PRESENTATION ON CARBON CREDITS AND
Birla Institute of Management Technology
16th October 2008
J K Dadoo
Secretary (Environment)-cum-Chairman (DPCC)
Govt. of NCT of Delhi
• According to the World Bank Economist Mr.
Stern, the effect of climate change could be
worse than the two World Wars.
• A famous ecologist says that 20 billion tonnes of
carbon dioxide is generated by humanity, every
year and absorbed by Nature. This tolerance of
Nature could be reversed, if the carbon dioxide
levels increase unabatedly.
• Prof. James Lovlock, USA believes that the 90
% of mankind may be wiped out if the planet
GLOBAL CLIMATE CHANGE
• To combat these changes globally, Kyoto
Protocol was created and has been ratified
by 170 countries so far, committing
themselves to reduce Green House Gas
Emissions and improve Energy Efficiency.
• The Kyoto Protocol envisages reduction of
Green House Gases by 5.2% in the period
• The CDM is supervised by the CDM Executive
Board (CDM EB) and is under the guidance of
the Conference of the Parties (COP/MOP) of
• Certified Emission Reductions (CERs)
commonly known as carbon credits, where
each unit is equivalent to the reduction of one
metric tonne of CO2e
• The value of one CER in Indian Rupees is
about Rs. 1600/-
TYPE OF GREENHOUSE GASES
S. Greenhouse Gas Global Warming
No. Potential (GWP)
1 Carbon dioxide 1
2 Methane 21
3 Nitrous oxide 310
4 Hydrofluoro 140-1170
5 Perfluoro carbons 6500-9200
6 Sulphur 23900
WHY CITIES MATTER ?
• In 1800, 2% of world’s population lived in cities.
Currently, it is 50% and heading towards 60% by
2030. Urban populations are expected to grow by
2 billion people within 30 years.
• Cities in developing countries are expected to
absorb 95 percent of this increase.
• Over, 1 billion people live in urban slums. In the
least developed nations, slums house 70% of the
• Droughts and floods in rural areas have increased
migration to cities. By 2030, if nothing is done,
slum population will reach 2 billion. 6
REDUCING EMISSIONS REQUIRES
ACTION ACROSS MANY SECTORS
EMISSIONS 24% Other Energy
8% Landuse NON-ENERGY
Total emissions in 2000 42 GtCO2e
CO2 TOTAL EMISSIONS 1990 - 2005
Mt of CO2
1000 813 569
421 549 530 397 449
CO2 EMISSIONS PER CAPITA BY
Mt of CO2
Anex-I AGA BGA World Average
Per capita CO2 emissions of different groups of countries (2005)
Group CO2 Total Total CO2 Population Per Capita
(Mt of CO2)
Annex-I 38 14,183 1,261 11.25
Non Annex –I 99 11,938 4,952 2.41
AGA 27 7,868 1,636 4.81
BGA 72 4,070 3,317 1.23
Global 137 26,121 6,213 4.2
Equity Principle Comparison
Total and per capita emissions of group A & B
Group-B Total Per Capita Group-A Total Per
(Mt) (Mt) Capita
Saudi Arabia 320 13.83 Italy 454 7.76
Korea 449 9.3 Spain 342 7.87
South Africa 330 7.04 France 388 6.19
Iran 407 5.96 Switzerland 45 6
Malaysia 138 5.45 Sweden 51 5.64
Venezuela 142 5.35 Portugal 63 5.97
$Some NAC have higher total and higher or similar per capita emissions
$Yet, these countries have no obligations!
$Transition mechanism is needed.
CARBON DIOXIDE EMISSION
EIA Reference Case , MtCO2 (From Energy ) 2002-2025
Country 2002 2025 Avg. Annual Growth Total Growth
World 24410 38791 2.00% 58.9%
Annex-I 14169 18258 1.10% 28.9%
Non Annex-I 10241 20533 3.10% 100.5%
United State 5752 7980 1.4% 38.7%
Western 3550 3953 0.5% 11.4%
China 3323 8134 4.00% 144.8%
India 1026 1993 2.90% 94.3%
Brazil 341 678 3.0% 98.9%
Source : Climate Analysis Indicators Tool (CAIT) Version 4.0 13
Washington DC, World Resource Institute, 2007
9 to 14 months process
Project Approval Verification
Design Issuance of
(LOA) by Validation Registration and
•Largely used for EUAs •Few auctions held for CERs/VERs
•Not much activity in CERs •CERs are not a commoditized
product – many features cause
•VER exchange in place (CCX)
differences in price
but commands lower prices
than OTC market •Seller’s credit, project type etc
Direct Sale Intermediaries
•Avoid Commission •Market professionals matching
•No Guarantee of market price buyers and sellers
(narrow lens on buyer market) •Develop optimal transaction
•Must deal with market risk and structures
complexity •Incentive structure to deliver the
highest price to the seller 15
Project Development Process
Pre-PDD Why Sell Early?
