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Environmental Management

Unit 6

Unit 6
Structure 6.1 Introduction 6.2 Climate Change and its Implications 6.3 Climate Change Mitigation 6.3.1 The Kyoto Protocol 6.3.2 Joint implementation

Climate Change Finance

6.4 Clean Development Mechanism (CDM) 6.4.1 The Regional initiatives 6.4.2 CDM projects in India 6.4.3 The Copenhagen Accord 6.5 Summary 6.6 Glossary 6.7 Terminal Questions 6.8 Answers 6.9 Caselet

6.1 Introduction
In the previous unit we discussed the mission of UNEP and financial institutions to fund for environmental friendly projects. In this unit we will discuss the climate friendly projects undertaken to reduce carbon-emission. Climate change is an irreversible element of environmental change. It refers to the variations in the climatic conditions that persist for an extended period of time beyond ones lifespan. Financial sectors are aware of the socioeconomic and business impacts of climate change and hence are trying to develop a consensus approach to minimise the visible climatic implications.
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In Bhutan, villagers suffered from water scarcity as a result of increased civilisation. Water bodies perished due to deforestation. In 2006, government took an initiative to set up rooftop rainwater harvesting systems for various communities. In this type of harvesting system, a reservoir tank having a capacity to hold enough water throughout the dry season was setup. Water from each house was channelised into the tank through gutters and down pipes. The local community was trained to ensure correct operation and maintenance. This measure has impacted the lives of many villagers and also has reduced the effect of climatic changes. (Source: http://203.90.70.117/PDS_DOCS/B4296.pdf) This unit provides the answers to questions like: What is climate change? How is it affecting the atmosphere? What are the measurements undertaken to mitigate climate change? How the Indian government is taking initiative to develop consensus approaches to help the society? Objectives After studying this unit, you should be able to: analyse the consequences of climate change in terms of socio-economic and business implications assess how market can play vital role in climate change mitigation interpret global approach in climate change finance explain how Indian corporate contributes to environmental finance

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6.2 Climate Change and its Implications


The concern for climate change was raised in the early nineteenth century. Scientists predicted that harmful gasses such as carbon-di-oxide and methane warmed the climate by accumulating in the atmosphere. But, the measurements for implications were taken only after the accumulation became evident. Chemical composition of the atmosphere is one of the main elements responsible for the existence of life on the earth. It comprises 78% of nitrogen, 21% of oxygen and 0.036% of carbon-di-oxide all of which are essential for the survival of animals and plants. Energy emitted from the sun is partially absorbed by the seas, land, mountains, etc. Whereas, rest of the energy is absorbed by the Green House Gasses (GHGs) present in the atmosphere. If only, all the energy from the sun is absorbed by the earth then, it would hinder the survival of life because then the planet would become hotter. Earth simultaneously absorbs and releases infrared rays. Green House Gasses (GHGs) like carbon-di-oxide, nitrous oxide, water vapour, methane and ozone absorb and re-emit a portion of the heat to the earth's surface thus preventing the earth from becoming very cold. Due to this useful action, the required amount of heat energy essential for survival reaches the earth. However, rise in industrial revolution resulted in addition of significant amount of GHGs to the atmosphere. The chemical compositions of carbondi-oxide, nitrous oxide and methane have known to be increased by 31%, 17%, and 151% in the atmosphere respectively. Deforestation resulted in reduced carbon absorption capacity thereby causing seasonal variations. Some ill effects due to increased concentrations of GHGs are trapped air bubbles in ice fields of Arctic and Antarctic regions, rise in water level in oceans and seas, decrease in glacier size, non-seasonal rains causing floods and withering of crops. Self Assessment Questions 1. Industrial revolution has resulted in addition of significant amount of ___________________________ to the atmosphere.
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2. Scientists predicted that increased concentrations of GHG gasses warmed the climate. But, the measurements were taken only after the accumulation became evident. (True/False) 3. Suns incoming energy is partially absorbed by the earth while the rest is absorbed by _____________________. (Pick the right option) a) b) c) d) GHGs Carbon-di-oxide Nitrous oxide Methane

