Climate Change, UNFCCC & Kyoto, CDM by malj


									Climate Change, UNFCCC &
        Kyoto, CDM

       Promode Kant
      Director, IGWES
Global mean temperatures are rising faster with time
                         Warmest 12 years:

                                            Period     Rate
                                             50 0.1280.026
                                             100 0.0740.018
                                            Years /decade
Retreat of the Gangotri glacier snout in last 220 year
               Greenhouse effect
• Natural greenhouse gas effect known for last 175 years
• Fourier (1827)- “atmosphere acts like glass of hothouse
  because it lets thru light rays of the sun but retains the dark
  rays from the ground”
• These trace gases are transparent to incoming short wave
  solar radiation
• But absorb the outgoing long wave terrestrial radiation and
  remitting this energy in all directions
• Thus fundamentally altering the radiation balance of the
  earth atmosphere system
Radiative forcing
    Source: Stern Review
Link between GHGs and climate
        changeSource: Stern Review
         Global carbon stock
• Carbonated rocks 65000000 Gt
• Fossil fuel reserves 4000 Gt
• Deep ocean 38000 Gt
• Surface ocean 1020 Gt
• Terrestrial ecosystems 2070 Gt (vegetation
  610 Gt, soils 1400 Gt & litter 60 Gt)
• Atmospheric ecosystem 750 Gt
Greenhouse gases
  Kyoto Protocol recognizes six
       •    Carbon di oxide
       •    Methane
       •    Nitrus oxide
       •    Sulpher hexafluoride
       •    Hydrofluorocarbons
       •    Perfluorocarbons
             Kyoto protocol
• Gives effect to the aims and intents of the
  UNFCCC to reduce anthropogenic changes
  in the climate
• Adopted under article 17 of UNFCCC
• Places legally binding commitments on
  developed countries to bring their collective
  emissions 5.2% below the 1990 levels
  during the first commitment period 2008-12
   Land use, land use change &
       forestry (LULUCF)
• The Forests are both sources and sinks of carbon.
• Appropriate management practices can enhance
  their net sink values.
• Net changes in GHGs caused by direct human
  induced LULUCF limited to afforestation,
  reforestation and deforestation (ARD) since 1990
  eligible for meeting commitments of Annex 1
• These activities should be based on sound science
   Land use, land use change &
       forestry (LULUCF)
• These activities should contribute to
  conservation of biodiversity and sustainable
  use of natural resources,
• Limited use of forest management activities
  allowed within Annex 1 countries for
  meeting their commitments
            LULUCF (contd)
• Defines “forest” as a min area of 0.05-1.0 ha
  (India 0.05 ha) with tree crown cover of more than
  10-30% (India 30%) with trees (or regeneration)
  with the potential to reach 2-5 m (India 5 m) at
• “Afforestation” is conversion of land which has
  not been a forest for atleast 50 years through
  planting, seeding and/or the human induced
  promotion of natural seed sources
• “Reforestation” is raising forest on lands not
  containing forests as on 31.12.1989
    Mitigation Action of Forests
• By emission avoidance or conserving existing
  carbon pools by slowing deforestation or
  improving forest harvesting practices – forest
• By carbon sequestration or expanding the storage
  of C in forest ecosystems by increasing the area
  and/or C density of forests – management &
• By lengthening C storage in forest ecosystems &
  in forest products – end use management
   Mitigation Action of Forests
• By substituting sustainably grown wood for
  energy (bio-fuel) and energy intensive
  cement based products (construction
  material) – end use management
• Biomass used as replacement for fossil fuel
• The credits earned are equal to the fossil fuel
• Very short rotation possible – quick income
• Biomass-based energy generation technologies
  costly, long distance transportation of this
  resource not economical, hence limited use
• With technological changes this may prove to be
  the most attractive activity
         Barriers to biofuels
• In EU biofuels become competitive when
  petrolium prices reach $70/barrel
• In US $ 50 to 60 only
• Brazilian threshold is $25-30
• Petroleum prices can be manipulated just to
  harm nascent biofuel industry
• Food security when corn, sugarcane, wheat
  etc used or excessive land utilization
         Barriers to biofuels
• Threat to biodiversity and forests
• Environmental consequences of large scale
• Large usage of water
• Pollution due to pesticide and fertilizers
• Land degradation
    Promotion of biofuels in China
• A risk management scheme to cover losses caused
  by reduction in fossil fuel prices
• Preferential treatment and/or subsidies to raw
  material producers using idle land,
  saline/alkaline/desert lands
• Encouragement to model projects using high and
  new technologies
• Preferential tax treatment to biofuel companies
  that face operating difficulties
         Jatropha and beyond
• There are hundreds of species of TBOs in
  forests of India
• We need to use a large part of the existing
  oil potential in forest and non-forest lands
• Use of oilseeds from forests
• Exploitation within threshold possible with
  appropriate management
                     Some TBOs in India
                  (source CRDT, IIT, Delhi)
Oil seeds         Seed potential in   Oil yield   Oil potential in 100
                  100 Mt                          Mt
sal               5504 Mt             12.5%       688 Mt
Mohwa             490                 35          171
Neem              418                 20          83.6
Mango kernel      600                 8           48
Pongamia          111                 27          30
Kusum             90                  33          29.7
Khakan            46                  33          15.2
Pinnai/Undi       18.6                60          11.2
Pisa              12                  48          5.8
Rubberseed        30                  18.5        5.6
Dhupa             30                  17          5.1
Kokum             12.5                40          5
Maraoti/Kavathi   12                  33          4
Nahar             5.7                 40          2.3
    Growing TBOs in forest lands
•   Total geographic area of J&K 222236 sq km
•   Total forest cover 21267 sq km
•   Dense 2102 sq km, moderately dense 8395 sq km
•   Open 10770 sq km
•   Can we use a part of these open forests for raising
    TBOs – say 10%, or about 0.1 Mha by mixing
    locally appropriate TBOs in 25% mix
            Using wastelands
                    source PCRA

