Clean Development Mechanism - CDM

Part II: Power Sector in India..

Apurva Gandhi,T.Y.Planning

111314019

Elective II

8/02/2016

URBAN ENERGY SYSTEMS

Contents…

Part II

• Global Warming and its effects

• Kyoto protocol

• What is CDM ?

• CDM Eligibility and its Applications

• CDM project cycle

▪ CDM in India

Background

▪ The increasing amount of Green Houses Gases has lead to problems like climate change and global warming.

▪ It is need of the hour to work upon solving these problems through reduction in the GHGs produced globally.

▪ Global warming is a gradual increase in the overall temperature of the earth's atmosphere .

Factors contributing to Global Warming

• Human activities lead to generation of certain gases through

– Combustion of fuel

– Land use changes

– Agricultural practices

– Various industrial processes

• Greenhouse gases (GHG)

- Carbon dioxide (CO2)

- Methane (CH4)

- Nitrous oxide (N2O)

- Hydrofluorocarbons (HFC)

- Perfluorocarbons (PFCs)

- Sulphur Hexafluoride (SF6)

Effects of Global Warming in 2050

Global avg. surface temperature has increased by 0.4oC to 0.8oC over the 20th century

Evidences of Climate Change

Kyoto Protocol

What is the Kyoto Protocol

▪ A protocol to the UN framework convention on climate change aimed at fighting global warming.

▪ Set binding targets on 37 industrialized and EU communities to reduce their GHG emissions by at least 5.2% compared to 1990 levels by 2008 – 12. This need is to be met primarily through national markets.

▪ Additional means / flexibility mechanisms –

1. Clean Development Mechanism

2. Joint Implementation

3. Emission trading – also called ‘Carbon Market’

Flexibility Mechanisms

▪ CDM – It allows a country with an emission-reduction commitment, to implement ER projects 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.

▪ Joint Implementation - Any Annex I country can invest in an emission reduction project in any other Annex I country as an alternative to reducing emissions domestically and then using the resulting Emission Reduction Units towards their commitment goal.

▪ Emission Trading - Allows countries to sell this excess capacity of emission units to countries that are over their targets. Carbon credits are traded as commodity in Carbon Market.

What can Annex I (developed) countries do?

1) Pay expensive fines

3) Buy emission credits on CO2 market (ETS)

2) Carbon reduction through improvement in production process.

▪ 4) Carry out carbon reduction through technology transfer in CDM or JI projects

Clean Development Mechanism

Clean Development Mechanism

“Real, measurable and long-term climate benefits in form of Emission Reduction units or Removals that are additional”

–Generate investment in developing countries

–Enhance environment friendly technology transfer

–Promote Sustainable Development

–Additionality: To ensure that projects reduce emissions more than what would have occurred in absence of intervention created by CDM.

Clean Development Mechanism

In simple terms CDM is Carbon credits exchange program or credits trading.

CDM - Eligibility Criteria

• Project started after 1st January 2000

• Meets Sustainable Development criteria

• Baseline

– Scenario that reasonably represents the anthropogenic emissions by sources of GHG that would occur in the absence of the proposed project activity

• Additionality

• To be hosted by Non-Annex I countries who are registered with the CDM Executive Board

Where is CDM applicable

• Renewable energy– Wind power, Solar– Biomass power, Hydel

Power

• Fuel switching– Fossil fuel to greener fuel– Biomass power, Hydel Power

• In waste management– Capturing of landfill methane

emission to generate power– Utilization of waste and waste

water emissions for generation of energy for captive use or power generation

• In transport– Fuel switch from gasoline and

diesel to natural gas– Modal shift from air to

train, road to train at macro level

– Replacement of shipment of certain raw materials through road to pipelines

• Energy efficiency measures related to

– Boilers, pumps, turbines– Efficient cooling system– Cogeneration in industries having

both steam and power requirement• In power sector– Induction of new technologies– switching from coal to other fuels– reduction in technical T& D losses– CO2 sequestration • Afforestation

Small-scale projects

Categories:

Renewable Energy Project activities with a maximum output

capacity equivalent of up to 15 MW

Energy Efficiency improvement project activities which

reduce energy consumption, on the supply and/ or demand

side by up to equivalent of 15 GWh/ annum

Other project activities that both reduce anthropogenic

emissions by sources and that directly emits less than 15

kilotonnes of CO2 equivalent annually.

PROJECT DEVELOPER, FACILITATOR &

Designated National Authority

Preparation and review of the Project

FACILITATOR

Carbon Asset Due Diligence

VALIDATOR

PROJECT DEVELOPER & BUYER

Project Appraisal and Negotiations

Designated

Operational Entity

-Periodic verification &

certification

PROJECT DEVELOPER

Construction and start up

Executive Board, PROJECT

DEVELOPER & BUYER

-CDM Project completion • Project Concept Note (PCN)

• Endorsement by DNA

• Project Design Document (PDD)

• Baseline Study and ER projections

• Monitoring Plan

• Validation Report

• Project Appraisal Document and related documentation

• Emission Reduction Purchase Agreement

CDM Project Cycle & Players

-Initial verification report

-Verification report

- Supervision report

CDM Project Cycle & Players

MAJOR CER BUYERS

▪ Annex 1 Country Government Bodies

▪ Private Buyers/ Brokers

▪ Other Bodies

CER Procurement Initiatives

Various strategies by Annex I countries

▪ Procurement tenders (For ex.

