Clean Development Mechanism & Agriculture Sector

Clean Development Mechanism & Agriculture Sector
Shalin Shah – Sr. Manager (Environment) Mundra Port & SEZ, Adani Group Honorary Joint Secretary - NCCSD 1

Background for presentation
Climate Change, Global Warming are well known terms world over. So I will not discuss anything on the basics of Climate Change.

Outline Mitigation of Global Warming Kyoto Gases & GWP
The CDM – what & how? The CDM project Cycle India’s Position Types of CDM projects 5

Mitigation of Global Warming
To tackle the challenges posed by global warming (climate change), United Nations made an agreement at the ‘ United Nations Conference on Environment and Development’ in 1992 in Rio De Janeiro, Brazil – a conference popularly known as the “Rio Earth Summit”. That agreement was “The United Nations Framework Convention on Climate Change” (UNFCCC). 6

……24 year story Rio Earth Summit & birth of UNFCCC 1992 1997
Kyoto Protocol adopted IPCC GHG inventory report 1990 IPCC constituted 1988 Kyoto Protocol comes into force 2005 2008 First commitment period starts 2012 First commitment period ends ……24 year story

UNFCCC Signed by 154 states (plus the EU) in 1992 foundation of global efforts to combat global warming. Objective: “ The stabilisation of greenhouse gas (GHGs) concentrations in the atmosphere at a level that would prevent dangerous man made interference with the natural climate system. ”

UNFCCC Members

Mitigation of Global Warming
Kyoto Protocol Amendment to the UNFCCC outlined in 1997 in Kyoto, Japan Commitment for 38 developed countries to reduce GHG emissions by 5.2% relative to 1990 levels It must be achieved by – 2012 – first commitment period Developed countries – bound with targets – Annex I countries – Such as: UK, Europe, Australia etc. Developing countries – no targets – non annex I countries – Such as: India; Pakistan; China; Thailand; Malaysia; Mexico; Brazil etc. 10

The CDM – what & how? The CDM project Cycle India’s position Types of CDM projects

Kyoto Gases & GWP There are over 30 atmospheric greenhouse gases…But only 6 attract CC, so called ”Kyoto Gases” Carbon Dioxide (CO2) Methane (CH4) Nitrous Oxide (N2O) Relevant to bio-carbon & industrial projects Relevant to industrial projects Perfluorocarbons (CXFX) Hydrofluorocarbons (CXHXFX) Sulphur Hexaflouride (SF6) Each of these gases has a different warming potential 12

Solution: develop a relative scale, using CO2 as a reference gas
Kyoto Gases & GWP Each of these gases has a different ‘radiative forcing’ capability and a different atmospheric residence time Need for a ‘common currency’, so that all such Kyoto gases are denominated in the same way Solution: develop a relative scale, using CO2 as a reference gas 13 13

Kyoto Gases & GWP Kyoto Gas (Green House Gas)
Relative scale – everything is measured relative to CO2 e.g. Methane is 21 times more potent as a Green House Gas than CO2 e.g. Sulphur Hexafluoride is 23,900 times more potent! Kyoto Gas (Green House Gas) Global Warming Potential (GWP) CO2 1 CH4 23 N2O 310 PFC 6500 – 9200 HFC 140 – 11700 SF6 23900 14 14

The CDM – what & how? The CDM project Cycle India’s Position Types of CDM projects

Clean Development Mechanism
‘Flexibility Mechanisms’ of Kyoto Protocol Clean Development Mechanism (Achieving part of reduction obligations of developed countries through projects in developing countries that reduce GHG emissions) It is defined under Article 12 of the Kyoto Protocol Emission Trading (Trading of emission allowances between developed countries) Joint implementation (Transferring emission allowances between developed nations, linked to specific emission reduction projects) 16

Purposes of CDM – two primary goals Advantages for developed countries: relatively low-cost & politically acceptable Developed countries can reduce emissions anywhere in the world They can count these reductions towards their own targets CDM allows developed countries to generate CC (Certified Emission Reductions, CERs) in developing countries Advantages for developing countries: inward investment, environmental & technology benefits 17 17

