NEW FRONTIERS IN

HYDROPOWER INVESTMENT:
THE CLEAN DEVELOPMENT
MECHANISM (CDM)

Dweependra Nath Kalita

 The UNFCCC

• The United Nations Framework Convention on Climate

Change (UNFCCC) is an international environmental treaty
produced at the United Nations Conference on Environment and
Development (UNCED), informally known as the Earth Summit,
held in Rio de Janeiro from 3 to 14 June 1992. The treaty is aimed
at stabilizing greenhouse gas concentrations in the atmosphere at
a level that would prevent dangerous anthropogenic interference
with the climate system.
• The UNFCCC Conference of Parties (countries) met for the first
time in Berlin in 1995.
• Since then, 14 conferences have been held in various parts of the
world. COP-8 was held in New Delhi in 2002. COP-15 is due in
August 2009 in Copenhagen
• COP-3 held in Kyoto, Japan in December 1997 by far remains the
most important milestone of the UNFCCC and the resolutions
adopted in this conference after intense negotiations came to be
known as the Kyoto Protocol.
 The Kyoto Protocol

• The major feature of the Kyoto Protocol is that it sets binding

targets for 37 industrialized countries and the European
community (Annex-I countries) for reducing greenhouse gas
(GHG) emissions . These amount to an average of five per cent
against 1990 levels over the five-year period 2008-2012.
• The Kyoto Protocol entered into force on 16 February 2005. 184
Parties (countries) of the Convention have ratified its Protocol to
date.
• The first commitment period under the Kyoto Protocol expires in
2012.
• Six Green House Gases are covered under this protocol.
– Carbon Dioxide (CO2)
– Methane (CH4)
– Nitrous Oxide (N2O)
– Hydro fluorocarbons (HFC)
 The Kyoto mechanisms

• The Kyoto Protocol recognizes that developed countries are

principally responsible for the current high levels of GHG
emissions in the atmosphere as a result of more than 150 years of
industrial activity, and therefore the Protocol places a heavier
burden on developed nations under the principle of “common but
differentiated responsibilities.”
• Countries must meet their targets primarily through national
measures. However, the Kyoto Protocol offers additional means of
meeting their targets by way of three market-based mechanisms.

• The three Kyoto mechanisms are:

• Emissions trading – known as “the carbon market" 

• Clean development mechanism (CDM)
• Joint implementation (JI)
 The Clean Development Mechanism (CDM)

• The Kyoto Protocol’s Clean Development Mechanism is expected

to result in emission reductions equivalent to over 2 billion tonnes
of CO2 by the end of 2012.
• CDM project implementers earn certified emission reduction units
which are bought by countries with emission reduction
commitments under the Kyoto protocol.
• Energy projects lowering the carbon intensity of the electricity grid
can generate additional revenues from carbon credits.
• CDM gives an opportunity to developing countries in achieving
their sustainable development objective, besides providing
opportunity to introduce new and efficient technologies.
• CDM provides an opportunity for the Indian power sector to earn
revenue through the reduction of greenhouse gas emissions
(GHG), particularly carbon dioxide (CO2). India has tremendous
potential for CDM projects.
 CDM in the Indian hydropower context

• The Ministry of Power has accorded high priority to the CDM

projects in the power sector.
• CEA took the initiative to publish the CO2 baseline database for
the Indian Power Sector to assist CDM project developers for
speedy approval of their CDM projects.
• This has facilitated adoption of authentic baseline emissions data
and has ensured uniformity in the calculations of CO2 emission
reductions by CDM project developers.
• CEA in cooperation with GTZ CDM-India, has compiled the
database containing necessary data on CO2 emissions for all grid-
connected power stations in India.
• The database currently covers eight fiscal years 2000-01 to 2007-
08. CEA intends to update the database at the end of each
financial year.
• A user guide has been posted in CEA’s website to enable project
developers to use these baseline emission data effectively for
CDM benefits.
Scope of CDM in the Indian Power Scenario

• Installed Capacity as on 30.04.2009

•It is evident from the table that the installed capacity is

predominantly coal based and therefore, is a major source of
carbon dioxide emissions in India.

•Hence, there exists scope for reducing the CO2 emissions in the
country by way of fuel substitution, and increased use of
 How CDM works

• A project claiming to reduce emissions has to apply to the

Designated National Authority (in India, the Ministry of
Environment).
• If the DNA approves the project, it is submitted to the International
CDM Executive Board (EB).
• The EB has appointed certain consultants as Designated
Operational Entities (DOE), who are to validate this claim. Based
on their validation, the EB will Register (the technical word for
approving) the project.
• Once registered, the project will be issued Certified Emission
Reduction (CERs) or carbon credits but only when it starts
operation and after verification of its claims of reduction by a DOE
other than the one that did the validation.
• One CER is equivalent to one ton of carbon-dioxide emission
saved. These CERs are bought by developed countries who can
then claim that they have met their reduction target by the
amount of CERs they have purchased. The CERs can be purchased
directly from the project, or from the several international carbon
The CDM Project Cycle
Composition of NCDMA
Host Country Approval Procedure
 Eligibility

The project proposal should establish the following in order to qualify

for consideration as CDM project activity:
Additionalities:

- Emission Additionality: The project should lead to real,

measurable and long term GHG mitigation. The additional GHG
reductions are to be calculated with reference to a baseline.
- Financial Additionality: The procurement of CERs should not be
from Official Development Assistance (ODA)

Sustainable Development Indicators

– It is the prerogative of the host Party to confirm whether a

clean development mechanism project activity assists it in
achieving sustainable development. The CDM projects should
also be oriented towards improving the quality of life of the
poor from the environmental standpoint.
 Aspects to be considered while designing a
CDM project

1. Social well being: The CDM project activity should lead to

alleviation of poverty by generating additional employment,
removal of social disparities and contribution to provision of
basic amenities to people leading to improvement in quality
of life of people.
2. Economic well being: The CDM project activity should
bring in additional investment consistent with the needs of
the people.
3. Environmental well being: This should include a
discussion of impact of the project activity on resource
sustainability and resource degradation, if any, due to
proposed activity; bio-diversity friendliness; impact on
human health; reduction of levels of pollution in general;
4. Technological well being: The CDM project activity
should lead to transfer of environmentally safe and sound
technologies that are comparable to best practices in order
to assist in up-gradation of the technological base. The
transfer of technology can be within the country as well
Status of CDM hydro projects of India
(including small hydro) as of 01 May
2009
Some notable CDM hydro projects
 CBM hydro in the pipeline

• Reliance Power, which has been allotted the Siyom (1000 MW),
Tato II (700 MW) and Kalai II (1200 MW) projects in Arunachal
Pradesh and the 400 MW Urthing Sobla project in Uttarkhand, has
declared its intention to register some of its projects with the CDM
and has signed MoUs with consultants for this purpose.
Thank you