•   India has 64 Mha of wastelands of which
•   Gullies/ravines 2055300 ha
•   Waterlogged/marshy lands 1656800 ha
•   Saline/alkaline 2047700 ha
•   Shifting cultivation 3514200 ha
•   Degraded grazing lands 2597800 ha
•   Degraded lands under plantation crops
    582800 ha
           Using wastelands
• Sands inland/coastal 5002100 ha
• Mining/industrial wastelands 125200 ha
• Barren rocky patches 6458400 ha
• Steep slopes 5578800 ha
• Can we develop models that encourage
  private initiatives to use WL for growing
• Private ownership of WL – distribution
  among poor
    Food Security and Biodiesel
• Corn for bio-ethanol in US and China competes
  with animal feed
• Oilseed farming like Rape seed competes with
  foodcrop farming
• In biodiesel we limit ourselves to nonedible oil
  grown over agri surplus lands
• And also used edible oil
• Biotech research for far higher food productivity
  so as to release more lands for biofuels
               Scope for bioenrgy
• A galloping demand for energy
• Finding balance between energy security, economic development and
  environmental protection
• Creating a demand of biofuels in India and worldwide
• Land availability- shifting cultivation lands, encroached lands and
  waste lands
• Open forests – source of tree borne oilseeds?
• Dense and moderate dense forests for biodiversity conservation
• Reaching one third forest and tree cover target
• Waste lands
• Need for diverse sourcing of raw material
• Biodiversity and bioenergy
• Food security and bioenergy
 Clean development mechanism
• Undertaken by Annex 1 countries or their entities
  in non-Annex 1 countries
• Objectives are to mitigate climate change effects,
  assist developed countries meet their commitments
  at reduced costs taking advantage of low costs in
  non-Annex 1 countries and help developing
  countries achieve sustainable development
• Emission reduction and sink enhancement projects
  are eligible. In forestry only afforestation and
  reforestation projects are currently eligible
  Clean development mechanism
• Only areas not forested as on 31.12.1989 eligible
• Additionality-reduce GHG above BAU,
  sequestration to be additional to any that would
  occur without the project
• Emission reduction must be real, measurable and
  bring long term mitigation
• Should be voluntary, approved by host country
• Projects must begin from 2000 onwards
       CDM administrative and
         functional structure
CDM Executive Board (EB) at apex –
• to develop CDM rules and methodologies for
  baseline, additionality and leakage assessments
• accredit DOEs, expected to monitor their
• review validation & register projects,
• review certification reports and issue CERs
• Maintain public data base for CDM projects
      CDM administrative and
        functional structure
• Designated National Authority (DNA) in
  each country - to develop and publicize
  country level operational procedures, decide
  sustainable development criteria, confirm
  voluntary nature of participation and
  project’s contribution to sustainable
  development & biological diversity; issue
  letters of approval for validation and
CDM functional structure - DOE
Designated Operational Entities (DOE) to
  work independent auditors of the projects
• Should be a legal entity with a documented
  and public internal structure of governance
  and management
• Should have sufficient in-house expertise in
  CDM rules, methodologies and in
  monitoring of emission sources and sinks
CDM functional structure - DOE
• Should have financial stability to support the
  activities and insurance to cover the legal and
  other liabilities arising from its activities
• Demonstrate that it has no conflict of interest
• Can either validate projects for registration or
  verify emission reductions as per Marakkesh
  Accord but EB can permit it to do both
• Verify monitoring reports
        CDM project initiation
Project Developer to prepare the Project Design
  Document (PDD) and submit to DNA
• Provide or obtain debt or equity finance for project
