clean development mechanism-scribd

8/8/2019 Clean Development Mechanism-Scribd

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Clean DevelopmentClean Development

MechanismMechanism

PresentationPresentation


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Gr een house gasesGr een house gaseseffects of globaleffects of globalwa r mingwa r ming

Climate modelsClimate modelsp r edict the globalp r edict the globaltempe r atu r e willtempe r atu r e willr ise by aboutr ise by about1.4 to 5.8 deg r ees1.4 to 5.8 deg r eesby 2100by 2100

Climate change is likely to have aClimate change is likely to have a significant impactsignificant impact on theon theglobal envi r onment, economy and societyglobal envi r onment, economy and society

G lobal wa r ming :G lobal wa r ming :


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U nited Nations F r amewo r kU nited Nations F r amewo r kConvention on ClimateConvention on ClimateChange ( U NFCCC)Change ( U NFCCC)

A globa l le ga l instrument (internationa l a greement) to protect the A globa l le ga l instrument (internationa l a greement) to protect the climate system and stabi lize GHG emissionsclimate system and stabi lize GHG emissions

Ado pted in 1992, entered into f orce in 1994 Ado pted in 1992, entered into f orce in 1994

S tatus of partici pation: 189 PartiesS tatus of partici pation: 189 Parties Ado pted at third Con f erence of Parties (COP) to the UNFCCC in Ado pted at third Con f erence of Parties (COP) to the UNFCCC in Kyoto in 1997Kyoto in 1997Required rati f ication of > 55 countries re presentin g > 55% of GHGRequired rati f ication of > 55 countries re presentin g > 55% of GHGemissionsemissionsEntered into f orce on February 16 th , 2005 a f ter rati f ication of the Entered into f orce on February 16 th , 2005 a f ter rati f ication of the Russian Federation Russian Federation As of 2010J u ly 191 countries have rati f ied the protoco l As of 2010J u ly 191 countries have rati f ied the protoco l


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K yoto p r otocolK yoto p r otocol

Objective of climate change conventionObjective of climate change conventionThe climate change convention seeks to stabilize atmosphericThe climate change convention seeks to stabilize atmosphericconcentrations of greenhouse gases at a level that would prevent concentrations of greenhouse gases at a level that would prevent dangerous anthropogenic [humandangerous anthropogenic [human- -induced] interface with climate change.induced] interface with climate change.

K ey P r ovisionsK ey P r ovisions

Adopted in K yoto ,Japan in Decembe r 1997.Adopted in K yoto ,Japan in Decembe r 1997.Cove r s 6 g r een house gases(COCove r s 6 g r een house gases(CO 2,2, CHCH 44,N,N 22O,HFCs,PFCs and SFO,HFCs,PFCs and SF 66 )) ..Nations r educing combined g r eenhouse gas emissions by at least 5Nations r educing combined g r eenhouse gas emissions by at least 5

per

cent f r om 1990 levels by the pe

r iod 2008pe

r cent f

r om 1990 levels by the pe

r iod 2008- -2012.2012.Each nation demonst r able p r og r ess in implementing its emissionEach nation demonst r able p r og r ess in implementing its emission

r eduction commitments by 2005.r eduction commitments by 2005.

Annex 1Annex 1: count r ies with obligations to take measu r es to mitigate the: count r ies with obligations to take measu r es to mitigate theeffects of climate changeeffects of climate change

Annex 2Annex 2: count r ies with obligations to p r ovide financing to developing: count r ies with obligations to p r ovide financing to developingcount r ies fo r thei r obligations unde r U NFCCCcount r ies fo r thei r obligations unde r U NFCCC


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Main r equi r ements of Main r equi r ements of

K yoto p r otocolK yoto p r otocolT he f ood production shou ld not be threatened T he f ood production shou ld not be threatened Shou ld be consistent with the sustainab le economic Shou ld be consistent with the sustainab le economic

deve lopment deve lopment Achieved ear ly enou gh to a llow ecosystems to ada pt Achieved ear ly enou gh to a llow ecosystems to ada pt natura lly to c limate chan ge.natura lly to c limate chan ge.