6.3 Climate Change Mitigation


Climate change is a global issue and hence the countries across the globe are trying to develop mitigation techniques to reduce the GHG emissions globally. Following issues need to be addressed to reduce global GHG emissions: Cost effective - Being cost effective to cut down the emission of GHGs. This can be achieved by pricing the GHG emissions. Any additional cost incurred for reducing the carbon emission must be equal to all sources of emission. The amount thus obtained by pricing the emissions serves as incentive to invest in Research and Development (R&D) to develop environment friendly technologies. Energy saving and climate friendly technologies - An innovative initiative to curb the increase of GHGs. For example, using LPG for automobiles that emit less carbon content, using electric cars that are efficient and environmentally clean. Global participation to curb GHG - Every country must take an initiative to reduce the increase in the concentrations of GHG. Though, countries across the globe are working towards abating GHG emissions, few countries still lack in participation. The possible reasons are that the countries feel the cost incurred in reducing carbon emission is too high to afford which impacts job loss in energy-intensive sectors. This prevents them from implementing mitigation policies.
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Develop consensus approach - The costs of emission reduction activities for climate change are unequally distributed across various regions and sectors in countries. This hinders the overall participation in the abatement framework. An optimal approach would be to frame a range of approaches and instruments that help in providing support for the abating action and therefore achieving the nationwide coverage.

Thus, the countries across the globe must be cost effective, use climate friendly technologies like LPG and electric cars and work hand in hand to curb the emissions of GHGs. 6.3.1 The Kyoto Protocol

The Kyoto Protocol was negotiated in Kyoto, Japan, on December 11, 1997 and was enforced on February 16, 2005. The rules for the protocol implementation were adopted at Conference of Parties (COP) 7 in Marrakesh in the year 2001, and are known as the Marrakesh Accords. The Kyoto Protocol is an international legal binding agreement on climate change linking the United Nations Framework Climate Change Convention (UNFCCC). The key feature of this protocol is to bind 37 industrialised countries and the European community to decrease GHG emissions. The aim is to achieve an average of five per cent during the period 2008-2012. The industrialised countries binding to Kyoto Protocol work towards reducing GHG emissions by 5.2% for the period 2008-2012. The overall aim is to lower emissions resulting from six greenhouse gasses, namely, methane, carbon-di-oxide, sulphur-hexafluoride, nitrous oxide, Hydrofluorocarbon (HFCs) and Perfluorocarbons (PFCs). The difference between the Kyoto Protocol and the climate change convention is, the convention encourages the industrialised countries to stabilise GHG emissions. But, the protocol commits the countries to stabilise GHG emissions. The Kyoto Protocol acknowledges the fact that the developed countries are responsible for high levels of GHG emissions due to industrial activity of
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more than 150 years. Thus, the protocol places burden on developed countries to reduce GHG emissions. India emphasises the importance of Kyoto protocol in controlling the emission of carbon. Though, India is not bound to implement emissionreduction targets until the year 2012, the future of the protocol seems bright. India suggests that global community must make equal advancements to extend the Kyoto Protocol to work together with other nations on Long-Term Co-operative Action (LCA) to mitigate carbon emission. The protocol offers the countries to meet their targets through three marketbased mechanisms namely: Emissions trading Clean Development Mechanism (CDM) Joint Implementation (JI)

Let us now discuss in detail the three mechanisms of Kyoto Protocol. Emissions trading Countries in agreement with the Kyoto Protocol must meet the accepted targets for reducing emissions. The targets are the accepted levels of emissions allowed over the commitment period that is 2008-2012. The allowed emission levels are divided into Assigned Amount Units (AAUs). The Annex I countries, who have agreed to reduce the GHG emissions annually, are permitted to trade the unused spare emission units with other countries to cut down the cost of achieving emission reductions. For example, countries that have more windy regions can set up turbines and generate emission free energy. Thus, they can sell the reduction credits to countries that have less windy regions where obtaining emission free energy is a costly affair using the same turbines. All countries report their total emissions and emission reductions to the Intergovernmental Panel on Climate Change (IPCC) on a yearly basis. The countries continue to have trading privileges if they are on track on emission reductions. Else, penalties may be imposed.
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Emission trading is also known as carbon market because carbon-di-oxide, the principal GHG is traded as a commodity.

Clean Development Mechanism (CDM) Clean Development Mechanism (CDM) permits countries under Kyoto Protocol commitment to implement emission-reduction projects in developing countries. This encourages the developing countries to work towards reducing the emission of harmful gasses that pollute the environment. The country implementing such useful projects also earns profitable credits known as Certified Emission Reduction (CER) credits. Each credit earned is equivalent to one ton of carbon-di-oxide and is counted to meet the Kyoto targets. This mechanism is explained in detail under section 6.3. Joint implementation JI mechanism permits countries under Kyoto Protocol commitment to earn Emission Reduction Units (ERUs) from an emission-reduction project established in other countries that bind to the Kyoto Protocol commitment. Each ERU is equivalent to one ton of carbon-di-oxide and can be counted to meet the Kyoto target. This mechanism is explained in detail under section 6.3.2. 6.3.2 Joint implementation

The previous section described JI as a mechanism designed to promote Annex I countries to earn ERUs by investing and developing projects in other Annex I countries. This section explains the JI mechanism in detail. The host country where the project is implemented receives benefits from the foreign investments and technology transfer. The Kyoto Protocol limits the emission levels in the host country. The established JI projects aims at reducing the emission levels and in turn free up the AAUs in the host country. These units are sold in the form of ERUs to the investor country. ERUs are then deducted from the allowed levels of
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emissions of the host country and are summated to the total allowable emission levels in the investor country.

