Professional Documents
Culture Documents
28‐29 April, New Delhi
CONTENTS
Preface
Executive summary
Chapter 1 Introduction
Chapter 2 Conference
2.1 Day 1
2.1.1 Inaugural Session
2.1.2 Session I: Programme of Activities: New and
Emerging Areas
2.1.3 Session II: Buyers, Financers and Investors:
Money for Change
2.1.4 Session III: Renewable energy and CDM
2.2 Day 2
2.2.1 Session I: CDM and Municipal Solid Waste (MSW)
2.2.2 Session II: CDM Potential in Energy Sector
2.2.3 Session III: Sustainable Development priorities &
Gold Standard CDM projects
2.2.4 Panel Discussion
2.2.5 Valedictory
Chapter 4 Exhibition
Chapter 5 One to One Meeting of Mr. F. Schafhausen, Deputy Director, Energy and
Environment, BMU
• Presentations of Session I
• Presentations of Session II
• Presentations of Session I
• Presentations of Session II
Annexure VII: Valedictory Address by Mr. Girish Pradhan, I.A.S, AS, Ministry of Power, GoI.
PREFACE
CDM/JI Initiative launched by the German Ministry for the Environment, Nature Conservation
and Nuclear Safety (BMU) to encourage the participation of German companies in the flexible
mechanisms established under the Kyoto Protocol. At the same time, the Initiative aims to
intensify bilateral co-operation with governments and institutions in the host countries for CDM
and JI in order to support their respective national climate policies.
The initiative will help market players to maximize their use of the opportunities presented by
the Clean Development Mechanism (CDM) and Joint Implementation (JI). It particularly targets
small and medium-sized enterprises (SMEs) that participate in the EU emission trading scheme
in Germany, but also technology providers. The SMEs often lack information about CDM and JI
project implementation and relevant networks in host countries, which are needed to leverage
investments for projects and to complete emissions-trading agreements. The activities conducted
as part of the initiative take a long-term approach and pursue a clear objective of continuing
cooperation efforts when the first Kyoto Protocol commitment period ends in 2012. Innovative
instruments like the programmatic approach, with the potential to scale up the flexible
mechanisms and to tap new sectors, are therefore also part of the scope of the Initiative.
On behalf of the BMU, GTZ aims to develop portfolios of CDM projects in India that can be
implemented before 2012. CDM projects in India operate in a very competitive environment, and
specific market information provided by GTZ can facilitate the successful implementation,
investment and technology transfer for CDM projects.
EXECUTIVE SUMMARY
Under Indo-German bilateral cooperation GTZ has provided technical support to National CDM
Authority, Ministry of Environment and Forest, Government of India to build capacity and
develop Carbon Market in India since 2003. To further strengthen the CDM Market and to
establish direct linkages between the buyer and sellers, BMU (Bundesministerium für Umwelt,
Naturschutz und Reaktorsicherheit) German Federal Ministry for the Environment, Nature
Conservation and Nuclear Safety has extended support for Clean Development Mechanism
(CDM) and Joint Implementation (JI) initiative.
In order to facilitate this objective GTZ Climate Change Mitigation, New Delhi, India in
collaboration with Ministry of Environment and Forests, Government of India organized ‘Carbon
Bazaar 2009’ on 28-29 April, to take CDM to the next level in carbon trading in India.
The Carbon Bazaar 2009 offered a platform for interaction between carbon market developers,
investors, buyers and sellers, public & private sector units, facilitators, Chambers of Commerce,
State and Central Government policy makers, consultants, technology providers to strengthen
direct linkages. It had 3 components namely Conference, Business to Business Meeting and
Exhibition. The event had an overwhelming participation of over 700 delegates in two days.
The two day conference dealt with pertinent and emerging issues related to carbon markets and
clean development mechanism. The issues dealt with were:
1. Programme of Activities: New and Emerging Areas
2. Buyers, Financers and Investors: Money for Change
3. Renewable energy and CDM
4. CDM and Municipal Solid Waste (MSW)
5. CDM Potential in Energy Sector
6. Sustainable Development priorities & Gold Standard CDM projects
7. Future of CDM and Low Carbon High Growth Economy
Prolific and successful B2B advanced match making meetings were taking place simultaneously.
The B2B Meetings resulted in 19 projects out of 82 to enter into a Memorandum of
Understanding with buyers, investors and technology transferors from different parts of the
world. The Exhibition component of the event showcased innovative state art of technologies
from various stakeholders in the carbon market. There were in all 20 stalls and 3 special displays
namely two solar rickshaws and the electric golf cart.
This event was a huge success because of the success of GTZ’s capacity building programme
CDM India since the year 2003. GTZ CDM-India has emerged as one of the main CDM
Knowledge Management Centre in India. It is a neutral entity working to develop the Carbon
Market in India in cooperation with Ministry of Environment and Forests, Government of India.
It has a dedicated team of national and international experts which provide technical support.
CHAPTER-1
INTRODUCTION
India has a huge potential for CDM projects. It has been a leading destination for CDM projects
since the beginning of the CDM in the world. It has been ranked the leading country to have
highest number of registered protects until Feb 2009. GTZ CDM India has been a knowledge
partner to National Clean Development Mechanism Authority (NCDMA) of India since the
institutionalization of CDM in India in 2003. Over the years GTZ CDM India has created
awareness about CDM through several capacity building programs and seminars in India. GTZ
CDM India has successfully created awareness amongst more than 10,000 project developers
and trained more than 100 consultants till date. GTZ CDM India has facilitated the data
collection in specific areas, developed new Methodologies and assisted the Central Electricity
Authority in publishing “National CO2 Baseline Database for Power sector”.
The first commitment period of CDM under the Kyoto Protocol is about to end in 2012 and still
the concept of CDM has been limited to the large Industrial sectors. India has more than 1000
Small and Medium Enterprises units which have huge CDM potential. Presently these Small and
Medium Enterprises units are highly energy inefficient and are not aware about the opportunities
arising due to Kyoto Protocol.
Keeping a pace with its mandate to promote CDM in India, the German Federal Ministry for
Environment conservation and Nuclear Safety (BMU) launched the BMU CDM JI Initiative on
Aug 2008. The BMU CDM JI initiative would mainly focus on promotion of CDM among Small
and Medium Enterprises and development of new potential CDM sectors. This initiative would
explore the opportunities of technology transfer and investment for German industry and would
reduce the transaction costs related to CDM projects, would help in development of Program of
Activities, and establish early contacts with Buyers/Technology Transferors/ Investors from
Germany.
To meet the above mentioned objectives of BMU CDM JI initiative, GTZ Climate Change
Mitigation Unit promoted CDM through workshops and seminars in 4 states of India and
compiled the CDM country analysis report with major focus on SME units. To further
accelerated the BMU CDM JI initiative, it was decided to organize the event “Carbon Bazaar
2009” which would serve as a meeting ground for different market players like carbon market
developers, investors, buyers and sellers, public & private sector units facilitators, Chambers of
Commerce, State and Central Government policy makers, consultants and technology providers.
