The Clean Development Mechanism (CDM) as defined in the Article 12 of the Kyoto Protocol is to assist developing countries in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist developed country Parties in achieving compliance with their commitments under Article 3 of the Protocol. It is however the responsibility of the host country like India to set their sustainability goals. The reconvened sixth session of the Conference of the Parties took certain historic decisions considered to be a step forward (Box-1). The Parties further agreed at Bonn that it is the host country’s perogative to confirm whether a CDM project activity assists it in achieving sustainable development. It thus becomes the responsibility of the Government of India (GoI) to ensure that the CDM project activities in India should be in conformity to the developmental goals, priorities and strategies set in India’s Ninth Five Year Plan (NFYP). In view of this requirement, CDM project activities have to have a sustainability screening and processes and mechanisms have to be put in place to maximise benefits from CDM project activities in India.

CDM & Sustainable Development
Since the Earth Summit at Rio in June 1992, sustainability has become a widely shared goal of development and provides a firm base for achieving sustainable development. The World Resource Institute has outlined the four pillars of sustainable development as social, economic, environmental and technological.

The Ninth Five Year Plan (1997-2002) has set the objectives of development as agriculture and rural development, adequate productive employment, poverty eradication, accelerated economic growth rate, food security, drinking water, primary health care, universal primary education, population control, environmental sustainability of the development process, women empowerment, national security, strengthening participatory institutions and building self-reliance. The NFYP also has set strategies and priorities such as natural resource management, regeneration of forest cover, technology development, development of infrastructure and human capital, and improving efficiency.

Assessing sustainability of a development process is a complex task.
In view of this and the complexity of sustainable development process the Government of India (GoI) has a key role to play both at the CDM policy and project levels.

At the policy level, the GoI needs to :

Criteria for SDIs

Criterion 1 : Since one of the main purpose of a CDM project is to assist host (developing) countries achieve sustainable development, the sustainable development goal of the CDM project must be in conformity with the national sustainable development goals.

Criterion 2 : A CDM project must address the four pillars of sustainable development - economic, social, environmental and technological. At least one SDI under each of the four pillars may be chosen for assessing sustainability of CDM projects. (Methodologies for developing SDIs for assessing sustainablity of CDM projects is described in Box-3)

Using one of these methodologies, GoI can develop appropriate SDIs for CDM projects in various sectors of the economy viz.; Conventional energy sector, Renewable energy sector (solar, wind, biomass, bagasse, mini hydro, etc.), Building sector, Transport sector, Agricultural sector, etc. for use by the Project Developers. Metrices and baselines for the SDIs identified in different sectors should be developed to assess sustainability of the projects.

Each metric should :

A process of Monitoring, Verification and Certification of sustainability of CDM projects needs to be devised for qualification for CERs.

GoI may designate a few Operational Entities (OEs) for Monitoring, Verification and Certification in India. For any of the tools and techniques adopted, baseline data of the SDIs (economic, social, environmental and technological) are very crucial. However, in most host (developing) countries, major barriers to M&V may be lack of baseline data on SDIs.

At the project level, Government of India needs to:

CDM projects may be broadly categorised under energy, transportation, building and renewable energy (solar, wind, biomass) sectors. Not all projects that result in emission reductions are eligible to qualify as a CDM project. In order to qualify, projects need to have characteristics which are explicit or implicit in the Kyoto Protocol.

CDM Projects need to be designed such that they :

Assessment of whether CDM projects will fulfil these criteria require comparing projects against a baseline, which may be static or dynamic. In many cases, it is counter-factual to construct a baseline that may never actually happen. Assessing environmental benefits also requires establishing system boundaries appropriate to the scale and complexity of the project to assess ‘leakage’. Besides, a CDM project needs to be environmentally sound, economically efficient and equitable.

Rigorous applications of these principles may raise transaction costs of the project and thus alter its financial viability. In the design stage the concept of CO2 equivalent reduction of the six gases viz.; carbon dioxide (CO2), nitrousoxide (N2O), methane (CH4), hydrofluorocarbon (HFCs), perfluorocarbon (PFCs) and sulphur hexafluoride (SF6) should be introduced and their procedure for emission reduction measurements agreed upon.

India clearly needs to gear itself more proactively to address issues and opportunities arising from the global attention on climate change. Currently the Ministry of Environment and Forests (MoEF) with assistance from the Ministry of External Affairs is the nodal governmental agency addressing issues. At the same time, a few NGOs, academic institutions and business associations are also contributing to the process of understanding the science, developing policies and operationalising response strategies.

As various forms of CDMs are introduced the need for more focused attention becomes imperative for efficient pre-emptive measures.

For a prompt start of CDM in India it becomes necessary to formulate two institutional support mechanisms:

Further, for India to take advantage of the Clean Development Mechanism (CDM), India has to become a Party to the Kyoto Protocol at the earliest, as per the agreement reached at Bonn.

A Designated National Authority for CDM

As already described in the previous section the GoI has to address a range of issues on climate change and CDMs both at the policy and project levels, the CDM National Authority in India will provide focused and accelerated action and a linkage between the CDM Executive Board at the UNFCCC level and the host government.

At the Policy end, the National Authority will be responsible for co-ordinating inputs from other ministries within the government and also generate debate among the concerned stakeholders in India. Through this process a more considered Indian position and policy can be evolved on climate change issues.

At the project level, guidelines and manuals for appraisal, monitoring and verification of CDM projects need to be prepared by appropriate institutions / agencies and set in place. The National Authority can play a pre-emptive and a critical pivotal role in operationalising these mechanisms.

Climate Change Centres

A bulk of the activities to address climate change and utilise opportunities need to be undertaken outside government. Here again the urgency is becoming increasingly felt to facilitate in CDM projects under the Kyoto Protocol.

While at the science and policy levels there is considerable awareness and debate building up among stakeholders including NGOs, academic institutions, business and media, it is the operational aspect where India is relatively weak. Most project developers are fairly conversant with formulating a normal business proposal, however, they need considerable support to incorporate sustainable development concerns and CDM operational requirements.

As a matter of urgency the GoI needs to designate one or more CCCs to support and build up a climate change policy and project activities in India.

The Climate Change Centre at Development Alternatives has the following key functions :

2. Brokerage

3. Advisory Services

4. Research

It may be noted that the Climate Change Centre at Development Alternatives (DA) has already initiated activities to facilitate the CDM project activity in India, and the different stakeholders both in India and form developed countries may now take the advantage of this facility operating at Development Alternatives.

CDM Projects necessarily involve incorporation of sustainable development and climate change concerns, which project developers are often not conversant with. While they may engage consultants to assist them in project development, it is critical to have a single window process to facilitate approval of the project by the GoI.