Joint Implementation Supervisory Committee (JISC) The JISC is set up to validate the ERUs generated by JI projects. It comprises ten members and ten alternates. The ten members of the supervisory committee include six members from Annex I countries classified as Economies in Transition (EITs) like the Russian Federation, certain Central and Eastern European States, three members from nonAnnex countries, and one member representing Small Island developing states.

Key participants To become a participant of JI, countries must fall under Annex I section of United Nations Framework Convention on climate change with emission caps listed in Annex B of Kyoto Protocol. This safeguards the generated ERUs to be accounted by trading units between national registries. ERUs can be generated using two methods track1 and track2. In the first method, the host country validates the ERUs and issues them appropriately. This method requires the host country to satisfy certain requirements like: Defined processes to approve JI projects. Efficient monitoring of project performance. Clear methods to validate generated ERUs.

This method also states that the host countries must have a nationalised system to keep track of their greenhouse gas inventory and AAUs. In the second method, if the host country satisfies only the criteria of having nationalised system and AAUs, then the ERUs are generated by validating the procedure defined by JISC. In this method, an independent individual
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approved by JISC has to verify whether the defined criteria have been met prior to trading ERUs by the host country. In both the methods, participant countries must appoint a Designated Focal Point and submit national guidelines and procedures for the approval of JI projects. Some of the financing agencies of JI projects are Intergovernmental Panel for Climate Change (IPCC), United Nations Development Programme (UNDP) and United Nations Environment Programme (UNEP). The IPCC reviews global scientific research queries on climate change, provides regular assessment reports, and gathers special reports and technical papers. Till date, IPCC has issued four assessment reports on climate change. UNDP drafts policy frameworks, strengthens local capacity and facilitates knowledge-based advisory services for expanded availability of energy services to the weaker sections of the community. In India UNDP operates in the areas like poverty reduction, democratic governance, disaster risk management, HIV, environment and energy. The contribution of UNDP ranges from analysing climate change from Indian perspective, highlighting significance of small scale industries in mitigating climate change, and voicing the needs of the poor. UNEP supports developing countries to overcome vulnerabilities and develop resistance towards the impact of climate change. UNEP creates and reinforces the national institutional capacities for assessment of vulnerability and adaptation planning. It also encourages integration of the efforts of several nations towards climate change adaptation measures. Some of the activities initiated by UNEP are: The Rural Energy Enterprise Development Initiative (REED): helps the private sector to offer affordable energy services based on usage of clean and renewable energy technologies. The UNEP Indian Solar Loan Programme: offers loan programmes for solar home systems in partnership with Canara Bank and Syndicate
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Bank. These credit facilities reduce the initial lending risks involved with this sector Thus, JI projects are useful in earning ERUs by implementing emissionreduction projects in Annex countries. The investor country benefits by earning the ERUs from the host country to meet the Kyoto target and in turn the host country benefits by reducing carbon emission in their region.

Self Assessment Questions 4. The rules for the Kyoto Protocol implementation were adopted at Marrakesh in the year 2001and are known as Marrakesh Accords. (True/False) 5. The Kyoto Protocol offers the countries to meet their targets through which of the following mechanisms? (Pick the right option) a) b) c) d) Emission Reduction Units Assigned Amount Units Certified Emission Reduction Emission Trading

6. Emission trading is also known as _______________________. 7. JI allows Annex I countries to implement emission-reduction projects in non-Annex countries. (True/False) 8. ERUs are generated using ______________ and _____________ methods.