This Carbon Bazaar 2009 event was held on 28-29 April 2009 and has successfully strengthened
the foundation of the BMU CDM JI Initiative in India. The event comprised of 3 components i.e.
Conference, Business to Business meetings and Exhibition.
This report would elaborate the outcome of all the 3 components of the Carbon Bazaar 2009
event.
CHAPTER-2
CONFERENCE
2.1 DAY 1
The first day of the conference had in all four sessions. The first session was the inaugural
session where the event was announced open by lighting the ceremonious lamp by Shri Vijai
Sharma, Secretary, Ministry of Environment and Forests, Govt. of India; Mr. Franzjosef.
Schafhausen, Deputy Director General ‘Environment and Energy’ – German Federal Ministry for
the Environment, Nature Conservation and Nuclear Safety (BMU) and Mr. Guenter Dresruesse,
Country Director, GTZ, India. The rest of the day had three technical sessions on the topics of
Programme of Activities: New and Emerging Areas; Buyers, Financers and Investors: Money for
Change; and Renewable energy and CDM. The highlights of each session are briefed below.
The Inaugural Panel: Mr. Franzjosef Schafahusen, Shri Vijai Sharma, Mr. Guenter
Dresruesse
Indo-German bilateral development cooperation has completed 50 years in 2008, actually the
cooperation started since Conference of Parties (COP 7) of UNFCCC in Berlin, Germany. India
realizes the vital need for bilateral and multilateral international cooperation which focuses not
only on governments and international agencies but also among other major sectors such as
private sector, the civil society and voluntary organizations. Our shared belief that
environmentally harmful processes should be stopped and overexploitation of non-renewable
resources be controlled, has driven our efforts to such international cooperation initiatives. The
major thrust of bilateral cooperation with Ministry of Environment & Forests through GTZ-India is
that it actively co-operates with the Designated National Authority (DNA)-Ministry of
Environment and Forests (MoEF) for institutionalizing CDM projects in India. GTZ CDM-India
has emerged as one of the main CDM Knowledge Management Centre in India and
collaborating with Ministry’s efforts on climate change issue. This technical cooperation is also
managing the MoEF-CDM website http://cdmindia.nic.in and the new initiative of online
submission of projects for host country approval has been very much appreciated by GoI.
Secretary, MoEF, Govt. of India stressed that he believes that the interactions, especially the
business interactions, lead to fruitful results and the Indo-German environmental cooperation
gets more diversified. This Forum will serve a useful purpose through putting the bilateral
business perspectives in place and thus build up this bilateral relationship and strengthen this
strategic alliance in the times to come.
Mr. F. Schafhausen from German Ministry of Environment, Berlin expressed that it was a
pleasure to organize Carbon Bazaar 2009 in cooperation with Ministry of Environment &
Forests, GoI. German Ministry of Environment very much appreciated the association and
cooperative ways of working with GoI especially in Environment Sector and categorically in the
field of climate change, which is an issue of great concern.
In this context, it is important to emphasize that the prerogative of Clean Development
Mechanism (CDM) is quite broad and countries should understand the need of the hour. In the
present scenario, along with CDM, the stress should also be given on emission trading aspects,
as a marketing instrument to promote trade between industrialized countries of high economic
growth. The idea should be focused on demand and supply side. To cope with the future of
CDM it is now essential to define clear emission targets. As per the German/European emission
trading schemes, it has proposed 21% reduction of emission especially from power sector.
The countries that have ratified Kyoto Protocol must target ambitiously but stress should also be
given to those who have not ratified it so far. The world must come together to focus on the
phenomena of common but differentiated responsibilities (CBDR). Investment on technology
and promotion of technology transfer are also key areas in this regard, to consider CDM beyond
2012. We may call it a modified CDM approach with additionality component of financial and
social attributes. The outcome of a CDM project should be positive that could contribute to
sustainable aspects of climate change debate.
On behalf of GTZ India, Dr. Juergen Bischoff thanked Mr. Vijai Sharma and Mr. Franzjosef
Schafhausen for sparing their time for Carbon Bazaar 2009. He said that Carbon Bazaar has
laid the initial foundation of the BMU CDM JI Initiative in India. The initiative has a mandate to
develop new sectors having CDM potential, with major focus on the Small and Medium
Enterprises. Carbon Bazaar 2009 have been instrumental in bringing CDM stakeholders from all
spheres of the CDM business including Carbon Market developers, buyers and sellers, public &
private sector units, facilitators, Chambers of Commerce, State and Central Government Policy
Makers, consultants and technology providers.
He thanked all the speakers who shared their valuable experience related to the different
aspects of CDM. He said that panel discussions would raise and stimulate valuable insights,
which would help to crystallize the thought process on the subject. Dr. Bischoff also thanked
GTZ team and Ministry of Environment and Forest officials, who have worked tirelessly for 3
months to make this event a success
Finally Dr. Bischoff appreciated all the participants for joining the event.
*****************
2.1.2 Session I: Programme of Activities: New and Emerging Areas
Programmatic CDM (pCDM) or PoA is clearly emerging as the “new CDM” due to various
inherent benefits it offers, leading to higher uptake of projects resulting in higher volume CERs
combined with a better degree of predictability. There are only a handful of pCDM projects in the
public domain under development and validation. However there is already a significant
momentum gained in designing pCDM projects in the developing countries. pCDM offers many
benefits as compared to traditional CDM projects. They include possibility to register an
unlimited number of CDM project activities under a single CDM program of activities. In other
words, complementing traditional CDM that focuses on emission reductions (ERs) achieved in a
single site, programmatic CDM allows the aggregation of ERs achieved in a dispersed manner.
pCDM broadens the scope of the CDM to include small and medium enterprises, renewable
energy or energy efficiency in homes and buildings, and individual/family transportation. Such
micro level inclusions benefit them greatly as each of them could individually achieve only a
minimal level of emission reductions that would not be high enough to enter the market.
Chair: Mr. R K. Sethi, Member (Alternate) CDM-EB Co-Chair: Mr. Thomas Forth
& Ex-chairman CDM-EB / Senior Expert, BMU
Director (Climate Change), MoEF, Govt. of India.
The speakers at the Panel were Mr. Bernhard Zander, First Vice President, KfW Carbon Fund;
Ms K. Usha Rao, Project Manager, KfW; Mr. Atul Sangal, Chief Consultant, Carbon Advisory
Business, Emergent Ventures India Private Limited; Mr. Y. Dinesh Babu, CEO, IDEACarbon,
The Carbon Rating Agency; Mr. Bratin Roy, Product Head-CDM, TUV-SUD South Asia.