Generation of CC GHG emissions Historical Trend Project start Carbon credits (CERs) Carbon credits (CERs) Carbon credits (CERs) Carbon credits (CERs) CERs from a CDM project are calculated as: CER = BE – PE The Baseline Emissions (BE) is the amount of GHG that would have been emitted to the atmosphere in the absence of the CDM project activity. PE is the Project Emissions 18 Time 18

What is Carbon Credit ? Carbon credits are reduction in emission of GHGs caused by a project 1 CER = 1 tonne of CO2 equivalent (e) reduction 1 CER = 1 Carbon Credit 1 VER = 1 Carbon Credit ( Earned Through Voluntary Route ) _____________________________ CER – Certified Emission Reduction VER – Voluntary Emission Reduction

Qualification for CDM Project Five major criteria a) GHG reduction - real and measurable b) Contribution to the sustainable development of the host country c) No “diversion” of official development assistance d) Demonstration of Additionality e) Project after 2 August 2008 – Inform UNFCCC within Six months 20 20

Demonstration of Additionality Additional incentives provided by emission reduction credits, is a concept known as "additionality". It is the most significant requirement for a project to qualify for the CDM benefits. Emission Additionality – Net decrease in GHG emission is called Emission Additionality. Financial Additionality – Project funding should not be counted towards the financial obligations of the host country Technological Additionality – CDM project activities should lead to transfer of environmentally safe & sound technologies. If the industry is legally mandated (bound to do any of the above by law) to undertake the project activity (e.g. use of CNG for public transport in Delhi), such a project is generally not eligible for CDM benefits. 21

Project with carbon element Project without carbon element
Additionality – benchmark analysis Choose an appropriate financial indicator and compare it with a relevant benchmark value: e.g. required return on capital or internal company benchmark Carbon revenue makes the project attractive relative to investment alternatives Investment threshold Revenue / NPV / IRR Project with carbon element Project without carbon element Project without carbon revenue is profitable – but not sufficiently profitable compared with alternatives

Some examples of additionality
Capturing methane from an urban landfill and flaring it Carbon credits represent the only source of income for undertaking this activity  Capturing methane from an urban landfill and utilizing it to generate electricity Project developer would have to demonstrate that the electricity revenue alone would not make this project attractive ? Building a large hydro project for the grid in Ethiopia Questionable additionality: there is already plenty of hydro activity in Ethiopia 

CDM – Cancun outcome Issue - Continuation of CDM Post 2012
Progress / Decisions - Indications CDM will be part of new post-2012 scheme, despite on-going uncertainty over the future of the Kyoto Protocol Remarks Cancun conference decided that next year (at the next Climate Change Conference in South Africa), one or more new market based mechanism will be established. Any such new mechanism will maintain and build upon existing mechanisms, including those established under the Kyoto Protocol (like CDM)

CDM Project Cycle Project Design Project screening
CDM Approval Stages Responsible Parties Duration A Project Design Project screening Development of PIN, PDD & PCN PP 2 – 6 Months B Host Country Approval (HCA) Submission of PCN & PDD to NCDMA/DNA Presentation by PP during NCDMA meeting DNA 2 Months C Validation Submission of PDD & HCA approval letter to DOE DOE 1 Month D Registration Submission of validation report & PDD to CDM EB CDM EB E Project Implementation and Monitoring Implementation of project Monitoring and recording of emissions Continuous F Verification and Certification Verification of emission reduction Certification of emission reduction Once every year G Issuance of CER Submission of certificate given by DOE to CDM EB Issuance of CER to Project Proponent 10 or 21 Years (variable) 26

Activities in CDM Cycle Average Time Taken (Weeks)
CDM - Time Needed Vs. Time Taken Activities in CDM Cycle Time Needed (Weeks) Average Time Taken (Weeks) Reason for Delay Preparation of PIN, PCN, PDD 8 16 Resource Constraint, Lack of Knowledge, procedural changes etc. Host Country Approval 6 10 Delay in submission of required documents Validation 14 24 Delay in appointment of DOE, Amendment of frequent changes in methodology, Guidelines, Tool etc. Registration 4 - 8 Delay in web-hosting by EB, Req. for Review, Under Review, Corrections Requested etc. Monitoring & Verification 52 70 Delay in appointment of DOE, Delay in web-hosting by EB etc. Issuance of CER 4 12 Req. for Review, Under Review, Corrections Requested etc. CER Transaction Delay in identifying buyers, ERPA signing, Buyer DNA approval etc. Total (Approx.) 96 164

