Case Studies on CDM Projects From India

Case Studies on CDM Projects from India

National Workshop onCapacity Building in CDM ProjectsSept 04, 2007, Bhubaneswar

Bhanumathidas.N & Kalidas.NEco Carbon Pvt. Ltd.,Visakhapatnam

What is UNFCCC and its ultimate objective?

United Nations Framework Convention on Climate Change, UNFCCC, is an Intergovernmental Negotiating Committee that createed a common platform at global level towork on mitigation of global warming and climate change.

What is UNFCCC and its ultimate objective?

The ultimate objective of convention:

* Stabilisation of greenhouse gas concentration in the atmosphere,

* at the level that would prevent dangerous anthropogenic interference with the climate system.

* Such a level should be achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate change.

Means before the total reversal of climate system

Kyoto Protocol

That commits developed countries to reduce their collective emissions of greenhouse gases by at least 5% below to that of 1990 levels by the period 2008-12.

This limit is further enhanced to 5.2%.

What is the way to achieve the above ???

Clean Development Mechanism (CDM)

CDM is a tool to assist developed countriesin complying with their reduction commitmentby investing in projects or through transfer of efficient and sound technologies that reduce emissions in developing countries.

Developed countries would then use such emission reductions to offset their compliance.

Developed CountriesAnnex I

Developing Countries

Non-annex I

Investment/ sound technologies to reduce emissions

In return emission reductions are transferred

Clean Development Mechanism (CDM)Implicit philosophy of CDM: Give and Take

Result:Stabilisation of GHG concentration in the atmosphereSustainable development in non-annex I countries.

Registration of CDM project

Registration is the formal acceptance by the EB of a validated project as a CDM project activity. Registration is the prerequisite for the

** Verification, ** Certification & ** Issuance of certified emission reductions (CERs) relating to that project

as per modalities and procedures of CDM

Basis for Designated Operational Entity (DOE) to forward the project activity

** Voluntary participation approved by each party involved

** Real, measurable, and long-term benefits related to the mitigation of climate change

** Reduction in emissions that are additional to any that would occur in the absence of the Registered CDM project activity

What is additionality for CDM project?

A CDM Project is described as additional:

“ If anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered project activity.”

Registered or proposed? Unless the additionality is established the project cannot be registered.

Baseline scenario

The baseline for a CDM project activity is thescenario that reasonably represents the anthropogenic emissions by sources of GHGsthat would occur in the absence of the proposedproject activity.

Thus baseline is a custom-scenario and has to be derived using a baseline methodology already approved by EB or by proposing/ drafting a new methodology that needs to be approved by EB.

Demonstration of additionality for large scale projects

Step 1. Identification of alternative to the Project activity consistent with mandatory

Laws and regulations

Step2. Investment analysis

Step 3. Barrier analysis

Step4. Common practice

analysis

Y

N

Project is additionalProject is not

additional

Y

N

N

Case studies - AS. No

Registered project Rejected project

1 Methodology: ACM 0004 : Projects for power generation through waste gas and/or heat:

2 Generation of electricity through combustion of waste gases from BF& Corex units

Power generation from proposed 11.2 MW waste heat recovery boiler

3 Baseline scenario

As per PDD major of the steel and iron plants in India depend on coal-based captive power plants. Hence coal- based power generation is identified as BL scenario, which is deemed proper as per methodology.

The identification of baseline scenario is not clearly outlined thus failing to give right interpretation to the provisions in selected methodology.Hence project got rejected.

Case studies – A (contd)

S. No


4 Demonstration of additionality

*Investment barrier analysed vide benchmark approach concluded that without CDM revenue project is unviable.

*Being the first project of its kind technological barriers are unique. Additionality is well demonstrated, thus the project got registered.

*Investment and technological barriers could not be properly discussed even when the project has gone for request for review. Additionality demonstration failed, thusthe project got rejected.

Case studies - BS. No


1 Baseline Methodology:AMS Type II: Energy efficiency improvement projectsSub Type IID: Energy efficiency and fuel switching measures for industrial facilities.

2 GHG Emission Reduction through Energy Efficiency Improvement

GHG Emission Reduction through Energy Efficiency Improvement of Clinker Cooler in Cement Manufacture

3 Baseline development

This issue has been handled in detail considering all possible approaches based on regional grid.Baseline emissions are calculated after computing baseline emission factor.

Details of baseline development are not given.

Case studies - B (Contd.,)

S. No


4 Justification of methodology

The conservation of electrical energy is computed at 2.67 GWh, thus the methodology is appropriately applied.

As per EB there are no convincing calculations to show that the energy saving on account of project activity is within the limits prescribed in the methodology. The application of methodology could not be substantiated. In the absence of such information the project is rejected.

Case studies - CS. No


1 Baseline Methodology:AMS Type I: Renewable Energy ProjectsSub Type ID:Grid Connected Renewable Electricity

2 4.5 MW Grid connected SHP in Himachal Pradesh

2 x 5 MW Hydro Electric Project

3 Baseline Methodology

As indicated in the title the project is designed for electricity generation towards grid connection, hence the selected methodology is found to be appropriate.

While ID is defined for grid connected renewable electricity, the project proponent highlighted in PDD that the project is meant for 100% captive consumption. Hence the methodology selection itself is wrong.

Case studies - CS. No


During discussion about project details PDD indicated that the :‘The project will involve the addition of ------ with total installed capacity of 10 MW.’As per reviewers the terminology ‘addition’ might imply the existence of hydel plant and in the absence of their capacity indication the project might cross the cap.

Case studies – C (contd.,)S. No


4 Additionality

In view of the hilly geographical terrain the project needed lot of infrastructure facilities to be created thereby increasing the cost of project. Hence investment barrier has been projected as additionality.

Technological barrier mentioned and investment barriers projected by the project participant are observed to be common for any hydel power project.Barriers due to prevailing practices has gone out of context by discussing on fossil-fuel based power plants.In the absence of any acceptable demonstration of additionality, the project is rejected.

Case studies - DS. No


1 Baseline Methodology:ACM 0005: Consolidated Baseline Methodology for increasing the Blend in cement Production.

2 Optimum utilisation of clinker by Production of Pozzolan Cement

Increasing the Additive Blend in Cement Production

3 Additionality

As per PDD, Portland Pozzolan Cement (PPC) is not considered as common practice in the region of project activity with less than 25% plants manufacturing this product at the time of project proposal period.

The common practice of fly ash blend in cement industry in the project activity region has been taken as 15 to 26%.

Case studies – D (contd.,)S. No


3 Additionality (contd)

With this background the technological and marketing barriers could well be established conferring additionality to the project, further concluding that the project activity would not have been implemented in the absence of CDM.

The technological and marketing barriers faced when the fly ash addition is increased beyond 26% and as projected in PDD could not be substantiated in a plausible manner upon request for review, as recorded by CDM-EB. Project is rejected with an observation that it did not meet the additionality requirements on the common practice analysis.

CONCLUSIONS

** In view of the time to time refinements and changes in the definitions of methodologies, it is essential for Project proponents to take a stock of latest versions Before applying.

** Selection of approved methodology and substantiate the same with proper arguments is very important.

** As everybody is at learning curve the analysis through churning of the issues is very important, to get nectar.

Case Studies on CDM Projects From India

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