Carboncredits Kp

7/31/2019 Carboncredits Kp

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CARBON CREDITS AND

KYOTO PROTOCOL

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CLIMATE CHANGE

• According to the World Bank Economist Mr. Stern, the effect of climate change could beworse than the two World Wars.

• A famous ecologist says that 20 billion tonnes of carbon dioxide is generated by humanity, everyyear and absorbed by Nature. This tolerance ofNature could be reversed, if the carbon dioxidelevels increase unabatedly.

• Prof. James Lovlock, USA believes that the 90 % of mankind may be wiped out if the planetheats up.

2



GLOBAL CLIMATE CHANGE

SCENARIO

• To combat these changes globally, Kyoto Protocol was created and has been ratifiedby 170 countries so far, committingthemselves to reduce Green House GasEmissions and improve Energy Efficiency.

• The Kyoto Protocol envisages reduction of Green House Gases by 5.2% in the period2008-12.

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CLEAN DEVELOPMENT

MECHANISM (CDM)

• The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance ofthe Conference of the Parties (COP/MOP) ofthe UNFCCC

• Certified Emission Reductions (CERs)commonly known as carbon credits, whereeach unit is equivalent to the reduction of onemetric tonne of CO2e

• The value of one CER in Indian Rupees is about Rs. 1600/-

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TYPE OF GREENHOUSE GASES

S. Greenhouse Gas Global WarmingNo. Potential (GWP)

1 Carbon dioxide 1

2 Methane 213 Nitrous oxide 310

4 Hydrofluoro 140-1170carbons

5 Perfluoro carbons 6500-9200

6 Sulphur 239005

hexafluoride



CDM PROCESS

9 to 14 months process

CDM ProcessPrepare Letter ofProject Approval Verification

Issuance ofDesign (LOA) by Validation Registration andCERsDocument Host Certification

(PDD) Country

India’s Designated National AuthorityNational CDM

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Authority (NCDMA)



HOW?

AuctionsExchanges

•Largely used for EUAs •Few auctions held for CERs/VERs

•CERs are not a commoditized •Not much activity in CERs product – many features cause

•VER exchange in place (CCX) differences in price

but commands lower pricesthan OTC market •Seller’s credit, project type etc

Direct Sale Intermediaries

•Avoid Commission •Market professionals matching buyers and sellers•No Guarantee of market price

(narrow lens on buyer market) •Develop optimal transaction structures•Must deal with market risk and

complexity •Incentive structure to deliver the 15highest price to the seller



WHEN ?

Project Development Process

Why Sell Early?Pre-PDD•Certainty of revenue

–May be necessary for project finance.PDD•Certainty of price.

Validation

Why Sell Later?Registered•Delivery risk decreases.

Issued •Therefore price of credit increases.

Guaranteed

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PROJECT PIPELINE – GLOBAL

● Host Country Investor Country● China: 976 (>1000) • UK: 486 ● India: 983 190 mn Euro• Japan: 256

CER acquisition● Mexico: 180 • Sweden: 93 budget 2008● Brazil: 171

• Spain: 67 ● Malaysia: 36 • Germany: 59 ● Philippines: 27 Japanese

power● Indonesia: 24utilities to

● Israel: 22 buy 120 mn

● South Africa: 18 19



STATUS OF THE CDM REGISTRATION

Region Number ofprojects

NAI-Africa 27

NAI-Asia and 773the Pacific

NAI-Other 8

NAI-Latin 375Americaand theCaribbean

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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

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HOST COUNTRY APPROVED

PROJECTS IN INDIAAP 100 Maharashtra 142

Chattisgarh 63 MP 28

Gujarat 98 Orissa 51HP 39 Punjab 54

Rajasthan 58 TN 120

Jharkhand 15 UP 93

Karnataka 113 Utarranchal 20

WB 47 Goa/Pondicherry -

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POTENTIAL IN RENEWABLES

Technology Potential Cum. Installationupto March 31,

2003Wind 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 MWp24



Investment in Rs. Crores

INVESTMENT IN CDM PROJECTS

Investment in Rs. Crores vs Years

80000

7170370000 68691

60000

50000

40000

3645130000

20000

1593310000

17940 358252003 2004 2005 2006 2007 2008

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 marketuntil 2012 fluctuations.

(without Current Fixed Forward Pricerecourse to the a) €8 for the project planningcompany stage.

b) €10 for registered projects.

c) €12 for Registered projects andin operation

Spot NA NA 10-24 12-17 Price dependent on the EUA PriceCurrent spot price : €15-17

Fixed Forward - - - 12-17 Price dependent on the EUA price.until 2012 (with Current price : €15-17

26recourse to thecompany)



GLOBAL CLIMATE CHANGE SCENARIO• 5 outreach countries – Brazil, China, India, Mexico

and South Africa have challenged G-8 countries toreduce their GHG emissions by more than 80% by2050 and by 25 – 40% by 2020.

