The Protocol entered into force on February 15th 2005 when Russia ratified the treaty.

What is the Clean Development Mechanism (CDM) ?

CDM allows Annex I (industrialized) countries to meet their emission reduction targets by paying for green house gas emission reduction in non-Annex I (developing) countries. Normally, Projects of 15MW and below are considered as small scale projects. Projects of more than 15MW capacity are considered as large scale projects.

What is a CER ?

CER or Certified Emission Reduction is a "certificate" just like a stock. A CER is given by the CDM Executive Board to the projects in developing countries to certify that they have reduced green house gas emissions by one ton of carbon dioxide.

Developed countries buy CERs from developing countries under the CDM process to help them in achieving their targets under Kyoto Protocol.

What are the six green house gases under the Kyoto Protocol ?

There are many gases that contribute to the green house effect. The Kyoto Protocol deals with six of them.

There are six green house gases covered by the Kyoto Protocol.

CERs awarded = Tons of green house gas reduced X Global Warming Potential of the Gas (single line).

Potential of the Gas

What are the Kyoto protocol's three flexibility mechanisms ?

The Clean Development Mechanism is one of three Kyoto Protocol Flexibility mechanisms. The other two are Joint Implementation and International Emissions Trading . They help Annex I countries to meet their emission reduction targets.

What countries participate in CDM ?

Countries listed in Annex I of the UNFCCC can purchase CDM credits. Non Annex-I countries can host CDM projects.

How do Annex I countries benefit from CDM ?

All Annex-I countries (Except Belarus and Turkey) have legally binding green house gas emission reduction requirements under the Kyoto Protocol. The clean development mechanism is one of the "flexibility mechanisms" of the Protocol to help these countries to meet these targets.

Instead of countries reducing emissions of their own companies, Annex I countries can "buy" emission reductions in non-Annex I countries.

How do developing countries benefit from CDM ?

The Kyoto Protocol (Article 12) states :

"The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments"

The idea was that developed countries get some flexibility in emission reductions in exchange for , to bring in investment in developing countries for projects and technologies that reduce green house gases.

What makes a project eligible for CDM ? What is additionality ?

A project is eligible for CDM benefits if the project will result in a net decrease in green house gas emissions – this is called additionality.

Technically speaking a CDM project is additional if "anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity."

(1) Outline the alternatives to the CDM activity

The developer has to first outline what the possible outcomes of the project are if it doesn't get CDM benefits – so called "baseline" scenarios the associate green house gas emissions. It must then show that with the CDM project, greenhouse gas emissions are reduced. This reduction in emissions over the baseline is the CERs that the project would generate.

(2) Investment analysis

Once the possible alternatives are outlined, and the CDM project is shown to have lower greenhouse gas emissions, the developer must show that CDM scenario satisfies either:

• It is not a common practice in the region or sector.
• It is the least financially attractive option available OR
• Faces "barriers" preventing implementation if the project was not registered as a CDM project such as either:
• Financial : such as inability to get bank loans.
• Technological: lack of infrastructure for implementation or skills/labour to operate the technology.
• "First of its kind" : No project activity of its type is operational in the region or country.

What is a Baseline?

A baseline for a CDM project gives the greenhouse gases emissions that would have occurred in the absence of the proposed CDM project activity.

There are three approaches to establishing baselines:

• Existing actual or historical emissions, as applicable
• Emission from a technology that represents an economically attractive course of action, taking into account barriers to investment
• The average emissions of similar project activities undertaken in the previous five years, in similar social, economic, environmental and technological circumstances, and whose performance is among the top 20 per cent of their category.

What are the sustainable development criteria for CDM projects ?

Sustainable development is a legal requirement of a CDM project. "It is the host party's (e.g. India 's) prerogative to confirm whether a CDM project activity assists it in achieving sustainable development".

Different countries have different sustainable development criteria. In India, clearance for sustainability is granted by the National CDM Authority (NCDMA) and is spearheaded by the Union Ministry of Environment and Forests (MOEF).

The Indian NCDMA has the following sustainable development criteria :

• Social well being : The project should lead to the alleviation of poverty by generating additional employment, removal of social disparities and… leading to improvement in quality of life of people.
• Economic well being: The project should bring in additional investment consistent with the needs of the people.
• Environmental well being: This includes a discussion of impact of the project activity on resource sustainability and resource degradation… reduction of levels of pollution.
Technological well being: The activity should lead to transfer of environmentally safe and sound technologies that are comparable to best practices.
• It is now obligated to provide at least 2% of the CDM revenues derived from large projects for sustainable social well being.

What is the CDM Executive Board ?

The Executive Board supervises the working of CDM. It meets four or five times a year. The Board has final say on whether a project is approved or not and lays out procedures and guidelines for CDM. It is constituted of 10 members from countries which are signatories to the Kyoto Protocol. Two from Annex I, Two from non-Annex I countries, one from small island developing states, and 1 from each of the 5 UN groupings.

What is a Designated Operational Entity (DOE)? Who are the 5 in India ?

A Designated Operational Entity (DOE) is a Body accredited by the CDM Executive Boards that checks whether projects are fulfilling CDM criteria. A CDM project must be checked by two processes – Validation and Verification.

Validation is done once before project approval. Verification is done periodically after the project has been approved or registered.

A Designated Operational Entity (DOE) is accredited provisionally by the CDM Executive Board, further confirmed by the meeting of the Parties to the Kyoto Protocol.

Validation:

Based on the Project Design Document (PDD), the DOE will evaluate and validate the proposed CDM project, confirming whether :

1 - Voluntary participation of parties.

2 - Comments by stakeholders have been invited.

3 – Project participants have submitted documentation on environmental impacts to the DOE.

4 – The project will result in reduction in greenhouse gas that is additional.

5 – A methodology has been adopted in accordance with CDM norms.

6 – Provisions for monitoring, verification and reporting are in accordance with CDM norms.

7 - The project complies with all other CDM norms.

The DOE then issues a validation report and requests the CDM Executive Board for registration of the project based on this report. The Project developer pays around Rs 8 to 10 Lakhs for this , depending upon the volume of the pojects. Large scale projects have to pay more according to their size.

Verification:

CDM projects are monitored or "verified" after the project has been registered by the CDM Executive Board. After the project has been registered by the Executive Board, the DOE periodically checks (usually once a year) whether emission reduction has actually taken place. It will then request that the EB to issue CERs accordingly, based on this verification report.

It is only after verification that CERs are actually delivered.

Designated Operational Entities in India :

• TUV SUD
• TUV NORD
• DNV
• SGS
• TUV Rheinland
• BVQI

What is a Designated National Authority (DNA)?

It is an office, ministry, or other official entity appointed by a Party to the Kyoto Protocol to review and give national approval to projects proposed under the Clean Development Mechanism.

India's DNA is called the National CDM authority (NCDMA).

Structure of the NCDMA:

Chairperson: Secretary (Ministry of Environment and Forests, MoEF)
Member-Secretary: Director (Climate Change), MoEF

Members: