EM Unit 6 Climate Change Finance SLM

7/28/2019 EM Unit 6 Climate Change Finance SLM

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Environmental Management Unit 6

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Unit 6 Climate Change Finance

Structure

6.1 Introduction6.2 Climate Change and its Implications6.3 Climate Change Mitigation

6.3.1 The Kyoto Protocol6.3.2 Joint implementation

6.4 Clean Development Mechanism (CDM)6.4.1 The Regional initiatives6.4.2 CDM projects in India6.4.3 The Copenhagen Accord

6.5 Summary6.6 Glossary6.7 Terminal Questions6.8

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 socio-economic 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 theenergy 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 carbon-

di-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 theaccumulation 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) GHGs

b) Carbon-di-oxide

c) Nitrous oxide

d) Methane

6.3 Climate Change MitigationClimate 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 variousregions 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 areresponsible 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 emission-

reduction 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 market-

based 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. Thecountries 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 non-

Annex countries, and one member representing Small Island developingstates.

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 climatechange.

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 emission-

reduction 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.


4. The rules for the Kyoto Protocol implementation were adopted atMarrakesh 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) Emission Reduction Units

b) Assigned Amount Units

c) Certified Emission Reduction

d) 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 withenvironmental 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 wouldotherwise 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 itsresponsibilities. 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 withaccrediting 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-di-oxide 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 emission-

reduction 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 mustcapitalise on the countrys position as a developing giant, take the initiative

and join hands with the government of other countries to create a low-

carbon 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 DevelopmentAlternatives. 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

After using best

technology

2003-041990-91 1994-95

Cement Kwh/ton 132 120.5 82

Paper Mwh/ton 1.255 1.003 0.9

Caustic Soda Kwh/ton 3351 3130 2150

Aluminium Kwh/ton 16763 16606 13100


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Urea Kwh/ton 425.6 390 340

Steel G.Cal/ton 11.27 8.93 7.5

(Source: http://www.basic-

project.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

agriculture sector

80,000

Lighting in domestic, commercialand industrial sector

10,000

Energy intensive industries 5,000

Total possible annual savings 95,000

(Source: http://www.basic-

project.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 improve driving conditions

o reduce traffic congestions

o 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 canmitigate 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 mostpolluted 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 policiesinitiated 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 deregulate the prices for all grades of cooking and non-coking coal.

o coal bed methane exploitation.

o 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 3.26 million biogas plants

o 34.3 million improved wood-burning stoves

o Wind energy generation of 1507 MW and stands fifth in the world


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o Biomass generation of 358 MW

o Small, mini and micro hydro generation of 1406 MW

o 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 solar-

pumping 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

Host

party

Project

scope

Methodologies

used

Reduction

rate

Crediting

period

10.5 MW

wind mill

project in

the state of

Tamil Nadu

India Involved

energy

industries

(renewable

and non-

renewable)

Grid connected

renewable

electricity

generation from

renewable

sources

24,009

metric tons

of carbon-

di-oxide

equivalent

per annum

22 July

2011 to

July 21

2018

15.2 MW

wind

energy

project in

Madhya

Pradesh by

Manganese

Ore Limited

India Involved

energy

industries

(renewable

and non-

renewable)

Grid connected

renewable

electricity

generation from

renewable

sources

27,149

metric tons

of carbon-

di-oxide

equivalent

per annum

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.

o Infrastructure Development Finance Company (IDFC) financed

around twelve projects concentrating on sectors like mini hydel, and

biomass.

o 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 wereraised 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-received-

cers-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.


9. __________________________________ is one of the consensus

approaches created by the Kyoto Protocol to encourage carbon trading.

10. ______________________ approves CDM projects implemented indeveloping 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-Annexcountries.

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


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

TerminalQuestions

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 non-

edible 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 projectsworldwide. 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 toobtain sustained income from collection and sale of seeds.

Results

1. The project generates emission-reductions around 27,205 tons of carbon-

di-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: Refersustainable 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 - Retrieved on

September 26, 2011.

http://www.indiaclimateportal.org/how-climate-change-affects-india -

Retrieved on September 26, 2011.

http://www.rediff.com/money/2007/jun/05clim.htm - Retrieved on

September 26, 2011.

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.

Documents

EM Unit 6 Climate Change Finance SLM