Contents

MEAs
Kyoto Protocol
Flexible Mechanisms
CDM

Benefits
Project Cycle
Requirements
CDM India
CDM Approval Process
Example
CDM global scenario

MEAs
International legal instruments that:

Have a goal of environmental protection

Are concluded between a large number of states or
international organizations as parties
Concluded in written form
Governed by international law
Can be embodied in a single instrument or in two or
more related instruments (framework agreements)

MEAs : Kyoto Protocol

The Kyoto Protocol (1997) to the United

Nations Framework Convention on Climate
Change is an amendment to the international treaty
on climate change assigning mandatory targets for
the reduction of greenhouse gas emissions to
signatory nations.
The objective is the "stabilization of greenhouse gas
concentrations in the atmosphere at a level that
would prevent dangerous anthropogenic interference
with the climate system"

MEAs : Kyoto Protocol

Kyoto is underwritten by governments and is governed by

global legislation enacted under the UNs aegis
Governments are separated into two general categories:
developed countries, referred to as Annex 1 countries (who
have accepted GHG emission reduction obligations); and
developing countries, referred to as Non-Annex 1 countries
(who have no GHG emission reduction obligations)
Any Annex 1 entity failing to meet its Kyoto targets is subject to
a fine and further penalised by having its reduction targets
increased by 30%
By 2008-2012, Annex 1 countries have to reduce their GHG
emissions by around 5% below their 1990 levels (for many
countries, such as the EU member states, this corresponds to
some 15% below their expected GHG emissions in 2008)

MEAs : Kyoto Protocol

Binding targets for 37 industrialized countries and the European

Community
Common but differentiated responsibilities
The Kyoto Protocol was adopted in Kyoto, Japan, on 11
December 1997 and entered into force on 16 February 2005.
The detailed rules for the implementation of the Protocol were
adopted at COP 7 in Marrakesh in 2001, and are called the
Marrakesh Accords.

MEAs : Kyoto Protocol

Countries with commitments under the Kyoto Protocol to limit or

reduce greenhouse gas emissions must meet their targets
primarily through national measures. As an additional means of
meeting these targets, the Kyoto Protocol introduced three
market-based mechanisms, thereby creating what is now known
as the carbon market.
The Kyoto mechanisms are:

Emissions Trading
The Clean Development Mechanism (CDM)
Joint Implementation (JI)

MEAs : Kyoto Protocol

The Kyoto mechanisms:

Stimulate sustainable development through technology transfer and investment
Help countries with Kyoto commitments to meet their targets by reducing emissions or
removing carbon from the atmosphere in other countries in a cost-effective way
Encourage the private sector and developing countries to contribute to emission reduction
efforts
JI and CDM are the two project-based mechanisms which feed the carbon market. JI
enables industrialized countries to carry out joint implementation projects with other
developed countries, while the CDM involves investment in sustainable development
projects that reduce emissions in developing countries.
The carbon market is a key tool for reducing emissions worldwide. It was worth 30 billion
USD in 2006 and is growing.
Annex I Parties must provide information in their national communications under the
Protocol to demonstrate that their use of the mechanisms is supplemental to domestic
action to achieve their targets. This information is assessed by the facilitative branch of the
Compliance Committee

MEAs : Kyoto Protocol

Eligibility requirements To participate in the mechanisms, Annex I Parties must meet,

among others, the following eligibility requirements:
They must have ratified the Kyoto Protocol.
They must have calculated their assigned amount in terms of tonnes of CO2-equivalent
emissions.
They must have in place a national system for estimating emissions and removals of
greenhouse gases within their territory.
They must have in place a national registry to record and track the creation and movement
of ERUs, CERs, AAUs and RMUs and must annually report such information to the
secretariat.
They must annually report information on emissions and removals to the secretariat.

