Clean Development Mechanism

Ministry of Environment & ForestsGovernment of India

What is anthropogenic climate change? Suite of gases (CO2, CH4, N2O, etc,)

emitted from various economic activities: Fossil fuel use, wet paddy cultivation, cattle raising, fertilizer use, etc.

Growing (but not mature) forests absorb (“sequester”) CO2, the major GHG

Increasing concentrations of these gases in the atmosphere have same effect as a greenhouse, hence “Greenhouse gases” (GHGs). The resulting increase in temperature may impact many climate parameters

Green house gas (GHG)

Chemical Formula

GWP

Carbon-di-oxide CO2 1

Methane CH4 21

Nitrous oxide N2O 310

Per fluoro carbons (PFCs)

(PFCs) 560 ~ 9200

Hydro fluoro carbons

(HFCs) 140 to 11700

Sulphur hexa fluoride

(SF6) Above 10,000

Global Warming Potential (GWP)

Kyoto Protocol Parties adopted in COP-3 in 1997 Commits developed countries to reduce GHG

emissions by 5.2% below 1990 levels during the first commitment period 2008-12

KP came into force on February 16, 2005. Required ratification by at least 55 Parties and amounting to 55 % emissions

USA major country who has not ratified yet

Kyoto Reduction Commitments

Country Reduction commitment for 2008-2012 [% of base year]

Japan – 6 %

Canada – 6 %

EU – 8 % (EU Burden Sharing Agreement)

- Germany – 21 %

- United Kingdom – 12.5 %

- Italy – 6.5 %

Contd.. Three Mechanisms

Clean Development Mechanism Joint Implementation Emissions Trading

Project Performance Monitoring by Project Proponent

Preparation of PIN - DNAPreparation of PDD - UNFCCC

Host Country ApprovalTo the Candidate Project

Project Validation By UNFCCC Accredited DOE

Submission for Registration (UNFCCC – CDM Executive Board)

Certification & Issuance of CERs (DOE & UNFCCC)

CDM Project Cycle - Basics

ONE TIME ACTIVITY

RECURRING ACTIVITY

Additionality tool

Screening for early start projects Identification of alternatives to the project

activity; Investment analysis to determine that the

proposed project activity is not the most economically or financially attractive;

Barriers analysis; Common practice analysis; and Impact of registration of the proposed

project activity as a CDM project activity

Existing actual or historic emissions Emissions from Technology___ attractive investment Average emissions of similar ___ previous 5 years___

performance top 20% Calculation of GHG emission by sources Precise transparent, comparable , avoid over

estimation Applicability System boundaries Leakages

Baseline

Small Scale CDM Projects Power projects upto 15 MWe Energy saving of 60 GWhe Reduction of 60 kt CO2 eq. A & R Sequestration of 8 kt CO2 Approved Simplified Methodologies by

CDM EB Same DOE can undertake validation,

verification and certification Bundling of projects feasible

Small Scale CDM Projects (Contd..)

Additionality Investment barrier Technological barrier Barrier due to prevailing practice Other barriers

Simplified methodologies developed by EB

Same DOE can undertake validation, verification and certification

Bundling of projects feasible

No. Sectoral Scope

1 Energy industries (Renewable / Non-renewable sources)

2 Energy distribution

3 Energy demand

4 Manufacturing industries

5 Chemical industries

6 Construction

7 Transport

8 Mining/mineral production

9 Metal production

10 Fugitive emissions from fuels (solid, oil and gas)

11 Fugitive emissions from production and consumption of halocarbons and sulphur hexafluoride

12 Solvent use

13 Waste handling and disposal

14 Afforestation and reforestation

15 Agriculture

Sectoral Scope

Methodologies 127 Meths available for use

• 67 approved large scale• 14 consolidated large scale• 46 small scale for small scale projects• 10 A/R • 5 SSC A/R

20 Meth tools (Including A&R) CH4 emissions avoided from dumping

wastes Combined baseline selection & additionality

Approved methodologies

Sectoral Scope Large Scale

Small Scale

Consolidated Methodologies

Energy industries (renewable/non-renewable sources)

30 7 7

Energy distribution

1 1 -

Energy demand 6 7 -

Manufacturing industries

11 10 5

Chemical industry 13 4 -

Construction - - -

Transport 1 5 -

Mining/mineral production

- - 1

Metal production 7 - -

Fugitive emissions from fuels (solid, oil and gas)

6 1 1

Fugitive emissions from production andconsumption ofhalocarbons and sulphurHexafluoride

6 2 -

Solvents use - - -

Waste handling and disposal.

6 7 3

Aforestation and reforestation

9 6 2

Agriculture 1 3 1

Approved methodologies Contd/-

• First Order decay method for estimating methane emissions from waste disposed in landfill sites

• Estimation of combined margin factor for an electricity grid

• Estimation of methane flare efficiency

Methodological Tools

National CDM Authority Secretary (E&F) - Chairman Foreign Secretary Finance Secretary Secretary, DST Secretary, DIPP Secretary, MNRE Secretary, MOP Secretary, Planning Commission Joint Secretary (CC), MoEF Director (CC), MoEF - Member Secretary

Single Window Clearance

PCN as per MoEF format PDD as per UNFCCC format Project promoter to give a

presentation in the DNA meeting Host Country Approval

Host Country Approval Emissions Additionality Sustainable Development Parties should have ratified Kyoto

Protocol Voluntary participation

Sustainable Development Sustainable Development CriteriaCriteria

Prerogative of the Host Party

Economic well being

Social well being

Environmental well being

Type of Type of projectsprojects

Renewable energy (Wind, Biomass, Solar,Hydro)

Switching to Alternate Fuels

Energy Efficiency

Waste Management

Oil & Gas

Agriculture

Carbon Sequestration in Forests

CDM Regulatory Bodies| the basics

COP/MOP

EB

UNFCCC

secretariat

SSCWGA/RWG

MP APRIT

DOE

superviseselects

accredits supports

recommends

supportsapproves

supports

recommends

Portfolio of Host Country Approved CDM Projects

Portfolio of Host Country Projects approved.

