PERIODICAL OCTOBER 2004-MARCH 2005

Transcription

1 CDM IN INDIA TERI s Periodicals for the Kyoto Mechanisms Information Platform PERIODICAL OCTOBER 2004-MARCH 2005 Background The entry of Kyoto Protocol into force on 16 th February 2005, thanks to Russia, has provided an impetus to the already emerging carbon market. Among the three flexibility mechanisms under the Kyoto Protocol, CDM (Clean Development Mechanism) will witness a host of actions in the coming years, given the wide range of stakeholders involved in operationalizing this mechanism. Developing countries expectations from CDM were many folded in-terms of investments and technology transfer from Annex I countries to developing countries. However, CDM has so far resulted in creation of a carbon market, emphasis laid much on the mere purchase of emission reductions. India has demonstrated its participation in CDM by setting-up the DNA (Designated National Authority) known as the NCA (National CDM Authority) and according host country approvals. Also recently, India completed the World Bank s National Strategy Study for CDM implementation in India. This half-yearly report provides an overview of the CDM activities in India from October 2004 through March Creation of an association for Indian project promoters, completion of CDM NSS (National Strategy Study)-India study, host of capacity building workshops, registration of the first Indian CDM project at the CDM EB (Executive Board), etc., are few major news from India on CDM. The details are provided below. On the regulatory front : The National CDM Authority The National CDM Authority established during December 2003, has been playing a dynamic role in according host country approvals for CDM projects. The NCA has provided host country approval for 44 projects in four sectors and 13 Indian states as of 31 st December The details of these projects are given in Annex I. It has further approved 25 more projects totalling upto 69 as of March 2005.

2 2 TERI s Periodicals for the Kyoto Mechanisms Information Platform NCA endeavours to provide host country approval within 60 days from the date of receipt of the complete documents. The process diagram of host country approval is provided in Annex II. NCA formally endorsed the GTZ (German agency for technical co-operation) capacity building programme for CDM in India during September This programme is being organised by the GTZ CDM India and executed by a consortium of international firms (Factor Consulting, Fitchner Consulting, Climate Perspectives) and domestic firm (Zenith Corporate Services). Private and public sector pie : Marching towards CDM The private and public sector off-late have shown keen interest in developing CDM projects. Though several projects may fall under retroactive CDM 1 category, clarity and simplification of additionality will resolve this issue. Building the capacity of the intensive sectors enabling enhanced participation in CDM has been the recent approach by the international donors. The sectors namely the iron and steel, cement,, aluminium etc., have initiated in developing CDM projects in India, and possess potential for huge volume of emission reductions. New methodologies from the iron and steel, cement, aluminium and the sectors (mainly fuel switch) have been submitted to the CDM Executive Board recently. India became the number one country from the CDM Investors perspective as per the survey results of Point Carbon during April 2004, and continues to hold the position as of December According to this survey countries are rated and ranked on the basis of institutional conditions, investment climate, and project status and potential. The survey mentioned that India is currently the CDM world market leader when it comes to projects with host country approval and numbers of projects with PDDs. It has the widest range of project types of any host country and a high number of knowledgeable players regarding CDM consultancy. However, investment climate remains relatively poor and at the state level, barriers for project implementation may arise. Also, some projects have additionality problems. To facilitate dialogue of Indian CDM stakeholders with the Government of India on CDM policies and facilitate sharing of 1 Business as usual projects with CDM component considered at a later stage

