National Action Plan in Operationalizing CDM in India

1
National Action Plan in Operationalizing CDM in
India
International Conference on Clean Development
Mechanism ( CDM )
Organized by Hamburg Institute of
International Economics ( HWWA ), Germany A
presentation by Srikanta K. Panigrahi
Environment Forest Division Planning
Commission, Government of India
2
India is a Partner in Global GHG Mitigation

• Signed UNFCCC in 10th June, 1992
• Ratified the Convention on 1st November, 1993
• Acceded to Montreal Protocol on 19th June, 1992
• Established ODS phasing-out prg. in Nov. 1993
• Signed Kyoto Protocol in December, 1997
• Ratified Kyoto Protocol in August, 2002

Environment Forest Division Planning
Commission, Government of India
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India - Emerging as a Global Leader

• Hosted COP-8 at New Delhi 23rd Oct. 1st Nov.
  2002
• ( Linked Adaptation of Climate Change to
  Sustainable Development, Capacity Building of
  Training, Promotion of Renewable Energy,
  Guidelines for Small scale CDM projects )
• At the Instance of PMO a WG was constituted at
  Planning Commission to prepare a National Action
  Plan for operationalising CDM in India March,
  2003
• DNA is established in December, 2003

Environment Forest Division Planning
Commission, Government of India
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India - Emerging as a Global Leader

• Among non-Annex-I Countries, India is the first
  Nation to recommend highest number of CDM
  projects to CDM Executive Board of UNCCC.
• Much ahead of China, Brazil, Indonesia and other
  non-Annex Counties.
• Indian DNA has offered a simple, first tracked
  Clearance System for the issuance of Host
  Country Endorsement .
• Although, India doesnt have any GHGs Reduction
  Target during First Commitment Period ( 2008-2012
  ).

Environment Forest Division Planning
Commission, Government of India
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How India Initiated the Process ?

• WG was formed at Planning Commission
• Climate Technology Bazaar organized in Nov. 2003
• DNA is set up.
• CDM Endorsement Criteria is established
• Sustainable Development Indicators were placed
  in.
• Additionality Criteria is formulated.
• Fastest, Transparent,Simple Clearance Procedure
  is offered.

Environment Forest Division Planning
Commission, Government of India
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Major Recommendations of the WG

• Structure of DNA
• CDM Cell
• CDM Promotion Agency
• State wise CDM Awareness Campaign
• Sector-specific Capacity Building Programs
• CDM Implementation Manual
• CDM Investors Guide
• International CDM Road Shows

Environment Forest Division Planning
Commission, Government of India
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Major Recommendations of the WG

• Processing Fees for CDM Projects
• Bundling of Projects
• Management of Transaction Costs
• Capacity Building of Local Consultants
• Easy access to Information Base
• Awareness Training Workshops
• Marketing for attracting International players
• Need for Local Targeted Marketing

Environment Forest Division Planning
Commission, Government of India
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National CDM Action Plan

• Organization of an International Climate
  Technology Bazaar Nov-03 ( MoEF )
• Establishment of the DNA Dec-03( MoEF )
• Establishment of CDM Cell ( MoEF )
• Hiring of CDM Promotion Agency ( DNA )
• Execution of CDM Awareness Campaign - ( MoEF )
• Preparation of CDM Implementation Manual /
  Investors Guide - ( MoEF )
• Execution of International Road shows (MoEF)

Environment Forest Division Planning
Commission, Government of India
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Structure of DNA

• Members are drawn from Ministries of
• Planning Commission, Environment, External
  Affairs, Power, Industry Commerce,
  Non-conventional Energy Sources
• Secretary, MoEF as Chairman
• Jt. Secretary, MoEF as a Member
• Director, MoEF as Member Secretary
• Member Secretary shall be responsible for day to
  day activities, carry out preliminary examination
  of the projects, Prepare the Guidelines for the
  issuance of Host Country Endorsement , arrange
  meetings, communicating CDM Executive Board

Environment Forest Division Planning
Commission, Government of India
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Interim Approval Criteria ( Eligibility )

• Additionality Issue
• - Emission -Financial - Technological
• Sustainable Development Indicators
• (Assuring Social, Environmental, Economic,
  Technological Well Being)
• Baseline
• Financial Indicators ( Financing Pattern, Flow of
  Additional Investment, Cost effectiveness of
  Energy savings, Liquidity, N.P.V., Cost / Benefit
  Analysis, IRR with without CERs, Financial
  Closure )
• Technological Feasibility Risk Analysis

Environment Forest Division Planning
Commission, Government of India
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Sustainable Development Indicators

• The Project has to confirm, if it assists in
  achieving sustainable development.
• Social well being The Project should lead to
  alleviation of poverty by generating additional
  employment, Removal of social disparities,
  Contributing to the provision of basic amenities
  to people leading to improve the quality of life
  of people.
• Economic well being Project should bring in
  additional investment consistent with the needs
  of the people.
• Environmental well being Impact of the project
  activity on resource sustainability and resource
  degradation, if any, due to proposed activity
  bio-diversity friendliness impact on human
  health reduction of levels of pollution etc.
• Technological well being The project should lead
  to transfer of environmentally safe and sound
  technologies with a priority to the renewable
  sector or energy efficiency projects that are
  comparable to best practices in order to assist
  in up gradation of technological base.