•Certainty of revenue
PDD –May be necessary for project finance.
•Certainty of price.
Registered Why Sell Later?
•Delivery risk decreases.
Issued •Therefore price of credit increases.
STATUS OF THE CDM MEASURING SUCCESS
An explosion of activities
Registered Project Activities
1500 Project in the Pipe line
May-- Dec-- May-- May-- Oct-- Feb-- Oct-- 17
05 05 06 07 07 08 08
GENERAL OVERVIEW OF THE CDM
To date : In Pipeline :
1183 registered CDM (639 LS + 544 SSC) projects 3000 projects
1.33 billion CERs expected to the end of 2012 2.7 billion CERs expected
PROJECT PIPELINE – GLOBAL
● Host Country Investor Country
● China: 976 (>1000) • UK: 486
● India: 983 • Japan: 256 190 mn Euro
● Mexico: 180 CER acquisition
• Sweden: 93 budget 2008
● Brazil: 171
• Spain: 67
● Malaysia: 36
● Philippines: 27
• Germany: 59
● Indonesia: 24 power
● Israel: 22 buy 120 mn
● South Africa: 18 19
STATUS OF THE CDM REGISTRATION
Region Number of
NAI-Asia and 773
STATUS OF THE CDM | ISSUANCE
Country CER Issued
Republic of 14,599,555
STATUS OF THE CDM METHODOLOGIES
Scope No . of
Energy industries 39
(renewable - / non-
renewable sources) (1)
Chemical industries (5) 14
Waste handling and 12 22
HOST COUNTRY APPROVED
PROJECTS IN INDIA
AP 100 Maharashtra 142
Chattisgarh 63 MP 28
Gujarat 98 Orissa 51
HP 39 Punjab 54
Rajasthan 58 TN 120
Jharkhand 15 UP 93
Karnataka 113 Utarranchal 20
WB 47 Goa/Pondicherry -
POTENTIAL IN RENEWABLES
Technology Potential Cum. Installation
upto March 31,
Wind Power 45000 MW 1870 MW
Small Hydropower 15000 MW 1509 MW
(< 25 MW)
Biomass 19500 MW 484 MW
Energy from Waste 1700 MW 26 MW
Solar photovoltaic 121 MWp
INVESTMENT IN CDM PROJECTS
Investment in Rs. Crores vs Years
Investment in Rs. Crores
0 358 1794
2003 2004 2005 2006 2007 2008 25
Historical CER Prices over the Last 4 years
Structure Euro/CER Price
2004 2005 2006 2007 Remarks
Fixed Forward 4 5-7 7-10 8-11 Price firm irrespective of the market
until 2012 fluctuations.
(without Current Fixed Forward Price
recourse to the a) €8 for the project planning
b) €10 for registered projects.
c) €12 for Registered projects and
Spot NA NA 10-24 12-17 Price dependent on the EUA Price
Current spot price : €15-17
Fixed Forward - - - 12-17 Price dependent on the EUA price.
until 2012 (with Current price : €15-17
recourse to the 26
GLOBAL CLIMATE CHANGE SCENARIO
• 5 outreach countries – Brazil, China, India, Mexico
and South Africa have challenged G-8 countries to
reduce their GHG emissions by more than 80% by
2050 and by 25 – 40% by 2020.
• Switzerland wants a carbon tax imposed on
emissions of all countries above a certain level of
per capita emissions.
• Stern Committee had recommended a carbon tax
on all coal, natural gas and oil based industries so
that social cost of carbon production could be
countered by using this fund for developing
• Sweden has a carbon tax since 1991 on power
generating plants and aviation fuel used in air 27
• India wants the issues of technology
transfer, expanded trade in carbon credits
and a strong adaptation fund to be put in
place at Copenhagen in 2009.
• Britain wants to start a carbon ration card
to sensitize each adult about the carbon
dioxide allowance given to him annually.
