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					PRESENTATION ON CARBON CREDITS AND
         KYOTO PROTOCOL

                         in
   Birla Institute of Management Technology
                         on
                 16th October 2008

                   J K Dadoo
 Secretary (Environment)-cum-Chairman (DPCC)
              Govt. of NCT of Delhi
                                               1
           CLIMATE CHANGE

• 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
  heats up.

                                                      2
     GLOBAL CLIMATE CHANGE
           SCENARIO

• 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
  2008-12.

                                               3
       CLEAN DEVELOPMENT
        MECHANISM (CDM)

• 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
  the UNFCCC
• 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/-
                                               4
    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
      carbons
5     Perfluoro carbons   6500-9200

6     Sulphur             23900
      hexafluoride                          5
    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
  urban population.
• Droughts and floods in rural areas have increased
  migration to cities. By 2030, if nothing is done,
  slum population will reach 2 billion.             6
      KEELING CURVE



380




                      7
 REDUCING EMISSIONS REQUIRES
 ACTION ACROSS MANY SECTORS

       ENERGY
                                      Industry
                        Power           14%
       EMISSIONS         24%                     Other Energy
                                                    related
                                                      5%

                                                      Waste
                                                       3%




                                                    Agriculture
        Transport
           14%                                         14%

                    Buildings
                       8%       Landuse      NON-ENERGY
                                  18%
                                             EMISSIONS
                                                                  8
Total emissions in 2000 42 GtCO2e
 CO2 TOTAL EMISSIONS 1990 - 2005

            7000



            6000        5817

                                         5050
            5000
                   4852
Mt of CO2




            4000
                                                                                                                                                           1990
            3000
                                                                                                                                                           2005
                                   2358
                                                 1937
            2000
                                                      1544
                                                                1214           1147
                                                             1048                      968
            1000                                                                             813                569
                                                                          591                                                        454
                                                                                                     421 549          530      397               449
                                                                                                                                           236
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                                                                                                                                                       9
                 CO2 EMISSIONS PER CAPITA BY
                           GROUPS
            12     11.25

            10



             8
Mt of CO2




             6                                            Series1
                            4.81
                                               4.2
             4



             2                     1.23

             0
                                                          10
                   Anex-I   AGA    BGA    World Average
      AGGREGATED PICTURE
   Per capita CO2 emissions of different groups of countries (2005)
Group CO2        Total         Total CO2       Population      Per Capita
emissions                      emissions

                                (Mt of CO2)

Annex-I          38            14,183          1,261           11.25
Countries
Non Annex –I     99            11,938          4,952           2.41
countries
AGA              27            7,868           1,636           4.81

BGA              72            4,070           3,317           1.23

Global           137           26,121          6,213           4.2
Average
                                                                          11
Source: IEA,2007.http://data.iea.org/iea.org/ieastore/statislisting.asp
           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!
                                                                       12
$Transition mechanism is needed.
          CARBON DIOXIDE EMISSION
               PROJECTIONS
   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%
of America
Western           3550      3953        0.5%                       11.4%
Europe
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
           CDM PROCESS


             9 to 14 months process


 Prepare
                 CDM Process
           Letter of
 Project   Approval                           Verification
 Design                                                     Issuance of
           (LOA) by   Validation Registration    and
Document                                                       CERs
             Host                             Certification
  (PDD)     Country



      India’s Designated
      National Authority
      National CDM
                                                                   14
      Authority (NCDMA)
                         HOW?

Exchanges                         Auctions
•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
                 WHEN ?
Project Development Process
Pre-PDD             Why Sell Early?
                    •Certainty of revenue
PDD                     –May be necessary for project finance.
                    •Certainty of price.
Validation
Registered          Why Sell Later?
                    •Delivery risk decreases.
Issued              •Therefore price of credit increases.