Project feasibility assessment / PIN CDM project development / PDD
The CDM project cycle 6 to 12 months 1.5 months Crediting period Project Developer Project feasibility assessment / PIN CDM project development / PDD Host country approval DNA Project validation Project verification DOE CDM Executive Board Project registration CER issuance

CDM Project Cycle A) Project Design Three major credentials
Project Idea Note (PIN): It includes the basic information and basic calculations to check the viability of the proposed project. It is not a mandatory document. Project Concept Note (PCN): It includes basic information about project and project developers, technology, finance, sustainable development criteria, project risks, baseline methodology etc. Mandatory document required for HCA Project Design Document (PDD): It is a project specific document which included expected emission reduction calculations and monitoring plan along with the elaborated information provided in the PCN. Mandatory document required by NCDMA; DOE and CDM EB 36 36

B) Host Country Approval
37

CDM Project Cycle B. Validation: Once the PDD has been completed and the HCA has been received, all documents along with HCA letter have to be submitted to DOE (Designated Operational Entity) for review and approval (Validation). C. Registration: The DOE submits the validation report, validation opinion and a request for registration to the CDM EB. Registration of project by the CDM EB is an act of formal acceptance of the validated project. D. Project Implementation & Monitoring: Once the project has been registered, it can be implemented. From the point of implementation on, the project developer needs to monitor the project performance, according to the procedures laid out in validated monitoring plan of PDD. D. Verification & certification: The DOE verifies the data collected by the project developers according to the monitoring plan and certifies the total emission reductions actually occurred during the specified time period. E. Issuance of CERs: Based on the DOE certification, CDM EB issues the CERs to the project proponent. 38 38

Crediting period CDM mitigation projects
Project developers have two crediting period options: A maximum of 7 years, which can be renewed up to 2 times (i.e. a potential total crediting period of 21 years) A maximum of 10 years, with no option for renewal CDM sequestration projects (forestry) Project developers have two crediting period options: A maximum of 20 years, which can be renewed up to 2 times (i.e. a potential total crediting period of 60 years) A maximum of 30 years, with no option for renewal

Crediting period A maximum of 10 years with no option of renewal
Emissions under the baseline scenario Greenhouse gas emissions Emissions under the project scenario Starting date of the crediting period No renewal 10 years

Baseline must be reassessed by DOE at each renewal
Why not maximise the crediting period? Baseline must be reassessed by DOE at each renewal Greenhouse gas emissions 7 years

Why not maximise the crediting period?
Baseline must be reassessed by DOE at each renewal The baseline scenario may become less favourable Emissions under the baseline scenario Greenhouse gas emissions Emissions under the project scenario 7 years 7 years 7 years

Per Capita CO2 Emissions
25 19.18 19.18 20 15 10.06 10.06 10.06 10.06 9.54 9.54 9.54 10 4.91 4.91 4.91 4.91 4.91 5 1.31 1.31 1.31 1.31 1.31 India China Germany Japan U.S.A. Source: EIA 2008

Per Capita Emissions (Tons/Capita)
TOP 20 Emitters of the World Country Total Emissions (MMtCO2) Per Capita Emissions (Tons/Capita) 1. China 6534 4.91 2. United States 5833 19.18 3. Russia 1729 12.29 4. India 1495 1.31 5. Japan 1214 9.54 6. Germany 829 10.06 7. Canada 574 17.27 8. United Kingdom 572 9.38 9. Korea, South 542 11.21 10. Iran 511 7.76 11. Saudi Arabia 466 16.56 12. Italy 455 7.82 13. South Africa 451 9.25 14. Mexico 445 4.04 15. Australia 437 20.82 16. Indonesia 434 1.83 17. Brazil 428 2.18 18. France 415 6.48 19. Spain 359 8.86 20. Ukraine 350 7.61 Source: EIA 2008