The Emergent-Ventures shared their views and a case study commissioned by MNRE to
develop a Framework for Programmatic CDM for Renewable Energy in India that elucidated the
key implementation steps in a PoA, PoA/ CPA registration process, PoA impact on public policy.
The TUV SUD presented an overall perspective of PoAs, the registration process, DOE
perspective, and the specific implications of inadequate validation opinions for PoA
The Panel of Session 1: Programme of Activities: New and Emerging Areas
KFW shared experiences and vision of foreign investors and banking sector. KFW specifically
mentioned about Programmatic CDM in India and about the present scenario & challenges.
They also touched upon the relevant and current emerging issues for PoA incentive or policy
implementation program as CDM project market entry barriers for PoAs. KFW briefed about the
PoA Support Center Germany and its ways of working and mentioned the PoA related risks -
preparation and implementation.
During the session speakers shared their sector specific PoA ideas viz Energetic building
rehabilitation, household stoves and domestic biogas, fuel switch and energy efficiency, SME
service sector and transport, small and micro renewable energy and CFLs.
The deliberations provided a wide scope for both the panelist and the participants to express
that there is a strong interest from India in PoA support programme of Germany.
*******
2.1.3 Session II: Buyers, Financers and investors: Money for Change
A smooth implementation of the CDM in India, however, requires mobilizing and establishing a
strong capacity initiative in the financial sector. Although CDM awareness in the financial sector
has grown in the recent past due to major outreach programmes run by bilateral agencies, the
level of awareness of CDM opportunities in the Indian financial and insurance sector, in general,
remains low and is concentrated in a few financial institutions. The element of risk involved in
investments in CDM projects, consequently, is of serious concern to investors and lenders
considering giving credit for CDM projects. The typical risk components include issues related to
uncertain revenues due to volatile CER markets, uncertain costs for CDM project development,
unreliable crediting lifetime for the project, and a variable discount rate.
The speakers at the Panel were Mr. Umesh Chabra , Head Corporate Client Relationship -
CABG and Carbon Credit ICICI Bank Limited- Mumbai; Mr. K. Umamaheswaran , Dy. Team
Leader, CPU GTZ-IS; Mr. Abhijit Chatterjee, Head Sustainability Services, eaga India Private
Limited; Mr. S. Raghupathy, Senior Director and Head of Godrej Green Business Centre,
Confederation of Indian Industry (CII); Mr. Unmesh Brahme, Senior Vice President, HSBC.
eaga Energy India Pvt. Ltd. mainly focused upon the bundling, PoAs and financing aspects of
community based CDM projects and the implications of next Kyoto phase on community based
projects. It was highlighted that promotion of community projects needs simplified approach,
reduce transaction costs financing: CERs for OpEx, Risk sharing a key factor for success.
CII presented its endeavour to CII’s Mission on sustainable growth, facilitating ecologically
sustainable business growth, green buildings and world class energy efficiency - examples of
success; seek the participation of industry, government, multilateral organizations and others in
this endeavor.
The Panelists of Session II on Buyers, Financers and investors: Money for Change
ICICI Bank provided an insight on the complex financing mechanism for CDM projects and gave
an elaborated view on the need of national policy on carbon credit. It highlighted the need of
national policy on carbon credit, need of regulatory framework and need for regulator and formal
trading mechanism for carbon credit.
The GTZ-CPU presented an overview on projects financing, where debt and equity are used to
finance the project. It was stated that debt is repaid using the cash flow generated by operation
of the project, rather than the general assets or credit worthiness of the project sponsors.
HSBC Bank highlighted the experience and emphasized on the HSBC climate change indices,
the regulatory, institutional, technology and the risk associated with environmental and social
compliance with an additional benefit.
The session brought out the facts about financing small scale & community linked CDM
Projects that Community CDM projects can access carbon market, scalability is the key and
hence, the ‘real’ CDM = CC mitigation + local sustainable development.
*******
2.1.4 Session III: Renewable Energy and CDM
Shortcomings in meeting National Energy Policy objectives as well as threats posed by climate
change put pressure on Indian energy politics to consider alternative options such as enhanced
renewable energy deployment. The challenge is how to assist emerging economies such as
India to leapfrog a polluting development path by facilitating the transition to alternative sources
of power generation. The Clean Development Mechanism (CDM) provides industrialized
countries with an incentive to invest in emission reduction projects in developing countries to
achieve a reduction in CO2 emissions at lowest cost that also promotes sustainable
development in the host country. Renewable Energy Sector is one of the interests under the
CDM because they directly displace greenhouse gas emissions while contributing to sustainable
development by reducing local pollutants.
The speakers of the session were Dr. P.C. Maithani, Director, MNRE; Mr. Mohan Reddy,
Director, Zenith Energy; Mr. Deepak Zade, Executive Vice President, MITCON Consultancy
Services Ltd.; Mr. Mathias Laub, CDM JI Project Analyst, EnBW Trading GmbH.
Ministry of New and Renewable Energy (MNRE) presented a very relevant and burning issue on
CDM in renewable energy and the present perspective and beyond 2012 scenario. MNRE
added that renewables are already seen as an important option for sustainable world with
carbon-free energy economy. Carbon trading is likely to remain under any kind of post Kyoto
regime. The new regime could draw from CDM’s direct link to UNFCCC system and obligations
and improve the bottlenecks - inflexible and slow process, Technology linked CDM could be an
option that sets technology transfer/absorption priorities
EnBW Trading GmbH gave a German perspective on renewable CDM projects from the
perspective of a major German compliance buyer.
During the deliberations discussion were held for good accredited Indian consultants for
developing PCN and PDD for CDM projects. It was responded that 8 CDM consultants have
been accredited by the Quality Council of India to be fit for CDM consultancy. Similarly on the
issue of supercritical boilers, it was informed that it is anticipated that by 12th Plan about 5000-
10,000 MW of electricity will be generated using supercritical boilers.
*******
2.2 DAY 2, April 29, 2009
The Second day of the Carbon Bazaar had four sessions. Three of the sessions were technical
sessions on CDM and Municipal Solid Waste; CDM Potential in Energy Sector; and Sustainable
Development Priorities & Gold Standard CDM projects and the last session was Panel
Discussion on Future of CDM and Low Carbon High Growth Economy. The highlights of the
same have been briefed below.
The Day 2 began with technical Session on CDM and Municipal Solid Waste (MSW).
India produces 1 lakh metric tones of MSW each day. In the absence of proper management
and landfill facility, majority of the waste is dumped in open dumping grounds within the cities.
The Municipal Solid Waste Management and Handling Rules- 2000 make it mandatory for every
municipality to have a proper waste management system consisting of sanitary landfill facility.
The non compliance of this law throughout India makes it eligible for Carbon credits.
