CLEAN DEVELOPMENT MECHANISM

Background

The mankind has witnessed the tremendous advancement

in Science and Technology, modernization and
industrialization in the last 100 years, which was not seen
for millions of years.

Energy had been a key issue to industrialization and he

sought after Fossil fuels like Petroleum and Coal.

This came together with Pollution of Environment be it Air,

Water, Earth, including vegetation and Animal kingdom.

Burning Fossil Fuel over the last 200years, we have added

400 Gigatonnes of Carbon di Oxide into the atmosphere. (1
GT = 1000 million tones.)

The Plants have been able to absorb only 200GT and the
balance in still there in the atmosphere.
This is the primary cause of Global Warming and Climate
Change.
The effects of Global warming is now felt by mankind
through Climate changes, melting of Ice caps in Artic
Zone, rise in the sea level reducing the land area, threat to
marine life etc.
The solution to the Global Warming lies in the
development of the Green cover or Forest cover to absorb
the excess CO2,
together with harnessing Renewable sources of Energy in
lieu of Fossil fuel so as to arrest the pollution level from
further increasing.
Sustainable Development of our Textile Industry depends
upon the source and Cost of Energy, as the Industry has
become highly Power Intensive.

At present we are dependant on Grid Power, which is

primarily Fossil Fuel based, polluting Environment.

In addition our Mills offers direct employment to millions

of workers and indirect employment to millions of
agriculture families’ thro cotton purchase annually.

These families primarily depend on our Mills for their

sustenance.
Therefore our Mills need to constantly strive for
Sustainable development of the Units in the interest of
these dependant families.
 Sustainable Development of the Nation in general and
our Industry in particular can be achieved through opting
for Renewable Energy programs

such as Wind, Biomass, Solar, and MiniHydel etc.

Renewable Energy contributes both towards sustainable
development as well as Environment protection by sheer
virtue of its inexhaustible nature.

Renewable Energy Sources will offer long term Energy

Security to our Mills as well as contribute to Environment
thro Clean Energy.

In turn this will save for our Nation equivalent Grid

power for which Country has to import Fossil fuel be it
Coal or Petroleum.
India is fortunately endowed with large potential of all
forms of renewable energy sources, which has carbon
avoidance potential.

The preliminary estimates show that the capacity expected

to be installed by the end of 10th plan would result in
avoidance of about 16 million tonnes of Carbon every
year.

The capacity at the end of 11th plan would result in annual

avoidance of about 27 million tonne of carbon.

The notional yearly carbon avoidance by the present

installed capacity has been estimated at about 7 million
tonnes.
Kyoto Protocol and CDM

 While global warming has been a subject of discussion

and concern of the global community since 1987, it was
at RIO, Convention in 1992 a special purpose vehicle
was instituted to the study the impact of Global
Warming and suggest measure to arrest further
deterioration of the environment.

 In the year 1997, at the Third Conference of Parties

(COP 3), to the United Nations Framework Convention
on Climate Change (UNFCCC) in Kyoto Japan, a
protocol was proclaimed, to reduce the carbon
emissions by at least 5% less than the benchmark year
1990.
 Kyoto Protocol demands the developed nations to
reduce their carbon emission at least by 5.2% less than
that of the year 1990,

by the end of year 2012, the commitment period

starting 2008.

The protocol also defines Clean Development

Mechanism (CDM) to facilitate the developed nations to
achieve the objective. 

CDM offers opportunities to developed nations to

undertake Clean Energy Programs in Developing
Nations (developing nations do not have emission
deduction obligation) and take credit of such emission
reduction to their account and comply with the
protocol.

Thus carbon has become a tradable commodity.

 Carbon emission, a major cause of global warming is
primarily due to use of fossil fuels such as coal and
petroleum in Thermal Power Plants and automobiles.

 Therefore any project undertaken to improve the

energy efficiency in the utilities,

or renewable sources of energy or clean energy

projects supporting emission reduction qualify carbon
credit.
To get certified potential CDM projects need to undergo
series of following steps:

STEP I (Preparation of PDD)

Upon identifying eligible project, the project developer

has to prepare a Project Design Document (PDD) in the
prescribed format.
 
STEP II (Approval by DNA)

Submit the PDD to Designated National Authority (in

our case it is Ministry of Environment and Forest) for
approval.
STEP III (Validation)

Then submit these documents (PDD and approval from

DNA) to a third party agency known as Designated
Operational Entity (DOE) for Validation.

There are few DOEs in India like DNV, TUV, JQA, and
SGS.