Environment Forest Division Planning
Commission, Government of India
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Baselines

• Project should describe the methodology of
  determination of baseline, which should
• Be Precise, Transparent, Comparable and Workable
• Avoid overestimation
• Be Homogeneous, Clear and Reliable
• Indicate Potential errors
• Contain Lifetime of project cycle
• Bring out social, economic and environmental Role
  of externalities
• Include historic emission data-sets wherever
  available

Environment Forest Division Planning
Commission, Government of India
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Baselines

• Should be on project by project basis except for
  those
• categories that qualify for simplified
  procedures.
• Should indicate the formulae used for calculating
  GHG offsets in the project and baseline scenario
  and Leakage, if any
• For Project Idea Notes (PIN), default values may
  be used with
• justification.
• Determination of base project which would have
  come up in
• absence of proposed one should be clearly
  described in the
• project proposal.

Environment Forest Division Planning
Commission, Government of India
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Financial Indicators

• The project participants has to submit
  followings
• Flow of Additional Investment
• Cost effectiveness of energy saving
• Internal Rate of Return (IRR) - with and
  without CERs.
• Liquidity, N.P.V., Cost/Benefit Analysis, Cash
  Flow etc for establishing the profitability
  of the project.
• Agreements reached with the Stakeholders, if
  any, including Power Purchase Agreements
  (PPA), MoUs etc.
• Indicative costs related to Validation,
  Approval, Registration, Monitoring and
  Verification, Certification and Share of proceeds
• Proposal should indicate funding available,
  financing agency and also describe the financial
  closure

Environment Forest Division Planning
Commission, Government of India
15
Technological Feasibility

• The proposal should include following elements
• The proposed technology/process
• Product/technology/material supply chain
• Technical complexities, if any
• Preliminary designs, schematics for all major
  equipment needed, design requirement,
  manufacturers name and details, capital cost
  estimate
• Technological reliability
• Organizational and management plan for
  implementation, including timetable, personnel
  requirements, staff training, project
  engineering, CPM/PERT-Chart etc.

Environment Forest Division Planning
Commission, Government of India
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Risk Analysis Credentials

• Risk Analysis
• The project proposal should clearly state risks
  associated with a project including apportionment
  of risks and liabilities insurance and
  guarantees, if any.
• Credentials
• The credentials of the project participants must
  be clearly described.

Environment Forest Division Planning
Commission, Government of India
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CDM Cell

• Secretarial Wings of the DNA
• Member Secretary heads the cell
• Coordinates the activities of the DNA
• Issuance of Host Country Endorsement to
  approved PDD by DNA
• Disseminates information on CDM process DNA
• Maintains the record of the approved projects
• Empanelling Experts from the field of Energy,
  Environment, Finance, Law Forest sectors etc.

Environment Forest Division Planning
Commission, Government of India
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CDM Promotion Agency

• Can be from a NGO or Industry Association
• Would be appointed for a term of Two Years.
• DNA is empowered to appoint such an Agency.
• Key responsibilities
• - Organizing State level Awareness Workshops
• - Preparation of CDM Investors Guide
• - Sector-specific Orientation Programs
• - Marketing to attract International players
• - Dissemination of Basic Information on CDM
  

Environment Forest Division Planning
Commission, Government of India
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State Wise CDM Awareness Campaign

• Background of CDM
• Opportunities for the State
• Issues in CDM
• Identification of Priority Sector Projects for
  CDM
• PIN, PCN, PDD Preparation process
• Requirements of Host Country Endorsement
• Role of State Government, Project Promoters,
  Financers Others Stakeholders

Environment Forest Division Planning
Commission, Government of India
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Sector Specific Capacity Building

• Power Sector
• Renewable Energy Sector
• ( Small Hydro, Waste-to-Energy, Wind, Biomass
  etc. )
• Energy Efficiency Projects from Industries
• ( Steel, Cement, Brick Kilns, Coal Benefication
  etc )
• Transportation Sector
• LULUCF ( Sink or Carbon Sequestration) Sector
• Abatement of Methane Emission from Paddy field

Environment Forest Division Planning
Commission, Government of India
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Small Scale CDM Projects

• Separate Guidelines from Executive Board
• ( Decision 17 / CP.7 FCCC / CP / 2001 / 13 /
  Add.2 )
• Simplified Modalities Procedures during COP-8
• Type, Categories, Technologies Methodologies
• Simple Baseline Methodologies for 14 categories
• RE Projects less than or equal to 15 MW
• EE Improvement Projects up to 15 GWha
• Other Projects reducing 15 Kilo Tons of CO2 e p.a.

