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Government of Pakistan
Ministry of Environment
Clean Development Mechanism (CDM)
and Government Initiatives for Promotion of CDM
Project Activities in Pakistan
Syed Amjad Hussain
Acting Head, CDM Cell
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Overview Presentation
Part-1
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Climate Change/Global Warming
UNFCCC and Kyoto Protocol
CDM and CDM Project Cycle
Benefits from CDM
Types of CDM Projects
Government Initiatives for Promotion of CDM Activities in Pakistan
Part- 2
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Criteria for Host Country Approval Process in Pakistan
Tax and Credit Sharing Policies
CDM Project Approval Process
CDM Projects in Pipeline in Pakistan
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Part 1: Climate Change and CDM
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Climate change/Global Warming
• The Greenhouse Effect
Some gases naturally exist in the atmosphere, the so called
Greenhouse Gases (GHGs) that form a blanket surrounding the
earth and keeps the earth warmer. This is called Greenhouse Effect.
• The Enhanced Greenhouse Effect
Human activities (fossil fuel burning, depletion of sinks like forests
etc.) has been increasing the concentration of GHGs in the
atmosphere and is leading to rise in temperatures. This is called
Enhanced Greenhouse Effect.
• Global Warming/Climate Change
Rise in temperatures of earth and other associated climatic changes
as caused by the Enhanced Green House Effect is called “Global
Warming” and in broader term “Climate Change”.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Scientific Evidence of Climate Change/Global Warming
The 4th Assessment Report of IPCC (2007) indicate that
Global temperature rises of 2 – 4.5 °C are almost inevitable due to
increased concentration of green house gases as caused by human
activities (fossil fuel use, land use changes etc.).
The above global warming (or in broader term Climate Change) is
expected to have serious consequences for:
-
Agricultural production
Biodiversity
Heath
Sea Level rise
Poor will be most affected by the Climate Change
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
International Response
The United Nations Framework Convention of Climate Change
(UNFCCC)
Adopted in June 1992 by over 180 countries at the “Earth Summit” in Rio
de Janeiro, Brazil.
The Convention was signed by 154 states (including Pakistan) and entered
into force on 21st March, 1994.
UNFCCC is a non-binding legal framework:
- Aims at stabilization of GHG concentration in the atmosphere
at safe level.
- To balance out the response along mitigation and adaptation
measures
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
The Kyoto Protocol of UNFCCC
Adopted in Kyoto, Japan in 1997 and ratified in February 2005
(Pakistan singed the Protocol on 11th January, 2005)
The Kyoto Protocol: Aims to reduce GHG emissions by 2012 and
distinguish two types of countries:
Annex-I countries: With binding emission targets (industrialised
countries):
Western and Eastern Europe, Canada, Japan, New Zealand,
Russia, Ukraine etc.
Non-Annex I countries: With voluntary participation (developing
countries):
China, India, Pakistan, South Africa, Philippines, Uruguay, Brazil,
and other developing countries.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
The Kyoto Protocol Targets
Under the KP the Annex- I countries have been
given binding targets: i.e. to reduce their combined
GHG emission by 5.2 percent below their 1990’s
level, between the period 2008 - 2012.
USA
EU
Japan
All Developed Countries
-7%
-8%
-6%
- 5.2%
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Mechanisms Under the Kyoto Protocol
The Kyoto Protocol introduces three market based
flexible mechanisms for the emissions reduction:
-
Joint Implementation (JI),
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Emission Trading Scheme (ETS) and
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Clean Development Mechanism (CDM)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Clean Development Mechanism (CDM)
CDM is a market based instrument under the Kyoto Protocol of
UNFCCC:
Assists developing countries in sustainable development
while at the same time contributing to the ultimate objective
of the Convention.
Developed countries to support project activities that reduce
GHG emissions in the developing countries in return for
Certified Emission Reductions (CERs)/ Carbon Credits.
