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CLEAN DEVELOPMENT MECHANISM (CDM

)
Professor (Dr) M.C.Dash, Bhubaneswar an
Dr.A.S.P.M!shra, H!na"#o Inus$r!es, H!ra%u

H!s$or!#a" ba#%&roun
The first World Climate Conference in 1979 brought out the fact that there is human
interference to climate. The age old saying “ Every body talks about climate and no body
does any thing about it” as !roved to be rong after the "obel committee aarded the
!restigious nobel !ri#e to $r.%l &ore of '(% and )r.*.+.+achauri,Chairman of -+CC of
-ndia in .//7 for gathering scientific !roof on climate change and !o!ulari#ing the matter
and bringing to the forefront of human thinking. -n early 0/s, scientific evidence shoed that
global climate change !rocesses had set in, hich ere attributed !redominantly to emission
of greenhouse gases 1&2&3. While C4
.
as contributing to almost 0/5 of the global
arming, there ere other si6 gases 17yoto +rotocol3, hich had similar effect ith different
global arming !otential 1&W+3. These are tabulated belo.
(."o. &2& &lobal Warming +otential
E8uivalent to C4
.
9T of gas
1 C4. 1
. $ethane : C2
;
.1
< "itrous 46ide : "
.
4 <1/
; 2ydrofluorocarbon 12=C3 1/// : 1.///
> +erfluorocarbons 1+=C3?
@ C=
;
@ C
.
=
A
A>//
9.//
A (=
A
.<9//
The climate change !rocess as attributed to increasing global tem!erature. -n the last
century the C4
.
emissions have increased from
.0/ to <0< !!m and the global tem!erature has
gone u! by 1
o
C. This increase has led to melting
of glaciers, increase in see levels, and micro and
macro level climatic changes across the globe.
The regional effects of these ere also seen in
terms of increase in floods in some areas, drought
in other areas, submergence of islands, etc. $aBor reasons for this change ere attributed to
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increase in the consum!tion of fossil fuels, emission of above global arming gases and
uncontrolled deforestation across the continents :all activities due to man@made activities
called as anthropogenic emissions.
While on the one hand global !o!ulation has been
rising at a ra!id rate, on the otherhand demand for
material and energy resources is also increasing due to
im!rovement in the 8uality of life and standard of
living across all continents. +roBections made by
scientific community shos that if the same trend
continues, then by the end of this century, the
tem!erature ill go u! by ;@>
o
C and can threaten e6istence of human race, causing
uncontrollable damage of gigantic !ro!ortions, leading to irreversible damage, ith
unbearable economic burden. While develo!ed countries are enBoying better 8uality of life,
develo!ing countries are struggling meeting the basic needs. Therefore on the one hand there
is a need to reduce global &2& emissions on the otherC there is a need to allo an increase in
&2& emissions in develo!ing countries so that their 8uality of life im!roves to at least
minimum level. 2oever, there is another interesting feature in develo!ing countriesC the
efficiency of energy use is also !oor due to dum!ing of inefficient technologies from
develo!ed countries. This !rovides substantial sco!e for reducing s!ecific energy
consum!tion and &2& emissions in develo!ing countries, hich has a same effect as in
develo!ed countries, but at a much loer cost. Thus global &2& reduction can be achieved
at mush loer cost ithout affecting the develo!ment of human race as a hole This conce!t
has led to the conce!t of C"ean De'e"o()en$ Me#han!s).
-t has also been seen that develo!ed countries have been consuming large amount of energy
resources and are res!onsible for increase in &2& emissions, hereas develo!ing countries
ho are still belo the !overty line are devoid of basic amenities and are yet to reach
minimum standard of energy consum!tion for a sustainable living. Therefore, on the one
hand develo!ing countries must be alloed to consume more energy and allo increase in
the &2& emissions, on the other hand the develo!ed countries must reduce their
consum!tion levels to an acce!table level.
(ince this is an issue of global magnitude, an institute called 'nited "ations =rameork for
Coo!eration for Climate Change 1'"=CCC3 as formed in 199. ith all the heads of states
throughout the orld as their members to develo! and administer !olicies to control climate
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Trend of World Population
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change !rocesses. -n order to assist them on technical matters an -nter@governmental +anel
for Climate Change 1-+CC3 as formed much before in the year 1900. These to
organisations together are entrusted ith the res!onsibility to bring out !olicies and
!rogrammes, hich are binding on all the signatory countries.