Netherlands, Finland, Sweden, Austria, Germany)

▪ Participation in the World Bank’s carbon funds

(Canada, Finland, Italy, Netherlands, Norway and Sweden; and

other European countries)

▪ Participation in other (privately initiated) funds (Switzerland;

Denmark)

▪ The Netherlands also partnered with a regional development bank

(CAF) and a private bank (Rabobank) for CER procurement.

Announcement of first CDM Tender: CERUPT

Carbon Emission Reduction Unit Procurement Tender

CERUPT Tender

▪ Objective : The Netherlands to use CERs to help meet its commitment under KP

▪ Tender period : November 2001-January 2002

▪ Per. of purchase: 7-14 years

▪ SENTER (tendering authority) buys CERs

Eligible projects & Price per CER

▪ RE excluding biomass € 5.5

▪ Energy from clean & sustainability grown biomass € 4.4

▪ Energy-efficiency improvement € 4.4

▪ Others, incl. fossil fuel switch & CH4 recovery € 3.3

Results

▪ Received: 80 registrations

▪ Wind – 3, Biomass – 2, Wind-Biomass Hybrid – 1

▪ Project in 27 countries

▪ Selected: 26 registrations

▪ Average price of € 4.7 per CER

▪ Project in 13 countries

▪ El Salvador (1) Costa Rica (4) Panama (3) Jamaica (1) Peru (1) Bolivia (1)

Brazil (2) India (6) Indonesia (2) China (2) Nigeria (1) Kenya (1) & Uganda (1)

CDM in India

▪ India signed the Kyoto Protocol in December 1997 and ratified it in August 2002.

▪ Hosted Conference Of Parties 8 in October-November 2002

▪ Delhi Declaration during COP 8 focused on sustainable development, technology transfer and adaptation issues

▪ Set up Designated National Authority (DNA) – India in 2003

▪ National Strategy study conducted in 2005

▪ March ‘05 first registered project in India

▪ October ‘05 first Indian project received CERs

CDM PROVIDING INCENTIVE TO GO GREEN

Number of CDM projects:

Global - 2967

India – 638

CERs issued:

Global – 583 million

India – 93 million

Over 6 billion Euros

distributed globally to green

projects through CDM

INR 6 thousand crores to

India

79%

22%

Registered CDM Projects

Global

India

84%

16%

CER Issued

Global

India

76.2%

10.5%4.1%

4.0%

1.5%

3.7%Energy industries

Manufacturing IndustriesEnergy Demand

Waste handling & disposalAgriculture

Others

Sectorial Distribution of Project

First Registered CDM Project, India

Project title Project for GHG emission reduction by thermal oxidation of HFC 23 in Gujarat

Registered on8/3/2005

Host Party India

Other Parties Rabobank Nederlands

Ineos Fluor Ltd, United Kingdom of Great Britain and Northern Ireland, Sumitomo Corporation, Japan

Activity Sector Fugitive emissions

Activity Scale Large

Reductions 3 000 000 metric tonnes CO2e/pa

Fee level USD 30,000

Validator SGS

First Small-scale CDM Project Registered, India

Project title Biomass in Rajasthan – Electricity (7.6 MW) generation from mustard crop residues

Registered on23/5/2005

Host Parties India

Other Party SenterNovem, The Netherlands

Activity Sector Energy industries

Activity Scale Small

Reductions 31,374 metric tonnes CO2e/ pa

Fee level USD 10,000

Validator TÜV SÜD

Benefits to India from CDM

▪ India – 6th largest CO2 emitter although per capita emission is 0.2 tons as against USA’s 5.2 tons

▪ CDM could help reduce the financial constraints associated with adoption of cleaner technology

▪ Renewable energy technologies are amongst low cost options for carbon mitigation

▪ Total GHG emission in India in 1995 was estimated at 1235 million tonnes ( CO2-63% , CH4-36% )

CDM scenario – 2005-06

Registered

▪ Number of Projects: 409

▪ CER : 103.6 million

India Registered

▪ Number of Projects: 124

▪ CER: 11.9 million

Summary

▪ Allows Annex I countries to meet their reduction commitments in a flexible and cost-effective manner as it requires less invesstmentthan their own country.

▪ Gains to the developing country (host parties) are in the form of finance, technology, and sustainable development benefits.

Thank you for Listening…

http://www.slideshare.net/omkarparishwad/001-energy

http://www.slideshare.net/omkarparishwad/002-Energy-I