• Switzerland wants a carbon tax imposed on

emissions of all countries above a certain level ofper 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 becountered by using this fund for developingrenewable energy.

• Sweden has a carbon tax since 1991 on power generating plants and aviation fuel used in air 2727

travel.



• India wants the issues of technology transfer, expanded trade in carbon creditsand a strong adaptation fund to be put inplace at Copenhagen in 2009.

• Britain wants to start a carbon ration card to sensitize each adult about the carbondioxide 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 Globaleconomy $200 Billion annually.

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INDIA’S POSITION

• India wants not only promotion of sustainable production processes but also sustainablelifestyles across the Globe.

• India wants the developed world to fulfill its commitments for reduction of Green HouseGases, transfer new and additional financialresources and climate friendly technology tosupport 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 2929

listed namely



National Mission for Sustaining the Himalayan

Eco System by safeguarding the HimalayanGlacier.

National Mission for Green India by undertakingafforestation of 6 million hectares to reach the

National target of 33% green cover.

National Mission for Sustainable Agriculture bydeveloping thermal resistance crops andsupported by Bio-technology, geo-spatialtechnology and IT

National Mission on Strategic Knowledge tofund high quality and focused research onclimate change. 3131



CDM MARKET

• Fastest growing financial market – rose 80% in 2007to reach nearly $ 60 billion - expected to be $ 1 trillionby 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 ofno 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 ofRs.1000 crores so far with participation by 85

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members and 91 clients.



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 IndustrialDevelopment Co-operation, IIM Banglore,TERI,Clinton Foundation was organized in which allthe developmental agencies made their projectpresentation and experts highlighted potentialCDM avenues.This was inaugurated by Pr Secy(Finance)

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• Similarly in June,2007 another round table Conference wasorganized which was inaugurated by Hon’ble Chief Minister of

Delhi, wherein interaction with the experts from Bureau ofEnergy Efficiency (BEE), MOEF ,GTZ, World Bank andCentral Electricity Authority(CEA) was organized for all the 10infrastructural agencies.

• In August,2007 interaction with noted CDM Consultants

namely IL&FS Ecosmart, PriceWaterhouse Coopers Pvt.Ltd.,Ernest & Young, ONGC and ICF International was organizedwherein modalities , formulation and submission of CDMprojects were discussed with the Infrastructural Agencies.

• Again in April & August 2008, interactions with theinfrastructural agencies were organized with experts formMOEF, MNRE, MCX, NCDEX, FICCI etc.

• The objective was to sensitize the infra structural agenciesabout the procedures and formalities required for preparation

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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 Chokes3) 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.3535

9) Afforestation



Department of Env. & Forest and

Wildlife.• PDD ready for small-scale afforestation andreforestation projects activities in Dera Mandiand 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) expectedvolume 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 millionper annum.

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PWD

• PWD proposes to adopt following initiatives in all itsprojects:

i. Sustainable site planning and adoption of GreenBuilding concept.

ii. Optimum Energy efficiency

iii. Use of renewable forms of Energyiv. 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 Hospitalb) 500 bedded Dwaraka Hospital

c) Thyagaraja Sports Complex.

d) Delhi Institute of Pharmaceutical Sciences37



DIAL

Has CDM potential in the following areas:

• Green Buildings

• Energy efficiency in lighting, heating operations

• Energy efficiency in water and wastewatertreatment by setting up STP, and reuse of waterfor 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.

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NDMC

NDMC has potential for CDM projects in thefollowing activities:

Development, Construction, Operation andmaintenance of an integrated Municipal

waste Processing at OkhlaIntegrated multilevel parking facilities-Sarojini Nagar, B.K.S Marg & K.G Margproposed under PPP mode

Up gradation of Street LightingGeneral energy conservation measures forreduction of demand for energy by 1500KW by 2009.

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MCDMCD is in process of developing a methane extractionproject under CDM, with World Bank, for the existingthree land filed sites.MCD is also working with M/S ILFS in other waste toenergy and compost projects and it is envisaged thatcarbon credits @0.2 per Mt. Ton of garbage shall be

earned.Civic Centre built up in an area of 1.16 Lac Sq. Mts., isdesigned on the Green Building Concept and is likelyto be registered under TERI’s GRIHA rating scheme. LED based Street lighting as well as automationcontrol & dimmer based system for getting energysavings and earning Carbon Credits.Mechanized/Automated Car Parking: The work atKamala Nagar (Capacity – 863 ECUs) is in full swing.

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• On the lines of the Customs Department,

Environment Department may move aCabinet proposal for providing 1% of the

revenue earned by the carbon credits tothe concerned Department, whoformulates the project and generates this

additional revenue.

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