The CERs generated by such project activities can be used
by developed countries as credits to meet their emissions
targets under the Protocol.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Concept of CERs/ Carbon Credits
Developing Country (Host)
GHG
reduction
GHG Emission Projections
Baseline Scenario
CERs
Sold to
Developed
country
($)
CDM Project
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Eligible GHG’s Reduction under Kyoto Protocol
The KPs emissions targets cover the six main GHGs:
Name
Formula
GWP (CO2 eq.)
1.
2.
3.
5.
4.
6.
(CO2)
(CH4)
(N2O)
(PFCs)
(HFCs)
(SF6)
1
21
310
92,00
11,700
23,900
Carbon- dioxide
Methane
Nitrous oxide
Per- fluorocarbons
Hydro- fluorocarbons
Sulphur hexafluoride
Sinks (carbon sequestration)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM Project Cycle
Project Identification and
Formulation of PDD
Host Country
Approval
Validation
National CDM Authority
Designated Operational
Entities
Registration
Project
proponents
Implementation
and Monitoring
Verification &
Certification
Issue CERs
Executive Board
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Time Required for Completion of Different Component within CDM Project Cycle
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Benefits from CDM (Carbon Finance)
(An Example)
Benefits to Host country
CDM Project
(e.g., alternate energy
production)
Additional
Energy
Production
Direct
Foreign
Investment &
Revenue
Certified
Emission
Reductions
Carbon Credits
(Developed
country Buyer)
Plus other Benefits
(Jobs, Clean Env.
Tech. Transfer)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM Incentive for Developed Countries
Developed countries have been subjected to legally binding
emission targets…..2008/12.
Due to un-localized nature of CO2…it does not matter for
environment where reduction occurs.
Costs of abatement or reduction of emissions :
Developed Countries : U$ 50-100/ton (estimated)
Developing Countries : U$ 1-15/ton
Reductions of GHG is much cheaper in developing countries.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM Incentives for Developing Countries
Capitalize an “unvalued” commodity…… CERs
“Additional” financing for local Sustainable Development priorities
and as such has potential of “Catalyzing” large Foreign Direct
Investment (FDI) flows
Instrument for “appropriate” Technology Transfer
Linkage with local environmental issues – (air pollution etc.)
Financial viability ~ Carbon financing can increase project Internal
Rate Returns (IRRs) between 0.5 to 50% (WB)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Types of CDM Projects
–
Unilateral, Bilateral and Multilateral CDM Projects are allowed in
following sectors
–
Energy
- Renewable/alternate energy,
- Energy efficiency/conservation, and
- Fossil- fuel cogeneration
–
Waste Management
- Landfill gas capture
- Recycling
- Energy from solid waste etc.
–
Transportation
- Alternative fuel vehicles
- Mass transit systems
- Cleaner engines, CNG
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Cont--– Industrial processes (Steel, Fertilizer, Textile etc.)
– Land Use, Land Use Change and Forestry (watershed management, sustainable
forest management, Afforestation and reforestation)
– Agricultural and livestock practices
– Any other project resulting in GHG mitigation or carbon
sequestration.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM Prospectus of Energy Efficiency in Industrial
Sector of Pakistan
The main types of EE projects are:
•
Demand Side
– Retrofit new efficient lighting,
– Reduce energy losses in process,
– introduce new efficient appliances
•
Supply Side
– Improve efficiency of generator,
– Upgrade transmission line and transformers to reduce losses,
– Upgrade steam boiler for greater efficiency
•
Fuel Switching
– Replace coal boilers with gas-fired units,
– use Biofuels instead of diesel.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM in Pakistan
• Pakistan ratified Kyoto Protocol in January, 2005
• Ministry of Environment has been declared as Designated National
Authority for CDM D. G. (Env.) is the “Focal Pont” for DNA
• CDM Cell has been established under DNA for promotion of CDM, and for
policy/ technical support to DNA.
