Carbon finance and solar water heating technology: exploring possible synergies through five case studies

This paper explores the potential of carbon finance to boost markets for solar water heating (SWH) technology in developing countries. The promise of greater adoption of SWH systems into a global energy strategy is important for sustainable development efforts, since SWH systems can yield multiple local and global environmental, economic, and public health benefits. Carbon finance, in particular, is an important vehicle for sustainable development due to its ability to harness market forces for the greater good. After a brief introduction of the issues, the second section offers an outline of the political, economic and environmental context in which carbon finance has evolved to become an important tool for the global effort to reduce emissions of anthropogenic greenhouse gases. This paper then examines specific carbon trading mechanisms that have developed over years of negotiation and trial and error, such as the Clean Development Mechanism (CDM) and the Community Development Carbon Fund (CDCF), and it provides an overview of the myriad components of these mechanisms that are especially critical for their meaningful contribution to sustainable development. It concludes the third section with a summary of the current market for carbon-based commodities. The fourth section offers a survey of SWH technology and describes some of the technology’s attributes that make it a suitable component of sustainable development efforts. This section also introduces many of the barriers that have traditionally prevented SWH from gaining a foothold in the residential and commercial energy sectors. The fifth section then explores how the CDM and CDCF could affect SWH markets. It does this first through a specific examination of these mechanisms’ operational modalities and then attempts to find possible linkages where SWH markets can take advantage of carbon markets. Through the lens of five case studies of countries that have active SWH markets – Barbados, China, India, Mexico, and South Africa – the sixth section assesses the state of SWH markets and seeks to find more precise possible synergistic relationships between those markets and carbon finance. It explores many aspects of these countries’ demand for hot water, prevailing market conditions for conventional fuels and SWH technology, barriers to greater SWH adoption, and current initiatives to strengthen the position of SWH in the domestic marketplace. This section concludes by offering some insight into the potential for carbon finance to influence SWH markets. Finally, the last section offers some closing remarks and considerations for future activities to stimulate further synergies between carbon finance and SWH markets.