6.4 Clean Development Mechanism (CDM)


The previous section described CDM as a mechanism where Annex I countries can develop and implement emission-reduction projects in developing countries to reduce the emission of harmful gasses. In this section we will discuss the operation of CDM and the initiatives undertaken by the Indian government to mitigate climate change.
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CDM mechanism is one of the consensus approaches created by the Kyoto Protocol to encourage carbon trading. It is the first global mechanism with environmental investment and credit scheme introducing a standardised emission offset instrument named CERs. The CDM project activities such as setting up energy-efficient boilers in rural areas, implementing electrification project using solar panels to generate electricity etc. The mechanism provides flexibility to industrialised countries to meet Kyoto targets by encouraging them to develop sustainable projects that reduce emission of harmful GHG gasses. Operation of CDM The CDM projects provide additional emission reduction results that would otherwise have occurred. The CDM projects undergo a rigorous process of public registration and insurance procedure. The projects are then approved by the Designated National Authorities (DNA). The CDM mechanism is administered by the CDM Executive Board which manages the countries that are committed to the Kyoto Protocol. The Kyoto Protocol l was enforced in the beginning of the year 2006 and more than 1,650 projects are registered under this mechanism. During the commitment period 2008-2012, projects are expected to produce CERs worth more than 2.9 billion tons of carbon-di-oxide equivalent.

CDM Executive Board The CDM executive board was established by Marrakesh Accords during the seventh Conference of Parties (COP). The board consists of ten members and alternates from Annex I and non-Annex countries. The executive board appoints the chairperson and the vice-chairperson, one from Annex I country and other from non-Annex country for a term of two years to approve the CDM projects undertaken by the Annex I countries. The executive board establishes panels or work groups for carrying out its responsibilities. Currently, there are five panels namely:
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CDM registration and issuance group - In charge of considering requests for registration. Meth panel - In charge of framing recommendations and guidelines on methodologies based on submitted proposals. Afforestation and reforestation working group - In charge of framing recommendations on afforestation or reforestation methodologies in association with the Meth panel. Small scale working group - In charge of framing recommendations on small scale methodologies. Accreditation panel - In charge of creating material concerned with accrediting operational entities.

The delegates from several countries who are members of United Nations Framework for Climate Change Convention (UNFCC) participate in the proceedings of COP which is held yearly since 1995. In the meeting, the CDM projects are discussed and overseen. The first COP meeting was at Montreal in December 2005 and the second COP meeting was held at Nairobi, Kenya in November 2006. In the earlier COP-7 meetings, following types of projects received fast approval: Renewable energy projects giving an output capacity up to 15 MW. Energy efficiency improvement projects that reduce energy consumption on supply or demand up to 15 GWh annually. Project activities that reduce emission by sources and emit less than 15 kt of carbon-di-oxide equivalent annually.

CDM mechanism is a useful approach created by Kyoto Protocol to implement sustainable energy projects in developing countries to reduce carbon emission. The CDM executive board manages and approves the CDM projects undertaken by the Annex countries. 6.4.1 The Regional initiatives
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India is a vast country occupying 2.4% of land area and 16.2% of human population. A survey states that India emitted 1,205 million tons carbon-dioxide equivalent to the year 1994, 1,522 million tons in 2000 and 1727.71 million tons in the year 2007. Under such diverse conditions, India is working towards mitigating climate change. The Indian government is aware that global warming can have serious effects on the environment and hence is aiming at environment friendly sustainable development. In a binding agreement with UNFCCC, India is not subjected to emissionreduction targets until the period 2012. But, it actively participates in all multilateral negotiations of UNFCCC. Despite being a developing country India is ensuring that its social and development activities dont exceed per capita emissions beyond those of developed countries. The 11th five year plan has made progress in reducing energy intensity per unit of GHG by 20% and at the same time enhancing cleaner and renewable sources of energy. In June 2008, the prime minister released the National Action Plan on Climate Change (NAPCC). The action plan outlines an approach followed by India in adapting to climate change, while protecting poor and weak sections of society, maintaining a high growth rate and meeting national growth objectives. Considering the change in global market, Indian business organisations must view climate change as a business issue. The Indian government must capitalise on the countrys position as a developing giant, take the initiative and join hands with the government of other countries to create a lowcarbon future. Following are the centres established by the Ministry of Environment and Forests as a CDM initiative: CII (Confederation of Indian Industry) Climate Change Centre The Centre was established under supported initiative of United States Agency for International Development (USAID). The main objectives of the centre are to: create awareness of climate change issues within the Indian Industry.
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promote consensus on CDM within the Indian industry. strengthen local capacity to develop climate change mitigation projects.

