CLEAN DEVELOPMENT MECHANISM - OPPORTUNITIES
 
Burning coal, oil and natural gas to produce heat and power produces Carbon Dioxide and other greenhouse gases (GHG) as by-products. Deforestation and clearing of land for agricultural also releases significant quantities of GHG. Over the last century we have emitting GHG to the atmosphere faster than natural process can remove them. The atmospherical value of these gas has been increasing steadily and are expected to continue increasing as the global economy grows. The risks involved in the global climate change due to increased GHG levels has necessitated to reduce the emission levels.
 
The Clean Development Mechanism (CDM) is one of the many flexible mechanism authorised in December 1997 Kyoto Protocol to 1992 United Nations Framework Conventions on climate change (singed at the Rio De Janeiro 'Earth submit')
 
The Kyoto Protocol specified legally binding commitments by most industrialized country to reduce their collective GHG emission by atleast 5% compared to 1990 levels by the period 2008 -2012. With the goal of reaching these targets at the lowest possible cost for countries that are committed to reductions, the protocol created to flexible mechanism, GHG emission trading and CDM.
 
This section is under development and the details of CDM projects resulting in Certified Emission Reductions (CER) and their trading will be detailed in this section as and when the CDM projects take off in India.

Glossary of terms used in CDM
 
Additionality: It refers to the issue of whether greenhouse gas emissions reduction or sequestration in a Joint Implementation or Clean Development Mechanism project occurs over and above the baseline and constitutes a new reduction that would not have otherwise occurred in absence of the project.
Annex I Parties:  Industrialized countries belonging to the Organization for Economic Cooperation and Development (OECD) and countries designated as Economies in Transition under the Framework Convention on Climate Change (FCCC), that pledged to reduce their greenhouse gas emissions to 1990 levels by the year 2000.
Annex II Parties: Parties The rich countries listed under this FCCC annex have a special obligation to help developing countries with financial and technological resources. They include the 24 original OECD members and the EU.
Annex B Parties: Industrialized countries which have limitation or reduction targets under the Kyoto Protocol.
Baseline: An emission baseline is a hypothetical emission reference representing the estimated level of greenhouse gas emissions that would have been emitted in the absence of the process improvement tasks aimed at minimizing emissions.
Bubble: The EU proposal for differentiated reductions within the Union, which allows members inside the bubble to have commitments as diverse as an increase in emissions by 40 per cent to a cut of 30 per cent.
Cap: In the context of regulatory standards for emissions, cap implies the maximum level of emissions allowed. In the context of tradable units, the term refers to the extent to which certified emission reduction units can be used for accounting for commitments.
Certified Emission Reductions (CERs): Verified and authenticated units of greenhouse gas reduction from abatement or sequestration projects, and certified by an entity authorized under the Clean Development Mechanism.
Clean Development Mechanism (CDM): Mechanism under the Kyoto Protocol for trading in emission reductions between industrialized and developing countries through joint projects.
Climate Change: According to FCCC usage, a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods. According to IPCC usage, climate change which occurs because of internal changes within the climate system or in the interaction between its components, or because of changes in external forcing either for natural reasons or because of human activities.
Common but Differentiated Responsibilities: Common but differentiated responsibilities FCCC formulates different responsibilities for industrialized and developing countries. It requires industrialized countries to commit themselves to actions to reduce their contributions to the global net emissions and to enable developing countries to adequately address climate change without hindering their national development goals and objectives. Developing countries, meanwhile, are to commit themselves to appropriate action, though it is recognized that their net emissions must grow to accommodate their development needs.
Conference of Parties: The supreme body of the UNFCCC. It comprises all countries (170+ in November 1999) that have ratified the Convention.
Credits: Units used for the measurement (e.g., in tonnes of CO2 equivalent) in transfer and acquisition of emission reductions associated with Joint Implementation and Clean Development Mechanism projects.
Differentiation: The approach under which Annex I countries adopt an overall target and then share it among themselves instead of all of them adopting a uniform target.
Emissions timeline: Time (number of years) over which emission credits resulting from a Joint Implementation or Clean Development Mechanism project accrue.
Emissions Trading: Mechanism under the Kyoto Protocol where countries with emission commitments may trade emission allowances with other parties. It is a market-based approach to competitively reduce pollution loads.