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Annex B count r iesAnnex B count r ies

(= Annex I unde r U NFCCC(= Annex I unde r U NFCCCAust r alia

AustriaBe larusBe lgiumBu lgariaCanada Croatia

Czech Re pDenmark

EC

EstoniaFinlandFranceGermanyGreeceHun garyIce landIre land

Ita lyJa pan

Latvia LiechtensteinLithuaniaLuxembour gNether landsNe w Zea landNor wayPo land

Portu ga lRomania

Russia Slovakia SloveniaSp ainSwedenSw itzer landT urkeyUkraine

UKU SA


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Final ag r eementsFinal ag r eements

Reduction tar gets to a pply to 6g reen house tar getsReduction tar gets to a pply to 6g reen house tar getscountries under goin g transition to market economies (EIT ) countries under goin g transition to market economies (EIT ) Bu lgaria ,Croatia ,Czech Re pub lic,Estonia ,Hun gary ,Latvia ,Lithuania ,Po land ,Bu lgaria ,Croatia ,Czech Re pub lic,Estonia ,Hun gary ,Latvia ,Lithuania ,Po land ,

Romania ,Slovak Re pub lic,SloveniaRomania ,Slovak Re pub lic,Slovenia to have diff erin g base line years to have diff erin g base line years and a certain de gree to flexibi lity in implementin g their and a certain de gree to flexibi lity in implementin g their commitments.commitments.No commitments f orm deve loping countries.No commitments f orm deve loping countries.Deve loped countries shou ld use 1990 as their base year .Deve loped countries shou ld use 1990 as their base year .

Blocs of countries can joint ly achieve tar gets (e. g EU)Blocs of countries can joint ly achieve tar gets (e. g EU)Net chan ges in emissions f rom human induced e ff ects on Net chan ges in emissions f rom human induced e ff ects on f orests (e. g re f orestation and de f orestation) to a pply to reduction f orests (e. g re f orestation and de f orestation) to a pply to reduction tar gets.tar gets.


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Mechanisms devisedMechanisms devised

ET - Emissions T r ading AAU (Assigned Amount Units)are exchanged between Annex I countries

JI - JointImplementation Annex I investors receiveERUs (Emission ReductionUnits) by investing in a project in another Annex I nationwhich reduces GHG emissions

CDM - CleanDevelopmentMechanism

Annex I investors receiveCERs (Certified EmissionReductions) by investing in a

project in a non-Annex I nationwhich reduces GHG emissions


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W hat is CDM?W hat is CDM?

Pro jects in deve loping countries which reduce GHG emissions Pro jects in deve loping countries which reduce GHG emissions re lative to the base line .re lative to the base line .1tonne CO2=1 C erti f ied Emission Reduction (CER).1tonne CO2=1 C erti f ied Emission Reduction (CER).

Used by deve loped countries to meet their Kyoto Protoco l.Used by deve loped countries to meet their Kyoto Protoco l.Contribute to sustainab le deve lopment in deve loping countries.Contribute to sustainab le deve lopment in deve loping countries.


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How the CDM W o r ksHow the CDM W o r ks

Annex I country invests in GHG reduction Annex I country invests in GHG reduction pro ject in nonpro ject in non-- Annex I country Annex I country

Annex I country receives CERs Annex I country receives CERsNonNon-- Annex I country receives revenues Annex I country receives revenues f rom CERsf rom CERs

Annex 1 Countrye.g. Japan

N on-Annex 1 Countrye.g. Thailand

I nvestment

R evenues

CE R s (negotiated)


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W hat is baseline?W hat is baseline?

T heT he base linebase line f or f or aa CDMCDMpro jectpro ject activityactivity isis thethe scenarioscenariothatthat reasonab lyreasonab ly representsre presentsthethe anthro pogenicanthro pogenic emissionsemissionsbyby sourcessources o f of greenhousegreenhousegasesgases thatthat wou ldwou ld occur occur inin thetheabsenceabsence o f of thethe proposedproposedpro jectpro ject activityactivity..