Guaranteed
                                                                 16
 STATUS OF THE CDM MEASURING SUCCESS

  An explosion of activities
3500

                                                          3000
3000                                             2900

                                         2600
2500


2000
                                                                 Registered Project Activities
1500                                                             Project in the Pipe line
                                                        1183
                                 1000           937
1000                                    826
                          750
                                685
                  471
 500
                        183
           114
       1         39
   0
       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
                                                  to 2012




                                                                        18
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
                                              Japanese
●   Indonesia: 24                               power
                                              utilities to
●   Israel: 22                               buy 120 mn
●   South Africa: 18                                 19
STATUS OF THE CDM REGISTRATION



                   Region          Number of
                                     projects
                   NAI-Africa          27
                   NAI-Asia and        773
                     the Pacific
                   NAI-Other           8
                   NAI-Latin           375
                     America
                     and the
                     Caribbean

                                       20
STATUS OF THE CDM | ISSUANCE




                   Country       CER Issued

                   India         31,122,524
                   China         120,105,788
                   Republic of   14,599,555
                      Korea
                   Brazil        19,433,547
                                         21
STATUS OF THE CDM METHODOLOGIES



                   Scope                      No . of
                                              Methodolo
                                              gies

                   Energy        industries 39
                   (renewable - / non-
                   renewable sources) (1)


                   Manufacturing              23
                   industries (4)
                   Afforestation        and
                                              15
                   reforestation (14)
                   Chemical industries (5)    14
                   Waste handling       and 12 22
                   disposal (13)
 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 -

                                         23
                                         23
 POTENTIAL IN RENEWABLES

  Technology         Potential   Cum. Installation
                                  upto March 31,
                                       2003
   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
                                               24
                           INVESTMENT IN CDM PROJECTS
                                           Investment in Rs. Crores vs Years

                           80000


                           70000                                                          71703
                                                                                 68691
Investment in Rs. Crores




                           60000


                           50000


                           40000
                                                                     36451
                           30000


                           20000
                                                           15933
                           10000


                               0     358        1794
                                   2003      2004      2005        2006        2007      2008   25
                                                    Year
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
company                                         stage.
                                           b) €10 for registered projects.
                                           c) €12 for Registered projects and
                                                in operation
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
company)
  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
  renewable energy.
• Sweden has a carbon tax since 1991 on power
  generating plants and aviation fuel used in air   27
                                                    27
  travel.
• 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
  show savings.
• Recent estimates show that uncontrolled
  carbon emissions cost the Global
  economy $200 Billion annually.
                                           28
                                           28
             INDIA’S POSITION
• 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
  developing countries.
• India wants to protect the vulnerable sectors of
  Society in its sustainable development strategy.
• In its Action Plan 8 National Missions have been
                                                   29
                                                   29
  listed namely
National Solar Mission to increase the share of
this energy for decentralized distribution and to
create affordable and convenient solar power
systems.
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
                                                30
National Mission for Sustaining the Himalayan
Eco System by safeguarding the Himalayan
Glacier.
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
                                               31
                  CDM MARKET
• Fastest growing financial market – rose 80% in 2007
  to reach nearly $ 60 billion - expected to be $ 1 trillion
  by 2009–10.
• 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
                                                       32
 START OF CDM ACTIVITY IN DELHI
         GOVERNMENT
• 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(
  Finance)
                                                  33
                                                  33
•   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
    infrastructural agencies.
•   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
                                                               34
                                                               34
    of CDM projects.
•The Infrastructural Agencies in general agreed
to adopt the following concepts in making CDM
projects:

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.
                                                  35
9)   Afforestation                                35
  Department of Env. & Forest and
             Wildlife.
• 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
    per annum.
                                                     36
                                                     36
                            PWD
•      PWD proposes to adopt following initiatives in all its
       projects:
i.     Sustainable site planning and adoption of Green
       Building concept.
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
                                                                37
                        DIAL
    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.
                                                        38
                 NDMC
NDMC has potential for CDM projects in the
 following activities:
 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.
                                         39
                        MCD
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
earned.
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.

                                                    40
                      DJB
  Energy      Efficiency Improvement Programme in
  water supply, wastewater treatment and methane
  recovery.
  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
                                                 41
                   DMRC

Energy conservation through regenerative
breaking system.
Ernst and Young (E&Y) is engaged.
CDM clearance of 4 lakhs CERs has been
granted.
Another project on GHG Emission Reduction
due to Modal shift in transportation has
already been submitted to the Meth panel for
approval.
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.
                                                    42
                  NDPL

  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.


                                             43
                    DTC
 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
                                                  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
  soon.
• 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
                                                  46
                                                   46
  projects.
• 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
  additional revenue.




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