Thus, CII was established with a vision to create awareness on climate change issues and to promote CDM projects in India. Global Environment Systems Group The Global Environment Systems Group at Development Alternatives addresses various aspects of climate change. These include: identifying the problem estimating the impact of climate change formulating the response strategies

This group is actively involved in evaluating the impact of climate change on forests, water resources, agriculture, wildlife, human and ecology. Environment Information Centre (EIC) Clean Technology Initiative (CTI) a programme of USAID in association with ICICI limited has established an Environmental Information Centre (EIC) at Federation of Indian Chambers of Commerce and Industry (FICCI), New Delhi. It also has its regional centres in Calcutta, Hyderabad and Mumbai that gather and provide information on: energy efficiency clean technologies environmental policies regulations and company success stories

The main objective of the centre is to enable business-to-business linkages in areas of environmental technologies, products and services. It places a special emphasis on greenhouse gas mitigating technologies. Greenhouse Gas Pollution Prevention Project

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The project partners are Confederation of Indian Industry, ICICI, Lal Bahadur Shastri National Academy of Administration and Development Alternatives. The objective of the project is to strengthen local capacity, create technical co-operation on climate change, solve energy issues between US and Indian government and develop GHG mitigation projects. Following approaches are Indias initiatives to mitigate climate change: Energy efficiency in various sectors Climate friendly initiatives Policy reforms Renewable energy Carbon mitigation

Let us now discuss each initiative in detail. Energy efficiency in various sectors India has defined various norms to improve energy efficiency in various industries. Table 6.1 depicts energy efficiency improvements in energy intensive industries.
Table 6.1 Energy Improvements in Indian Industries Segment of an industry Units Average consumption 1990-91 1994-95 After using best technology 2003-04

Cement Paper Caustic Soda Aluminium

Kwh/ton Mwh/ton Kwh/ton Kwh/ton

132 1.255 3351 16763

120.5 1.003 3130 16606

82 0.9 2150 13100

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Urea Steel

Kwh/ton G.Cal/ton

425.6 11.27

390 8.93

340 7.5

(Source: http://www.basicproject.net/data/Johannesburg/Amit_Garg_Indias_approach_to_climate_ch ange_mimitigati.pdf) The figures in the table depict increase in energy efficiency in various sectors of the Indian industries after using technologies best suited for environment. The energy saving potential in industries like automobiles, lighting, commercial industries, etc. must be high enough to prevent the emission of harmful gasses. Table 6.2 depicts the Indias energy saving potential.
Table 6.2 Indias Energy Saving Potential Energy consumption type Energy saving potential (GWh)

Automobiles used in industries and 80,000 agriculture sector Lighting in domestic, commercial 10,000 and industrial sector Energy intensive industries Total possible annual savings 5,000 95,000

(Source: http://www.basicproject.net/data/Johannesburg/Amit_Garg_Indias_approach_to_climate_ch ange_mimitigati.pdf) The figures in table depict Indias annual energy saving potential to mitigate 130 Mt carbon-di-oxides per year.
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Climate friendly initiatives The climate friendly approaches undertaken by the Indian government to mitigate climate change are: National highway development This project is one among the several climate friendly initiatives undertaken by the Indian government. The project was started with an objective to: o o o improve driving conditions reduce traffic congestions lower fuel consumption

The initiative is estimated to mitigate carbon-di-oxide emission up to 3.2 million ton per year. Metro rail in large cities This project was initially implemented in Kolkata and New Delhi and is in progress in other eight large cities. The metro rail uses state-of-art technology to reduce traffic, increase in use of rail services, save fuel and reduce pollutants and GHG emissions. Use of biofuels During the period 2006-07, 10% blend with gasoline required 1.2 billion litres. Presently, 20% blend requires four billion litres. By using carbon neutral biofuels such as Ethanol and Bio-diesel we can mitigate 8 Mt-carbon-di-oxide per year. Energy plantations Energy plantation like Jatropha can be planted to produce bio-diesel. The crop has a life of 50 years and is capable of producing 2 tons of bio-diesel for INR 20 per litre, if planted on a one acre land. Efficient and cleaner road transport The government has encouraged the use of Compressed Natural Gas (CNG) for public transport in all major cities which are prone to emit carbon. Also, the use of Auto LPG (Liquid Petroleum Gas) is being promoted in ten most polluted cities in India. The government has also introduced an environment friendly electric car; REVA into the market for public use.
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Policy reforms The government has initiated economy wide policies in the year 1991 for various sectors that emit harmful GHGs. The policies initiated are: Energy conservation Act 2001 lists energy consumption norms for industries, standards and energy labelling for electric appliances, and also lists provisions for establishing energy efficient building codes and energy efficiency bureau. Power sector reforms and policies lists initiatives for establishing super critical technology for NTPC mega power plants, build two large power plants with a capacity of 100 MW each and enhance hydro share to 27% by the end of the year 2012. Hydrocarbon sector reforms establishes pricing reforms such as dismantling of Administered Price Mechanism, and policies such as petroleum product pipeline and auto fuel policy. Coal sector reforms establishes pricing reforms to: o o o deregulate the prices for all grades of cooking and non-coking coal. coal bed methane exploitation. R&D on carbon-di-oxide capture and storage.

