CLEAN DEVELOPEMNT MECHANISM,

AN OPPORTUNITY FOR PAKISTAN

Saadullah Ayaz. Head, CDM Cell, Ministry of Environment, Government of Pakistan

2006

CLIMATE CHANGE

Climate change is caused by various human induced activities such as burning of fossil fuel,
depletion of sinks like forests and land use changes that has disrupted the balance of
Greenhouse Gasses (GHGs) like; carbon dioxide, methane, nitrous oxide, HFCs and other
naturally occurring gases in the atmosphere. These GHGs together with water vapor act as a
blanket around the earth and therefore prevent energy from passing directly from the earth’s
surface out into space. The high concentration of GHGs is enhancing the “Green House
Effect” resulting in the rising of global temperatures.

Climate change was first recognized as a serious problem at the “First World Climate
Conference” held in 1979. Many subsequent inter- governmental conferences/meetings and
scientific studies have been conducted. The IPCC Third Assessment Report (TAR, 2001)
suggests that various GHGs are increasing in the atmosphere (e.g., CO2 has increased by
almost 30% in the atmosphere since industrial revolution) that arecausing global warming.
Average global temperature for example has already increased by 0.6 0C and is expected to
further increase in the range of 1.4 to 5.8 0C over the 21st century.

Climate change has negative impacts in form of impacts on agriculture production and food
security, depletetion of water resources, rise in sea levels. Impacts on coastal areas, loss of
biological diversity, ecosystems, species and habitats (depletetion of forests and
rangelands), human health (heat strokes and spread of vector borne diseases) climatic
disasters and extreme events (droughts, glacial lake outbursts, floods, hurricanes).

The change “Climate Change” will be accompanied by much larger changes of temperature
and precipitation in different world regions. These climatic changes will have considerable
effect on various socio-economic sectors

INTERNATIONAL RESPONSE TO CLIMATE CHANGE

United Nations Framework Convention on Climate Change (UNFCCC)

Keeping in view the tremendous Impacts of climate change, countries around the globe have
joined together to confront the problem In June 1992, over 180 countries at the “Earth
Summit” in Rio de Janeiro adopted the United Nations Framework Convention on Climate
Change (UNFCCC). It is a legal framework which aims at stabilization of GHG concentrations
in the atmosphere at a level that would prevent dangerous human- induced interference with
the climate system.

The Convention directs that “such a level should be achieved within a time-frame sufficient to
allow ecosystems to adapt to climate change, to ensure that food production is not
threatened and to enable economic development to proceed in a sustainable manner”.
The Kyoto Protocol

In December 1997, Kyoto Protocol was adopted under the UNFCCC at the 3rd Meeting of the
Parties held in Kyoto, Japan. It promises to move the international community one step
closer to achieving the UNFCCCs ultimate objective. Under the Protocol, developed
countries (also referred to as Annex-1 parties), agreed to reduce their combined green house
gas emissions by 5.2% below the 1990 level during the period 2008- 2012. It came into force
on 16th February 2005, upon ratification of the treaty by 55 countries which are jointly
responsible for 55% of the global GHG emissions. Pakistan is also a party to the protocol.

Clean Development Mechanism (CDM)

The Clean Development Mechanism (CDM) was established under Article 12 of the Kyoto
Protocol in order to explore cost- effective options to mitigate the impacts of climate change.
It is one of the instruments that help developing countries in achieving sustainable
development and contributing to the ultimate objective of the UNFCCC. It aims at assisting
the developing countries to implement project activities that reduce GHG emissions in return
for generating Kyoto credits or carbon credits which can be sold to developed countries to
meet their emission targets under the Protocol in return of money.

CDM in Pakistan

Pakistan acceded to the Kyoto Protocol on 11th January 2005. In order to manage the CDM
process in Pakistan efficiently and transparently and in line with national sustainable
development goals. For this purpose the Government of Pakistan has established the
Designated National Authority (DNA) for CDM in the Ministry of Environment, Islamabad. The
DNA, which is guided by the Prime Minister’s Committee on Climate Change, consists of the
National CDM Steering Committee, Technical Committees and the CDM Secretariat. A CDM
Cell has been established in order to facilitate the CDM process in Pakistan.

Pakistan National Operational Strategy was approved by the Honorable Prime Minster of
Pakistan in February 2006. The implementation of this strategy is expected to bring Pakistan
a competitive advantage in global carbon market along with addressing environmental
concerns and fostering sustainable development and in the country.

CDM as an Opportunity for Pakistan

CDM promises for financing sustainable development in developing countries through

provision of debt- free resources. In Pakistan the following advantages can be taken from this
process;

1. The Clean Development Mechanism establishes a link between local and global
environmental issues, thereby providing means for effective financing for
sustainable development with in the country.
2. It can help secure foreign investment for priority areas without the incurring of
national debt.
3. Its specific features are to give Pakistan a competitive advantage in large
potential carbon market.
 4. Allows effective participation of private investors in projects related to energy,
land- use, forestry, waste management and industrial processes.
5. It offers opportunity for effective requisite fuel substitution.
6. Technology transfer and import of environment friendly technology.
7. Creates jobs.
8. Helps earning foreign exchange for the country.

The priority sectors for project financing are;

1. Agriculture and livestock.

2. Forestry (afforestation, reforestation).
3. Energy efficiency (industrial, domestic and transport).
4. Renewable (hydro, wind, solar)/ alternate energy (bio- fuels, co-generation).
5. Waste management (incineration, composting).
6. Industrial processes (emission abatement, green technologies, efficiency etc.) in
industries like cement, fertilizer, textile, paper, steel, sugar, ghee, tanneries and
plastics etc).
7. Transportation (alternative fuel vehicles, mass transit systems, cleaner engines
and fuels like CNG).

In a growing global carbon market, the current national and international scenario offers best
opportunities for investment in CDM projects. Under the Pakistan National Operational
Strategy for CDM it has been envisaged that “No income tax or duty on transfer/ sale of CDM
emissions credits”. This gives a tremendous incentive to industrial sector who can earn
additional and huge benefit through sales of Certified Emission Reductants (CER). Besides
various policy initiatives by the Government of Pakistan, a number of national and
international key players are also present in Pakistan offering technical and financial
assistance to project developers who want to benefit from this opportunity.

For any other information visit CDM official website www.cdm.unfccc.int.

To obtain a copy of Pakistan National Operational Strategy for CDM, write to the author at
(saadayaz@gmail.com).