3 3 TERI s Periodicals for the Kyoto Mechanisms Information Platform information, knowledge and experience over the entire CDM project cycle, the ICMG (Indian Carbon Market Group) has been formed by a group of companies, NGOs (Non- Governmental Organisations) and individuals. ICMG envisages to act as an organized group in the international arena to enable a favourable environment for development of CDM projects and for sales of CERs by developing country companies. It invites memberships from Indian companies and more information is available at their website UNDP India in association with the Ministry of Environment and Forest, Government of India has recently funded five Indian state development nodal agencies for establishing state level CDM cells, capacity building and developing small scale CDM projects. The municipal corporation across the country are currently engaged in improving the of their public services namely street lighting, water pumping, solid waste management and captive fleet. Karnataka state is leading in this initiative and has already developed CDM projects in the areas of improvements in water pumping, street lighting and solid waste management. Delhi Jal Board (Delhi Water Authority) is also contemplating to develop CDM project in the water pumping area and MCD (Municipal Corporation of Delhi) in the solid waste to area. Rourkela Steel Plant, a public sector invited tenders for providing a report on the opportunities for developing CDM projects at their plant. Similarly GAIL and ONGC invited tenders for providing a report on the opportunities for developing CDM projects at their plant. ADB has shortlisted seven consultants for submission of a proposal for implementing a capacity building programme in India. The TA (Technical Assistance) targets the municipalities, urban local bodies, small scale and rural sector Major CDM Events Several events were held in promoting CDM in India between October 2004 and March Details of major events are provided below. TERI organised a PDD development workshop under the National Strategy Study during October The workshop provided an overview of the experience gained during the

4 4 TERI s Periodicals for the Kyoto Mechanisms Information Platform development of the above mentioned PDDs by the NSS team with respect to various issues in developing baseline scenarios, project boundaries, leakages, additionalities, monitoring & verification etc., The GTZ CDM India Programme launched its training phase with workshops with large companies and business associations namely NTPC (National Thermal Power Corporation, Cement Manufactures Association, Reliance Industries and Indian Oil Corporation) during October During February, 2005, CDM India organised a series of workshops in different industrial sectors namely Iron and steel,, rural electrification and conducted awareness and strategic planning with leading Chamber of Commerce. Currently it is working on baseline development and data collection in the sector in association with the Central Electricity Authority. A UK-India Climate Change business seminar was held during october 6-7, 2004 in New Delhi, organised by FICCI (Federation of Indian Chambers of Commerce and Industry) in association with 'Climate Change Project Office' of UK for creating widespread awareness of stakeholders on climate change issues. Rt Hon Margaret Beckett MP, Secretary of State for Environment, Food and Rural Affairs, Govt. of UK led a high level climate change business delegation of 14 prominent UK Companies, interested in seeking partnerships with Indian companies for CDM projects. The seminar focussed on technology and finance linkages for greenhouse gas mitigation projects followed by one-to-one business meetings between the UK companies and the Indian companies. Indian Infrastructure organised a conference on Update on CDM- Trading opportunities for Indian Industry during 9-10 December The conference provided an update on CDM and highlighted the opportunities for Indian businesses. ASSOCHAM (The Associated Chambers of Commerce and Industry of India) organised a seminar on CDM and carbon trading on December 22, 2005, at New Delhi for the Indian industry. ICMG organised a meeting with the Government of India delegation to the COP-10. The COP 10 India delegation shared experience on the CDM front with the audience during this event held on January 3, A series of four workshops were organized during January 2005 for various stakeholders in four different Indian states under the Integrated Capacity Strengthening for the Clean Development Mechanism programme by the IGES (Institute for