SectorsNo. of

Projects

EnergyEfficiency

431

FuelSwitching

76

IndustrialProcess

65

MSW 33

Renewable 474

Renewable(Biomass)

337

Forestry 9

Total 1,425

431, 30%

76, 5%

65, 5%

33, 2%474, 33%

337, 24%

9, 1%

Energy Efficiency

Fuel Switching

Industrial Process

MSW

Renewable

Renewable (Biomass)

Forestry

Sector-wise break-up : Host Country Approved project as on 21 August 2009.

Sector-wise break-up : CERs expected till 2012 from Host Country Approved projects as of 21

August 2009.

SectorsCERs (upto

2012)

Energy Efficiency

216,369,909

Fuel Switching

60,314,965

Industrial Process

104,956,443

MSW 11,258,855

Renewable 121,047,877

Renewable (Biomass)

88,731,489

Forestry 8,039,713

Total 610, 719, 251

35%

10%17%

2%

20%

15%1%

Energy Efficiency

Fuel Switching

Industrial Process

MSW

Renewable

Renewable (Biomass)

Forestry

Sector-wise break-up : CERs expected till 2012 in Host Country Approved project as on 21 August 2009.

Investment in CDM Projects

Investment in Rs. Crores Vs Years

358 1,79415,933

36,406

68,584

129,244

188,924

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2003 2004 2005 2006 2007 2008 2009

Year

Inv

es

tme

nt

in R

s.C

rore

s

SectorsNo. of

Projects

EnergyEfficiency

129

FuelSwitching

16

IndustrialProcess

22

MSW 9

Renewable 143

Renewable(Biomass)

129

Forestry 2

Total 450

Indian Projects Registered by CDM-EB .

Sector-wise break-up : No. of Projects Registered by CDM-EB as on 25 August 2009.

129, 29%

16, 4%

22, 5%

9, 2%

143, 31%

129, 29%

2, 0%

Energy Efficiency

Fuel SwitchingIndustrial Process

MSWRenewable

Renewable BiomassForestry

Portfolio of Host Country PSU Projects approved

SectorsNo. of

Projects

EnergyEfficiency

57

FuelSwitching

8

IndustrialProcess

20

MSW 2

Renewable 33

Renewable(Biomass)

2

Forestry 2

Total 124

Host Country Public Sector Approved Projects as on 25 August 2009.

45%

6%

16%

2%

27%

2%

2%

Energy Efficiency

Fuel Switching

Industrial Process

MSW

Renewable

Renewable (Biomass)

Forestry

International Statistics

Expected Average Annual CERS from Registered Projects till 2012

CERS Issued by Host Party.

India 69,073,247

NATCOM ANALYSIS GHG source categories CO2 emissions CH4 N20 CO2 eq.

emissions

1 Energy

Including industry, transport residential and mining etc

679.47 2.896 0.0114 743.82

2 Industrial Processes 99.878 0.002 0.009 102.710

3 Agriculture - 14.175 0.151 344.485

4 Land use, Land-use change and Forestry

37.675

Removals-23.533

0.0065 0.00004 14.292

5 Waste - 1.003 0.007 23.233

6 Emissions from Bunker fuels#

3.373 - - 3.373

Total (Net) National Emission

817.023 18.083 0.178 1228.54

# Not counted in the national totals (All figures in Million Tonnes)

0

39183

685

945

114

471

750

1,600

3,000

100

530

940

1,900

2,700

0

500

1000

1500

2000

2500

3000

3500

May 2005 (SB22) December 2005(COP/MOP1)

May-06 May-07 Feb-08

Registered project activities Projects in the pipeline Projected CERs

Number of projects / Millions of CERs (to 2012)

How far we’ve come | Growing demand

Typical revenue flow for a 5MW grid connected hydropower project in India

With 0.6 PLF, = 26280 MWh electricity generation

With 0.75 grid emission factor = 19710 t CO2 reduction /year= 19710 CER/year

With 10 Euro CER price = 197100 Euro/year revenue(conservative approach considering various transaction costs)

At Rs 53/Euro rate = Rs 10446300/year= Rs 1.04 Crore /year

For 10 year crediting period = Rs 10.4 Crore CDM revenue

Sample Calculation for CER Sample Calculation for CER RevenueRevenue

Challenges CMM, CBM, MSW, SME & CPSUs

potential un-tapped Afforestation and Reforestation offer

opportunities for CDM Projects Active Financial institutions

participation in CDM market with innovative financing models

Large CDM projects should be conceived

Programmatic CDM Developing projects under the

programmatic mode of CDM Guidelines issued by CDM EB Range of projects possible such as

CFLs, MSW, R&M of TPS etc.

CDM Post 2012 Strong signal from Annex-I Parties

for continuation of CDM beyond 2012

Deeper emission reduction targets and longer commitment period

Allow non state Parties, MNCs into Kyoto Mechanisms

One Universally acknowledged Carbon Unit i.e. CER

rksethi@nic.in