Role of the Clean Development Mechanism (Cdm) in the Development of National Energy Industries

Abstract

Clean Development Mechanism (CDM) is an agreement under the Kyoto Protocol (1997) allowing industrialized (Annex-I) countries with Greenhouse Gas emission reduction commitment to invest in or finance projects that reduce emissions in developing countries using clean technologies. Under CDM, for every tonne of CO2 that does not enter into the atmosphere, a developing (Non-Annex-I) country earns one carbon credit which can be further sold to developed countries (Annex-I) through the international carbon market. Developed countries exchange these credits in terms of money and technology transfer with developing countries to meet their GHG emission reduction targets. 7391 CDM projects were registered worldwide by November 2013, out of which 6205 (84%) are under energy industry sector. India is contributing 828 (13%) CDM projects with estimated emission reduction of 69,156,926 metric tonnes of CO2e. By the end of the first commitment period (2012), 19,061,210 metric tonnes of CO2e emission reduction was achieved. The estimated range of annual CDM-generated revenue in India varies between US$10 and 330 million (Birla et.al.2012). India has the second largest number of CDM projects in the world. The National Clean Development Mechanism Authority (NCDMA) is the Designated National Authority (DNA) which was set up to evaluate and approve CDM projects. This paper provides a probing insight into these projects, and the methodologies used in order to achieve emission reduction by Indian industries.

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“…First, CDM project itself can bring additional capital or technology injection to enterprises. In order to achieve the goal of improving resource and energy utilization at a lower cost and reducing pollutant emissions ( Castro P 2012;Shaikh MR et al2015), developed countries will provide nancial support, clean equipment and clean technology and other assistance to developing countries through CDM projects ( Zhang W et al 2019;Aditee P et al 2016;Naik MR et al 2014), which can effectively alleviate the nancial constraints and technical barriers faced by host enterprises in the process of low-carbon transformation. Second, participating in CDM projects can increase the weight of enterprise nancing negotiations and the attraction of investment by transmitting positive information.…”