India’s Position First registration: 8th March, 2005
First CER issued: 21st August, 2005 Registered projects: 513 projects (as of July, 2010) HCA projects: 1704 projects (as of July, 2010) Estimated CER volume: 441 million CERs (39690 Crore INR, till 2012) if they are successfully registered by CDM-EB CERs issued: ~79.11 million CERs The majority of registered project in India are renewable energy project focusing on hydropower, and wind energy 46 46

Energy efficiency (industry), 4% Energy efficiency (own generation) 9%
The CDM project pipeline Other 7% Fossil fuel switch 3% N2O 2% Hydro 26% Energy efficiency (industry), 4% Agriculture, 6% Biogas, 7% Landfill gas, 8% Biomass energy 16% Energy efficiency (own generation) 9% Wind 12%

India offers vast untapped market for Carbon Trading
India today manufactures >25 million tons of steel. Installed capacity of electrical power generation of >110,000 MW Produces over >200 million tons of food-grains With GDP growth of 8.5% against the energy consumption growth rate of 7.5%

India offers…..cont. Leading sectors, having GHG Mitigation potential include energy efficiency (45%), renewable energy (35%), methane emissions abatement (15%), and improvements in the thermal energy generation sector (5%). In India, total C02-e emissions in 1990 were 10,01,352 Gg, which was approx. 3% of global emissions. The Power sector was the largest emitter of C02, contributing 55% of national emissions. India would be requiring an additional 100,000 MW of power by 2012.

India’s Position 50

India’s Position Case Study Gujarat Fluoro Chemicals Limited:
Registered on 8th March, 2005 Claims ~ 3 million CERs (270 Crore INR) every year for reducing GHG by thermal oxidation of HFC23 (GWP = 11700) Recent monitoring report (01/08/08 to 30/09/08) claimed ~ 1.4 million CERs (126 Crore INR) Tamilnadu Spinning Mills Association (TASMA): Registered on 10th June, 2007 Claims ~ 0.69 million CERs (62 Crore INR) every year for reducing GHG by bundled wind power project in Tamilnadu Recent monitoring report (01/01/08 to 31/08/08) claimed ~ 0.6 million CERs (48.6 Crore INR) 51 51

RE & EE Potential in India
Sector Estimated Potential (MW) Installed Capacity (MW) Untapped Potential (MW) Wind 45,195 7,844.52 37,350.48 Small Hydro (<25 MW) 15,000 2,045.61 12,954.39 Biomass 16,881 605.8 16,275.2 Solar Power Plant --- 2.18 Cogeneration bagasse 5,000 719.83 4,280.17 Waste to Energy 2,700 55.25 2,644.75 Source: Ministry of New and Renewable Energy, Govt. of India (As on 31st December 2007) Energy Efficiency: 23,000 MW (Assessed by World Bank, Source: FICCI)

Types of CDM Projects Type Example Process Change
Changing over from HF process to catalytic conversion for LAB production Continuous digester (Pulp & Paper) Energy Efficiency High efficiency equipment & lighting Replacement of old electro mechanical drives with Invertors Waste heat recovery programmes Fuel substitution Switching over to cleaner fuels Biogas recovery from UASB – use instead of flare Renewable Energy Wind Power Hydro Power Solar Energy Forestry Afforestation Reforestation 55

Types of CDM Projects Apart from such obvious projects to claim CDM benefits, there are a few peculiar projects as well with significant CDM potentials Reducing the amount of energy required to deliver a unit of water to end-users in municipal water utilities; Methodology AM0020 Leak reduction from natural gas pipeline compressor or gas stations; Methodology AM0023 Project activities that reduce emissions through the construction and operation of a Bus Rapid Transit (BRT) system for urban road based transport; Methodology AM0031 Project activities that enhance energy-efficient lighting in households by replacing conventional FTL and bulbs by CFLs; Methodology AM0046 56

Types of CDM Projects Small Scale CDM Projects
Small-scale projects can use simplified procedures. The following types of projects are considered small-scale. Renewable energy projects: up to 15MW capacity Energy efficiency projects: up to 60 GWh/yr reduction in energy consumption Other projects: up to 60 KtCO2 equivalent (60,000 CER) emission reduction CH4 recovery in wastewater treatment Switching fossil fuels Landfill CH4 recovery 57