The baseline can be usedThe baseline can be usedto dete r mine:to dete r mine:

whether a CDM p ro ject whether a CDM p ro ject activity is additiona l; and activity is additiona l; and T he vo lume of additiona lT he vo lume of additiona lgreenhouse gas emission greenhouse gas emission reductions achieved by a reductions achieved by a pro ject activity.pro ject activity.


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W hat kind of p r ojectsW hat kind of p r ojects

a r e eligible?a r e eligible?P r ojects that r educe any of P r ojects that r educe any of the 6 G HG cove r ed in thethe 6 G HG cove r ed in theK yoto P r otocol.K yoto P r otocol.Fo r est r yFo r est r y--yes (only A&R)yes (only A&R)Nuclea r Nuclea r nonoP r oject types of inte r estP r oject types of inte r est

Affor estation andAffo r estation andr efo r estationr efo r estationAgr icultu r eAg r icultu r eBiogasBiogasBiomass ene r gyBiomass ene r gy

Ene r gy dist r ibutionEne r gy dist r ibutionEne r gy efficiencyEne r gy efficiency - -householdshouseholdsEne r gy efficiencyEne r gy efficiency - -indust r yindust r yEne r gy efficiencyEne r gy efficiency - - ownowngene r ationgene r ation


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U nits used fo r U nits used fo r

ca r bon t r adeca r bon t r adeERU(Emission reduction Units) f or J IERU(Emission reduction Units) f or J ICER(Certi f ied Emission Reduction) f or CDMCER(Certi f ied Emission Reduction) f or CDMVER(Vo lu lentry Emission reduction) without certi f icateVER(Vo lu lentry Emission reduction) without certi f icate


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Major differenceMajor difference

CER (Certified CER (Certified Emission Reduction)Emission Reduction)

CER is used f or CDM used by a llCER is used f or CDM used by a llnations a part f romnations a part f rom

Annexure Annexure II

ERU (EmissionReduction units)

Pro jects that are in Annexure I

of the protoco lare e ligible f or J I.

J I has nole ga l bindin g.

Emission rediction (remova ls)

occurrin g a f ter

2008 are ca lcu lated.

VER (Verified Emission Reduction)

VER is not acerti f ied certi f icate

and is not issued by UNFCC butsti ll traded


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Financial benefits fo r Financial benefits fo r companies th r oughcompanies th r oughCDMCDM

CDM bene f its CDM bene f its De preciation bene f its De preciation bene f its Bene f its under 80 I A which will on ly Bene f its under 80 I A which will on ly accrue due to the insta llation of the wind accrue due to the insta llation of the wind mills. mills.


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Financial FeasibilityFinancial Feasibility

Ca lcu lates the payback period of CDMCa lcu lates the payback period of CDMcosts versus CER revenuecosts versus CER revenue

CDM payback period =CDM payback period =

T ransaction costs + Additiona l costsT ransaction costs + Additiona l costs Assumed CER p rice X T ons CO2 Assumed CER p rice X T ons CO2 --eq/yr eq/yr


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Some of the ma jor price Some of the ma jor price influencin g f actors:influencin g f actors:

SupplySupply--demand mismatch demand mismatch Po licy issues Po licy issues

Crude oil prices Crude oil prices Coa l prices Coa l prices CO2 emissions CO2 emissions Weather/ Fue l prices Weather/ Fue l prices

Euro pean Union Allowances (EUAs) prices Euro pean Union Allowances (EUAs) prices Forei gn exchan ge fluctuations Forei gn exchan ge fluctuations Globa l economic growth Globa l economic growth


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P r ice existent in ma r ketsP r ice existent in ma r kets

and exchangeand exchangePrice of CER is at $11 .50 a tonne. as on Dec 20 th 2010

CERs closed at 11.71 -Dec 2010

Wor ld Bank pays $4 f or

f orest CERs Ethio pian f orestry pro ject , the Humbo Assisted Natura lRe generation Pro ject .