• Implement the project after registration
• Monitor in accordance with approved monitoring
• Deliver CER to purchaser thru market or other
     Project Design Document
• Sets project objectives
• Defines project boundaries
• Projects a baseline using an approved
  methodology or getting a new one approved
• Provides proof of additionality
• Assesses leakage and plans for reducing it
• Technical design of the proposed operations
     Project Design Document
• Project duration and crediting period
• Addresses biodiversity conservation and
  sustainable development issues
• Asseses environmental impact
• Proposes a monitoring plan
• A plan for the needed human and financial
• Establishes a project management plan
• Validation is evaluation of project by DOE
  after ensuring that basic eligibility
  conditions have been met
• Participation is voluntary
• Host country and Annex 1 partner are
  Parties to Protocol & have established DNA
• local stakeholders comments have been
  taken into account;
• socio-economic, environmental impacts & impacts
  outside project boundary have been considered;
• leakage minimized;
• Additionality established
• An approved baseline methodology & monitoring
  plan adopted;
• harvesting, thinning & verification cycles adopted
  in such a manner that verification does not show
  peaks in carbon stocks
• DOE to make PDD publicly available for
  comments for 30 days and take comments
  into consideration
     Registration & monitoring
• Registration is formal acceptance by CDM-EB of
  a validated project – prerequisite for verification,
  certification and issuance of tCER/lCER
• Project participants to include an acceptable
  monitoring plan in project design for collection
  and archiving of all relevant data, methodology for
  collection of data, taking uncertainties into
  account, quality assurance and control procedures
  for data collection
    Verification & certification
• Verification is periodic independent review
  and ex post determination of net GHG
  removal by sink by project activity since the
  beginning of the project by DOE
• Certification is written assurance by CDM-
  EB of the net GHG removal by sink after
• All biological sinks are non-permanent
• Non-permanency is handled thru the
  mechanism of temporary CER / longterm
• A&R projects to be issued with credits after
  the initial verification and certification of
  the project and then every five year after
  v&c till the end of the crediting period
• Crediting period is AR project life during which C
  sequestered is utilizable for issuing CERs
• It can be 20 years subject with up to 2 extensions
  of 20 years each subject to revalidation of baseline
• Or 30 years without extension
• Selection of crediting period is a business decision
• tCER valid till the end of commitment period
  subsequent to one for which they were issued –
  potentially valid till 9 years – if issued in 2008
  valid till 2017
• Issued after a CR verifies C sequestered since
  registered project starting date
• Thereafter every five years, but the tCER issued
  previously remains valid till the end of the
  subsequent commitment period
• At the end of validity the Annex party using
  that tCEr required to replace it with a
  permanent CER or another tCER/lCER
• But it is not necessary to replace the tCER
  from a different project activity – thus from
  a project that continues to be alive and well
  can continue to provide tCERs to replace
  the earlier ones
• lCER validity ends with the project crediting
  period but is subject to v&c every five years
• If there is addition in C after 5 years more lCER
  will be issued; if reduction then the lCER issued
  earlier will have to be replaced by the country
  using it for compliance
• If no certification then also replacement is
• Both cannot be banked, must be used in the
  commitment period in which these were
• Both stop gap arrangements – to be replaced
  by Annex 1 party using them for
  compliance after their expiry by ERU/
         Arranging finances
