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Clean Development Mechanism
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Clean Development Mechanism

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The Delhi Metro has earned Rs 19.5 crore from sale of 3.55 million carbon credits which it had collected over a period of six years, in its bid towards gaining greater energy efficiency.

About the News

  • In 2007, Delhi Metro became the first metro or railway project in the world to be registered by the United Nations under the Clean Development Mechanism (CDM) which enabled Delhi Metro to claim carbon credits for its Regenerative Braking Project.
  • For the period 2012-18, combined GHG emission reduction achieved from all the CDM and Gold Standard projects was 3.55 million carbon credits.

What is Clean Development Mechanism?

  • About: The CDM is a project-based greenhouse gas (GHG) offset mechanism under the Kyoto Protocol. It allows the public and private sector in high-income nations to purchase carbon credits from GHGs-reducing projects in low or middle-income nations as part of their efforts to meet international emissions targets.
    • The Clean Development Mechanism (CDM) is one of three "flexibility mechanisms" (the other two being Emissions trading and Joint Implementation). identified in the Kyoto Protocol to meet their GHG reduction targets. The CDM is the only mechanism that involves developing countries, or non-Annex I countries.
  • Certified Emission Reductions (CERs): CDM projects generate emissions credits called CERs, which are then bought and traded. One CER is equal to one ton of CO2(eq) emission reduced. The CDM helps to deliver sustainable development benefits to the host country.
  • Management: The CDM projects are managed by the United Nations Framework Convention on Climate Change (UNFCCC).

What have been the Benefits of CDM so far?

  • Hosting entity: Hosting entities stand to gain from additional investments in their enterprise. Hosting entities benefit from technology transfer, more efficient design, enhanced project feasibility and capital investment.
  • Hosting country: CDM projects are a potential source for new foreign investment and augment existing development projects. Other benefits are biodiversity protection, cleaner air and water, and sources of employment and poverty alleviation.
  • Investing entity: CDM projects enable private and other entities to comply with domestic GHG reduction regulations and are a mechanism intended to help Annex I countries meet their Kyoto commitments at lower costs.
  • Investing country: CDM projects are an option for Annex I countries to receive emission reduction credits at lower costs. CDM projects also offer an established, accountable and secure investment avenue.
  • Benefits for the planet: The CDM policy option is not only economically advantageous and politically expedient, but also moves development paths towards ecological sustainability, taking advantage of clean development and more efficient technologies.


India and Clean Development Mechanism: Status of India

  • NCDMA: The Central Government constituted the National Clean Development Mechanism Authority (NCDMA) for the purpose of protecting and improving the quality of environment in terms of the Kyoto Protocol.
  • Achievements: Along with China and Brazil, India is a leader in CDM since its inception in 2007. India has about 250 million Certified Emission Reduction (CER) units under CDM issued by the UNFCCC. The number of CDM projects registered in India is 1,376 (out of total 7,979 globally) and 89 per cent of these projects are still active.
  • Concerns of New Mechanism: The situation may change when market mechanisms mandated under the Paris Agreement come into operation. Most developed countries are strongly opposed to permitting the carryover of CDM projects and credits into the Paris Pact’s mechanisms. The credits lying unsold with the CDM projects could lose their economic worth.
  • The CDM gaps among States: The concentration of CDM projects in the more industrialised states and the lacklustre performance of the less industrialised states reflects half-hearted effort from India in capitalising on the CDM´s potential to contribute to sustainable development.


CDM projects are not without their controversies. Concerns Related to CDM

  • Sustainable development credentials: Questions surround the sustainable development credentials of certain projects, particularly in the case of industrial gas projects.
  • Ethical and Governance Issues: Concerns have also been raised regarding the conduct of project owners, with certain CDM projects implicated in land rights issues and human rights abuses..
  • Double-Counting: In the context of climate change mitigation, double counting is widely used to describe situations where a single greenhouse gas emission reduction or removal is used more than once to demonstrate compliance with mitigation targets.
    • Double counting becomes prominent where multiple mitigation mechanisms overlap over sources or sinks and when emission reductions are transferred among entities.
  • Criterion Problems: Credits for CDM projects are issued after their compliance with internationally approved criteria is ascertained. CDM project proponents should be free to choose available cost-effective technologies as long as the objective of emission reductions is achieved.
    • Moreover, “additionality” in CDM projects is judged solely on the criterion of technology; they are also about investments and overcoming market barriers.


Way Forward

  • Global environmental integrity: Environmentalists believe that, in case of project/programme-based mechanisms, countries should make arrangements to prevent double counting of emission reduction units in their national accounts.
  • Differentiated Principles: The proponents of sustainable development argue that adjustment principle should not be applied uniformly to developed and developing countries. The difference in levels of development of countries needs to be considered.
  • Bringing balance: It is time that we rethink the relationship between the project/programme-based emission reduction units and the national pool of emission reductions so as to establish a firm basis for access to future carbon markets.
  • Ecology and Economy: To improve the CDM´s contribution to sustainable development in India, the Government of India should consider investing in capacity building in those less developed states. It could reap the double benefit of climate mitigation and economic development.


Conclusion: As global climate action shifts epochs — from the Kyoto Protocol regime, where only developed countries (excluding the US, which opted out) undertook emission reduction commitments, to the Paris Agreement regime, where all countries are bound by their own voluntary commitments, called the Nationally Determined Contributions, or NDCs — the horns of the dilemma are whether or not to allow the offsets accumulated under the Kyoto regime to continue into the Paris regime.


Question: Discuss the Clean Development Mechanism and its benefits. What have been the major concerns w.r.t. this mechanism?



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