The speakers of the session were Mr. Mahesh Babu, CEO, Infrastructure Leasing & Financial
Services Ecosmart Limited; Dr. B. Padmaja, Director of Ramky Infra Consulting Private Limited;
Mr.Sampath Kumar, Managing Director, TIDE Technocrats Pvt. Ltd.; Mr. Damodar Sharma,
I.A.S, Municipal Commissioner, Jaipur.
The Panelists of Session I on CDM and Municipal Solid Waste
IL&FS Ecosmart Ltd. while presenting its views on carbon financing of SWM projects elucidated
the green benefits of processing MSW emphasizing on the fact that municipalities spend money
in collection and transportation, but it is in the disposal that there is maximum lacuna and gap.
Reiterating its stand towards a sustainable India, it presented case studies on composting
projects in Udumalpet, Mettupalayam, Coonoor, Erode, Trichy and Pollachi and bundled waste
processing facilities in Jalandhar in Punjab, Mysore in Karnataka and Kozhikode in Kerala and
stressed on the benefits of upfront carbon financing.
Representative from Ramky Energy & Environment Ltd presented on municipal solid waste and
CDM Indian perspective and added on framework & the prevailing model of MSW in India. Also
the financial viability of CDM projects in the MSW sector was discussed.
TIDE Technocrats (P) Limited Bangalore, a consulting company with project areas of municipal
solid waste management process and disposal, biomass assessment and CDM for waste and
renewable energy projects represented by N. Sampath Kumar presented a broad perspective
on global scenario of CDM in solid waste management enumerating the solid waste CDM
methodologies and giving the relevance of CDM in the Indian CDM context
The session brought out the technicalities and challenges involved in the municipal solid waste
sector in relation to CDM. Speakers also dealt with the Indian and global scenario in the sector.
*********************
2.2.2 Session II: CDM Potential in Energy Sector
Energy has been universally recognized as one of the most important inputs for economic
growth and human development. There is a strong two-way relationship between economic
development and energy consumption. On one hand, growth of an economy, with its global
competitiveness, hinges on the availability of cost-effective and environment friendly energy
sources, and on the other hand, the level of economic development has been observed to be
reliant on the energy demand. Clean Development Mechanism (CDM) as one of the 3 flexible
mechanism of Kyoto protocol works between those countries who have agreed emissions
reduction targets, under UNFCCC and those who have not i.e. non-annex countries or the bulk
of developing world. CDM encourages cleaner development and bring infusion of investments
and technologies; which thus provides them an opportunity to adopt cleaner technologies and
be paid for emission reductions.
The speakers of the session were Mr. Amarjeet Singh, Chief Engineer, Conservation and
Efficiency Division, Central Electricity Authority; Mr. Oskar Von Maltzan, India Country Director,
KfW; Mr. Praveen Gupta, Deputy Director, Conservation and Efficiency Division, Central
Electricity Authority; Mr. Deb Ashish Mukherjee, Managing Director, eaga India Private
Limited.
Amarjeet Singh from the Central Electricity Authority in his presentation on Carbon Dioxide
Emission Database for the Indian power sector gave an overview of the current Indian power
scenario and discussed the future programme of CEA. With an emphasis on the capacity
addition expected during the 11th Plan (2007-2012), he gave a tentative target that 14,000 MW
of electricity consisting of Wind Power (10,500 MW), biomass power baggasse co-generation
(2,100 MW), small hydro (up to 25 MW) (1,400 MW) will be looked up for.
Representative from KfW in their presentation on ‘German Financial Cooperation with India:
goals, sectors & links to CDM’ presented the goals and areas of promotion on behalf of the
German Federal Government. KfW Entwicklungsbank finances investment and advisory
services in developing countries and brought to front their willingness for Financial Cooperation
(FC) with Indian energy sector and renewable energy programmes.
Mr.Praveen Gupta, Deputy Director, Central Electricity Authority on his topic on ‘Baseline
Emission Factor for coal based supercritical power plants’ discussed the applicability of CDM
approved consolidated baseline and monitoring methodology ACM0013 for new coal based
generating units with supercritical parameters as supercritical technology efficiency is about 2%
higher than conventional sub critical technology.
Mr. Deb A. Mukherjee, Managing Director, eaga Energy India Private Limited, gave a
presentation on ‘Energy Efficiency and Role of ESCOs’ where he presented a definitive
approach and a holistic approach to ESCOs in India. The presentation touched upon issues
pertaining to incentivize ESCO, broadening the ESCO market spread and presented a recipe of
successful ESCO with a suggestion that ESCO in India should work like PPP project or on
BOOT Basis.
The session dealt with critical issues about the role of ESCOs, Carbon dioxide Emission
Database for the Indian Power Sector and German Financial Cooperation with India.
****************************
2.2.3 Session III: Sustainable Development Priorities & Gold Standard CDM
Projects.
Gold Standard CDM projects is a tool which ensure that the CDM and JI deliver credible
projects with real environmental benefits and, in doing so it provides confidence to host
countries and to the CDM stakeholder that the Gold Standard projects includes new and
additional investments which contributes in sustainable development.
Chair: Mr. R K. Sethi, Member (Alternate) CDM-EB Co-Chair: Ms. Pamposh Bhat
& Ex-chairman CDM-EB/ Director Climate Change,
Director (Climate Change), MoEF, Govt. of India. German Technical Cooperation
(GTZ), India
The speakers of the session were Mr. Mohan Reddy, Director, Zenith Energy Pvt. Ltd.; Mr.
Badal Shah, Managing Director, Gadhia Solar Energy Systems Pvt. Ltd.; Mr. S.K.Gupta,
Director, SP & CAD, Bureau of Indian Standards; Dr Thilotham, Consultant, Zenith Energy Pvt.
Ltd.
The Panelists of Session III on Sustainable Development priorities & Gold Standard CDM
projects
Zenith Energy, Hyderabad, presenting on the topic of Gold Standard (GS) tried to recapitulate
the GS Rules that GS rules follow more or less UNFCCC regulations and that GS requirements
present the fundamental principles and rules of GS certification. Zenith Energy also mentioned
that renewable energy projects and end use energy efficiency projects are most appropriate for
Gold Standard projects.
Representative from Gadhia solar in his presentation on ‘1st Gold Standard Project from India’
highlighted the Gadhia Solar mission to leverage on experience in solar thermal and work
towards making solar thermal application a mega scale reality and mentioned about their
pioneer efforts in solar thermal technologies, which is India’s First Solar Gold Standards
Premium Carbon Credit -CDM Project accredited by UNFCCC. He also mentioned that they are
in process for setting up 100 MW Solar Power Generation Plant at Gujarat. He informed that
Gadhia Solar had signed a MoU with Govt. of Gujarat at “Vibrant Gujarat Global Investor’s
Summit - 2009” for the said project.