• Host country invests and sell CERs
  generated – unilateral project
• Annex 1 participant provides debt in return
  for assurance of CERs within a prearranged
  range of prices
• Annex 1 partner provides equity capital in
  CDM venture and shares revenues
         Arranging finances
• An annex 1 multinational company dealing
  in renewable energy brings latest
  technology and swaps it with CERs
• Bundling CERs with fossil fuel imports eg
  India exports coal to UK through a contract
  which includes purchase of CERs from a
  CDM project from India also
    Foreign investment in CDM
• FDIs enter in a conducive atmosphere, most
  go to China, Brazil and India etc
• FDI in land based ventures not permitted in
  India - Foreign Investor can invest thru
  forward purchases of carbon credits
• Unilateral, bilateral and multilateral projects
              Risk insurance
  Major bearing on CER costs. Risk assessment and
  allocation among various participant necessary
  through contractual arrangements
• Policy related risks – changes in Protocol, CDM
  rules, changes in national policies related to CDM
  or FDI, changes in taxation policies,
• Major fires, disease or pest attack
• Land related disputes going out of control and
  leading to destruction
             Risk insurance
• Land opportunity costs sky rockets thus
  increasing the true costs leading to pressure
  on the project participants to abandon A&R
• Technological innovations provide cheaper
  options of generating CERs
• Major internal or external security threats
            Key Requirements
• Baseline – carbon emission by sources or
  reduction by sinks in the absence of the CDM
• Baseline could be based on the most likely land
  use at the project start
• Or, most economic course of action taking into
  account barriers to investment
• Or, existing or historical changes in carbon stock
          Key Requirements
Leakage – GHG emission due to project
 activity outside the project boundary. Only
 negative leakage to be considered in
 LULUCF. It is due to
      Small scale AR projects
AR Projects with net GHG removal < 8Ktons of
  CO2/yr & developed/implemented by low income
  communities and individuals. Renewable energy
  projects < 15MW
• Simplified PDD, baseline & monitoring methods,
  EIA analysis. Lowered registration costs
• Allowed to bundle project activities for PDD,
  registration, verification to reduce transaction
• Crediting period is AR project life during which C
  sequestered is utilizable for issuing CERs
• It can be 20 years subject with up to 2 extensions
  of 20 years each subject to revalidation of baseline
• Or 30 years without extension
• Selection of crediting period is a business decision
        Voluntary carbon market
• Many MNCs invest in carbon sequestration efforts outside
• Reason- Corporate Social Responsibility and also
  legislations as in California that requires carbon emission
  reductions or sink enhancement
• Relaxed conditions of additionality, leakage, low
  transaction costs
• Also low carbon prices
• Suitable for casuarina plantations in coastal areas which
  would otherwise not fulfil additionality conditions
                   CDM & VCM
• CDM in LULUCF sector – proof of additionality, leakage assessment,
  non-permanence, absence of post harvest norms; only 1 forestry
  project current
• VCM- outside Kyoto- more relaxed, 53% from LULUCF sector
• CDM generally not viable below 3000 ha and 10 tC/yr productivity
  (about 100000 t CO2e); VCM 46% below 5000 tCO2e, 69% below
  20000, 86% below 50000
• CDM price range for permanent CERs £13/t CO2e; VCM ranges from
  £0.5 to 20/ tCO2e, usually higher for lower volumes and also when
  backed by certification
• CDM – very high standards; VCM 9% CDM norms, 17% near CDM,
  12% Gold standards, uncertified 34%
• CDM market size 350 Mt CO2e, VCM currently 2 Mt but rising very
  fast and by 2010 expected to cross 400
        Potential of Open Forest
  for CDM & VCM Project Activities
• Open Forest (CDR 10-20%) – Ist Priority