-n 1997, the global community met in 7yoto in Da!an to ork out mechanism for controlling
&2& emissions. +olicy decisions taken during this conference have been termed as Kyoto
Protocol. %ccording to the mandate of this +rotocol, all countries are grou!ed into to
categories. Those consuming energy above the global average mostly industrial advanced
countries like '(%, *ussia, Da!an, Euro!e, %ustralia and east Euro!ean countries are called
Anne*+, #oun$r!es and the rest are called Non+Anne*+, #oun$r!es.
%ccording to 7yoto +rotocol, %nne6@1 countries have to bring don their countries &2&
emissions to less by >.. 5 average from the base level of 199/ kee!ing in mind their
economic develo!ment, !o!ulation groth, etc. -f for some reason they are not in a !osition
to bring don the consum!tion level to belo 199/ level, they are alloed to go and reduce
the &2& emission in the develo!ing countries here the efficiency of energy consum!tion is
also loer and there is a need to consume more energy for ensuring their develo!ment. %ny
reduction made in the s!ecific C4
.
emissions can be considered as being reduced in the
res!ective country. %lternatively, any organisation or industry in the "on@%nne6@1 country
reducing the &2& emissions can trade those emissions ith the %nne6@1 countries. This
financial instrument of selling &2& emission beteen the countries is called carbon trade
under Clean )evelo!ment $echanism.
How oes !$ wor%-
• To ensure reliability, trans!arency, accuracy, consistency, etc. systems, rules and
regulations are being develo!ed. The entire res!onsibility is assigned to '"=CCC and
its E6ecutive Eoard.
• %ny organisation or a grou! of organisations in a country can reduce the carbon or
e8uivalent emissions by making technological changes and generate hat is called as
Carbon emissions reductions or carbon emission credits. These credits have to be
generated and certified as !er the 7yoto +rotocol and the rules and regulations framed by
'"=CCC.
• Though '"=CCC has made substantial !rogress in evolving the mechanism for inter@
state sale of carbon emission credits, there are still some gray areas, hich are being
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resolved from time to time. Carbon trading is in full sing in many develo!ing countries
like Era#il, $e6ico, China and -ndia des!ite the fact that '(% is yet to ratify the 7yoto
+rotocol. 2oever, they have agreed to Eali *oad $a! beyond ./1..
• Carbon trading is moving across all the countries in a very ra!id ay. % market of
around 9 billion ton is envisaged by ./1..
• %mong the develo!ing countries, China has ca!tured about >>@A/5 of the carbon trading
market in .//A@/7 and -ndia has ca!tured about 1. to 1>5 of the market only. There is
vast sco!e for -ndia.
• The organi#ations can reduce energy consum!tion or release of any of the si6 gases by
ado!ting cleaner o!tions and claim reduction in &2& emission.
• The 7yoto +rotocol further sti!ulates that the time !eriod alloed for &2& emission
reduction commences from Danuary ./// and ends u! by ./1.. The accounting for
%nne6@1 countries begins from .//0 and ends u! ith ./1. 1first crediting !eriod3.
• To reduce the &W+ from the above gases, industries can undertake any of the folloing
C)$ !roBects?
113 -ncrease in methane gas consum!tion.
1.3 -ncreasing the use of biomass in !lace of fossil fuel for energy generation.
1<3 =uel sitching from coal to biomass
1;3 (itching over to hydroelectric !oer
1>3 Energy efficiency !roBects
1A3 =uel sitching from coal to gas
173 -m!roving energy efficiency at the user end
103 %griculture and carbon sink !roBects like afforestation etc.
Mana&e)en$ of Carbon Cre!$s
&eneration of &2& emission reductions and their sale into the market is carried out
essentially in folloing ste!s?
113 -dentification of the C)$ !roBect and defining its eligibility criteria.
1.3 +re!aring +roBect )esign )ocument 1+))3.
1<3 4btaining 2ost Country Endorsement.
1;3 %!!roval of baseline methodology.
1>3 Falidation by '"=CCC a!!roved agencies called )4Es 1)esignated 4!erating
Entities3, e.g. )"F, EFG-, etc.
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1A3 $onitoring and verification.
