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Orientation workshop
on CDM opportunities in Small Scale Sectors |
Mallika Roy
mallika@sdalt.ernet.in
On
March 25-26, 2004, Climate Change Centre, Development Alternatives, New
Delhi and Institute for Global Environmental Strategies (IGES), Japan,
jointly organised a workshop on CDM opportunities in small scale sectors
like Brick, Rice mills, Energy Efficient buildings and also in the
Renewable Energy sector. The workshop, held in New Delhi,
India, is an initiative of
the three-year capacity building programme on CDM in India by IGES,
Japan.
The workshop was
inaugurated by Dr. Prodipto Ghosh, Secretary to the Government of India,
Ministry of Environment and Forests. The workshop, sponsored by IGES,
Japan was attended by fifty experts from different sectors (Brick, Rice
mills, Energy Efficient buildings and Renewable Energy sector), other
NGOs and Financial Institutions.
The central theme of the workshop was to find a balance between the
following focus areas:
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Capacity Building in Small & Medium Scale
Enterprises (SMEs) for designing and implementation of CDM projects
in India particularly in sectors such as: |
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Brick Manufacture |
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Rice Mill |
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Energy Efficiency in Buildings such as hotels and
hospitals |
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Renewable Energy |
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The
workshop will lead to a three year programme on capacity building on
CDM in India. Some of the states that would be involved initially
under this programme of Climate Change Centre, Development
alternatives and IGES, Japan are Andhra Pradesh, Rajasthan,
Karnataka and Punjab. |
 The
workshop had a focus on the benefits of both the policy makers and
project developers and had aims to help them to take advantage of market
based mechanisms viz. CDM for Technology Transfer (TT) and Capacity
Building and also enable them to attract Foreign Direct Investment (FDI).
As funding is the common problem for implementation of CDM projects in
India, this workshop also highlighted the benefits of Financial and
Banking Institutions by demonstrating the opportunities related to CDM
projects.
Throughout the workshop, the
discussion centred on the issues which are described below:
Capacity Building in Developing Countries on CDM
Developing countries need capacity building on CDM in order to
effectively participate nationally and internationally in the process.
Capacity building on CDM can also contribute in achieving sustainable
development objectives as well as addressing to reduction in the growth
rate of greenhouse gases in India.
The workshop focused on initiating a process and bringing different
stakeholders from state and country levels to a common platform for
raising awareness and building capacity on the Clean Development
Mechanism.
CDM
Projects in Small Scale Sector in India
Small and Medium Enterprises (SMEs) are the backbone of the Indian
economy. With three million SMEs, this sector contributes 40 per cent
towards the national income. SMEs contribute to a large extent to
earning of precious foreign exchange which is very important for
importing crucial raw materials like oil, machinery, chemicals etc. It
is very important keeping in mind socio-economic conditions of the
country, in this regard some industrial sectors / sub-sectors have been
reserved for small scale.
Despite the above mentioned advantages, SMEs are also a major area of
concern as they account for about 70 per cent of industrial pollution.
This is due to their obsolete technologies, high waste generation
factors and less regulatory requirements. Cleaner Production schemes in
these enterprises are urgently required to mitigate climate change.
Apart from reduced pollution, cleaner production schemes also lead to
some direct benefits some of which are:
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Improved operating
efficiency of the plants |
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Cost saving through
reduced wastage of raw material and energy |
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Waste material
recovery |
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Better product
quality and consistency |
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Providing
sustainable livelihoods to a large number of people particularly for
the rural India. |
Due to the existence of
scope of improvement in small and medium enterprises, this sector needs
to be tapped to exploit the country’s CDM potential and catalyse
sustainable development throughout the country.
CDM Projects in Brick
Industry
Among
the small and medium enterprises, brick making is a traditional industry
in India. As with other SMEs, the brick industry is also highly
polluting in nature and very energy intensive. These highly polluting
industries are a major health hazard for not only the workers employed
there but also for the surrounding populations. Though there have been
new technologies like Vertical Shaft Brick Kiln that are highly energy
efficient and relatively pollution-free, their wide dissemination is yet
to be seen. The brick industry thus offers a huge scope for introduction
of cleaner production schemes and energy efficiency improvements which
can have a huge impact on the rate of return of such projects and also
take the advantages of the CDM projects..
