Kyoto Protocol

Introduction
• The Kyoto Protocol is an international treaty which
extends the 1992 United Nations Framework
Convention on Climate Change (UNFCCC) that commits
State Parties to reduce greenhouse gas emissions,
based on the premise that
• global warming exists and
• human-made CO2 emissions have caused it.
• The Kyoto Protocol was adopted in Kyoto, Japan, on 11
December 1997 and entered into force on 16 February
2005.
• There are currently 192 parties (Canada withdrew
effective December 2012) to the Protocol.
• The Kyoto Protocol implemented the objective of the UNFCCC to
fight global warming by reducing greenhouse gas concentrations
in the atmosphere to "a level that would prevent dangerous
anthropogenic interference with the climate system“
• Recognizing that developed countries are principally responsible
for the current high levels of GHG emissions in the atmosphere as
a result of more than 150 years of industrial activity, the Protocol
places a heavier burden on developed nations under the principle
of "common but differentiated responsibilities.“
• The main goal of the Kyoto Protocol is to control emissions of the
main anthropogenic (i.e., human-emitted) greenhouse gases
(GHGs) in ways that reflect underlying national differences in GHG
emissions, wealth, and capacity to make the reductions
• During the first commitment period, 37
industrialized countries and the European
Community committed to reduce GHG emissions to
an average of five percent against 1990 levels.
• During the second commitment period, Parties
committed to reduce GHG emissions by at least 18
percent below 1990 levels in the eight-year period
from 2013 to 2020; however, the composition of
Parties in the second commitment period is
different from the first.
• Under the Protocol, countries must meet their
targets primarily through national measures.
However, the Protocol also offers them an
additional means to meet their targets by way of
three market-based mechanisms.
• International Emissions Trading
• Clean Development Mechanism (CDM)
• Joint implementation (JI)
International Emissions
Trading
• Parties with commitments under the Kyoto Protocol (Annex
B Parties) have accepted targets for limiting or reducing
emissions. These targets are expressed as levels of allowed
emissions, or “assigned amounts,” over the 2008-2012
commitment period. The allowed emissions are divided into
“assigned amount units” (AAUs).
• Emissions trading, as set out in Article 17 of the Kyoto
Protocol, allows countries that have emission units to spare -
emissions permitted them but not "used" - to sell this excess
capacity to countries that are over their targets.
Thus, a new commodity was created in the form of emission
reductions or removals. Since carbon dioxide is the principal
greenhouse gas, people speak simply of trading in carbon.
Carbon is now tracked and traded like any other commodity.
This is known as the "carbon market."
CDM
• The Clean Development Mechanism (CDM), defined in Article 12 of the
Protocol, allows a country with an emission-reduction or emission-
limitation commitment under the Kyoto Protocol (Annex B Party) to
implement an emission-reduction project in developing countries. Such
projects can earn saleable certified emission reduction (CER) credits,
each equivalent to one tonne of CO2, which can be counted towards
meeting Kyoto targets.
• The mechanism is seen by many as a trailblazer. It is the first global,
environmental investment and credit scheme of its kind, providing a
standardized emissions offset instrument, CERs.
• A CDM project activity might involve, for example, a rural electrification
project using solar panels or the installation of more energy-efficient
boilers.
• The mechanism stimulates sustainable development and emission
reductions, while giving industrialized countries some flexibility in how
they meet their emission reduction or limitation targets.
CLEAN DEVELOPMENT MECHANISM (CDM)

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CLEAN DEVELOPMENT MECHANISM (CDM)

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 CDM
• A project based mechanism
• A document based mechanism??
• Project must be in a developing country
• Dual objective Assist Annex B in meeting their
targets through offset mechanism
• Assist non-Annex B in achieving sustainable
development
• Project must provide emission reductions “that are
additional to any that would occur in the absence of the
certified project activity”
• CDM Executive Board tasked with supervision
 The Concept of Baseline for a CDM
Project
• The baseline for a CDM project activity is the
scenario that reasonably represents the
anthropogenic emissions by sources of
greenhouse gases that would occur in the
absence of the proposed project activity.

• The baseline is defined on a project specific basis.

