Going green: The clean development mechanism

With the Kyoto Protocol, 1997, coming into force on 16 February 2005, clean development mechanism (CDM) projects in India have attracted a great deal of interest. Indeed, with the country issuing over 32% of all certified emission reductions (CERs) generated worldwide, India is fast emerging as a much sought after destination for these projects.

UN framework

India signed the United Nations Framework Convention on Climate Change (UNFCCC) on 10 June 1992 and ratified it on 1 November 1993.

To strengthen the developed country commitments under the UNFCCC, the parties adopted the Kyoto Protocol, which commits developed country parties to return their emissions of green house gases (GHGs) to an average of approximately 5.2% below 1990 levels over the period 2008-12. India ratified the Kyoto Protocol on 26 August 2002.

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National CDM authority

Pursuant to India’s ratification of the Kyoto Protocol, the Ministry of Environment and Forests (MoEF) which is the focal point for the issues relating to climate change, constituted the National CDM Authority (NCDMA).

The NCDMA is headed by the Secretary of the MoEF.

It also comprises eight other members from several different departments and ministries of the government of India.

The NCDMA accepts project proposals for evaluation and approval of CDM projects, i.e., projects that bring about a reduction in GHG

levels. This approval is done in accordance with the guidelines put forward by the UNFCCC.

The project evaluation process includes an assessment of the probability of successful implementation and an evaluation of the extent to which the CDM projects meet the national priorities and sustainable development objectives such as poverty alleviation, energy infrastructure development.

The powers of NCDMA include the power to recommend certain additional requirements for CDM project proposals to ensure that projects with higher sustainable development benefits and which are more likely to succeed are accorded higher priority.

It also maintains a registry of all CDM projects and carries out the necessary activities to ensure that project developers have reliable information relating to all aspects of the CDM projects, such as compiling and publishing technical information and statistical data relating to CDM initiatives.

Project approvals

To qualify as a CDM project and receive NCDMA approval, the CDM project proposals must:

(i) Lead to real, measurable and long term GHG mitigation; and

(ii) Procurement of CERs should not be from overseas development assistance, i.e., the grant/loan by developed countries to developing countries to address issues of critical importance like poverty alleviation programmes.

The NCDMA follows a single window clearance mechanism for CDM projects in the country.

The project proponents are required to submit a project concept note (PCN), which must include basic information on the project, and the project design document (PDD), which, in turn, must include detailed information on the critical technical and implementation-related aspects of the project activity.

The NCDMA examines the PDD and the PCN and the project proponent is given about 10-15 days notice to make a brief presentation to the NCDMA on their CDM project proposals.

Members of the NCDMA seek clarifications from the project proponent, and once these are satisfied, approval is issued.

Other policies

Though there is no special legislation which specifically incorporates CDM concepts into Indian law, there are certain policies framed by a number of government ministries with references to CDM projects.

For example, the National Tariff Policy, 2006, which provides guidance on tariff fixation for all electricity projects, states that projects which result in lower GHG emissions should take into account the benefits obtained from CDM, so as to provide adequate incentive to the project developers.

In similar fashion, the National Urban Transport Policy, 2006, also encourages integrated land use and transportation planning in cities so that these projects may qualify as CDM projects.

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Akshay Jaitly is a partner in the Delhi office of Trilegal where Shailendra Kumar Singh is an associate. Trilegal is a full service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.