Thilotham R.Kolanu from M/s.Amreli Power Projects Private Limited (APPL) in his presentation
on ‘Gold Standard CDM Project - Biomass Power Project in Amreli District, Gujarat’, gave an
insight of this first biomass based power plant in Gujarat State and discussed its special
features, barriers for development, sustainable development issues, local stakeholder
consultation and how the project fits in to GS norms.
This session dealt with issues like most appropriate for Gold Standard projects, 1st Gold
Standard Project from India, Standardization and first biomass based power plant in Gujarat
State.
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2.2.4 Panel Discussion: Future of CDM and Low Carbon High Growth Economy
Moderator: Dr. Prodipto Ghosh, Chairman, Climate Change Task Force, Federation of Indian
Chambers of Commerce and Industry (FICCI)
The distinguished panelists were Mr. Franzjosef Schafhausen, Deputy Director General
‘Environment and Energy’ - German Federal Ministry for Environment, Nature Conservation and
Nuclear Safety(BMU); Mr. V.S. Verma, Member, Central Electricity Regulatory Commission,
Government of India; Mr. R.K. Sethi, Member (Alternate) and Ex-Chair EB/ Member Secretary,
NCDMA, India; Mr. Konrad Raeschke-Kessler, DeHSt (German DNA); Mr. Nils Medenbach,
Regional Manager India, First Climate Group, Kolkata; Mr. S.K. Pati, Chief Power Stations,
Tata Steel; and Mr. Girish Pradhan, I.A.S. Additional Secretary, Ministry of Power, Government
of India.
The Panelists of Session on Panel discussion on Future of CDM and Low Carbon High
Growth Economy
Dr. Prodipto Ghosh, Chairman, Climate Change Task Force, Federation of Indian Chambers
of Commerce and Industry (FICCI) highlighted the post 2012 scenario and said that it is
important for India to grow and develop but the question is about the growth with low emission
rates. He expressed his concern that the negotiations towards Copenhagen could lose sight of
the science and that negotiators needed to go beyond fixed positions. There is a danger that
countries might go to Copenhagen with frozen positions and not face up fully to what is
happening to the climate. He further mentioned that tackling future risks involves addressing
both today’s vulnerabilities and planning for future impacts, stressing that financing adaptation
should be carried out at multiple levels.
The idea of using the CDM as a tool for future mitigation action in developing countries (in
compliance with Article 4.7) has been mooted long before the advent of the Bali Action Plan.
Ambassador, Chandrashekar Dasgupta (former chief climate change negotiator for India),
expressed some time ago the view that “it is essential to raise the Clean Development
Mechanism from a project-based level to a sector or programme-based level. This holds the key
to success for a second commitment period under the Kyoto Protocol.”
He said the fuel efficiency of India is, together with Japan, the best in the world as shown in the
statistics of the World Bank. The world's most efficient refinery is in India. There are also a large
number of projects in the pipeline for the future. The need for affordable technology is
paramount as the problems facing India due to climate change are already present. In essence,
India has to balance the two goals of development and climate protection.
He concluded with the opinion that India and the world in general should understand that
climate change is the major challenge that should be tackled with the motto of common but
differentiated responsibility (CBDR).
Mr. Franzjosef Schafhausen, Deputy Director General ‘Environment and Energy’ - German
Federal Ministry For the Environment, Nature Conservation and Nuclear Safety, said that CDM
has been an instrument for allowing the nations to reduce emissions by executing projects
which help countries in sustainable development. India has been very efficiently executing CDM
projects which have made them a leading destination. He went on to say that CDM is not going
to come to an end post 2012. What he perceives is that it will surely continue but may be in a
different form with new objectives and targets. He also said that Germany is prepared to help
India by helping develop bilateral projects. As of now there have been no bilateral projects in
India. All the projects have been unilateral. He foresees that there would be good cooperation
from India and encouragement for the exchange of knowledge and technology transfer. As far
as the process of ‘low carbon and high growth’ entails, India seems to be well tuned. To ensure
our future prosperity, we need a high-growth and low-carbon world economy. This may sound
aspirational. Yet, many business leaders around the world are increasingly convinced of the
long-term growth potential of the low-carbon economy. He said that that low-carbon economic
prosperity is not just an industrialized country issue; it is very much an agenda for sustainable
international development, especially in emerging markets. He also said that analysis suggests
that building a low-carbon global economy will require significant, long-term financial flows into
developing countries. A secure climate is essential for our prosperity and our security. And
developed nations must take the lead. Unlike the security challenges that defined the last
century, climate change is a problem for which there are no classic hard power solutions.
Mr. R.K. Sethi, Member (Alternate) and Ex-Chair Executive Board/ Member Secretary,
NCDMA, India, pointed out the issues of supercritical boiler and that there are lots of issues
pending on the board but it was made clear that it was not promotion of coal through CDM but
the promotion of energy efficiency through CDM. He said that in this context the new concept of
NAMAs i.e. Nationally Appropriate Mitigation Actions there are apprehensions of getting some
credits. On the issues of simplification of the CDM process, he added that since we can put
forth that environmental integrity is inversely proportional to simplicity and where each CER is
an offset tradable entity, the process has to take note of the different considerations with utmost
care and verifications. There were issues that the DOEs still are a stumbling block in the CDM
process but the matter is almost sorted out by the board.
In his remarks at the concluding session he mentioned that from issues of ‘Low Carbon
Economic Growth’ and India’s obligation, it was clear in the reports from World Bank that India
is well tuned on the path of Low Carbon Economic growth and in a situation when half of the
Indian population is still not having access to electricity, its important for us to fulfill our
Millennium Development Goals, but we will surely go by the sustainable development route.
Mr. Konrad Raeschke-Kessler, DeHSt (German DNA) spoke about the German DNA and
pointed out that there is an urgent need of proper understanding of the issue relating to the
supply and demand of the CERs both in India and Germany. India should concentrate on quality
CDM projects. He went on to tell us about the German DNA’s role and also congratulated India
on being the most active DNA in the world. In his final remarks he said that there is a lot to learn
from each other and hence cooperation is sought from both the sides.
Mr. Nils Medenbach, Regional Manager India, First Climate Group, Kolkata, said that the
bottom line from his point of view is that Kyoto Protocol and carbon trading has so far been a
means for the Indian industry to get additional revenue streams. In fact the Indian market has
probably been most efficient to do so, because of a flourishing consulting industry which
evolved around CDM, spread it across the market and facilitated huge number of projects He
also went on to say that even after initial years there is not enough scope for international
intermediaries and market facilitators and some investment at risk lead to good additional
revenue streams for many Indian companies. He opined that the Indian CDM market does not
want to question Additionality –which project deserves extra merits, which not- and it is clearly
visible that the CDM has led to or at least facilitated, major improvements in the sustainability of
Indian industry.