MEAs : Kyoto Protocol

Kyoto includes "flexible mechanisms" which allow Annex 1 economies

to meet their GHG targets by purchasing GHG emission reductions
from elsewhere. These can be bought either from financial exchanges
(such as the new EU Emissions Trading Scheme) or from projects
which reduce emissions in non-Annex 1 economies under the Clean
Development Mechanism (CDM), or in other Annex-1 countries under
the JI.
Only CDM Executive Board-accredited Certified Emission Reductions
(CER) can be bought and sold in this manner. Under the aegis of the
UN, Kyoto established this Bonn-based Clean Development Mechanism
Executive Board to assess and approve projects (CDM Projects) in
Non-Annex 1 economies prior to awarding CERs. (A similar scheme
called Joint Implementation or JI applies in transitional
economies mainly covering the former Soviet Union and Eastern
Europe).
What this means in practice is that Non-Annex 1 economies can
continue to pollute the environment without reprimand, but when a
GHG emission reduction project (a GHG Project) is implemented in
these countries, that GHG Project will receive Carbon Credits which
can be sold to Annex 1 buyers.

MEAs : Kyoto Protocol

The Kyoto linking mechanisms are in place for two main

reasons:
the cost of complying with Kyoto is prohibitive for many
Annex 1 countries (especially those countries, such as
Japan or the Netherlands for example, with highly
efficient, low GHG polluting industries, and high
prevailing environmental standards). Kyoto therefore
allows these countries to purchase Carbon Credits
instead of reducing GHG emissions domestically; and,
this is seen as a means of encouraging Non-Annex 1
developing economies to reduce GHG emissions since
doing so is now economically viable because of the sale
of Carbon Credits.

CDM- Key participants/terms in the

project cycle

AE: Applicant entity

EB: Executive Board
COP/MOP: Conference of
Parties/Meeting of Parties
PP: Project Proponent
DOE: Designated Operating Entity
DNA: Designated National Authority
CER: Certified Emission reductions

CDM Project Cycle

AE

DESIGN

VALIDATION/
REGISTRATION

PP

EB & COP/MOP

DOE
EB

MONITORING

PP

VALIDATION/
CERTIFICATION

DOE

EB
ISSUANCE
CER

DOE
DNA

ACCREDITATION/
DESIGNATION

CDM Process

Project design document (PDD)

Core document in the CDM process
Includes preliminary calculations of CERs
Can be produced by developer but often
outsourced to CDM professionals
Initial approval (Validation)
Host country government
CDM Executive Board
Project implementation
CER issuance based on actual reduction

Crediting Period

The crediting period is the time period for which credits will be
awarded without the need for a review of the project's baseline
assumptions.
Two choices
7 years with an option for renewal at most two times
(totaling 21 years)
A maximum of 10 years with no option for renewal
For the former, each renewal must be reviewed by a DOE for
validity

CDM requirements

Additionality
CDM projects must be additional
(A CDM project must achieve) Reduction in
emissions that are additional to any that
would occur in the absence of the certified
project activity (Kyoto Protocol, Article 12.5C)
A CDM project activity 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

CDM requirements

Interpretation
The CDM status will be given only to those projects
which cannot be implemented without it
Those projects which can / will be carried out in the
course of regular business (Business-As-Usual BAU
projects) are disqualified

CDM requirements

Explanation
CERs are an incentive to encourage developers to
undertake GHG mitigation projects that do not
happen under usual circumstances
CERs are NOT offered as a reward for accomplishing
GHG mitigation, no matter how much GHG reduction
a project achieves

Clean Development Mechanism

National CDM Authority

The Seventh Conference of Parties (COP-7) to the UNFCCC

decided that Parties participating in CDM should designate a
National Authority for the CDM and as per the CDM project
cycle, a project proposal should include written approval of
voluntary participation from the Designated National Authority
of each country and confirmation that the project activity
assists the host country in achieving sustainable development.

Clean Development Mechanism

National CDM Authority

Secretary (Environment and Forests)- Chairperson

Foreign Secretary (or his nomineeMember)
Finance Secretary ( )
Secretary, Industrial Policy and Promotion ( )
Secretary, Ministry of Non Conventional Energy Sources ()
Secretary, Ministry of Power ( )
Secretary, Planning Commission ( )
Joint Secretary (Climate Change), Ministry of Environment and
ForestsMember
Director (Climate Change), Ministry of Environment and
ForestsMember-Secretary

CDM-Approval Process