This presentation was given to The Director Dr. T. C. Jain, suggesting that the project should be taken up under the Clean Development Mechanism.

1. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
 Binding emission targets for industrialised countriesBinding emission targets for industrialised countries
(called Annex I)(called Annex I)
 Voluntary participation of developing countries (calledVoluntary participation of developing countries (called
Non-Annex I countries, e.g. India)Non-Annex I countries, e.g. India)
 Flexible mechanisms to allow countries to achieveFlexible mechanisms to allow countries to achieve
their emission targets cost effectively:their emission targets cost effectively:
– Emission tradingEmission trading (trading of allowances between Annex I(trading of allowances between Annex I
governments)governments)
– Clean Development MechanismClean Development Mechanism (projects in Non-Annex(projects in Non-Annex
I countries with participation of Annex I countries)I countries with participation of Annex I countries)
– Joint ImplementationJoint Implementation (projects between Annex I(projects between Annex I
countries)countries)
What is Kyoto Protocol?What is Kyoto Protocol?

2. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
CLEAN DEVELOPMENT MECHANISM (CDM)CLEAN DEVELOPMENT MECHANISM (CDM)
Twin objectives of CDM:Twin objectives of CDM:
 Help Annex 1 countries meet their GHG emission reduction targets andHelp Annex 1 countries meet their GHG emission reduction targets and
contribute to sustainable development in developing countries like India.contribute to sustainable development in developing countries like India.
 Projects that are eligible for CDM will produce Certified EmissionProjects that are eligible for CDM will produce Certified Emission
Reductions, CERs that helps Annexe 1 countries reach their emissionReductions, CERs that helps Annexe 1 countries reach their emission
targetstargets
 The CERs are tradable and their value is market driven. Current valueThe CERs are tradable and their value is market driven. Current value
(May 2006) is US$ 25/CER.(May 2006) is US$ 25/CER.
 Annex 1 countries are under pressure of heavy fines for failure to complyAnnex 1 countries are under pressure of heavy fines for failure to comply
with emission caps.with emission caps.
 These fines are likely to double by 2008, the value is expected to riseThese fines are likely to double by 2008, the value is expected to rise
further.further.

3. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Relevant Green House GasesRelevant Green House Gases
1)1) Carbon DioxideCarbon Dioxide
Global Warming PotentialGlobal Warming Potential 11
2)2) MethaneMethane
Global Warming PotentialGlobal Warming Potential
2121
3)3) Nitrous OxideNitrous Oxide
Global Warming PotentialGlobal Warming Potential 310310

4. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
How is CDM relevant for such Projects?How is CDM relevant for such Projects?
EmissionEmission
capcap
ActualActual
emissionsemissions
Buyer
Carbon Credits
Carbon value ($)
Annex I CountryAnnex I Country Renewable energyRenewable energy
CDM projectCDM project
IN the Host Country:
1) Projects reduce emissions
2) Projects Sequester Carbon.
By selling the carbon credits – CERs from a GHG
reduction/ Carbon sequestering project to a buyer
additional cash flow can be realised for projects.

5. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Rules for CDM participation: How does itRules for CDM participation: How does it
work, and what are the requirements?work, and what are the requirements?
 AdditionalityAdditionality
 The concept of baselinesThe concept of baselines
 Host country approval & SustainableHost country approval & Sustainable
development benefitsdevelopment benefits
 MethodologiesMethodologies

6. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Required
return on
investment
threshold
Project return
excluding
CDM revenue
Project return
including
CDM revenue
CDM
revenue
CDM cash flow
The gap between
the project
return and the
required
return on
investment
threshold
AdditionalityAdditionality

7. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
The concept of BaselinesThe concept of BaselinesGHGemissions
Time
Project
commissioned
“With project”
emission level
“Without project”
emission level
(e.g. grid
baseline)
Carbon
credits

8. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
The Methodology CriteriaThe Methodology Criteria
 A Methodology is the method forA Methodology is the method for
estimating carbon emissions from aestimating carbon emissions from a
technology/projecttechnology/project
 If a methodology exists, this simplifiesIf a methodology exists, this simplifies
the CDM process, however new onesthe CDM process, however new ones
can be developed.can be developed.

9. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Small Scale CDM ProjectsSmall Scale CDM Projects
 Simplified Modalities and procedures forSimplified Modalities and procedures for
Small Scale ProjectsSmall Scale Projects
 Reduces Transaction CostsReduces Transaction Costs
 Designed for Small and BackwardDesigned for Small and Backward
CommunitiesCommunities
 Simplified Modalities and Procedures forSimplified Modalities and Procedures for
Small Scale Afforestation Reforestation andSmall Scale Afforestation Reforestation and
Land use ProjectsLand use Projects
 Approved Methodologies ExistApproved Methodologies Exist

10. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Bundling of Small Scale CDM &Bundling of Small Scale CDM &
A/R CDM Project ActivitiesA/R CDM Project Activities
 Small Scale CDM Projects can further be bundledSmall Scale CDM Projects can further be bundled
together.together.
 Upper limits for bundling exist.Upper limits for bundling exist.
 Small Scale Afforestation and ReforestationSmall Scale Afforestation and Reforestation
Projects can also be bundled.Projects can also be bundled.
 This helps the tiniest of projects to benefit fromThis helps the tiniest of projects to benefit from
the CDMthe CDM
 Cost is further reduced after bundling.Cost is further reduced after bundling.

11. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
CDM under the reforestation
category has nothing to do
with the end use of the fruit of
the tree.
It is only linked to the amount
of Carbon that is taken in by
the trees (as CO2) and
delivered to the soil.
Steps in Assessment of
Carbon Sequestering

12. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Bundling Small Scale &Bundling Small Scale &
Community development ProjectsCommunity development Projects
Bundling
organisation
GHGGHG
offsetsoffsets
(tCO(tCO22))
CER
buyers
CERsCERs
PaymentPayment
((RsRs)) Payment ($)Payment ($)
Financial
Institution
LoanLoan
RepaymentRepayment
ODA,
Government,
NGOs etc.
Validation, verification, PDD
PaymentPayment
((RsRs/$)/$)
Grant/Funds ?Grant/Funds ?
Bio Methanation
VER Buyers
Small ScaleSmall Scale
A/R ProjectsA/R Projects

13. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Carbon Emission Reduction/Carbon Emission Reduction/
SequesteringSequestering
Carbon Credits can be earned byCarbon Credits can be earned by
 Reduction in emission of Green HouseReduction in emission of Green House
Gases by activitiesGases by activities
 Sequestering of Carbon via additionalSequestering of Carbon via additional
plantations, that otherwise would notplantations, that otherwise would not
have been there.have been there.

14. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Project Activities having CDM PotentialProject Activities having CDM Potential
( in current Project)( in current Project)
o Afforestation, Reforestation and land useAfforestation, Reforestation and land use
Projects: Small Scale and/or otherwiseProjects: Small Scale and/or otherwise
o Avoidance of Methane emission from biomassAvoidance of Methane emission from biomass
through biomethanation or controlled combustionthrough biomethanation or controlled combustion
o Small Scale Wastewater Treatment ProjectsSmall Scale Wastewater Treatment Projects
o Reduction in Nitrous Oxide emission in theReduction in Nitrous Oxide emission in the
agriculture sector.agriculture sector.
o Energy from bio-oil from TBOs.Energy from bio-oil from TBOs.
o Implementation of methods reducing forest fires.Implementation of methods reducing forest fires.
o Other Bio-energy activities within the projectOther Bio-energy activities within the project
boundary : Hydro, Wind & Solar.boundary : Hydro, Wind & Solar.

15. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Quantum of Gain through CDMQuantum of Gain through CDM
The Environment and Social Management Guidelines to the Project givesThe Environment and Social Management Guidelines to the Project gives
the following calculations for various land use activities:the following calculations for various land use activities:
a)a) Value of CER: $ 2.5Value of CER: $ 2.5
b)b) Carbon Sequestered/ ha: 150 tonnesCarbon Sequestered/ ha: 150 tonnes
c)c) Revenue from CDM/100 ha: Rs. 17 lacs approx.Revenue from CDM/100 ha: Rs. 17 lacs approx.
d)d) The latest documents from World Bank site reveal that the tradingThe latest documents from World Bank site reveal that the trading
value of 1 CER is around $ 25value of 1 CER is around $ 25
e)e) Future projections: Penalties to double : demand for CERs willFuture projections: Penalties to double : demand for CERs will
increase: revenue/ CER will increase.increase: revenue/ CER will increase.
f)f) At current rates, using the data given above, the revenue/100 haAt current rates, using the data given above, the revenue/100 ha
would be Rs. 170 lacs.would be Rs. 170 lacs.
g)g) These figures do not include the revenue from other project activitiesThese figures do not include the revenue from other project activities

16. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Quantum of Gain through CDMQuantum of Gain through CDM
 The revenue earning potential of the otherThe revenue earning potential of the other
project activities can be very high asproject activities can be very high as
Methane has a GWP of 21 & Nitrous oxideMethane has a GWP of 21 & Nitrous oxide
310.310.
 A relatively smaller project can get higherA relatively smaller project can get higher
revenuesrevenues

17. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
Risk FactorsRisk Factors
Several risk factors have beenSeveral risk factors have been
mentioned in the ESG.mentioned in the ESG.
Most of them have been addressed withMost of them have been addressed with
the approval of methodologies.the approval of methodologies.
Small Scale AR methodology nowSmall Scale AR methodology now
existsexists
A mixed package of energy andA mixed package of energy and
methane projects will make this anmethane projects will make this an
extremely attractive CDM propositionextremely attractive CDM proposition

18. APPLICATION OF CDM TO THE HP WATERSHED PROJECTAPPLICATION OF CDM TO THE HP WATERSHED PROJECT
M. P. Singh
ConclusionConclusion
Looking at the possible impact of CDM onLooking at the possible impact of CDM on
the project, it may be desirable tothe project, it may be desirable to
restructure some components torestructure some components to
accommodate and provide for some ofaccommodate and provide for some of
these activities, which can have athese activities, which can have a
snowballing effect on the actual benefit tosnowballing effect on the actual benefit to
the communities and the sustainability ofthe communities and the sustainability of
the project.the project.