Population policy this policy has indirectly contributed in reducing GHG emissions. The policy has resulted in birth reduction by 40 million in the last 30 years. This in turn has resulted in reduction of carbon emissions to 60 Mt per year.

Hence, policy reforms laid down by the Indian government depicts its contribution towards mitigating climate change. Renewable energy India has initiated some of the active renewable energy programmes that include: o o o 3.26 million biogas plants 34.3 million improved wood-burning stoves Wind energy generation of 1507 MW and stands fifth in the world
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o o o

Biomass generation of 358 MW Small, mini and micro hydro generation of 1406 MW Integrated solar combined cycle of 140 MW

India has also taken initiative to make improvements in rural areas by establishing 350,000 solar lanterns, 177,000 home-lighting systems, 41, 400 street-lighting systems, 1.17 MW of power capacity and over 4200 solarpumping systems. 6.4.2 CDM projects in India

India has undertaken several CDM projects as a step to mitigate climate change and to meet Kyoto targets by earning ERUs from CDM projects. Table 6.3 depicts Indias CDM projects approved by CDM Executive Board.

Project name 10.5 MW wind mill project in the state of Tamil Nadu

Host party India

Project scope Involved energy industries (renewable and nonrenewable) Involved energy industries (renewable and nonrenewable)

Methodologies used Grid connected renewable electricity generation from renewable sources Grid connected renewable electricity generation from renewable sources

Reduction rate 24,009 metric tons of carbondi-oxide equivalent per annum 27,149 metric tons of carbondi-oxide equivalent per annum

Crediting period 22 July 2011 to July 21 2018

15.2 MW India wind energy project in Madhya Pradesh by Manganese Ore Limited

07 July 2011 to 06 July 2021

Other energy efficient projects established in India are:

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Gubbi energy efficiency project - In the state of Karnataka by Deloitte Touch and Tohmatsu India Pvt. Ltd, Bangalore. Replacement of coke through coal tar and coal dust in blast furnace - In the state of Chattisgarh at Bhilai Steel Plant by Infrastructure Development Finance Company Ltd. (IDFC), Chennai. Energy efficiency in lotus suits - In the state of Maharashtra at The Orchids Hotel Project Of Kamats Hotel, Mumbai by Development Alternatives, New Delhi. Energy efficiency and fuel switching in boiler In the state of Maharashtra at M/s Cadbury India Ltd, Thane by SEE-Tech Solutions Pvt. Ltd., Nagpur, Maharashtra.

Currently India has 233 registered CDM projects among them 93 projects have been issued CERs. The total issued CERs till date in numbers is 19,200,135. The financial investments made in India for mitigation of climate change are: Renewable energy financing through: o Indian Renewable Energy Development Agency (IREDA) with a loan commitment of INR 69.5 billion and disbursement of INR 37 billion power generation capacity of 2500 MW. Infrastructure Development Finance Company (IDFC) financed around twelve projects concentrating on sectors like mini hydel, and biomass. Power Finance Corporation / Rural Electrification Corporation involved funding state owned and private sector power projects including biomass, wind and mini hydel.

Energy efficiency financing o Fund for energy efficiency programmes like United States Agency for International Development (USAID) and fuel switching were raised from World Bank, State Bank of India (SBI), Canara Bank, and Syndicate Bank.
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Activity 1: Find out the approved CDM projects that received CERs. (Hint: http://indscanblog.com/2010/06/16/list-of-cdm-projects-that-receivedcers-in-june-2010/)

6.4.3

The Copenhagen Accord

Copenhagen accord is a crucial international conference of UNFCCC on climate change. It was held in the year 2009 at Copenhagen, Denmark. The conference included the participation of several heads of state, government officials, environmental organisations representatives and citizens from nearly 200 countries. Scientists had warned that there is a need for a strong agreement to reduce GHG emissions to avoid the consequences of civilisation activities on atmosphere. In the conference, it was agreed that climate change will require new investments and other expenditures in large scale in future. Also, developing countries would require substantial assistance to meet the challenges. The Copenhagen Accord included commitments in terms of financial support from developed countries to developing countries. By the year 2020, Copenhagen Accord scales to meet the financing needs of developing countries by extending a support of around $100 billion per year. The Accord supports the strong policy actions framed by the developing countries to mitigate and adapt to climate change. Following terms were agreed by the nations in the Copenhagen Accord: Developed countries must list their individual emission-reduction targets and developing countries must list measurements they will undertake to reduce emissions by specific amounts. Transparency in monitoring emissions must be accepted by all countries.
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Under developed countries will be credited to prevent deforestation. Developed countries will help by funding the underdeveloped countries that are poor and vulnerable. Legally binding nations must accept a goal of reducing global warming to 2C by 2050.