But clearly the picture changes! The low hanging fruits in the CDM market are being harvested
since long and projects which deserve the extra merits do actually face real risks and difficulties
in financial closure and implementation – (Situation gets worse with the financial market crash
and the much more difficult investment climate). Also stringency of CDM and increased rejection
rates make it ever more demanding to earn CDM revenues. Indian project proponents are
increasingly looking for support from international players, but even international players are
often not willing to take the risks: this is because Rejection rate has been especially high in India
and many activities become more and more common practice, Indian projects are typically very
small, Time window until 2012 is closing rapidly – projects kicked off now can earn maximum 1-
2 years during Kyoto phase, Returns (in terms of CER volume) until 2012 are small and the
costs at risk become comparably large also International buyers do no more offer the model of
taking all CDM costs and risks in return for a forward contract to just any project – a model
which they fiercely tried to implement in India and failed during the “golden years” of CDM.
He also elaborated on the international demand for CERs.If the demand is big, there will be
more companies willing to bear the CDM risks and new projects will be financed. Demand is
directly displayed in the carbon price: After crash in late 2008 we actually see rising prices, but
does this really reflect reality? Historically the Carbon price was linked very closely to the oil
price (correlation above 90%), now carbon price has not completely followed the break down of
oil. The economic melt down in EU has caused a natural reduction of CO2 emissions.
Fundamentally we may actually still trade too high: bullish signs of Carbon are not in line with
the ongoing recession in EU. True impact of the economic slow down on carbon may show only
over the next 2-3 years. He said that we may face risk of over supply (+AAU trading may have
major impact). The only thing which can currently explain the bullish EUA price is the bankability
into the next phase of EU trading. The bankability of CERs is still not decided > this is the only
explanation for the growing spread between CERs and EUAs.
He also confirmed that all eyes are on Post 2012 decisions. Pretty sure that there will be a gap
between Kyoto and follow up: With only 2 ½ years to 2012 far from international agreement on a
follow up, let alone ratification and implementation. Design of scheme is still highly unclear.
There will be emission trading: EU has committed, Australia is beginning now, in US first
domestic schemes will merge to a national market. But what also matters is the scope of CDM
under such scheme? There is competition from other supply types: like LULUCF/REDD,
sectoral CDM, Nuclear. Also demand may be lower than expected, EU cap will be prohibitive in
case no substantial reductions are agreed internationally, US: low marginal abatement costs
due to low energy efficiency of their economy (domestic abatement costs will become price cap
for imported credits), Certain project types and methodologies may not be eligible any more, Not
off the table: negative lists for countries and sectors.
Clearly there is more and more pressure on the emerging economies towards domestic action,
most advanced in this is China, Mexico, and South Korea likely to advance towards JI countries
with India next in line. Moreover under umbrella of National Appropriate Mitigation Activities we
may see many activities and regulations in India which may limit the scope for CDM like sectoral
benchmarks or baselines: emitters above the baseline may face liabilities and constraints
instead of earning from credit, Non loose target for whole sectors > crediting only below target,
Carbon taxes, May even see first domestic trading schemes. First steps have already been
taken: BEE has asked companies in the cement, iron and steel, metal sectors to monitor and
report emissions. So carbon liabilities are not a far away future any more and it is high time for
the Indian industry to rethink their carbon strategies or rather start developing real and realistic
carbon strategies.
He concluded that all these developments indicate that the days of the CDM as we know it may
be numbered. The days are numbered in which international emission trading is a pure source
of revenue for the Indian industry. Indian companies will look more and more into carbon
liabilities instead of merits and the merits will be harder earned in future. At the same time the
rationale behind emission trading and project based mechanisms is still there and even stronger
than ever: Emissions can only be effectively reduced with involvement of the private sector and I
am not able to think of any international system which works without liabilities and incentives for
the private sector. So it is beyond any doubt, that emission trading in one form or another will
play an ever more important role in real sustainable development in India
Mr. S.K. Pati, Chief Power Stations, Tata Steel presented the industry perspective in the entire
discussion. He was of the opinion that the methodologies which are made should keep in mind
the feasibility for the project developers to use it practically. He suggested that there should be
capacity building work for the grass root level people so that they can carry out the initial stages
of the project cycle without any difficulty. He opined that the there should be a list of consultants
who are accredited according to their performance in the field of CDM. He also said that
selecting the correct consultant is a project in itself.
2.2.4 Valedictory
The conference concluded with the valedictory address by Mr. G. B. Pradhan, Additional
Secretary, Ministry of Power, Govt. of India, who stated that CDM is low hanging fruits since
long and should only act as an instrument which help countries in sustainable development
rather than being modes of generation of CDM revenue. He also said that India being the
leading destination for CDM must look forward to projects in sectors that have not yet been fully
tapped. He was of the opinion that CDM will continue post 2012 and everyone has their eyes
on the Conference of Parties (COP 15) of the Copenhagen.
The conference was announced closed by Mr. Franzjosef Schafhausen, Deputy Director
General ‘Environment and Energy’ - German Federal Ministry for the Environment, Nature
Conservation and Nuclear Safety. He thanked the delegates and other dignitaries for attending
and making Carbon Bazaar 2009 a success.
CHAPTER-3
BUSINESS TO BUSINESS MEETINGS
“Carbon Bazaar 2009” provided the platform for direct business negotiations between Buyers/
Investors/ Technology Transferors from Germany and the CDM project proponents from India.
About 70 CDM project proponents had registered for B2B with the buyers immediately after the
announcement of the event in the national newspapers. The PIN/PDD of these projects were
studied in detail and the projects were segregated based on their sectors, CER volume
generation/year and stages of their status. An Expression of Interest form was filled by the CDM
proponent in which they had indicated their preference in terms of investment and technology
transfer for successful implementation of the projects. Similarly the interests from the buyers
were also taken into account and a suitable matchmaking for the business meetings was done.
On spot sellers meetings with buyers were also conducted based on the information of their
projects and their expectations form the buyers.
Meetings profile
Total projects 82
The PIN / PDD of the CDM were studied in detail to take an idea about the sectors and annual
CER breakup of the projects. This really helped in attracting buyers to show interest in a
particular project. The CER and sector wise
breakup of projects are mentioned below.
