CARTE CDM AND LAW.pdf

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  • L Lakshmi holds an LL.M and M.A (Pub. Admn.,) from Osmania University and a Postgraduate Diploma in Business Administration from AP Productivity Council. She is currently working as Consulting Editor at Amicus Books, an imprint of Icfai University Press. She is also the Consulting Editor, Icfai Journal of Environmental Law, a quarterly journal published by Icfai University Press. Prior to joining Amicus Books she was a practicing lawyer for five years. Her areas of interest are environmental law, labour laws, and administrative law.

  • Amicus Books

    An Introduction

    Amicus Books is the initiative of the Icfai University Press to publish a series of books in various segments of law with a special focus on emerging issues. These books seek to provide, at one place, a retrospective as well as prospective view of the contemporary developments in the legal environment, with emphasis on general and specialized branches of knowledge and applications.

    The books in this series are based on relevant, authoritative and thought-provoking articles written by experts and published in leading professional magazines and research journals. The articles are organized in a sequential and logical way that makes reading continuous and helps the reader acquire a holistic view of the subject. This helps in strengthening the understanding of the subject better and also enables the readers stretch their thoughts beyond the content of the book. The series is designed to meet the requirements of executives, research scholars, academicians and students of professional programs. The Icfai University Press has published over 900 books in this series. For full details, readers are invited to visit our website: www.amicus.iupindia.org

  • Clean Development Mechanism and Law

    Edited by

    L Lakshmi

    Amicus Books The Icfai University Press

  • Clean Development Mechanism and Law

    Editor: L Lakshmi 2008-09 The Icfai University Press. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying or otherwise without prior permission in writing from the Icfai University Press. While every care has been taken to avoid errors and omissions, this publication is being sold on the condition and understanding that the information given in the book is merely for reference and must not be taken as having authority of or being binding in any way on the authors, editors, publishers or sellers. Icfai University Press IUP and IUP logo, Amicus Books ab and ab logo are trademarks of the Icfai University Press. Any other product or corporate names, that may be registered trademarks, are used in the book only for the purpose of identification and explanation, without any intent to infringe. Other than the publisher, no individual or organization is permitted to export this book from India. First Edition: 2008 Printed in India

    Published by

    The Icfai University Press 52, Nagarjuna Hills, Punjagutta, Hyderabad, India500 082. Phone: (+91) (040) 23430 368, 369, 370 Fax: (+91) (040) 23435386 E-mail: [email protected], [email protected] Website: www.amicus.iupindia.org

    ISBN: 978-93-80120-02-7

    Editorial Team : G Yellam Goud, C Sri Devi and R Suneetha Layout Designer : VVSS Sai Babu, MSM Lakshmi, VRSC Prasad, N Jaya Bharathi,

    PSRASV Prasad and RV Srinivas. Cover Design : N Shashidhar Rao The views and content of this book are solely of the author(s)/editor(s). The author(s)/editor(s) of the book has/have taken all reasonable care to ensure that the contents of the book do not violate any existing copyright or other intellectual property rights of any person in any manner whatsoever. In the event the author(s)/editor(s) has/have been unable to track any source and if any copyright has been inadvertently infringed, please notify the publisher in writing for corrective action.

  • Contents

    Overview I

    1. Enlisting Carbondioxide Capture and Storage as a Clean Development Mechanism Project: Legal and Regulatory Issues Considered

    1

    Olawuyi Damilola Sunday

    2. Flexible Mechanisms for Climate Change Compliance: Emission Offset Purchases under the Clean Development Mechanism

    29

    Christopher Carr and Flavia Rosembuj

    3. Linking the EU Emissions Trading Scheme to JI, CDM and Post-2012 International Offsets

    49

    J. de Spibus

    4. Links between European Emissions Trading and CDM Credits for Renewable Energy and Energy Efficiency Projects

    85

    David M. Driesen

    5. Linking Community Forestry Projects in India with International Carbon Markets: Opportunities and Constraints

    105

    Rohit Jindal and Shailesh Nagar

    6. The Commerce Clause Meets Environmental Protection: The Compensatory Tax Doctrine as a Defense of Potential Regional Carbon Dioxide Regulation

