Global Warming, CDM Project and Nepal.

The impact of global warming is becoming increasingly evident in the world's fragile Polar Regions and our own Himalaya. High mountain communities in Nepal have noted that glaciers are retreating at unprecedented rates. The planet's extremities are the canary in the coal mine - alerting the rest of the world to the extent of the changes that are coming. Nepal has ratified Kyoto Protocol, which considers justifiable use of resources to limit or reduce the emission of gases that contribute to green house gas inventory in the atmosphere. Nepal's per capita green gas (GHG) emission from energy use is insignificant. Nepal has strong reasons to support the Kyoto Protocol. It is the first international agreement that sets binding targets on developed countries to reduce greenhouse gas emissions, but none on developing countries like Nepal. When Kyoto comes into force it means an effective carbon tax will be placed on fuel use, penalizing and making more expensive those fuels with high greenhouse gas emissions. This surcharge will benefit Nepal as it will make our own energy sources more competitive. But before taking any firm decision it’s our duty to understand and analyze, that what really makes developed countries, MNC to pay for GHG reduction. They are ready to pay because they have great love for nature and really want to save planet for global warming or its other hidden reason behind their motive. As Malaysia’s Prime Minister Mahathir Mohamad said “If the industrialized nations thought rainforests were so important for biodiversity and carbon dioxide storage why did not the rich, carbon dioxide producing countries pay for the service of preserving those forests, instead of bullying poor countries not to utilize one of their few natural resources.” Before we enter into debate, we will understand few words very famous recently in this context. Global warming is the increase in the average temperature of the Earth's near-surface air and oceans since the mid-20th century and its projected continuation. Global surface temperature increased 0.74 ± 0.18 °C (1.33 ± 0.32 °F) during the last century. The Intergovernmental Panel on Climate Change (IPCC) concludes that increasing greenhouse gas concentrations resulting from human activity such as fossil fuel burning and deforestation caused most of the observed temperature increase since the middle of the 20th century. An increase in global temperature will cause sea levels to rise and will change the amount and pattern of precipitation, probably including expansion of subtropical deserts. The continuing retreat of glaciers, permafrost and sea ice is expected, with warming being strongest in the Arctic. Other likely effects include increases in the intensity of extreme weather events, species extinctions, and changes in agricultural yields.

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The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), an international environmental treaty with the goal of achieving "stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system." The Kyoto Protocol establishes legally binding commitment for the reduction of four greenhouse gases (carbon dioxide, methane, nitrous oxide, sulphur hexafluoride), and two groups of gases (hydrofluorocarbons and perfluorocarbons) produced by "annex I" (industrialized) nations, as well as general commitments for all member countries. The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing industrialised countries with a greenhouse gas reduction commitment (called Annex A countries) to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. A crucial feature of an approved CDM carbon project is that it has established that the planned reductions would not occur without the additional incentive provided by emission reductions credits, a concept known as "additionality". The CDM allows net global greenhouse gas emissions to be reduced at a much lower global cost by financing emissions reduction projects in developing countries where costs are lower than in industrialized countries. The clean development mechanism is a global market mechanism in which a developing country can lower its CO2 emissions on behalf of industrialized countries. The CDM institutional architecture is complex, involving various stakeholders. Project developers, Designated National Authorities (DNA), Technology supplier, Designated Operational entities (DOEs), financial institutions, etc. The executive board is the regulator of the CDM, usually with a commission of ten members who gives accreditations and mandates to the DOEs. At present, developing countries have no obligations to constrain their GHG emissions. But they are still able, on a voluntary basis, to contribute to global emission reductions by hosting projects under the Clean Development Mechanism. The CDM has two key goals:

To assist developing countries who host CDM projects to achieve sustainable development; To provide developed countries with flexibility for achieving their emission reduction targets, by allowing them to take credits from emission reducing projects undertaken in developing countries.

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The greenhouse gas benefits of each CDM project will be measured according to internationally agreed methods and will be quantified in standard units, to be known as 'Certified Emission Reductions' (CERs). These are expressed in tons of CO2 emission avoided. When the Kyoto Protocol becomes fully operational, it is anticipated that these 'carbon credits' will be bought and sold in a new environmental market; they are already becoming a commodity. Each CDM credit – known as a certified emission reduction (CER) – supposedly represents one metric ton of carbon dioxide not emitted to the atmosphere. Governments can purchase credits directly or companies can buy them to comply with national-level legislation. The CERs produced through 2012 are expected to be worth $35-$85 billion. HOLES Unfortunately, the CDM is failing miserably and is undermining the effectiveness of the Kyoto Protocol. Most “emission reduction” credits are “fake,” from projects that do not actually reduce emissions. Billions of dollars have been transferred from taxpayers to undeserving project developers and a growing army of carbon brokers and consultants. In the process, the CDM is not only failing to support climate change mitigation and sustainable development in developing countries, but also provides industrialized countries with a way out of meeting their own domestic reduction obligations. The most basic problem – and indeed the fundamental flaw – with the CDM, as well as with any project-based offsetting mechanism, is the need to prove the “additionality” of a project. A project is “additional” if it was only able to go forward because of the extra carbon credit income from the CDM. Any project registered under the CDM that would have been built anyway, without carbon credit income, allows an industrialized country to emit more than their targets, without causing any changes on the ground where the project is located. In reality, non-additional projects are going forward under the CDM on a large scale. Researchers estimate the proportion of CDM projects that are truly additional to be only a fraction of the market. The evidence is clear that the majority of CDM projects do not actually reduce emissions (are “non-additional”): 75% of all approved CDM projects were already up and running at the time they were approved. If carbon credit income were really essential for a project to go forward, then most CDM project developers would need to wait to make sure that their project had been successfully approved by the CDM Board before beginning construction. However, as of October 1, 2008, 76% of all approved CDM projects had not only started construction, but were actually completed and up and running at the time they were registered as CDM projects. When asked, numerous CDM project developers admit that they would have built their projects anyway, regardless of CDM subsidies. Many validators, CDM consultants, and

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credit traders, as well as people involved in renewable energy development more generally, agree that the majority of CDM projects are nonadditional. Forgery and fraud are common themes discussed in carbon trading conferences and workshops. It is often suggested that the CDM’s rules and procedures should be tightened to prevent non-additional projects from going through. However, efforts to make additionality testing more rigorous will increase CDM process costs and timeframe, already considered too cumbersome and long, without resulting in sufficiently accurate additionality testing. The subjectivity involved in project development, investment and lending decisions makes an accurate test for project additionality impossible. Each proposed CDM project is audited by a validator, who, among other criteria, is asked to assess the likely additionality of the project. Auditors are accustomed to auditing fairly objective criteria, but there are no accurate objective measures of the intentions of developers, investors and lenders. Industry representatives have complained that “good story-tellers” can get a project approved, “while bad story-tellers may fail even if the project is really additional. Because offsetting mechanisms are measured against a “business-as-usual” baseline (what would have happened without CDM credits), they risk creating perverse incentives for governments and individual facilities to maintain high baselines. For example, a relatively efficient company will be credited with fewer credits for implementing additional efficiency measures than a company that is historically less efficient which implements the same measures. There is concern that, ultimately, the CDM could substantially increase emissions through these perverse incentives, especially by disincentivizing climate-friendly legislation by governments. Why would a government voluntarily act to cap methane from its landfills if in doing so it makes these activities “business-asusual” and therefore not additional and not eligible for CDM income? One of the purposes of the CDM is to act as a safety valve, as a means of controlling costs of compliance with the Kyoto Protocol. The two year or more lag between conceptualization of a CDM project and the start of credit generation limit the CDM’s effectiveness as a costcontainment mechanism. This time lag means that the CDM is not quickly responsive to changes in the supply and demand of CERs.

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Conclusion Rich, developed countries want to continue polluting. They can’t halt their industrialized system functioning. So they will pay undeveloped poor nations to cut carbon dioxide emission for them by planting, afforestation and using biomass used technology instead of fossil fuels. Though it look like justice to both of them, but its not so. The poor and undeveloped nations will get nothing at last but will be poorer and with more inefficient technology in their industry and all natural resources captured by them. As we all know, poor countries are always self sufficient with corruption. Half the money will be paid to corrupted officials, corrupt reporters to support their view and lead the country back to old age and remaining half will be returned back to them via new technologies and profits from goods which they sell in poorer countries. Where is the guarantee that Annex I country will not recover there money wasted in CDM project, from somewhere else in form of extra charge on products, technology, expertise they are selling, supplying to poor countries. Our industries will be left with least developed technology with poor performance, forest and environmental resources freeze, and can no more be used by local people in the name of carbon reduction. The other main important issue is monitoring. And to be true no body really cares whether this all CDM project really reduce carbon dioxide emissions or not. Greenpeace says the Kyoto targets will produce an actual overall reduction of gases by 1% or 2% only. As Guyana’s President Jagdeo says “The Kyoto protocol is limited in that sense and it’s short-sighted in that it encourages bad behavior basically among countries, if you cut down trees and you plant them back you get money, if you preserve them, you don’t get anything. It is hardly a mature market mechanism due to its short period of existence and CDM’s flaws are possible.Its time for our politician, experts to think well before taking any firm decision which might have very bad influence in coming future.

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Reference: 1. http://en.wikipedia.org 2. http://www.cdmcapacity.org/what_is_CDM/effect_developing_countries.html 3. http://www.internationalrivers.org/files/FOE%20IR%20CDM%20fact%20sheet%2
0FINAL3,%2010-08.pdf

4. Shaligram Pokharel: Kyoto protocol and Nepal's www.sciencedirect.com 5. http://www.nepalitimes.com.np/issue/224/Nation/9913

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