Programmatic CDM offers new Opportunities
Regular CDM Single site, stand-alone projects ‘Carbon upgrades’ Size-Distribution of Potential CDM Project Sites Bundled CDM Bundling several projects under a single PDD All projects must be identified ex ante, and must start at the same time Number of installations / units Programmatic CDM Addresses the ‘long tail’ of small units Permits sector-wide transition to low-carbon economy Particular relevance to Africa large medium small Installation / unit size

CDM Projects in Agriculture Sector
Improved manure management Reduced enteric fermentation Improved/reduced chemical agri-inputs use (fertilizers, pesticides, herbicides, etc.) Reduced machinery use (and/or lower fossil fuel intensity of conservation agriculture practices) Agronomic planning (selection of seeds and species with low chemical agri-inputs demand and water requirements) Energy from dedicated crops Energy from agricultural residues, animal waste, and other on-farm organic waste Water management (water saving from improved water retention, reduced evaporation, ect.) Improved irrigation techniques/technologies (i.e. drip and sprayer irrigation) Improved water management in rice cultivation

Global contribution of agriculture to greenhouse gas emissions.
1 Pg (Peta gram) = 1 Gt (Giga tonne) = 1000 million tonnes. Source: Cool Farming Climate Impacts of Agriculture & Mitigation potential GREENPEACE 2008

Sources of direct and indirect agriculture greenhouse gases
Sources of agriculture GHG CO2-eq Million tonnes Nitrous oxide from soils Methane from cattle enteric fermentation Biomass burning Rice production Manure Fertiliser production Irrigation Farm machinery (seeding, tilling, spraying, harvest) 158 Pesticide production Land conversion to agriculture

Mt CO2-eq CO2 CO2 CH4+ N2O CH4 CH4+ N2O N2O CH4 CH4+ N2O sources of agricultural greenhouse gases, excluding land use change

GHG emissions from fossil fuel and energy use in farm operations and production of chemicals for agriculture. kg CO2-eq km-2 Pg CO2-eq Tillage – – 0.113 Application of agrochemicals 180 – – 0.057 Drilling or seeding – – 0.022 Combine harvesting – – 0.065 Use of farm machinery Subtotal – 0.257 Pesticides (production) – – 0.14 Irrigation – – 0.684 Fertiliser (production) – – 0.575 Total – 1.656

Energy requirement and carbon dioxide emissions resulting from the production of different fertilisers Fertiliser Energy requirement Carbon dioxide emissions in in MJ kg-1 N kg (CO2)/kg produced* Nitrogen 65 – – 6.588 Phosporus – 1.098 Potassium – 0.732 Lime – 0.842 Manure – 0.029 N as manure – 2.9

Global carbon stocks in vegetation and top one metre of soils
Biome Area Carbon Stocks Carbon stock (Pg CO2-eq) concentration (Pg CO2-eq M km-2) M km2 Vegetation Soils Total Tropical forests Temperate forests Boreal forests Tropical savannas Temperate grasslands Deserts and Semi deserts Tundra Wetlands Croplands Total Source: IPCC 2001, Land use, land use change and forestry.

Technical mitigation potential by 2030 of
each agricultural management practice Source: IPCC (2007): IPCC Fourth Assessment Report: Climate Change: Mitigation of Climate Change.

Total technical mitigation potentials (all practices, all GHGs:
MtCO2-eq/yr) for each region by 2030, Source: IPCC (2007): IPCC Fourth Assessment Report: Climate Change: Mitigation of Climate Change.

Economic potential for GHG Agricultural mitigation by 2030

Simplified methodologies
Aspect 1: Technology/measure: What would be specific examples for new sustainable technologies, management practice etc. (avail)able to reduce GHG emissions (e.g. reduced mechanization, low-tillage practices, or use of lighter machinery)?

Aspect 2: Baselines Could you think of clear, logical and quantifiable procedures for the identification of baseline emissions, i.e. the scenario for GHG emissions in absence of the proposed activity/project?

Aspect 3: Monitoring plan What would be simple, straight-forward monitoring measures /plans/indicators to verify GHG reductions throughout the life time of each respective activity/project?

Aspect 4: Project boundary What is your idea of reasonable project boundaries (e.g. the physical, geographical boundaries of the agricultural field, including machinery used on the field but maybe excluding machinery used for processing or transportation) for quantifying GHG emission reductions?