S.No Particulars
A. CDM project proponents looking for Technology transfer for their projects
1. Jembychem Ltd
2. Kamal Engineering Corporation
3. Harsil Hydro Ltd.
4. Suvarna Bhoomi Enterprises Pvt Ltd
5. Gail India Ltd
6. Jaipur Zila Vikas Parishad
7. Ruchi Soya Industries Ltd
8. Green Vortex India Pvt Ltd.
9. Centre for Environment Education
10. Ecoslag Cements & Additives Pvt. Ltd
B. CDM project proponents looking for Investment
1. Arora Infrastructure Development Company Private Limited
2. Orion Paper Industries Pvt. Limited
3. S.R. Corporate Consultant Pvt Ltd
4. Sai Chemicals Pvt Ltd
5. Caledonian Jute & Industries Ltd.
6. Eaga Energy India Pvt. Ltd.
7. Machhar Polymer Pvt. Ltd
8. Rural Education for Development Society
9. Priya Clay Products Pvt. Ltd
10. Shree Jai Ambe Associates
11. Krishi Rasayan Pvt Ltd
12. Non-conventional Energy and Rural Development Society
13. Amreli Power Projects(P) Ltd
14. Junagadh Power Projects (P) Ltd
15. Bhavnagar Biomass Power Projects (P) Ltd
16. Usaka Hydro Powers Pvt. Ltd.
17. Kuninex minerals Pvt. Ltd.
18. Taurant Projects Ltd
19. Organic Recycling Systems Pvt.Ltd
20. A.D. Patel Institute of Technology
21. Reliance Infrastructure Ltd
22. Magnum concretes Pvt Ltd
23. Ganga Envirotech Engineers Pvt. Ltd.
24. Adani group
25. Chanderpur Renewable Power Corporation Pvt. Ltd.
26. Sri Jyoti Renewable Energy Pvt Ltd.
27. GVP Infra Projects Pvt Ltd.
28. Harish Ethos & Bios Pvt. Ltd
29. Grassroots Management and Research Services Pvt. Ltd.
30. Arctic holdings Pvt. Ltd.
31. UBE Industries Pvt. Ltd.
32. Continental Carbon India Pvt Ltd.
C. CDM project proponents looking direct CER sale
1. Jajoo Exports
2. Alembic Pvt. Ltd.
3. Hanuman Agro Industries Limited
4. Gloster Jute Mills
5. Oil India Ltd
6. Fresenius Kabi India Pvt Ltd
7. Perstorp Chemicals India Pvt Ltd
8. Pfizer Pvt Ltd
9. Salasar steel and power Pvt.ltd.
10. Yashwant Energy Pvt Ltd.
11. ITC Pvt. Ltd.
12. Transport corporation of India ltd.
List of Buyers
S.No Particulars
1. Buyers ready to provide Technology Transfer
a. X-Change Carbon Pvt. Ltd.
b. Zeroemissions Technologies S.A
c. GTZ IS CPU
d. EnBW Trading GmbH
e. Agrinergy Pte Ltd
f. NEFCO
2. Buyers interested only in CER purchase
a. CITI Bank
b. EMIT securities Limited
c. Ecolutions Carbon India Pvt. Ltd.
d. AES India Pvt Ltd.
e. Clean Tech Consultancy
3. Buyers ready to provide investment in the form of transaction cost
a. KfW
b. First Climate AG
c. Evolutions Markets India Pvt. Ltd.
d. IDEA Carbon
A number of sellers have given a positive feedback of their business meetings with the buyers.
Out of 82 projects about 19 projects have given their indication to enter into MoU with the
buyers immediately after the event.
Successful Meetings
Seller Feedback
Mr.Harihar Sharma At the outset I would like to congratulate you for a successful
Environment Head event which provided a big platform in India to the CDM project
Oil India Ltd developers. The concept of B2B meeting was excellent and such
programs need to be conducted to boost the awareness
and provide the latest information regarding GHG management
and meeting the relevant agencies under single roof. The B2B
meeting with the buyer for my project was a successful one.
Overall we can take this conference as an excellent effort of
organizers.
Mr. Munish Sehgal I would like to share that the Carbon Bazaar organized for two
Dy. General Manager days by your organization was one of the finest on this subject. I
Adani Enterprises Ltd would really like to thank you & congratulate you for this
tremendous effort. Even the B2B meeting organized with GTZ IS
CPU was informative as well as productive.
Mr. Sanjay Kulkarni I would like to thank you for all your cooperation for my CDM
CEO project. The B2B meeting with the buyer was helpful for me. I
Urja Electronics would like to thank you once again for this initiative of yours.
3.4 Photo gallery of Business to Business meetings
BMU-The German Federal Ministry for the Environment, Nature Conservation and Nuclear
Safety has launched CDM JI initiative in India to boost the market mechanisms and CER trading
in developing nations and to provide a meeting ground of different market players. In order to
facilitate this objective GTZ Climate Change Mitigation, New Delhi, India has organized a
Carbon Bazaar, 2009 on 28-29th April’2009, to take CDM to the next Level. The idea was to
exhibit new innovative low carbon technologies, which would reduce emission and would
contribute to low carbon growth.
Carbon Bazaar 2009 has been the most successful event in the field of promoting CDM JI
initiative in India. After initial space has been sold out within 3 days of public announcement in
leading newspaper about Carbon Bazaar 2009, GTZ had planned 16 stalls initially but had to
increase to 20 stalls and 3 displays, although some companies requests were turned down due
to lack of space. The entire exhibition was booked within next couple of days.
4.2 EXHIBITORS:
Over a gross exhibition area of 120 sqm, ‘Carbon Bazaar 2009’ hosted 20 stands showcasing
some 40 brands (including 3 new exhibitors). All the industries related to renewable energy
sector like Theme Solar Systems, Central Research Organization like CSIR, Govt. of India,
Nordic Carbon Fund like NEFCO, International Rating Agency like Idea Carbon and ESCOS like
eaga India Pvt. Ltd were well represented (see pie chart below).
EXHIBITORS BY REGION:
The breakdown of visitors from different Indian industries, foreign industries consultancies,
Central Government officials, State Government Officials, CDM Project Participants shows an
even distribution.
VISITORS BY REGION:
REASONS FOR VISITING:
· Discover new products 50 %
· Gather technical information 42 %
· To buy 8%
CHAPTER-5
ONE-TO-ONE MEETING ON CLIMATE CHANGE NEGOTIATIONS
Prearranged official one to one meetings between Mr. Franzjosef Schafhausen, Deputy Director
General ‘Environment and Energy’-Federal Ministry for the Environment, Nature Conservation
and Nuclear Safety (BMU) and Indian government Officials were held on 28th and 29th April
2009. These meetings provided an insight to climate change issues and policies in Indian
context and India’s stand on these issues beyond 2012. Mr. Franzjosef Schafhausen was
accompanied by Dr. Juergen Bischoff, Principle Advisor, GTZ ASEM and Mr. Christan M.
Schlaga , Deputy Advisor, German Embassy.
Meetings Schedule
Government of India.
FICCI
New Delhi-03
Meeting with the media personnel was held on 29th April 2009 from 6:10 to 7:20 pm at Diwane-
Aam Auditorium, Hotel Taj Mahal, and New Delhi. Senior reporter Miss. Neha Sinha from The
Indian Express newspaper interviewed Mr. Franzjosef Schafhausen, Deputy Director General
‘Environment and Energy’-Federal Ministry for the Environment, Nature Conservation and
Nuclear Safety (BMU) regarding the CDM/JI initiative in India, future of Copenhagen 2009 and
GTZ cooperation for SME’s in India.