Apart from the agreements by the nations, the Accord also faced several criticisms such as: The limit of 2C is too high rather a limit of 1.5C was already supported by over 100 countries to abate climate impacts. The Accord did not set a target date for evaluating emissions reduction. There was just a suggestion stating emissions must peak as soon as possible." There was no global emission targets set for the year 2020 to 2050. The Accord did not mention any solid deal or agreement on reducing emissions from deforestation. The finances promised for undeveloped countries were too small. For example, African countries requested $400 billion financing for climate change adaptation. These countries were not only offered less amounts but they were asked to associate with the Accord to be eligible for the funds.

Thus, the Copenhagen Accord discussed the future investments that have to be undertaken to mitigate climate change. It also highlighted the developing countries that need financial support to reduce GHG emissions. Self Assessment Questions 9. __________________________________ is one of the consensus approaches created by the Kyoto Protocol to encourage carbon trading. 10. ______________________ approves CDM projects implemented in developing countries. (Pick the right option)
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a) CDM Executive Board b) United Nations Framework for Climate Change Convention (UNFCC) c) Clean Technology Initiative (CTI) d) Federation of Indian Chambers of Commerce and Industry (FICCI) 11. In the binding agreement with UNFCC, India is not subjected to emission-reduction targets until the period 2008. (True/False) 12. ________________ policy has indirectly contributed to mitigate GHG emissions.

6.5 Summary
Let us recapitulate the important concepts discussed in this unit. Climate change is the variations in the climatic conditions that persist for an extended period of time beyond ones lifespan. Industrial activities without proper precautionary measures can result in emission of harmful GHG gasses. To mitigate climate change countries have to be cost effective, use climate friendly technologies, participate globally to curb GHG, and develop consensus approach. Kyoto Protocol is a legal agreement binding 37 industrialised countries to decrease GHG emissions. Kyoto Protocol allows Annex I countries to meet the targets by three market based mechanisms, namely, emission trading, Clean Development Mechanism and Joint Implementation. Joint Implementation mechanism allows Annex I countries to implement emission-reduction projects in other Annex I countries that bind to Kyoto Protocol agreement. JISC committee validates the ERUs generated by JI projects. It comprises ten members and ten alternates to validate ERUs.
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CDM allows the Annex I countries binding the agreement to Kyoto Protocol to implement emission-reduction projects in non-Annex countries. CDM Executive Board was established by Marrakesh Accords to approve CDM projects undertaken by the host and investor countries. The CDM Executive Board consists of five panels namely, CDM registration and insurance group, meth panel, afforestation and reforestation group, small scale working group and accreditation panel. The approaches undertaken by India to mitigate climate change are energy efficiency in various sectors, climate friendly initiatives, policy reforms, renewable energy and carbon mitigation.

6.6 Glossary
Certified Emission Reductions (CER): This is the basic unit of CDM. Each unit represents the successful emission-reduction equivalent to one ton of carbon-di-oxide. Emission Reduction Unit (ERU): This is a basic unit of JI projects, each unit represents the successful emission-reduction equivalent to one ton of carbon-di-oxide. Credits: They are assigned for emission-reductions. There are four types of Kyoto credits namely Assigned Amount Units (AAU), Certified Emission Reductions (CERs), Emission Reduction Units (ERU) and Removal Units. Economies in Transition (EIT): EIT refers to the countries in the process of re-structuring their economies to make a more market-oriented system for example, countries from former Soviet Union and Eastern Europe. Annex I countries: These are the group of committed countries that aim at reducing emissions of the six GHG by at least 5% below the emitted levels in the years 1990 during the period 2008-12. Annex B countries: These are the group of industrialised countries listed under Annex B of the Kyoto Protocol. These countries have GHG reduction
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commitments. Annex identifies the countries currently making a transition to market economy.

6.7 Terminal Questions


1. What is climate change and what are its implications? 2. Define Kyoto Protocol. Explain three market-based mechanisms used by the annex countries to meet Kyoto targets. 3. Define Joint implementation and explain the significance of JISC? 4. What is CDM? Describe its operation. 5. List some of the regional initiatives undertaken by India to reduce carbon emission.