Aspect 5: Leakage Does the project/activity (indirectly) cause an increase in GHG emissions outside its project boundaries?

Two Chinese Case Examples
Rural Household Biogas Conservation Tillage

Approved CDM methodologies
For Biogas Digesters

Emission inventory per household under the baseline scenario and the project scenario respectively (tCO2e/year/household) Manure management or CH4 emissions from biogas digester leakage CO2 emissions from coal burning Emissions per household Baseline 0.66 1.95 2.61 Project 0.20 0.27 0.47 Emission Reduction 2.14

Conservation Tillage Conservation tillage is an integrated tillage system in which large amounts of crop straws are used to cover the soil and minimize all the possible tillage activities. Conservation tillage, which employs the technologies such as no tillage or minimum tillage, micro-terrain rebuilding, land covering, and controlling weeds with herbicides, is aimed to reduce the disturbance and increase the straw coverage to soil (Gao HW, 2005; Gao WS, 2007; Li HW, 2008). It is composed of four essential components (Di Y, 2008): Planting techniques without tillage; Covering soil with straws or plant residues; Deeply loosing the soil; and Integrated control techniques on weeds and pests.

Conservation Tillage – Increase in Soil Organic Carbon (SOC)
reduce the disturbance on soils to protect soil organic matter from oxidization and mineralization Straw coverage adds more soil organic carbon, which means conservation tillage may increase soil organic carbon in different degrees affects soil temperature and moisture status, which in turn affects soil carbon stock indirectly. Soil temperature affects micro organisms’ activity, and determines the decomposing speed of soil organic matter Different tillage practices may have different effects on micro organisms’ activity, which may lead to varying accumulation of organic matter in soils.

The area of conservation tillage and its percentage of sowing
area and other farming methods in the USA ( ), unit Mha, % Source: United States Conservation Tillage Information Centre (CTIC) and Reports of Crop Stubble Management (2004).

Chinese case example 7-year (2003–2009) field experiment was conducted near in Shandong province Soil at the site was a loam soil, per cent organic matter and pH of 7.1. Mean annual air temperature and precipitation in the area is 13.0°C and 621 mm, respectively The cropping system is winter wheat-maize rotation. All straw of wheat and maize was returned to the soil after harvest.

Information on application amount of straw amendment and nitrogen fertilizer, nitrogen in the straw

Total GHG emissions under baseline

Total GHG emissions under project activity

Complete scenario – Emission Reduction

Shri Sharad Pawar said during 4th World Congress on Conservation Agriculture on 4th Feb, 2009 New Delhi Conservation tillage or no-tillage is now being practised on almost 100 million ha area worldwide with the major countries being USA, Brazil, Argentina, Canada and Australia. In India alone, the area under conservation tillage has increased to more than 2 million ha.

But At present, the international climate change agreement post-2012 is still under negotiation. It is still uncertain if cropland management, including conservation tillage practice, can become an eligible project activity under CDM post-2012. Therefore, considering the effects of conservation tillage of enhancing the soil carbon stock, incentives for farmers to take actions of enhancing carbon sequestration, as well as providing technical support for reaching an international climate change agreement and associated implementation post-2012, it is necessary to conduct a feasibility study of conservation tillage as an eligible project activity under CDM and methodology guidelines.

Summary India has a very big role to play
More opportunities even after 2012 Demand for CERs is likely to increase Market based instruments will play a key role Government and trade organizations have to put more efforts to create strong awareness of CDM specifically for SMEs

You have these qualities – Meaning
Why all these to you?? The audience I am addressing consists of Agriculture Specialists Secondly, the CDM project developers need to have certain capabilities such as: Analytical thinking Mathematical ability Understanding of chemical processes and operations Creative opinion The mother Earth needs our attention You have these qualities – Meaning YOU CAN DO IT !! 88

Some Important Reference
unfccc.int cdmindia.in cdmindia.com UNEP Risoe Centre

oppenhagen exico Magic of C D M urban

Environmental Engineer
Let’s make the world a better place to live in Shalin Shah Environmental Engineer Mobile: Thank you Dhon - no - baad

Clean Development Mechanism & Agriculture Sector

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