Environment Forest Division Planning
Commission, Government of India
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CDM Investors Guide

• Provides Opportunities Advantage Details of
  Investing in India to attract International
  Players
• Informs Present Policy Programs of Govt. of
  India for Climate Change / CDM Sector
• Informs how to bridge the gap of understanding to
  reduce Transaction Cost
• Motivates International CDM Investors to choose
  Indian GHG Mitigating Initiatives
• Impress National Banks /Financers for lending loan

Environment Forest Division Planning
Commission, Government of India
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International CDM Road Shows

• Representatives from Government, Financial
  Institutions / Banks, Industry, Press / Media and
• other Stake holders should visit Key
  Participating Developed / Developing Countries to
  gain experience and also to market Indian
  potential in CDM market
• Countries could be Germany, Japan, UK,
  Netherlands, Brazil, China Indonesia

Environment Forest Division Planning
Commission, Government of India
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Processing Fees for CDM Projects

• CDM Fund - to meet the Establishment Cost of DNA
  by charging a Nominal Fee for Projects Generating
  CERs
• - up to 50,000 p.a. - Exempted from any
  charges.
• - exceeding 50,000 but less than 1 Lakh p.a. -
  charged _at_ 1 of CERs in excess of 50,000.
• - In excess of 1 Lakh p.a. - charged _at_ 2.
• Otherwise, a fixed slab - on the total CERs can
  be charged in the line of Registration Fee
  Structure of UNFCCC Executive Board.

Environment Forest Division Planning
Commission, Government of India
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Bundling of Projects

• The First option for reducing Transaction Cost.
• Implies uniting of Small Homogeneous Projects, so
  that the Project Cycle is One.
• Requires an Intermediary for collecting
  information from Sub-projects.
• A Bench-mark oriented Baseline can defined to
  simplify the determination of total CERs
  generated.

Environment Forest Division Planning
Commission, Government of India
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Reduction of Transaction Costs

• Minimizing cost at various stages
• - PIN, PCN, PDD preparation
• - Registration Processing Fees
• - Baseline Document
• - Validation
• - Monitoring Verification Certification
  process
• Also by Providing easy access to Information,
  Bundling of Projects, Capacity Building
  Promotion

Environment Forest Division Planning
Commission, Government of India
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Capacity Building of Local Consultants

• By exposing UNCCC Executive Boards Procedures,
  Modalities Guidelines
• By providing access to Approved Methodologies,
  Baselines other Web based Information
• By imparting necessary Trainings
• Through Sector / State - specific Workshops
• By making available of Leaf lets, Pamphlets,
  Information sheets, Guidelines, Manuals other
  Reference Materials.

Environment Forest Division Planning
Commission, Government of India
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Easy Access to Information

• Through Electronic Media by creating different
  Web sites at National, State Local levels
• Through dissemination of Large scale supporting
  Literature, Reference Material Leaf lets
• By Print Media regular advertisements in
  various National, State Local level News papers
• Through Audio / Visual Medium Video CDs
• By Organizing Workshops, Seminars and Symposiums
  at various levels

Environment Forest Division Planning
Commission, Government of India
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Awareness Training Workshops

• At each State Union Territories of India
• Stake holder specific Capacity Building program
• (Government Officers, Project Developers,
  Officers from Industry, Banks Financial
  Institutions, Insurance Company Officials, NGOs,
  Consultants Legal Practitioners)
• Special programs for Small scale Projects
• Special programs for LULUCF sector Projects
• Awareness Building through News Letters

Environment Forest Division Planning
Commission, Government of India
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Aggressive Marketing for Attracting International
Players

• By giving a Strong Signal on Indias potential to
  mitigate GHGs
• By showcasing Indias preparedness to accept CDM
  challenge
• By organizing International Road Show programs
• By displaying our ability to deliver
• ( Clearance of more no. of CDM proposals by
  Indian DNA with a minimum time period )
• By taking the Global Stewardship as a Leader

Environment Forest Division Planning
Commission, Government of India
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Present Risks in CDM Promotion in India

• Clarity on Taxation Issues
• Establishment of an Indian Operational Entity
  (OE)
• Non-acceptance of Agro-Forestry under LULUCF
• Insurance Sector in India yet to gear up
• Lack of Resources for adequate Capacity Building
• Will really CDM share be substantial compared to
  JI ET ?
• Uncertainty due to Non-Ratification of Kyoto

Environment Forest Division Planning
Commission, Government of India
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National Action Plan in Operationalizing CDM in
India
THANKS FOR YOUR KIND ATTANETION ...
Environment Forest Division Planning
Commission, Government of India