Those in excess pay for it to those who
• Recent estimates show that uncontrolled
carbon emissions cost the Global
economy $200 Billion annually.
• India wants not only promotion of sustainable
production processes but also sustainable
lifestyles across the Globe.
• India wants the developed world to fulfill its
commitments for reduction of Green House
Gases, transfer new and additional financial
resources and climate friendly technology to
support adaptation and mitigation measures in
• India wants to protect the vulnerable sectors of
Society in its sustainable development strategy.
• In its Action Plan 8 National Missions have been
National Solar Mission to increase the share of
this energy for decentralized distribution and to
create affordable and convenient solar power
National Mission for Enhanced Energy
Efficiency to introduce cost effectiveness and
shift to energy efficient appliances.
National Mission of Sustainable Habitats to
optimize energy application in large building and
efficient urban waste management.
National Water Mission to conserve water and
ensure equitable distribution between States
and areas. 30
National Mission for Sustaining the Himalayan
Eco System by safeguarding the Himalayan
National Mission for Green India by undertaking
afforestation of 6 million hectares to reach the
National target of 33% green cover.
National Mission for Sustainable Agriculture by
developing thermal resistance crops and
supported by Bio-technology, geo-spatial
technology and IT
National Mission on Strategic Knowledge to
fund high quality and focused research on
climate change. 31
• Fastest growing financial market – rose 80% in 2007
to reach nearly $ 60 billion - expected to be $ 1 trillion
• 2007 carbon market shows China’s share at 61% and
India at 12%. In terms of total CERs issued of 166
million, India has 43 million or 26%.
• In 2008, China’s share at 23% and India at 30% in
terms of no of projects and 36% and 25% in terms of
no of CER’s issued respectively. (13.10.08)
• An Indian firm, J.S.W Steel won the largest single
CER of 5.4 million in 2 projects.
• Multi-commodity exchange has traded CERs of
Rs.1000 crores so far with participation by 85
members and 91 clients. 32
START OF CDM ACTIVITY IN DELHI
• Government of Delhi in February 2007, initiated
the idea of adoption of CDM concepts in all infra-
structural agencies in a meeting taken with the
World Bank officials with Chief Secretary.
• Subsequently in March 2007, a seminar with
experts from World Bank, Japan Industrial
Development Co-operation, IIM Banglore,TERI
,Clinton Foundation was organized in which all
the developmental agencies made their project
presentation and experts highlighted potential
CDM avenues.This was inaugurated by Pr Secy(
• Similarly in June,2007 another round table Conference was
organized which was inaugurated by Hon’ble Chief Minister of
Delhi, wherein interaction with the experts from Bureau of
Energy Efficiency (BEE), MOEF ,GTZ, World Bank and
Central Electricity Authority(CEA) was organized for all the 10
• In August,2007 interaction with noted CDM Consultants
namely IL&FS Ecosmart, PriceWaterhouse Coopers Pvt.Ltd.,
Ernest & Young, ONGC and ICF International was organized
wherein modalities , formulation and submission of CDM
projects were discussed with the Infrastructural Agencies.
• Again in April & August 2008, interactions with the
infrastructural agencies were organized with experts form
MOEF, MNRE, MCX, NCDEX, FICCI etc.
• The objective was to sensitize the infra structural agencies
about the procedures and formalities required for preparation
of CDM projects.
•The Infrastructural Agencies in general agreed
to adopt the following concepts in making CDM
1) Energy Conservation
2) Use of CFL and Electric Chokes
3) Solar Water Heating Systems
4) Efficient Street-lighting
5) Efficient use of water pumps.
6) Energy efficient buildings
7) Promotion of LEDs
8) Solar Air-conditioning, etc.
9) Afforestation 35
Department of Env. & Forest and
• PDD ready for small-scale afforestation and
reforestation projects activities in Dera Mandi
and Bhatti Mines
• Another PDD is under development for Asola
Wild Life Sanctuary.
• Project proposals under consideration in the
area of Energy efficiency:
- CFL replacement (3 million households) expected
volume of CERs will be approx 12 million per annum
- solar water heating systems (5 lakh households)
expected volume of CERs will be approx 0.65 million
• PWD proposes to adopt following initiatives in all its
i. Sustainable site planning and adoption of Green
ii. Optimum Energy efficiency
iii. Use of renewable forms of Energy
iv. Water and waste Management Strategies
v. Use of fly ash bricks.