6.8 Answers
Self Assessment Questions 1. Green House Gasses (GHGs) 2. True 3. a) GHGs 4. True 5. d) Emission trading 6. Carbon market 7. False. JI allows Annex I countries to implement emission-reduction projects in other countries that also come under Annex I. 8. Track 1 and Track 2 9. Clean Development Mechanism (CDM) 10. a) CDM Executive Board
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11. False. In the binding agreement with UNFCC, India is not subjected to emission-reduction targets until the period 2012. 12. Population policy

Terminal Questions 1. Climate change refers to the variations in the climatic conditions due to harmful GHG emitted by the industrial and other developmental activities in the atmosphere. For more details, refer section 6.2. 2. The Kyoto Protocol is legal agreement that binds 37 countries to work towards minimising the emission of carbon. The three market based mechanisms are emission trading, CDM and JI. For more details refer, section 6.3. 3. JI is a mechanism designed to promote Annex I countries to invest and develop projects in other Annex I countries and earn ERUs for the implemented project. For more details, refer section 6.3. 4. CDM is a mechanism designed to promote Annex I countries to invest and develop projects in developing countries to reduce the emission of harmful gasses. For more details, refer section 6.4. 5. Some of the regional initiatives undertaken by India to reduce emission of GHG gasses are energy efficiency in various sectors, climate friendly initiatives, policy reforms and renewable energy. For more details, refer section 6.4.

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6.9 Caselet
Future Perspectives of Bio-diesel as an Auto Fuel A Government of India Initiative, this project is the first CDM project designed for Indian bio-fuels sector. The project was implemented in the Samsthan Narayanpur Village, Nalgonda District, of Andhra Pradesh. The promoter of this project was Southern Online Bio-technologies Limited, Hyderabad. The project is first of its kind in India leading to the establishment of state-of-the art and innovative technology in India. Project design The project was designed to extract 28,000 litres of Bio-diesel from nonedible oil seeds or vegetable fats by esterification or trans-esterification using Methanol or Ethanol and Chemical catalysts. Technology The technology used for the project is sourced from a German based company Lurgi, a pioneer in Bio-diesel technology. The company has provided technology for various Bio-diesel projects worldwide. Proposed project requires 30 large plants to be constructed by an Indian contractor based on Lurgi technology and engineering. Project financials The finances for the project were raised from several national and international entities. The sponsors were also interested in emission trading. The estimated cost of the project was around Rs.171 million. Sustainable development The project aims towards preventing environment pollution and climate change mitigation. The key aspects of this project are:
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1. Contributing to the sustainable development. 2. Creating direct and indirect employment in the region. 3. Using tree borne oil seeds collected by tribes and rural farmers. 4. Using raw Bio-diesel in rural areas for agriculture, electricity, tractors, etc. 5. Using by-products as rich nitrogenous bio-fertiliser and thus replacing the demand for energy intensive chemical fertiliser. 6. Using seed cake produced while extracting oil from seeds as bio-fertiliser. Economic benefits The project benefits are: 1. Project has impact on the national import duties as it contributes towards reduction of import bill. 2. Tribes collect oil bearing seeds from Pongamia and Jatropha trees grown in forest areas and receive additional revenues. 3. Farmers can grow Pongamia plantation in their fields or unused lands to obtain sustained income from collection and sale of seeds. Results 1. The project generates emission-reductions around 27,205 tons of carbondi-oxide per year for an estimated Bio-diesel production of 9.2 million litres per year. 2. Petro-diesel forms basis for bio-diesel and reduces GHG emissions. Discussion Questions: 1. What are the key aspects of the project?
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Hint: Refer sustainable development 2. Analyse the benefits of using bio-diesel as auto fuel Hint: Refer sustainable development (Source: http://www.carbonminus.org/presentation/Carbon%20Trading%20Pontential s%20of%20Biofuels%20of%20India%20Dr%20Srikanta%20K%20Panigrahi .pdf) Reference Labatt S, White .R (2002). Environmental Finance. New Jersy: John Wiley & Sons, Inc.

E-References http://cdm.unfccc.int/Projects/registered.html - Retrieved on September 26, 2011. http://unfccc.int/kyoto_protocol/items/2830.php September 26, 2011. Retrieved on on

http://www.indiaclimateportal.org/how-climate-change-affects-india Retrieved on September 26, 2011. http://www.rediff.com/money/2007/jun/05clim.htm September 26, 2011. Retrieved

http://www.gbn.com/articles/pdfs/GBN_Impacts%20of%20Climate%20C hange_whitepaper.pdf - Retrieved on September 27, 2011. http://www.tfsgreen.com/global-markets/clean-development-mechanism/ - Retrieved on September 27, 2011.

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