A cocktail dinner was hosted by Mr. Franzjosef Schafhausen, Deputy Director General
‘Environment and Energy’-Federal Ministry for the Environment, Nature Conservation and
Nuclear Safety (BMU) on 28th April 2009 at Long Champ Hall, Hotel Taj Mahal, New Delhi.
During the dinner several renowned officials from different industries, government organizations
and from Indian Ministries interacted with Mr. Franzjosef Schafhausen on informal basis.
Invitees were:
• Mr. V. Subramanian, Former Secretary, Ministry of New and Renewable Energy, GoI
• Mr.Guenter Dresruesse, Country Director, GTZ, India.
• Mr. R.D.Tiwari, Director, SFRI, Jammu & Kashmir
• Mr. Sanjay Srivastava IFS, Government of India.
• Mr. Bernard Zander, Vice President, Kfw Carbon Fund.
• Mr. Mohan Reddy, Director, Zenith Energy, Hyderabad
• Mr. R.K. Sethi, Member (Alternate) and Ex-chair EB UNFCCC, /Director (Climate
Change), Ministry of Environment and Forests, Government of India.
• Mr. Konrad Raeschke-Kessler, DeHSt (German DNA)
• Mr. Ian Johanason, Eaga India Pvt Ltd, UK..
• Mr. Thomas Forth, Senior Expert, BMU.
• Mr. Y.Dinesh Babu, CEO, IDEACarbon.
• Mr. Bratin Roy, Product Head, TUV SUD South Asia.
************
ANNEXURE I
Ms K. Usha Rao,
KfW
Mr. K. Umamaheswaran ,
DTL, CPU GTZ-IS
Mr. S. Raghupathy,
Senior Director and Head of Godrej Green Business Centre, Confederation of Indian Industry
(CII)
Konrad Raeschke-Kessler
DeHSt (German DNA)
Mr.J K Dadoo
Environment Secretary, Government of NCT of Delhi
Dr. B. Padmaja,
Director of Ramky Infra Consulting Private Limited
Mr.Sampath Kumar,
Managing Director, TIDE Technocrats Pvt. Ltd.
Mr. S.K.Gupta,
Director, SP & CAD, Bureau of Indian Standards
Dr Thilotham,
Consultant, Zenith Energy Pvt. Ltd.
LIST OF EXHIBITORS
1. We meet at a time when the world confronts a growing energy crisis in the backdrop
of concerns of climate change. Our ability to continue on a path of accelerated economic
growth is likely to face a major energy constraint. Our options are likely to narrow further as
a result of climate change concerns, which will inevitably limit our energy choices. An
encouraging sign is that in the recent past, India has been able to deliver 8-9% growth in
its economy with energy use rising at the rate of 3.7%. The energy intensity of our GDP
growth is one of the lowest in the world at 0.17 kg of oil equivalent per dollar of GDP, which
is less than the OECD average of 0.18 kg of oil equivalent. Energy conservation for India is
a compulsion imposed by scarce energy resources and must be on the top of our
development agenda.
2. Climate Change and energy security are inextricably linked together in the modern
world which consumes vast quantities of commercial energy relying heavily on carbon-
emitting fossil fuels such as coal, oil and gas. India relies heavily on coal for meeting more
than 50% of energy requirements, a scenario that will remain unchanged in the foreseeable
future. The need to adopt more efficient technologies that will reduce our carbon footprint,
while also giving a fillip to our quest for energy security, is expedient. Higher standards of
energy efficiency and incentives that encourage investments in energy efficiency and
renewable energy are the need of the hour.
4. CDM remains one of the major financial tools to promote transfer of technology for
sustainable growth. An estimated flow of $100 billion annually is expected in the developing
countries by the mid of this century through sale of carbon credits by the developing nations
like India. At present, India accounts for emission reduction transactions representing more
than 111.6 MtCO2e with an approximate value of $800milion, leveraging climate friendly
1
investment of $2.25 Billion. The relative demand for the emission reductions from the
industrialized countries will depend upon the nature of any post 2012 agreements.
5. However, CDM has not been able to attract energy efficiency projects in large
measure. The statistics of UNFCCC reveal that energy efficiency accounts for only 14% of
738 globally registered CDM projects and much less, i.e. 9% of the expected CERs from the
registered projects. In India, the numbers of EE projects are 59 of the 257 projects registered
and are small scale projects with average CER generation of less than 15,000 per annum.
This makes most EE investments not attractive enough for CDM given the high proportion of
transaction cost and time associated with the process in relation to the CER generated. The
time taken by a developer to register a project with the CDM Executive Board is usually
between 2-3 years and after that to start yielding revenues takes longer. Moreover,
uncertainty over the post 2012 scenario is now becoming a major element in taking
decisions in this regard. Most EE projects are inherently viable, given that they reduce
energy costs and have paybacks varying from one to five years. Thus the issue of
additionality, which is a key requirement for any CDM process, is difficult to prove.
6. Despite the fact that there is a huge market waiting to be tapped, progress in creating
Energy Service Companies has been limited. Part of the problem is the lack of commercial
bank financing, but equally a general lack of awareness of the possibilities for profit in this
area. Both industry and the banking sector need to focus attention on this area. CDM could
play a major role to attract investments in this important area as they could provide the much
needed risk mitigation and comfort that several financial institutions as well as facility owners
look for.
7. In our quest for improving the investment climate for energy efficiency, which is now
being escalated to a mission mode by the Government, CDM provides an important tool to
attract investment. One of the ways forward in making EE more attractive for CDM is by use
of the Programme of Activities (PoA) approach that has been recently approved by the CDM
Executive Board. This approach enables aggregation or bundling of projects to reduce
transaction cost. The PoA also deals with the issue of additionality, monitoring and
verification at the macro level thereby making it simpler for investors to avail CDM. The
Bachat Lamp Yojana, launched recently by Ministry of Power and Bureau of Energy
Efficiency (BEE) intends to promote energy efficient and high quality CFLs as replacement
for incandescent bulbs in households by making use of the PoA approach. Bureau of Energy
Efficiency, is coordinating this effort by preparing a PoA to enable provision of high-quality
CFLs to domestic consumers for about Rs. 15 per lamp, i.e., at a rate comparable to that
of incandescent bulbs by leveraging CDM revenues. This would remove the barrier of high
2
CFL price (which is currently Rs. 80 to 100 per lamp) which is constraining its penetration
into households. The scheme targets replacement of about 400 million incandescent bulbs in
use in the country, leading to a possible reduction of 6,000 MW-10,000 MW of electricity
demand, and a reduction of about 24 million tones of CO2 emissions every year. The PoA for
the scheme has been prepared after the first pilot project at Vizag registered by CDM EB.
Similar PoAs are on the anvil for DSM programmes in agriculture, municipal, SMEs,
appliances, etc.
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