    126

    Heddy Bolster

  • 7. Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade

    168

    Brian C. Murray, Richard G. Newell and William A. Pizer

    8. Greenhouse Gas Emissions Charges and Credits on Agricultural Land: What can a Model Tell Us?

    198

    Joanna Hendy, Suzi Kerr and Troy Baisden

    List of Cases 210 Index 211

  • Overview

    Due to massive industrialization the planet Earth had been witnessing a tremendous development in all spheres of human activities. In consequence, there is increase in huge quantities of atmospheric concentrations of carbon dioxide, methane, and nitrous oxide in the atmosphere. This in turn has been found to be escalating the temperature of Earth resulting in global warming and climate change. The concern for the health of the individuals made the States realize the likely adverse effects of global climate change on human health that led them to propose for mitigating the GHGs by entering the United Nations Framework Convention on Climate Change (UNFCCC). The efforts further led to Kyoto Protocol in 1997, which advocated for framing and implementation of flexible mechanisms enabling the industrialized countries to pursue their goals of GHG reduction by purchasing GHG emissions.

    The Kyoto Protocol provided for three mechanisms that enabled developed countries to acquire greenhouse gas reduction credits. These mechanisms

  • II

    include- Joint Implementation (JI) wherein a developed country with relatively high costs of domestic greenhouse reduction could set up a project in another developed country. Whereas, under the Clean Development Mechanism (CDM) a developed country could sponsor a greenhouse gas reduction project in a developing country where the cost of greenhouse gas reduction project activities is usually much lower, but the atmospheric effect is globally equivalent. The developed country would be given credits for meeting its emission reduction targets, while the developing country would receive the capital investment and clean technology or beneficial change in land use. Finally under International Emission Trading (IET) the countries can trade in the international carbon credit market to cover their shortfall in allowances. Countries with surplus credits can sell them to countries with capped emission commitments under the Kyoto Protocol. These carbon projects can be created by a national government or by an operator within the country.

    The Clean Development Mechanism (CDM) a market based concept developed under Article 12 of the Kyoto Protocol was intended to allow industrialized countries -Annex B countries with a greenhouse gas reduction commitment to invest in projects that would reduce emissions in developing countries as an alternative to more expensive emission reductions in their respective countries. The members further intended to assist developing countries in achieving sustainable development, while contributing to stabilization of greenhouse gas concentrations in the atmosphere. It is supervised by the CDM Executive Board (CDM EB) under the guidance of the Conference of the Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC).

    An industrialized country that wishes to get credits from a CDM project must obtain the consent of the developing country hosting the project that the project will contribute to sustainable development. Then, using

  • III

    methodologies approved by the CDM Executive Board (EB), the applicant -the industrialised country must establish a baseline estimating the future emissions. Then it is validated by a third party agency, called a Designated Operational Entity (DOE), to ensure the project results in real, measurable, and long-term emission reductions. The EB then decides whether or not to register the project. If a project is registered and implemented, the EB issues credits, called Certified Emission Reductions (CERs), known as carbon credits, where each unit is equivalent to the reduction of one metric tonne of carbon dioxide. Any proposed CDM project has to use an approved baseline and monitoring methodology to be validated, approved and registered. Baseline Methodology will set steps to determine the baseline within certain applicability conditions whilst monitoring methodology will set specific steps to determine monitoring parameters, quality assurance, and equipment to be used, in order to obtain datas to calculate the emission reductions. With costs of emission reduction typically much lower in developing countries than in industrialised countries, industrialised countries can comply with their emission reduction targets at much lower cost by receiving credits for emissions reduced in developing countries as long as administration costs are low.

    However, the concern i