First Commitment Period: The 2008-2012 deadline for Annex 1 countries to meet their Kyoto Protocol commitments.
Flexibility Mechanisms: The three mechanisms created under the Kyoto Protocol to give Annex I countries the "flexibility" in meeting their targets by achieving or acquiring reductions more cheaply in other countries than at home. These are the Clean Development Mechanism (CDM), joint implementation (JI) and International Emissions Trading (IET).
Global Environment Facility (GEF): Mechanism that provides grants and concessional loans to eligible countries for incremental costs of measures to achieve agreed global environmental benefits in the areas of climate change, biological diversity, international waters, and ozone depletion. The World Bank, the United Nations Development Programme and the United Nations Environment Programme act as the three implementing agencies for GEF.
Greenhouse Effect: A natural effect that traps heat in the atmosphere (troposphere) near the earth's surface. Some of the heat flowing back toward space from the earth's surface is absorbed by water vapour, carbon dioxide, ozone, and several other gases in the lower atmosphere and then radiated back toward the surface of the earth.
Greenhouse Gases (GHGs): Gases in the lower atmosphere that cause the greenhouse effect. Water vapour, carbon dioxide, nitrous oxide, methane and ozone are the primary greenhouse gases in the earth's atmosphere. If the atmospheric concentrations of these greenhouse gases rise and are not removed by other natural processes, the average temperature of the lower atmosphere will gradually increase.
Hot Air: Countries like Russia and Ukraine have low emissions today as compared to 1990 because of their economic collapse after the demise of the Soviet Union. Since they have agreed to stabilize at 1990 levels, which they are unlikely to reach by 2010, they can easily sell off these emissions--called "hot air"--which they would not emit until 2010.
Joint Implementation (JI): Mechanism under the Kyoto Protocol for an industrialized country to acquire emission reduction units (ERUs) when it helps finance projects that reduce emissions in another industrialized country.
Kyoto Protocol: An international agreement adopted at the Third Conference of Parties (COP-3) to the UNFCCC held in December 1997 in Kyoto, Japan. The Kyoto Protocol commits Annex I Parties to individual, legally-binding targets to limit or reduce their greenhouse gas emissions, adding up to a total cut of at least 5 per cent from 1990 levels in the period 2008-2012. The individual targets for Annex I parties are listed in the Protocol's Annex B. In order to enter into force, the Protocol must be ratified (or adopted, approved, or acceded to) by 55 parties to the Convention, including Annex I Parties accounting for 55 per cent of carbon dioxide emissions from this group in 1990. As of October 1999, 16 countries had ratified the Protocol, of which Norway is the only Annex I country so far.
Leakage: occurs if actual emission reductions (or increase in sinks) from a project results in emissions increasing (or sinks decreasing) elsewhere. It occurs if the system boundaries do not capture all emission efforts of a project.
Non-Annex I Parties: Developing countries with no stabilization or reduction commitments under FCCC.
Precautionary Principle Principle 15 of the Rio Declaration, the precautionary principle, states: Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation. Article 3(3) of the FCCC endorses the precautionary principle as an element of international law and emphasizes the essential connection between environmental protection and economic development. Rather than imposing a set of environmental standards or policies, the Convention sets up a process of negotiation that is expected to continue, aided by a systematic, long-term programme of scientific research to re-evaluate the adequacy of commitments.
Quantified Emission Limitation and Reduction Objectives (QELROs): Legally binding targets and timetables under the Kyoto Protocol for the limitation or reduction of greenhouse gas emissions for industrialized countries.
Sinks: Land, forests and oceans which absorb carbon dioxide and act as its reservoirs. Under the Kyoto Protocol, industrialized countries can include changes in net emissions (calculated as emissions minus removals of carbon dioxide) from certain activities in the land-use change and forestry (LUCF) sector. This is being negotiated.
Supplementarity: Post-Kyoto, it still remains to be determined whether industrialized countries can meet their entire commitments through the flexibility mechanisms, or whether trading should "supplement" domestic action.
United Nations Framework Convention on Climate Change (UNFCCC): Also called the Climate Change Convention, it is the centerpiece of global efforts to combat global warming. It was adopted in June 1992 at the Earth Summit in Rio de Janeiro, and entered into force on 21 March 1998. The Convention's primary objective is the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic (manmade) interference with the climate system. Such a level should be achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate change to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.
Value of credits: The monetary value resulting from the supply and demand of emission credits derived from Joint Implementation and Clean Development Mechanism projects, and from International Emissions Trade reduction options.