, but I
think it is one of the best countries to do business [in energy]," said Mathias,
who was worked with more than 100 CDM projects in the region. "The cost of energy
in Cambodia is three times higher than in Thailand. That makes your investment three
times more profitable."
The Climate Change office within the Ministry of Environment has been working for
two years to set up guidelines for CDM investment in Cambodia.
"CDM and carbon credits are a great way to get investment in developing countries
for projects that reduce greenhouse emission," said Bridget McIntosh, the CDM
advisor at the Climate Change office.
McIntosh said the key to Cambodia benefiting from CDM is implementing projects that
can improve long-term, sustainable development in Cambodia.
Suitable projects would use indigenous fuel sources and reduce local pollution.
For Angkor Rice, the project will not only earn them carbon credits and extra cash,
but will also reduce the amount of waste material they produce and help the local
If the rice husks left over after milling were allowed to decay naturally, they would
release methane - an environmentally destructive greenhouse gas - after four to five
By burning the rice husks, Angkor Rice will produce 1.5 megawatts (MW) of energy
per day, which will power their rice mill and still leave 0.5 MW to supply to 19
The existing supplier has already agreed to distribute the extra electricity, and
the price will be reduced from the current 1,800 riel per kilowatt to 900 riel.