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Pitch

Hydro Corporate Social Responsibility Model guides the energy industry to balance stakeholder needs and ecosystem requirements.


Description

Summary

Small hydropower projects in developing countries are effective climate change mitigation actions (Boyd, et al, 2009) and have the opportunity to get funding from the international carbon markets, especially through the Clean Development Mechanism-CDM-. In this context, as an action to address climate change in the energy sector, I propose the Hydro Corporate Social Responsibility Model- HCSRM- to guide communities to develop small hydropower projects.

The main barrier for the participation of communities in the CDM is that transaction costs are prohibitive for small projects in developing countries, $63000 USD per project on average (GECF, 2010). The HCSRM facilitates the process and reduces the cost to allow poor communities to take advantage of their potential to develop CDM projects. HCSRM standardizes the main procedures of project development, and give information to stakeholders to avoid the need of hiring consultants to develop CDM projects.

HCSRM integrates organizational, socioeconomic, and ecological aspects in developing strategies at a community level, and communicating the information to different stakeholders (Potoski & Prakash, 2013). That way the integrative model address other difficulties that jeopardize the participation of poor communities like: The concentration of projects on certain regions (Sawhney and Rahul, 2014) and sectors (Eni-Ibukun and Akanle, 2013) with very little participation of poor communities (Subbarao and Lloyd, 2011); a managerial disciplinary approach that fails to address the complexities of the projects (Boyd and Goodman, 2011); the fact that funding is going mainly to project consultants no to the communities who need to be funded.

The HCSRM helps hydroelectric projects to mitigate climate change and to balance stakeholder needs, and ecosystem requirements in order to reduce impacts and increase benefits in a strategic manner transforming barriers into innovation opportunities (Shepherd and Patzelt, 2011).


Category of the action

Reducing emissions from electric power sector.


What actions do you propose?

Clean Social Power will use the Hydro Corporate Social Responsibility Model –HCSRM- to mitigate climate change in the following specific actions. A calibration of the model at a local scale in Colombia, a replication of the model at a regional scale in Latin America.

The model HCSRM would be calibrated using the small hydroelectric project Chachagüí, this project has complex interactions with stakeholders and ecosystems.

The pilot project would be developed by a community located in one of the poorest states of Colombia, Departamento de Nariño, in the Southeast corner of the country.  The small hydroelectric project would be developed in Chachagüí town and is planned bring electricity and to power an irrigation system that would benefit 1200 rural families.

In the small hydro power pilot Chachagüí, the electricity delivered to the households would be metered using electronic meters; the consumption information would be centralized and analyzed by the communal organization that would manage the facility.

Most of the population has mobile phones; the households would pay consumption by electronic transactions. The community in the area use phones in a model called pre-paid, where the user buys a card charged with a specific amount of money and pays sending a text message.

This pilot project is representative of rural poor population non connected to the grid. In Colombia 66% of the country is defined as Non Connected Zones (Zonas no Interconectadas-ZNI), not connected to a national power grid, that is 17 departamentos, 5 capitals, 54 medium towns, and 1262 towns (IPSE, Agosto 2010).

In a second stage the HCSRM would be replicated at different regional scenarios working with communities to adjust the model to different population’s requirements. .

Latin America uses around 21% of its hydropower potential. I am planning to reach 0.1% of the market in a mature stage. At the scalable stage, the model would help communities to take advantage of the regional potential developing small hydroelectric projects to participate in carbon markets demonstrating that the model is scalable.


Who will take these actions?

Hydro Corporate Social Responsibility Model –HCSRM-is a product that could be applied by funding agencies, project developers, hydroelectric planers, and managers on different hydroelectric projects.

HCSRM will give the users: A framework of benefits and impacts as a data management tool; dynamic strategic scenarios to guide firm’s strategic planning and decision making, and a communication tool to interact with stakeholders.

Despite the huge potential on Solar and Wind electricity generation in the region, hydropower is the technology with easier application and with greater benefits in Latin America.

The main barrier to develop the small hydro projects is the difficulty of access to some areas, communities live in an isolated territory and that increases the costs of building infrastructure, work with the community, and overcome legal and regulatory processes.

Other difficult barrier to the development of small hydropower is that the community and local government have low administrative, technical, and organizational knowledge and capabilities. The companion of the project is especially important from the previous study stage, the operation of the facility, and the management of the carbon market negotiations.

At the scalable phase, communities at any location can access the HCSRM to develop their small hydropower projects.

The regulation and licensing varies between countries and regions. Due to the diversity of regulatory processes at the regional and global scales Clean Social Power would use the model case by case to facilitate the development of small hydro power facilities (Practical Action, 2014).


Where will these actions be taken?

The pilot study will be developed in Colombia.

The regional stages would be applied in the Andean region in a first stage and Central America in a Second Stage.


How much will emissions be reduced or sequestered vs. business as usual levels?

The potential energy production for small hydro power is 173 GW, Clean Social Power has the goal to reach 0.1% of the potential market at a mature stage achieving around 0.173 GW. The potential reduction of emissions for Clean Social Power would be about 2550000 tons of CO2. This amount of emission reductions would depend on Clean Social Power’s penetration on the market, efficient adoption of the model by the different stakeholders involved in the development of small hydroelectric projects, and the efficiency in the standardization of the model that would determine the capacity of Clean Social Power to support several projects at the same time. At the pilot local stage, the Small Hydro Power facility Chachagüí would potentially reduce approx. 29190 t CO2e.