• Projects proposed based on the above practices are:
a) 500 bedded new ward Block of GTB Hospital
b) 500 bedded Dwaraka Hospital
c) Thyagaraja Sports Complex.
d) Delhi Institute of Pharmaceutical Sciences
Has CDM potential in the following areas:
• Green Buildings
• Energy efficiency in lighting, heating operations
• Energy efficiency in water and wastewater
treatment by setting up STP, and reuse of water
for air-conditioning and horticultural purposes.
• M/S PWC has been appointed as consultant for
CDM in September,2008
• For adopting Green Building certification, M/S L
&T has been appointed as consultant.
NDMC has potential for CDM projects in the
Development, Construction, Operation and
maintenance of an integrated Municipal
waste Processing at Okhla
Integrated multilevel parking facilities-
Sarojini Nagar, B.K.S Marg & K.G Marg
proposed under PPP mode
Up gradation of Street Lighting
General energy conservation measures for
reduction of demand for energy by 1500
KW by 2009.
MCD is in process of developing a methane extraction
project under CDM, with World Bank, for the existing
three land filed sites.
MCD is also working with M/S ILFS in other waste to
energy and compost projects and it is envisaged that
carbon credits @0.2 per Mt. Ton of garbage shall be
Civic Centre built up in an area of 1.16 Lac Sq. Mts., is
designed on the Green Building Concept and is likely
to be registered under TERI’s GRIHA rating scheme.
LED based Street lighting as well as automation
control & dimmer based system for getting energy
savings and earning Carbon Credits.
Mechanized/Automated Car Parking: The work at
Kamala Nagar (Capacity – 863 ECUs) is in full swing.
Energy Efficiency Improvement Programme in
water supply, wastewater treatment and methane
Rithala STP alone is estimated to provide CER’s
worth of 7.88 Cr annually.
STPs at Kondli and Yamuna Vihar are good
contenders for getting carbon credits.
• M/s FICCI, has been appointed as Due Diligence
consultant for evaluating the CDM potential of DJB
• For methane recovery Project from Kondli & Yamuna
Vihar, RFP will be issued shortly
Energy conservation through regenerative
Ernst and Young (E&Y) is engaged.
CDM clearance of 4 lakhs CERs has been
Another project on GHG Emission Reduction
due to Modal shift in transportation has
already been submitted to the Meth panel for
The shift from the use of private vehicles to the
Public Transport is expected to generate CER’s
worth of 4 lakh US Dollars annually.
Rithala, 108 MW Combined Cycle Power Project
at Rohini has been taken as a CDM Project.
Other potential projects are:
LED Lighting projects.
CFL distribution & Lighting projects under
Bachat Lamp Yojana of BEE.
Technical loss reduction projects.
CDM potential exists in the:
Introduction of low floor buses, which are fuel
efficient and carry more passengers per trip
491 Non AC & 25 AC Low Floor CNG Buses have
been procured. 134 non AC LF buses are likely to
be inducted by Oct.2008. Order for purchasing of
additional 2500 low floor buses is in progress.
EOIs has been invited and received from
following firms-M/s Ernst and Young Pvt. Ltd,
Asian carbon and ICF international for appointing
a CDM consultant.
New Pan Delhi Mega Carpool Scheme has been
proposed, estimated potential of 8 lakh CERs
(initially for 4 lakh car members).
Likely to appointment a consultant shortly 44
Tapping Delhi’s CDM Potential
• It has been estimated that several plan schemes
have the potential of generated carbon credits, if
adequate capacity is built in each department for
recognizing such projects and preparing the
necessary documentation for the same.
• All departments are being requested to attend
the workshops regularly conducted by the
Department of Environment to expose few Nodal
Officers for this purpose.
• If the numbers are large, training programmes
could also be organized with the help of expert
Faculty at the Directorate of Training. 45
• Some Departments have requested for creating
a base line Consultant in the Department of
Environment, who can advise all the
Departments. We are initiating this process
• CDM is a bonus, which must be understood and
acted upon accordingly. It can provide ARM and
make certain unviable projects viable. In this
sprit, if the the departments approach this issue,
a large inflow of additional funds is possible.
• With the help of Finance Department, a circular
is being issued to all HODs to keep CDM
perspective in mind, in all infrastructure based
• On the lines of the Customs Department,
Environment Department may move a
Cabinet proposal for providing 1% of the
revenue earned by the carbon credits to
the concerned Department, who
formulates the project and generates this