Monday, 25 August 2008

Programme of Activities (PoA)

In June of last year, at its 32nd meeting, the Executive Board (EB) of the UN Clean Development Mechanism (CDM) adopted procedures regarding the registration of a programme of activities as a single CDM project activity and issuance of certified emission reductions for a programme of activities. Since then, the Board has published guidance documents and project design documents to facilitate better understanding of PoA and enable registrations of CDM projects as PoA. And from this month onwards, the CDM pipeline shall be including PoAs in its monthly analysis of CDM projects.

Up till now, only four PoAs have been sent to the UNFCCC. None of these have been approved; all are at validation stage. The PoAs are:

  • Installation of Solar Home Systems in Bangladesh
  • Methane capture and combustion from Animal Waste Management System (AWMS) in Mexico
  • New Energies Commercial Solar Water Heating Programme in South Africa
  • Smart Use of Energy in Mexico (CUIDEMOS Mexico: Campana De Uso Intelegente De Energia Mexico)

Beginning this week, the CDM Board launched a call for public inputs on Programme of Activities (PoA) to seek comments on issues associated with the development of the Programme of Activities as a CDM Project Activity and difficulties in the validation and submission for registration of a PoA. These comments will be considered by the Board at its next meeting.

The PoA has been a very innovative programme launched by the CDM Board. It is expected to solve the important bottlenecks of registration backlog at the UNFCC and expensive fees for CDM projects. It will be interesting to see how this programme futher develops especially in relation to CDM projects.

Thursday, 14 August 2008

UN Introduces New Rules In The CDM Registration Process

The CDM Executive Board has decreed that all CDM projects requesting for registration will now have to show prior consideration of the fact that CDM benefits were considered necessary in order for the proposed CDM project activity to be successful.

The Board decided that for project activities with a starting date on or after 02 August 2008, the project participant must inform a Host Party DNA and/or the UNFCCC secretariat in writing of the commencement of the project activity and of their intention to seek CDM status. Such notification must be made within six months of the project activity start date and shall contain the precise geographical location and a brief description of the proposed project activity. Similarly the Board has issued a set of rules to demonstrate prior consideration of CDM for project activities with a start date before 2 August 2008. Complete details of these new rules can be found at: http://cdm.unfccc.int/EB/041/eb41_repan46.pdf (EB 41, Annexe 46)

The UN registration process for CDM projects is already suffering from protracted delays and it has received a fair share of criticism for its lengthiness, bureaucratic tape and lack of absolute clarity. Adding another step to the already long (and expensive) CDM registration process, will only lead to further delays. Small scale projects will be the hardest hit as project proponents usually do not have the resources to navigate the already complex UN CDM registration process.

It will be interesting to see how this extra step helps the Executive Board in making stronger and clearer assessments of a given CDM project.

Friday, 8 August 2008

UK's Carbon Reduction Commitment (CRC) Scheme

While the EU has taken a lead role in the global arena in tackling climate change, it looks like UK is taking a lead role in tackling climate change within the EU. UK has promulgated first-of-its-kind domestic legislation on climate change. UK's Carbon Reduction Commitment (CRC) scheme targets any (business and public sector) organization, including any parent company and its subsidiaries, which spends more than £500,000 a year in the UK on electricity. The CRC establishes a domestic carbon trading scheme and requires firms to purchase allowances, initially at a set price of £12 per tonne, in correspondence to the cap on emissions levels imposed on them by Defra (UK Department of Energy, Food and Rural Affairs). Firms that then exceed their emissions cap will have to buy in extra credits to cover excess emissions before surrendering their credits back to Defra at the end of each year, while those that come in under their cap will be able to sell their unused credits

The regulation comes into force in October 2009 and the introductory auction phase starts in 2010. It is expected to save at least four million tonnes a year of carbon dioxide equivalent (CO2e) by 2020, according to an official at the UK environment ministry.

The UK is thus showing praise-worthy initiative in tackling climate change which is one of the greatest environmental challenges facing the world today. It is hoped that more countries within the EU and elsewhere follow UK's excellent example.

Friday, 1 August 2008

CDM Trends in India

India has the second largest number of total projects in the CDM pipeline, after China. But while China controls more than 50 per cent of the total carbon credits market (by volume), India barely controls 15 per cent.

There are a number of reasons for this discrepancy: the Indian government has not been as proactive and aggressive as the Chinese in courting foreign investments in CDM; it is harder to receive public funding for CDM projects in India, etc.

And now, a new survey by the international tax advisory and auditing firm, KPMG, tells us that Indian companies have also not been aggressive but have shown limited initiative in tackling climate change. The KPMG survey of 70 CEOs found their response to climate issues was driven largely by the need to comply with expected regulations, while leaving the leadership role in tackling global warming to the government. The survey included top companies from power, automobile, petroleum, cement, mining, and construction sectors.

Moreover, the KPMG survey showed that only 17 percent of the respondents saw the growing market for low-energy/carbon products and services as motivation to reduce their carbon footprints.

Globally, many of the top industries have undertaken self-imposed cuts on their emissions and have reduction targets for themselves. In India, however, only 41 percent of the respondents had some qualified reduction goals to be achieved by 2010, while about 38 percent had no such goals.

Thus it is not surprising that despite high potential, India's performance in the global CDM market is mediocre. With even the leading industries refusing to get serious about investing in emissions reductions measures, it is difficult for India to capture a substantial share of the global CDM market.