• Open Forest ( CDR 20-30%) – 2nd Priority

• Open Forest (CDR 30 – 40%) – Not Applicable

(Assumption: Open Forests equally divided into three ranges of
  10-20%, 20-30% & 30-40% cover density range.)
          Possible priority areas
•   Glaciers etc – 1.5% - not suitable
•   Hyper arid – 7% - not suitable
•   Typic arid 100-500 mm rainfall, 7% - Priority 1
•   Semi arid (dry) 500-750 mm, 15.6%, some part -
    Priority 1
•   Shifting cultivation areas –Priority 1
•   Rehabilitation of encroached areas- Priority 1
•   Lands to be allotted under Tribal Act – Priority 1
•   JFM areas – Priority 1
                Priority areas
• Human settlement land (along roadside and rail
  tracks, residential, parks, green belts) etc –
  methodology under approval – Priority 2
• Semi arid (moist) 750-1000 mm, 22%, mostly
  good for agri, small part can be used - Priority 2
• Coastal areas-shelterbelt – biofuel plantations –
  casuarina etc
         Some possible projects
• CDM/ VCM project on sequestration and
  fossil fuel replacement by fuelwood
• CDM / VCM Projects on reforestation in
  degrade Reserve forests under JFM control.
• CDM/VCM project on Biomass Gasifier
  Using Available Biomass
• CDM/VCM village energy project for
  household lighting using existing Tree bearing
  oilseed in forest areas
• CDM / VCM Pilot Small Scale Project on
  biodiesel from jatropha owned by small
• VCM project on replacement of fertilizer by
  vermicompost by small vegetable growers
• CDM / VCM Large Scale Project on biodiesel
  from jatropha plantations
• VCM project on biogas plants in a cattle
  intensive villages
     Organizing the community
• Projects taken up by individual farmers would not
  capture much carbon, and its is an expensive affair
• The carbon offset projects can be profitable only if
  taken up collectively at a community level
• This calls for organization of people
• Willing project participants can form a society that
  can initiate and execute the project.
           How to organize
• Conceptualizing the possible project
• Should benefit the low-income
• Meeting of the stakeholders
• Formulation of Byelaws of the society
• Registration of the Society
• Society byelaws are the soul of societies
• Have to be drafted very carefully to keep the
  members together for a long time
• Must provide opportunities for all sections of
  society including women and minorities
• Should not allow a small number of people to
  monopolize the society as it will weaken the
  interest of others who would then walk away
• Membership in the society to be given to
  any adult farmer/stakeholder of the area
  who is willing to contribute land voluntarily
  for the project
• The society should be formed under the
  guidance and leadership of the forestry
  department or other able organization
  working in this field
• Carbon credits to be managed and shared by
  the society
• The Forest Department may take no share
  of CERs so as to encourage more CDM and
  VCM based projects to sequester the GHGs
  and mitigate climate change
    Role of Forest Department
• The department can provide technical know
  how for the project
• Department can help in selling the credits
  generated from the project
• The forest department can provide seedlings
• But the basic responsibility for the running
  of society lies with the villagers
• The technical assistance to the society in the form
  of skills in nursery development etc and as tree
  seedlings may be provided by the forest
• either the society will directly manage the whole
  project land or the individual members shall be
  responsible for the land that has been contributed
  by them to the project activity.
       The Haryana Small Scale CDM project

• 227 farmers from 8 villages in Ellenabad Block of Sirsa
  district in Haryana formed a society
• They contributed 370 hectares of land collectively for a
  period of 20 years
• These lands were degraded due to sand dunes and very
  low in productivity due to less rainfall
• Now they are planting those degraded lands with trees
  that are native and tolerant to such conditions
• This project is expected to earn a net revenue of Rs. 47.5
  crore over 20 years
        Avoided deforestation
• Discussions are ongoing on providing incentives
  for avoiding deforestation
• Preventing deforestation beyond the baseline
  deforestation for a non-Annex 1 country would be
  rewarded under this system if approved
• But countries like India and China which have
  avoided deforestation at considerable cost to the
  society will not benefit from it

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