A huge barrier to implementation of these cleaner production schemes is
the availability of finance and a revenue stream directly proportional
to the investments made in cleaner technologies. A way out of this
financial crunch could be the potential investment flowing in through
CDM. It being a relatively very new mechanism for businesses to raise
funding from, only very few project developers and financial
institutions are aware of it. Furthermore, even those who know about it
are not very sure of its modalities and procedures as none of the
projects have yet been able to actually earn the carbon revenues. The
modalities and procedures being quite complex, there is a need for
capacity building among business sector in the small scale sectors in
terms of awareness generation on the CDM as a possible source of revenue
generation as well as raising their capacity to take up initiatives for
CDM project development.
CDM Projects on Energy
Efficiency in Buildings
Most commercial establishments such as offices, hotels, hospitals,
shopping complexes etc. are extremely energy intensive. There is an
immense scope of improvement on this front, with several hotels such as
the Orchid Hotel, Mumbai already taking the lead and deriving huge
benefits in terms of cost savings. Improving the energy efficiency of
the system has multiple advantages, viz., efficiency of utilization of
natural resources, reducing air pollution levels, and lower spending on
energy related expenditure. As already mentioned, these commercial
buildings are high consumers of energy, if the energy consumption can be
reduced by a substantial amount, then there is a huge scope for the CDM
projects.
CDM Projects in
Renewable Energy Sector
Current patterns of energy use are causing growing concerns all over the
world. Fossil fuel reserves are not only depleting rapidly but the
combustion of these fuels also leads to atmospheric carbon emissions
that are resulting in global warming and sea level rise. Clearly,
alternative sources of energy are now urgently required, and among
these, renewable energy offers major advantages. Besides this, since
supplying electricity to the entire population through centralised power
generation systems has not been found to be very feasible,
de-centralised renewable energy also offers a distinct advantage in
terms of being a strong driver for rural development, thus improving the
life of more than 70% of the country’s population. India has one of the
world’s largest renewable energy programmes which seeks to
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increase the share
of renewable in the overall installed capacity of power generation
to about 10% |
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meet the energy
needs of rural and remote areas for a variety of applications |
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minimize the
drudgery and health hazards faced by rural women in collecting and
burning wood for domestic purposes. |
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develop and operate
biomass based power generation utilising locally available such
renewable sources. |
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extract energy from
urban and industrial wastes, besides chemical, ocean and geo-thermal
sources. |
Main discussion points
of the workshop, at a glance
Participants agreed that further streamlining for project design
procedures for the projects from small scale sectors is desirable. It
was emphasized that this project segment forms the heart of the CDM in
terms of achieving the twin aim of contributing to sustainable
development and reducing GHG emission. Bundling of projects (e,g.
cluster of hundred Vertical Shaft Brick Kiln) would be a good option.
A group of participants argued on the relatively high transaction cost
for the small scale projects, that additional capacity building is
required. This would then function as a catalyst to attract CDM funding
(Foreign Direct Investment) and would help developing countries to
benefit from the CDM.
Expected outcomes from
the workshop
The workshop can be an important milestone in the process of making
India benefit from CDM in the long run, as it targets sectors whose
growth can address to the four pillars of sustainable development –
economic well being, technological well being, environmental well being
and social well being. The growth of these sectors fuelled by carbon
avoided or reduced has the potential to make our development process
more efficient by conserving resources, reducing local and global
pollution, thus addressing to mitigation of climate change, and an
improved quality of life. As mentioned earlier, this orientation
workshop under IGES and CCC, DA initiatives will lead to a three year
CDM capacity building programme amongst the different stakeholders in
India focusing on:
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assisting project
developers to initiate CDM project activity in their respective
sectors. |
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facilitation
of designing, development and implementation of a number of CDM
projects under the small scale sector and strengthening learning
process by doing |
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assisting in
achieving sustainable development objectives |
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assisting in the
mitigation and adaptation to climate change, poverty eradication and
rural development in the longer term.
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