STEP IV (Registration)

After validation, the DOE forwards its reports to the

Executive Board, which normally registers the project
as a CDM project within eight weeks.
ADMINISTRATION FEE FOR CDM PROJECTS 

Volume of CER’s Fee (US

generated annually dollars)
(TCO2)
<= 15,000 5,000
>15,000 & <=50,000 10,000
>50,000 & <= 100,000 15,000
>100,000 & <=200,000 20,000
>200,000 30,000
STEP V (Monitoring)
Monitoring is the systematic surveillance of project
performance by the project developer.

For this purpose, a transparent and reliable monitoring

plan must be specified to collect and archive all data
needed to estimate GHG emission occurring within the
project boundary, determine the baseline emissions, and
determine leakage.
STEP VI (Verification)

Verification is the periodic independent review and ex

post determination by the DOE of the monitored
emission reductions resulting from the CDM project.

In case of small-scale projects, the same agency that

did the Validation can perform the Verification too.

STEP VII (Certification)

Certification is the written assurance by the DOE that

the project has achieved the emissions reductions as
verified.  
STEP VIII (Issuance of CER)

Within fifteen days of the DOE making its certification

report public, the Executive Board issues the
necessary CERs.

A registry for the issuance and tracking of CERs is under

development by the Executive Board.

The project developer has two options for the period of

receiving credits:

Ten years without any revision in the base line.

Twenty-one years with a reassessment of the base line

after every seven years.
TIME LINES:

Time Lines required to carrying out various activities

shall be:

 Development of PDD : 3 months from date of

agreement

Validation : 4 months from date of

submission of PDD

Registration : 2 months from the date

of Validation

Verification and Certification : 2 months from

Registration
How can CDM benefit your project?

As a result of the Kyoto Protocol, carbon has become

a tradable commodity with an associated value.

One tonne of CO2 (carbon dioxide) reduced through a

CDM project, when certified by a designated
operational entity, is known as a CER (certified
emission reduction), which can be traded.

Revenue from CERs can form part of your project's

annual cash inflow, equity, or debt.
What types of projects can benefit from CDM finance?

All CDM projects must result in a net GHG reduction, as

in the case of energy efficiency improvement, renewable
energy generation, or carbon sequestration through a
forestation and reforestation.

Typical CDM projects fall into the following categories.

Renewable energy
Fuel switching (in industry, transport, residential sector,
etc.)

Solid waste management

Advanced coal-based power generation technologies

Renovation and modernization

Demand-side management

Industrial energy efficiency improvement

Small-scale CDM projects are eligible for fast-track

clearance procedures.
What are the potential opportunities for India?

There are varying estimates of the potential opportunities

under the CDM.

Earlier studies expected annual flows of as much as 1

billion dollars into India.

However, the United States’ refusal to ratify the Kyoto

Protocol has reduced the demand for CDM considerably.
 If India can capture a 10% share of the global CDM
market,

annual CER revenues to the country could range from 10

million to 300 million dollars (assuming that CDM is used
to meet 10%–50% of the global demand for GHG emission
reduction of roughly 1 billion tonnes of CO2,

and prices range from 1–6 dollars per tonne of CO2).

As the deadline for meeting the Kyoto Protocol targets

draws nearer, prices can be expected to rise,

as countries/companies save carbon credits to meet

stricter targets in the future.
LATEST ON CDM

Bonn, Germany, 1 October 2019 -- The

Clean Development Mechanism (CDM)
recently passed two exciting milestones –
its millionth cancellation on the UN carbon
offset platform and its 2-billionth issuance.
Projects registered under the CDM earn a
saleable credit – a certified emission
reduction (CER) – for each tonne of CO2
they reduce or avoid.
The units are used by countries to
help cover commitments under the
Kyoto Protocol. They are used as part
of climate action efforts by
companies, organizations, events and
individuals who source and cancel
units on the United Nations online
platform for voluntary cancellation of
certified emission reductions.
To date, 1,013,446 CERs have been
sold and cancelled on the platform, by
those wishing to do more to address
climate change by supporting the
actions of others in developing
countries. Meanwhile, those
developing-country projects using the
commission-free site have earned
USD 1,084,000.
Companies, organizations, events
and individuals are encouraged to
measure their emissions, continually
reduce all they can, and compensate
for the rest by supporting climate
action through purchase and
cancellation of CERs.
Visit the Climate Neutral Now website
where you can measure your
emissions, learn about practical ways
to reduce emissions, and consider
taking the Climate Neutral Now
pledge to measure, reduce and offset,
via the UN carbon offset platform.
The incentive created by the CDM has
catalysed the registration of more than
8,100 projects and programmes of activities
in 111 countries and has led to the issuance
of some 2,016,262,000 CERs.
An increasing number of subnational and
national governments are using carbon-
pricing instruments as part of efforts to
address greenhouse gas emissions in their
jurisdictions.