5 5 TERI s Periodicals for the Kyoto Mechanisms Information Platform Global Environmental Strategies), Japan. TERI, Winrock International India and Development Alternatives organised these workshops on behalf of the IGES. While TERI s workshops targeted the state level policy makers, workshops organised by Winrock and Development Alternatives targeted the financial sector and small scale industries respectively. A national workshop was also organized to summarise the lessons learnt from the four workshops, consolidate the experience and to develop a plan for the future capacity building activities in India. The Delhi GHG Forum 2005 was organized by a partnership of The Energy and Resources Institute (TERI), the International Emissions Trading Association (IETA), the Word Bank s Carbon Finance Unit, the World Business Council for Sustainable Development (WBCSD), and Canada s CDM and JI Office. The Forum took place at the Hotel Grand, Vasant Kunj, New Delhi on February 1-2, It provided an opportunity for participants to discuss and interact with senior policymakers and business representatives from India, Sri Lanka, Nepal, and Bangladesh, as well as experts and practitioners from OECD countries. The topics of discussion included an update on the GHG market, including new carbon funds, recent pronouncements of the CDM Executive Board and their impacts on the market. The Forum also provided an excellent opportunity to learn about existing regulations and programs concerning emission reduction projects and the progress that countries and sectors are making to participate in this market. It showcased select CDM projects and served as a platform for project developers to meet with potential investors as well as for the development of new partnerships. WBCSD (The World Business Council for Sustainable Development), IETA (International Emissions Trading Association, and TERI organized a training workshop on the Clean Development Mechanism in TERI, Bangalore on 3 February The workshop aimed to enhance private sector participation in the CDM by improving understanding of the CDM, its underlying concepts and eligibility criteria and how companies can engage in the Mechanism. It also identified areas that need further guidance, in an effort to identify unresolved issues. On behalf of the Ministry of Environment and Forest, government of India, ICMG organised an event ClearsKies marking the entry of Kyoto Protocol into force on February 17, 2005 in New Delhi. The event discussed on the priorities, enabling environment essential for India for participating in CDM. The event was attended by the Government officials, public and private sector, NGOs, media and other stakeholders.

6 6 TERI s Periodicals for the Kyoto Mechanisms Information Platform TERI is organising a two day CDM training programme for the MSEB (Maharashtra State Electricity Board) during March 29-30, The training programme besides providing general awareness on CDM will also discuss on potential opportunities in developing CDM projects in the sector. The programmes is being attended by over 60 utility engineers of MSEB. Hot news section The summary report of the NSS-India study for CDM implementation in India was released on January 31, TERI (The Energy and Resources Institute). In recognition of the significant developments taking place nationally and internationally, the NSS-India study was designed to be in tune with the new capacity-building programme of the World Bank, namely CF-Assist (capacity building and technical assistance for carbon finance). The study was launched by the World Bank; the State Secretariat for Economic Affairs, Government of Switzerland; and the MoEF (Ministry of Environment and Forests), Government of India in October 2003 and executed by TERI (The Energy and Resources Institute), New Delhi in partnership with the IDFC (Infrastructure Development Finance Company) Ltd, a national legal expert, and appointed Swiss experts Infras AG, Ernst Basler + Partners Ltd, and LASEN-EPFL (Laboratory of Energy Systems, Swiss Federal Institute of Technology). The summary of the report can be downloaded from The study builds upon the considerable body of existing knowledge on the subject, and focuses more on facilitating the operationalization of the CDM in India through strategic analysis, capacity building, and development of CDM projects. The study examines the international demand for certified emission reductions, the supply potential from India, and the application of CDM methodologies in the Indian context by developing five project design documents. It also presents the elements of a facilitative framework for CDM implementation in India. India secured a membership with voting s at the CDM Executive Board. Mr Rajesh Kumar Sethi, Director, Climate Change, Ministry of Environment and Forest was nominated by the Government of India. He attended the eighteenth meeting of the CDM EB held between February At COP 10, the Government of India delegation voiced its serious concern on the issue of additionality and desired for simplification of the same.

7 7 TERI s Periodicals for the Kyoto Mechanisms Information Platform The first CDM project from India registered at the Executive Board is the project for GHG (Green House Gas) emission reduction by thermal oxidation of HFC 23 (Hydro Fluoro Carbons) in Gujarat. The CDM EB in their eighteenth meeting agreed for registration of unilateral CDM projects, which paved way and provided relief to several such projects being developed in India. The COP 10 (Conference of Parties) recalled that, as indicated by the Executive Board, the use of the Tool for the demonstration and assessment of additionality is not mandatory for project participants. Japan Carbon Finance Ltd signed a Memorandum of Association with TERI on 3rd February 2005 for developing CDM (Clean Development Mechanism) projects in South Asia including India. Ecosecurities Ltd, United Kingdom signed a Memorandum of Association with TERI during February 2005 for developing CDM (Clean Development Mechanism) projects in India. KPTCL (Karnataka Power Transmission Corporation) had imposed a sharing of 70 per cent of the Certified Emission Reduction (CER) revenues from the grid connected renewable projects. After representation from the renewable private sector and other CDM experts, KPTCL agreed to drop the CER sharing clause in the new purchase agreements. MCD (Municipal Corporation of Delhi) in a joint initiative with IL&FS (Infrastructure Leasing & Financial Services Limited), has approved during March 2005, implementation of a 15 MW municipal waste pelletisation based plant and has also announced that the project will be developed under the CDM to sell carbon credits. Similar plants are proposed in Mumbai, Jaipur, Ahmedabad and other cities as well.

