Contents

→ Global Warming

→ Climate Change Initiatives

→ Clean Development Mechanism

→ Why Ernst and Young ?

→ E&Y India’s CDM Profile

→ E&Y India’s CDM Credentials

May 2008 Page 1 CDM Approach Note

Climate Change Initiatives
Global Climate Change Initiatives
United Nation Framework Convention on Climate Change (‘UNFCCC’) adopted
in Rio - Earth Summit 1992. It was the first major Initiative for International

Cooperation in the area of GHG mitigation.

► Primary objective being stabilization of GHG concentrations in the
atmosphere that would prevent interference with the climate system.
► Further strengthened at Kyoto in 1997, wherein the nations of the world
agreed that industrialized countries will reduce their aggregate emission
by 5.2% below 1990 levels by 2008-2012
► Kyoto Protocol entered into force on 16th Feb, 2005
► It set legally binding emission reduction targets for GHG Reduction only
for Annex-1 (i.e., developed ) countries with the aim of reducing overall
GHG emissions by at least 5.2% below 1990 levels in first 2008-2012
commitment period

May 2008 Page 3 CDM Approach Note

Three Flexibility Mechanisms under KP
Aim to maximize cost-effectiveness of climate change mitigation by allowing
parties to pursue those opportunities to cut emissions or alternatively,
enhance carbon sinks, more cheaply elsewhere than domestically.
Developed
Clean Development Mechanism (‘CDM’) Country Govt/
Pvt. Sector

International Emission Trading (‘IET’)

Sale Carbon
proceeds Credits
Joint Implementation (‘JI’)

 Carbon credits are measured in terms of Certified Developing

Emission Reduction (‘CER’) Country GHG
Abatement Project
 One CER equals 1 MT CO2 equivalent

May 2008 Page 4 CDM Approach Note

Emission trading between countries
ERU
AAU

IET Annex 1
CER JI
$$$ $$$
Annex 1

CDM
non-Annex1

CER – Certified Emission Reduction

ERU – Emission Reduction Unit
AAU – Assigned Amount Unit

May 2008 Page 5 CDM Approach Note

Clean Development Mechanism
Clean Development Mechanism (CDM)
Main features:
► GHG Reduction
► Should not be a Legal Mandate
► Impact Of CDM/ Additionality

Carbon credits are measured in terms of Certified Emission Reduction (‘CER’). One CER equals 1 MT CO2
equivalent.

Process modifications/ inception of better technology resulting in process emissions ßß

Process modifications/ inception of better technology resulting in thermal energy emissions ßß

Process modifications/ inception of better technology resulting in electrical energy emissions ßß

REDUCE
REDUCE DEMAND
DEMAND ENERGY
ENERGY RECOVERY
RECOVERY EFFICIENT
EFFICIENT SUPPLY
SUPPLY

May 2008 Page 7 CDM Approach Note

Typical CDM Opportunities
Hydro, Wind, Solar
Efficient Efficient machines
Biomass / bagasse generation
Renewable T&D loss reduction
Geothermal, Tidal
energy Electrical
Energy efficiency
Thermal / fuel Steam saving
Process Thermal efficiency
Cement
Waste heat
Steel / metallurgical
recovery Fly ash in cement
Coke ovens
Industrial fuel switch LPG, Natural gas
(fossil -> clean) Biomass
Waste Waste-water mgmt. (biogas)
management Power generation
MSW management Fuel pellets
Process change
Use as fuel

Fertilizer: CO2 recovery

Transportation LPG, NG, Biodiesel
Refrigerant: HFC abatement
Modal shift, Pipeline
Aluminum: PFC control
A/R projects Carbon sequestration
Biodiesel production

May 2008 Page 8 CDM Approach Note

Basic CDM Eligibility Criteria

► The project activity should have started after January 2000

► The project activity should not have been taken under legal
compulsion
► The project activity should not be a “business as usual
activity”
► It should result in reduction of GHG emissions against the
identified baseline
► It should contribute to overall sustainability

Note: All projects that aim to register under CDM must meet the minimum eligibility
criteria. Each project follows a certain process from conceptualization to
registration. This process is commonly known as the CDM Project Cycle. The
CDM project cycle is mentioned in the schematic on slide 17.

May 2008 Page 9 CDM Approach Note

Availing the carbon credits

Project
Identification

Strategy
Project
Documentation Construction
(PIN & PDD)

Project
operation
Host country Finding PDD
endorsement buyer validation

Generation of
Carbon credits

Contract with Registration

buyer with UNFCCC
Verification/
certification

UNFCC / EB Buyer pays

Issues CERs Project proponent
PIN : Project Identification Note
PDD : Project Design Documentation

May 2008 Page 10 CDM Approach Note

 Estimate of emission reductions
General rules
 Electrical energy saving projects:

1 kWh  0.7~0.9 kg CO2 (This factor depends on the Regional grid connected
to the project activity)
 Fuel oil saving

1 litre oil  3~3.15 kg CO2

 Coal saving

1 kg coal  1.3~1.6 kg CO2

 NG based power generation

1 kg NG burning 2.4~2.5 kg CO2

CDM
CDM Funding
Funding could
could yield
yield more
more than
than
their
their capital
capital investment
investment

May 2008 Page 11 CDM Approach Note