173 *egistration and certification by '"=CCC.
So)e !)(or$an$ fea$ures of #arbon e)!ss!on reu#$!ons.
113 Emission reductions 1E*s3 are grou!ed into to categories : after they are validated
by )4Es they are called as Ferified Emission *eductions 1FE*s3 and once the FE*s
are certified by '"=CCC, they are called Certified Emission *eductions 1CE*s3.
Today buyers are ready to buy FE*, if the !roBects are good and reliable and sources
of generation are reliable. 2oever they fetch loer !rice than CE*.
1.3 Today in a global market, there are many brokers, traders and financial institutions
!romoting agencies ho are ready to buy and sell these carbon credits from the
generators to the !urchasers like Prototype Carbon Fund of World Eank,
-nternational =inancial Cor!oration, "atsource and also CE**'+T of "etherlands.
These agencies are ready to buy even FE*s and CE*s.
1<3 Though technically any !roBect, hich has been im!lemented from Danuary .///
onards, 8ualifies for C)$. 2oever, both '"=CCC and buyers do not !refer
already im!lemented !roBects, but those that are either in the !rocess of
im!lementation or design or installation are entertained Eecause in such cases the
criteria of 7yoto +rotocol can be clearly established.
1;3 There are clear rules develo!ed for !roviding assurance to the buyers that the seller
doses not cheat him. Therefore, the C)$ !roBect develo!ed needs to satisfy certain
eligibility criteria. (alient ones are given belo?
a. The buyer or his consultant is called a “+roBect )evelo!er 1+)3” till the !roBect is
certified by '"=CCC.
b. The +) should develo! the !roBect as !er the '"=CCC guidelines and 7yoto
!rotocol only.
c. The +roBect )evelo!er must evaluate &2& Emission *eductions 1E*3 ith
res!ect to '"=CCC a!!roved Ease Hines $ethodologies only.
d. The baselines for different C)$ !roBects are evolved by the !roBect develo!ers
and a!!roved by a se!arate !anel under '"=CCC@ E6ecutive Eoard called
Meth-Panel. -f an a!!roved base line methodologies available then it is
dis!layed on '"=CCC ebsite and is available for +). This may be used for
evaluating E*s
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e. -f an a!!roved base line methodology is not available for a !roBect, then a ne
base line methodology has to be !ro!osed and got a!!roved by $eth@+anel
before !roceeding further.
f. The +) should evaluate the !roBects additionality, leakages etc, hich are critical
in ensuring acce!tability of the !roBect.
g. The !roBect then re8uires endorsement of the 2ost &overnment 1"ational
&overnment3 of the +), before submitting to '"=CCC through the )esignated
4!erational Entity 1)4E3.
h. (imultaneously it can be sent for the revie of )4E and then to Meth-Panel for
a!!roval of base line methodology.
i. %fter it is endorsed by "ational %uthority and EH$ is a!!roved then )4E ill
audit and validate the E*s
B. 2e ill then send to EE@'"=CCC for certification, here the ill become CE*.
k. CE*s are then ready for sale.
Pr!#!n& an E#ono)!#s.
• %t !resent the !rices of CE*s range beteen 1>@.A '*4 !er Ton of C4
.
• +rices vary de!ending on the ty!e of &2& emissions.
• *eneables and methane ca!tures are at the to! of the list and energy efficiency
at loer end
• %s the accounting !eriod a!!roaches 1./1.,as !er 7yoto !rotocol33 the !rices
may increase further
• (i#e of the !roBect is determined based on the total emissions saleable over
accrediting !eriod
/e0 re1u!re)en$s for sub)!$$!n& a CDM (ro2e#$
1. 4ne of the re8uirements is to revie the (take holderIs e6!ectations including the
findings in the +roBect )esign )ocument. This ensures that (takeholders are
su!!orting the !roBect.
.. 4btain 2ost &overnment a!!roval. $inistry of Environment J =orests, hich
has an e6clusive ing under Climate Change +rogram, grants this.
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Con#"us!on.
Though in -ndia green house gas emission reduction through C)$ is a voluntary
initiative1 -ndia emits about 1;0> million tons of C4. !er year@ ./// estimate3 still then for
sustainable develo!ment and contribution to !revent climate change, it should be encouraged
addressing the call of the earth.
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