Background Paper CDM- A KEY TO AVERTING CLIMATE

Background Paper CDM- A KEY TO AVERTING CLIMATE CHANGE

Strategic Response • Prevention • Energy Conservation • Green practices, change in lifestyle • Abatement • GHG emission mitigation through : Improved energy efficiency Cleaner energy sources / technologies Preventing deforestation Reducing methane emission (by improved Waste management practices) • Technological and economic potential • Policies, measures, and instruments • Global, regional and national cost of mitigation; Ancillary benefits

CO 2 mitigation Options: Case of Electricity Sector • Coal: Dominates the electricity sector today • Fuel switching (Coal NG) • Conventional Plants + Carbon Capture & Sequestration (CCS) (Post –Combustion CO 2 Capture) • Gasification/ Reforming + CCS (Pre-Combustion CO 2 Capture) • Oxyfuel Combustion + CCS

CO 2 Capture and Sequestration (CCS) • Emerging area of research – Active work being conducted in Europe, US, Canada, Japan, India and Australia • Option 1: Forestry and algal / microbial processes that integrate the separation, capture and sequestration (fixation) of CO 2 • Option 2: Capture CO 2 generated in a combustion process, transport it as a concentrated steam and securely store it (till eternity!) CCS involves capture+ compression+ transport+storage+ monitoring

Global Problem • CO 2 is a global pollutant • Responsibility of the industrialized (developed) nations • Large contribution to the present crisis • Very high per capita emissions • Strong, fossil- fuel driven economies • Role of developing nations • • Developmental needs Large demand for energy Increasing population Vulnerable due to lack of resources / adaptive capabilities • Need for International cooperation • North- South debate • Kyoto Protocol (1997)

Brief History • 1992: United Nations Framework convention on Climate Change, adopted by most of the countries at the Earth Summit in Rio de Janeiro • 1997: Kyoto Protocol was adopted • An important step towards stabilization of GHG concentration to prevent dangerous impacts on climate system • Industrialized countries are required to reduce their combined GHG emissions by at least 5. 2% compared to 1990 levels by the first commitment period(2008 -2012) • 2005: Kyoto protocol entered into force • Met 55 / 55%condition, after ratification by the Russian Federation • Is now fully operational

What is CDM ? • Clean Development Mechanism • Innovative feature of the Kyoto Protocol to the UNFCCC, Introduced in Article 12. • Legal entities in developed countries can invest in projects in developing countries that reduce GHGs. • Once certified, these emission reductions can be used to meet the commitments made by the developed countries under the Kyoto Protocol.

Objectives of CDM • To give Annex- I nations, flexibility to meet emission reduction obligations (by investing in projects in south and taking climate credits in their balance sheets) • To promote sustainable development in the developing countries.

CDM: Pre-requisites • The project should aim to reduce/ absorb at least 1 of 6 GHGs(CO 2, CH 4, N 2 O, HFCs, PFCs, SF 6) • Additionality: Anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity. • “Real” and “Measurable” GHG reductions against the baseline scenario. • The project activity must demonstrate its contribution to environmental integrity and the host country’s sustainable development goals.

Where is CDM Applicable ? • Renewable Energy: Wind, Solar, Biomass, Hydel power • Fuel switching: Fossil fuels to green fuel • Energy efficiency measures related to: Boilers, pumps, turbines, cooling system etc. • Introduction of new, efficient power generation technologies; Reduction in technical T&D losses • Improved waste management practieses: e. g. Capturing landfill methane for power generation • Transport: Modal shift (e. g. pipelines, train), fuel switch • Forestry: Afforestration

CDM: Disqualifiers • Emission reduction from Nuclear facilities • A diversion of official development assistance (ODA) from Annex – I countries • Any other type of sequestration activities apart from afforestation and reforerstation!

India as a partner in Global GHG Mitigation • • • June 1992: Rio conference signs UNFCCC Nov. 1993: Ratified the convention Dec. 1997: Signed the Kyoto Protocol Aug. 2002: Ratified the Kyoto Protocol Dec. 2003: National CDM authority was established March 2005: 1 st CDM project from India was registered • Among non Annex- I countries, India is the first Nation to recommend highest number of CDM projects to CDM Executive Board of UNFCCC (1000 th projects registered on 14 April 2008) • Indian DNA (Designated National Authority) has offered simple, first tracked clearance system for the issuance of Host Country Endorsement.

CDM- A WIN-WIN SITUATION Industrialized countries (AI) ®To assist in meeting their emission limitation commitments Investors Project proponents (private business, governments, NGOs) CDM project activity (private business, governments, NGOs) Developing countries (Non-AI) ®To assist in achieving sustainable development

What makes a project activity a CDM project activity? GHG “What would have happened” situation (fictitious situation) = baseline CERs CDM project activity Start of CDM project activity time GHG = Greenhouse gas emissions CERs =certified emissions reduction

CDM Projects Status • • Total projects registered by EB – 1000 Equivalent CERs – 340 Million Projects from India – 47 (~ 30%) Total Baseline Methodologies approved > 50 • Majority of the projects: Biomass – energy • Majority of CERs generated: HFC oxidation

Typical CDM Projects Categories in India • Renewable energy (e. g. solar, wind, biomass, hydro) • Fuel switching (e. g. oil to gas, coal to gas) • Energy efficiency (e. g. lighting, insulation, process optimization) • Waste processing (e. g. land fill gas extraction, waste incineration) • Waste heat recovery projects including power generation • Energy saving by elimination of reheating processes • Thermal oxidation of HFC • Afforestation

India’s Sustainable Development Criterion for CDM Project Approval • • Environmental well being Economic well being Social well being Technological well being

Some Issues with CDM • Incentives to inflate baseline emissions (both parties gain by overstating CERs) • Technology transfer • Major attraction of Kyoto Protocol to developing countries, now virtually forgotten • A technology acquisition fund (cess on CER buyers) should be created to be given to developing countries to buy technology from wherever and whomsoever • Large transaction costs, discouraging small projects • Perverse policy Incentives- A national policy promoting renewable may disqualify the host century for CER credits • Design for developed countries • Market risk to be borne by the seller alone • Non- transparent deals, keeps the buyers in control