• The baseline refers to hypothetical future

emissions that would occur if the proposed CDM
project activity is not implemented.
CER and Baseline Concepts
• t0= Starting year of CDM
• E0t=Total emission
without CDM project
• ECDMt=Total emission with
CDM
• CER = E0t –ECDMt
= tons of equivalent
CO2reduction (tradable
in the international
market)
• Types of Projects eligible for
CDM
– Renewable energy
– Fuel switching
– End-use energy efficiency
improvements
– Supply-side energy efficiency
improvements
– Waste handling and disposal
– Agriculture (reduction of
CH4& N2O emissions)
– Industrial processes (CO2from
cement, HFCs, etc.)
– Sink projects (only
afforestation & reforestation)
 SMALL SCALE CDM PROJECTS

• Type I: RE projects with a maximum output

capacity equivalent to up to 15 megawatts (or an
appropriate equivalent)
• Type II: energy-efficiency improvement project
activities which reduce energy consumption on
the supply and/or demand side by up to the
equivalent of 15 gigawatt-hours per year
• Type III: other project activities that both reduce
anthropogenic emissions by sources and directly
emit less than 15 kilo tonnes of CO2 equivalent
(CO2e) annually
 CDM opportunities in Nepal
• Energy Efficiency
– Process optimization: new
technology, retrofits
– Building Energy Efficiency
– Power Generation
– Efficiency Improvement in
T&D
– Energy Efficient Lighting
technology
• Renewable Energy
– Micro hydro power
generation
– Solar energy -power,
heating, lighting
– Biomass based energy -
power, heating
– Wind based power
generation
– Geo-thermal energy
utilization -heating/
cooling, power generation
• Transportation
– Low GHG emitting vehicles
– Bus Rapid Transit Projects
– Energy efficiency by using
retrofit technologies
• Bio-fuels
– Plant oil production and use for
transport application
– Production of biodiesel based
on waste oils and/or waste fats
from biogenic originfor use as
fuel
• Waste Management
– Methane recovery
– Capturing/Avoiding the landfill
gas emissions
– Waste-to-energy
– Biological treatment of the
biomass
• Afforestation / Reforestation
– Creation of carbon sinks
– In addition to what is required
under regulations
– Reforestation of degraded land
– Afforestation of degraded land
CDM Projects Of Nepal
Cheque due to CDM based on Biogas
Plants

Second Payment in early 2009 amounting to US $ 333,547

So far received US$ 848,333
Source: AEPC/BSP-N
CDM Project Cycle
1. Project Design
2. National Approval
3. Validation
4. Registration
5. Monitoring
6. Verification
7. CER Issuance
1. Project Design
The Project Design stage includes developing a
project concept, choosing or developing a baseline
and monitoring methodology, and stakeholder
consultations. All of these elements are documented
in the project design document (PDD).

2. Project Validation
After the project developer has written the PDD, UN-
approved third-party auditor conducts the project
validation. These auditors are called Designated
Operational Entities or DOEs.
After completion, the validation report and the PDD
are submitted to the CDM Secretariat for review and
registration.
3. Project Registration
Project registration involves several steps: a completeness check done by the
UNFCCC Secretariat; a review by the UNFCCC Secretariat and the Registration
and Issuance Team; and either final approval, request for review or rejection
by the CDM Executive Board.
4. Project Implementation
Project implementation can begin at any time during the project cycle.
However, if the project is implemented before it is registered by the CDM EB,
the project developer must supply evidence proving that it considered CDM
revenues at the time of planning the project. If evidence is not supplied, then
the project is likely to be rejected on the grounds that it is not additional.
5. Project Monitoring
Project developers are required to maintain records measuring the emission
reductions achieved during a project’s operation phase. These records,
maintained in a monitoring report, must be in accordance with the parameters
and procedures laid out in the original PDD that was validated by the DOE and
registered by the CDM EB. Emission reductions are issued based on the
monitoring report. There are no requirements as to how long or short a
monitoring period must be, because they range from a few weeks to several
years.
6. Project Verification
• The monitoring that the project developer has done is
then evaluated and approved by a DOE.
• The auditor prepares a draft verification report,
highlighting any issues in the process.
• Once the project developer resolves these issues, the
auditor prepares the final verification and certification
report, which also quantifies the actual emission
reductions achieved by the project. Verification is done
at time intervals freely chosen by the project developer
or owner.

7. Credit Issuance
• The verification report is submitted to the CDM EB for
certification and issuance of CERs.
 Issues and Constraints of CDM

• Low price of CER and lack of a well established CER

market,
• The slow CDM process,
• High transaction cost,
• Lack of institutional capacity,
• Lack of skilled human resource,
• Country risk varies –so projects in high risk country
may be less competitive,
• Need to develop capacity on CDM in financial/legal
institutions in developing countries.
Joint Implementation
• The mechanism known as “joint implementation,”
defined in Article 6 of the Kyoto Protocol, allows a
country with an emission reduction or limitation
commitment under the Kyoto Protocol (Annex B Party)
to earn emission reduction units (ERUs) from an
emission-reduction or emission removal project in
another Annex B Party, each equivalent to one tonne of
CO2, which can be counted towards meeting its Kyoto
target.
• Joint implementation offers Parties a flexible and cost-
efficient means of fulfilling a part of their Kyoto
commitments, while the host Party benefits from
foreign investment and technology transfer.