Fl uctuations in Swiss exchange


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CDM p r ocessCDM p r ocess

Hos t

oun t

pp oval

Poss ibl r vi wby CDM EB

R ist r t ion of the CDM roject

8. Pr ojec ti p lemen t a ti on

and mon it o r ing

9.Yea r ly

ve r ifi ca ti on and

cer

tifi ca ti on

Poss ibl e re vi e wby CDM EB

Reg ist r t ion of the CDM roject

1 . Pr ojec t Pr e p a r a ti on i. I ent if icat ion of roject ii. Pre-sc reen ing of CDM -

App lica bili tyiii. De ve lopment of Feas ibili t y

S tud y

2 . D evelo p men t o f Pr ojec t I dea N o t e P IN

3. D evelo p men t o f Pr ojec t D es ign D ocumen t P DD i. Project Desc ri pt ion ii. S e lect b ase line app roach iii. Assess add it iona lit y

iv. S et b ase line em iss ion le ve lv. S et Cr ed it ing Pe ri od vi. Ca lcu late net em iss ion reduct ion vii. De ve lop a mon ito ri ng p lan viii. Assess en vir onmenta l i mpacts ix. In vi te stakeho lde rs fo r comments

4 . S ubm iss ion o f th e P DD and Hos t

oun t r y

pp r oval t o Val ida t o r

5.Make P DD

p ubl icly ava ilable f o r

30 days 6.Val ida ti on o f Pr ojec t

7.S ubm iss ion o f

Val ida ti on R e p o r t and

P DD

Project developer DOE DNA EB


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Gr owth of CER t r adeGr owth of CER t r ade

0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 5 0 0

3 0 0 0

3 5 0 0

4 0 0 0

2 0 1 0 2 0 1 2 2 0 2 0

I n m i l l i o n

Current l y,$ 450 mi ll ion CERs have been issued, major l y industria l , main l y H F C-23 projects ($219 mi ll ion issued) and N2O-adipic projects (97 $mi ll ion issued), renewab l e projects (63 $Smi ll ion issued) and energy efficiency projects (28 $mi ll ion issued). By theend of 2012, this wi ll increase to $980 mi ll ion CERs, reaching $3.6 bi ll ion by 2020, of which around $1.3 bi ll ion CERs wi ll come from industria l projects, whi l e another 1.3bi ll ion wi ll come from renewab l e projects.

S ource-commodities-now.com


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CER Demand andCER Demand and

supply between nationssupply between nations

S ource-UNEP RI SK CENTER


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Indian ca r bon ma r ketIndian ca r bon ma r ket

by secto r sby secto r s

Infrastructure


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Expected Ave r ageExpected Ave r ageAnnual CERsAnnual CERs

Registe r edRegiste r edP r ojects byP r ojects by

Count r yCount r y Expected Expected Total 338 991 508 Total 338 991 508 - - UNFCCC UNFCCC

* Assumption: No renewal of crediting periods(UNFCCC) ( Jan 2010 )


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Futu r e outlookFutu r e outlook - - Rules fo r landRules fo r landuse activities and CDM beinguse activities and CDM being

finalized .finalized .Considerations inc lude:Considerations inc lude:

Forest de f initionsForest de f initions

Accountin g methodo logies Accountin g methodo logiesBase line methodo logiesBase line methodo logiesPermanence of CERsPermanence of CERsS implif ied methodo logy f or sma ll sca leS implif ied methodo logy f or sma ll sca le

Current ly usin g de f initions f or Annex 1Current ly usin g de f initions f or Annex 1countriescountries


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Impo r tant contactsImpo r tant contacts

Internationa l AgenciesInternationa l AgenciesUN F CC UN F CC WWW.cdmbazar.net WWW.cdmbazar.net www.energyefficiencyasia.org www.energyefficiencyasia.org www.unep.fr www.unep.fr

www.cd4cdm.org www.cd4cdm.org www.cdmcapacity.org www.cdmcapacity.org

www.cseindia.org www.cseindia.org www.envfor.nic.in/cc/cdmwww.envfor.nic.in/cc/cdm

www.pointcarbon.comwww.pointcarbon.com

www.Carbonfund.org www.Carbonfund.org

Government. of India a genciesGovernment. of India a genciesNational CDM authority of IndiaNational CDM authority of IndiaMOEF being nodal ministry for Carbon creditsMOEF being nodal ministry for Carbon creditsDNA(Desiganated authority of India)DNA(Desiganated authority of India)


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T hank youT hank you

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