8 8 TERI s Periodicals for the Kyoto Mechanisms Information Platform Annex I NCA approved projects (as on December 2004) S. Sector Project type Promoter Capacity Location no. 1 Renewable Wind project Encon Services Ltd (ESL) 3 MW Chitradurga, Karnataka 2 Renewable Biomass based Raghu Rama Renewable 18 MW Ramanathapuram, TN Energies Ltd 3 Renewable Biomass based Clarion Power 12 MW Prakasam, AP Corporation Ltd 4 Renewable Biomass based Rithwik Energy 6 MW Chittoor, AP Services Ltd 5 Renewable Biomass based Alwar Power Co. 7.5 MW Alwar, Rajasthan Pvt. Ltd 6 Renewable Biomass based Vandana Vidyut Ltd 7.7 MW Bilaspur, Chhattisgarh 7 Renewable Biomass based Gujarat Ambuja 24 MW Ropar, Punjab 8 Renewable 9 Renewable 10 Renewable 11 Renewable 12 Renewable 13 Renewable 14 Renewable 15 Renewable 16 Renewable 17 Renewable 18 Renewable 19 Renewable 20 Renewable Biodiesel production Cements Dhampur Sugar Mills Ltd Balarampur Chini Mills Ltd Haidergarh Chini Mills Ltd Sri Chamundeswari Sugars Ltd Bannari Amman Sugars Ltd Bannari Amman Sugars Ltd 27.5 MW Dhampur, UP 20 MW Haidergarh, UP 20 MW Haidergarh, UP 22 MW Mandya, Karnataka 20 MW Sathyamangalam, TN MW Mysore, Karnataka Triveni industries 22 MW Deoband, UP Shree Renuka Sugars Ltd DCM Shriram Consolidated Ltd Rajashree Sugars and Chemicals Southern Online Biotechnologies Ltd Cosmos Consulting 6 MW Raichur, Karnataka Belgaum, Karnataka 7.5 MW Kheri, UP 22 MW Villupuram, TN 30 TPD Nalgonda District, AP 9 MW Kullu, HP

9 9 TERI s Periodicals for the Kyoto Mechanisms Information Platform 21 Renewable 22 Renewable 23 Renewable 24 Renewable 25 Renewable 26 Renewable 27 Municipal solid waste 28 Fuelswitching 29 Fuelswitching 30 Energy 31 Energy 32 Energy 33 Energy 34 Energy 35 Energy Narayanapur Right Bank Canal Municipal Solid Waste to Energy Plant Fuel-switching from naphtha to natural gas Switching of fossil fuel from naphtha to natural gas Emission reduction in smelter BOF gas waste heat recovery Power project Corex gas waste heat recovery based Project Optimal utilization of clinker and conversion factor improvement in cement manufacturing plant Energy Efficiency Initiatives Energy Efficiency through installation of modified CO2 removal system in Ammonia Plant MW Karnataka Astha Projects (India) Ltd Dharamshala Hydro Power Ltd Orissa Power Consortium Ltd Orissa Power Consortium Ltd Meenakshi Power Ltd Asia Bio- India Ltd BSES Andhra Power Ltd 5 HP 4.5 MW Kangra, HP 18 MW Visakhapatnam, AP 20 MW Angul, Orissa 37 MW Orissa 5.6 MW Lucknow, UP 220 MW Samalkot, East Godavari, AP Essar Power Ltd 515 MW Hazira, Gujarat Indian Aluminium Co. Ltd Jindal Vijaynagar Steel Ltd Jindal Vijaynagar Steel Ltd Birla Corporation Ltd Kamat Hotels India Ltd Indo Gulf Fertilizers Ltd Hirakud, Orissa 1.6 mtpa Bellary, Karnataka 1.6 mtpa Bellary, Karnataka Chittorgarh, Rajasthan Andheri, Mumbai mtpa Sultanpur, UP 36 Energy Waste heat recovery based captive Orissa Sponge Iron Ltd 10 MW Orissa