The regional and global reductions of greenhouse gases would depend on the size and number of projects that apply the Hydro Corporate Social Responsibility Model –HCSRM-


What are other key benefits?

Other benefits additional to the reduction of GHG are: Clean energy for communities, in particular, populations not connected to the grid; increase in social investment and economic activity which represents jobs for the community (Olsen and Fenhann, 2008); development of  social fabric and identity in the communities that develop hydropower projects; better relationships energy industry-society-environment; education for the communities that would empower their actions on energy and environmental projects (Mishra, Singal, and Khatod, 2011); and the reduction of transaction costs and administrative inefficiencies (Maraseni, 2013) that would increase the number and quality of small hydropower projects.

Clean Energy with Social Responsibility has a sounding business model. Startup investors would grow up with Clean Social Power, they will share the benefits of an expected fast grow of the use of this new model. I am expecting a minimum 10% return for early investors.


What are the proposal’s costs?

Phase one of standardization at a local level has a cost of $10000 USD, this amount includes: data collection, model development, and meetings with communities.

The second phase at a regional level has a cost of $30000 USD, this amount includes: data collection, software development, meetings with communities, and travel costs.

The model would be used directly by stakeholders involved in small hydro power projects. There are two alternatives to use the model. An online use of the model with continuous support, and an in site use of the model. The company would receive startup funding at the starting stage to set the infrastructure to offer the services, and would be funded after that selling the services, and getting a percentage of the sale of carbon credits.


Time line

The actions would be applied in different phases. In the first phase the model would be applied to Chachagüí, 6 months, the results of this pilot phase would be replicable in other projects at a regional scale for two years, and then the results would be scalable to the small hydropower industry in three years.

From the pilot phase to the development and global application of the Hydro Corporate Social Responsibility Model –HCSRM- the total estimate time is three years and a half. After that time the model would continue its life cycle being constantly adjusted to social, environmental, and economic changes. The model is based in a continuous improvement business framework (Al-Tabbaa, Gadd, and Ankrah, 2013) and coevolves with the industry and external requirements. 


Related proposals

None to date


References

Al-Tabbaa, O., Gadd, K., & Ankrah, S. (May 01, 2013). Excellence models in the non-profit context: Strategies for continuous improvement. International Journal of Quality and Reliability Management, 30, 5, 590-612.

Boyd, E., Hultman, N., Timmons, R. J., Corbera, E., Cole, J., Bozmoski, A., Ebeling, J., ... Liverman, D. M. (November 01, 2009). Reforming the CDM for sustainable development: lessons learned and policy futures. Environmental Science and Policy, 12, 7, 820-831.

Boyd, E., & Goodman, M. K. (August 01, 2011). The Clean Development Mechanism as Ethical Development?: Reconciling Emissions Trading And Local Development. Journal of International Development, 23, 6, 836-854.

Global Environment Centre Foundation (2010) CDM/JI Manual for Project Developers and Policy Makers. Available: http://gec.jp/main.nsf/en/Activities-CDMJI_FS_Programme-CDMJI_Manual2010

Liu, H., Masera, D. and Esser, L., eds. (2013). World Small Hydropower Development Report 2013. United Nations Industrial Development Organization; International Center on Small Hydro Power. Available fromwww.smallhydroworld.org

Maraseni, T. N. (February 01, 2013). Selecting a CDM investor in China: A critical analysis. Energy Policy, 53, 3, 484-489.

Mishra, S., Singal, S. K., & Khatod, D. K. (June 01, 2011). Sustainable energy development by small hydropower with CDM benefits in India. International Journal of Ambient Energy, 32, 2, 103-110.

Olsen, K. H., & Fenhann, J. (August 01, 2008). Sustainable development benefits of clean development mechanism projects A new methodology for sustainability assessment based on text analysis of the project design documents submitted for validation. Energy Policy, 36, 8, 2773.

Potoski, Matthew and Prakash, Aseem, Green Clubs: Collective Action and Voluntary Environmental Programs (May 2013). Annual Review of Political Science, Vol. 16, pp. 399-419, 2013. Available at SSRN:http://ssrn.com/abstract=2265147or http://dx.doi.org/10.1146/annurev-polisci-032211-211224

Practical Action (2014) Poor people’s energy outlook 2014: Key messages on energy for poverty alleviation, Rugby, UK: Practical Action Publishing. Available:http://global-off-grid-lighting-association.org/wp-content/uploads/2013/09/539ae24e-74f8-4ef2-a359-1c690a000075.pdf

Sawhney, A., & Rahul, M. (January 01, 2014). Examining the regional pattern of renewable energy CDM power projects in India. Energy Economics, 42, 240-247.

Shepherd, D. A., & Patzelt, H. (January 01, 2011). The new field of sustainable entrepreneurship: studying entrepreneurial action linking "what is to be sustained" with "what is to be developed". Entrepreneurship: Theory and Practice, 35, 1.)

Subbarao, S., & Lloyd, B. (March 01, 2011). Can the Clean Development Mechanism (CDM) deliver?. Energy Policy, 39, 3, 1600-1611.