10 10 TERI s Periodicals for the Kyoto Mechanisms Information Platform 37 Energy 38 Energy 39 Energy 40 Energy 41 Energy 42 Energy 43 Energy 44 Industrial process plant Energy using a coke dry quenching system Fuel-switching for generation Energy Efficiency : Thermal improvements Demand side programme Waste Heat based captive plant GHG Emission Reduction in forging SMEs Waste Heat Recovery for captive GHG Emission Reduction by Thermal Oxidation of HFC Tata Iron and Steel Company Chhattisgarh Electricity Co. Indian Rayon Industries Ltd Indian Rayon Industries Ltd Jamshedpur, Jharkhand Raipur, Chhattisgarh West Bengal West Bengal Ispat Godavari 7 MW Chhattisgarh Special Purpose Punjab Vehicle of Punjab Industries Association OCL India Ltd 8 MW Sundargarh, Orissa Gujarat Flurochemicals Ltd Panchmahals, Gujarat TN Tamil Nadu; AP Andhra Pradesh; UP Uttar Pradesh; HP Himachal Pradesh Source : Ministry of Environment and Forests, Government of India

11 11 TERI s Periodicals for the Kyoto Mechanisms Information Platform National CDM authority Annex II The National CDM Authority (NCA) is hosted by the Ministry of Environment and Forests (MoEF). Presently the NCA comprises 9 members from 6 ministries and the Planning Commission (Box 1). The major functions of the NCA are to accord host country approval (HCA) for CDM projects and to facilitate information dissemination. Box 1. Composition of NCA Chairperson: Secretary, MOEF Members or their nominee: Foreign Secretary Finance Secretary Secretary, Industrial Policy and Promotion Secretary, Ministry of Non-Conventional Energy Sources Secretary, Ministry of Power Secretary, Planning Commission Joint Secretary, (Climate Change),MOEF Member Secretary: Director (Climate Change), MOEF Steps for evaluation The NCA endeavours to provide approval within 60 days. To guide the stakeholders in developing CDM projects, the MoEF has also announced interim CDM project approval criteria( So far the NCA has provided host country approvals for 44 projects. The steps followed for according host country approval by NCA are listed below copies of the project concept note and 2 copies of the CDM PDD have to be submitted in the proper formats along with soft copies. 2. The documents are circulated to all the NCA members for comments and evaluation. 3. A meeting of the NCA is held with the project promoters and their CDM advisors where the promoters give a brief presentation. 4. Any queries and issues are clarified in the meeting with the project promoters. 5. If the NCA members have no additional queries and are satisfied with the project, Host Country Approval (HCA) is issued, preferably within 60 days.

12 12 TERI s Periodicals for the Kyoto Mechanisms Information Platform 6. If the NCA members have any enquiries, the information has to be submitted at the earliest. The appraisal is then redone for approval. This is diagrammatically represented in Figure 1. Figure 1. Process of host country approval by NCA Formats consistent with International best practices Single Window Clearance Review and Clarifications If any Submission of PCN & PDD to DNA (20 copies) About 60 days from submission to issuance of A pproval Simple and straight forward documentation Meetings every Month or when there is project load 69 projects approved till date Issue Of Approval Letter