• Pakistan National Operational Strategy for CDM has been approved in
February 2006 (www.cdmpakistan.gov.pk)
• Pakistan has granted Host Country Approval to fourteen (14) CDM projects
and more than 60 CDM projects are in process of development which
require host country approval in future
• Several capacity building/ awareness raising initiatives have been
conducted under this project
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Project: Establishment of CDM Cell in the MoE
Funding:
Public Sector Development Programme (PSDP)
Period:
3 years (July 2006 - June 2009).
Budget :
Rs. 38.93 million.
Objectives:
– Strengthening of Clean Development Mechanism (CDM)
Cell in the Ministry for implementation of Pakistan
National Operational Strategy for CDM.
– Capacity building and awareness raising of public/ private
stakeholders in CDM activities under the Kyoto Protocol of
UNFCCC.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Progress made so far:
CDM Cell, Ministry of Environment has organized the following
seminars/workshops/symposiums for awareness and capacity building for
GHGs Emission Reduction in Pakistan during the last three years;
Workshop on ‘The Climate Change and Natural
Management in June 2007.
Resource
Workshop on ‘Carbon Credits Potential in Oil and Gas Sector of
Pakistan in September 2007.
Workshop on ‘Carbon Credits Potential in Cement
Pakistan in January 2008.
Industry of
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
• Workshop on ‘Carbon Credits Potential in Sugar Industry of Pakistan in April
2008.
• Workshop on “Carbon Credits Opportunities in industry Sector of Pakistan
in August 2008
• Workshop on “Carbon Credits Opportunities in Wind Sector of Pakistan in
August 2008.
• Seminar on “Climate Change and Greenhouse Gases (GHG’s ) Mitigation
Options under the Kyoto Protocol” for creating awareness among the
student community in all Universities like Quaid-i-Azam University, Pir
Mehr Ali Shah University of Arid Agriculture, Fatima Jinnah University,
International Islamic university and Bahria University.
• An awareness raising seminar on Climate change and Clean Development
Mechanism in Agricultural Sector of Pakistan at NARC, Islamabad.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
• Following workshops have been planned in provincial headquarters
and industrial hubs of Pakistan in all CDM eligible sectors for
awareness raising and enhancement of CDM project activities for
national sustainable development and controlling environmental
pollution.
1) Steel Industry of Pakistan
2) Textile Industry of Pakistan
3) Alternate and Renewable Energies
4) Waste Management Sector of Pakistan
5) Power Sector of Pakistan
6) Paper and Pulp Industry of Pakistan
• Given Host Country Approval to 14 CDM Projects
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM Capacity Building Initiatives
Project Name
World Banks Project for Capacity Building for Development and Implementation of
Carbon Finance Projects under Japanese Policy and Human Resource Development
Grant
Period
18 Months
Budget
US$ 0.57 million
Aims and Objectives
1.
Strengthening of institutional framework and enabling environment to promote
public and private participation in the carbon market.
2.
Training/Workshops for enhancement of capacities of local stakeholders (public
institutions, private investors, NGOs etc.) in CDM project development.
3.
Support CDM project preparation and development in priority sectors: Energy,
waste management, industries, forest and agriculture).
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The Action Plan for the project has already been prepared.
The institutional and financial arrangements for the execution of project have been
approved.
Capacity building workshops have been organized
Progress Made so Far
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Current Status
Consultant Firm i.e. WINROCK International has been hired. And is in process of
implementation
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
(Cont…)
Project Name
Institutional Capacity Enhancement for CDM in Pakistan.
Period
18 months
Total Cost
US$ 0.674 million
Project Implementation
Grant from Royal Norwegian Embassy through United Nations Industrial
Development Organization (UNIDO)
Objectives
1.
To build institutional capacities in Pakistan for addressing climate
change; through enhancement of the DNA/CDM in the Ministry of
Environment for better management of CDM process and increasing
the capacity of CDM Project developers
2.
To tape the GEF funding to give a kick-start to initiating the process
of developing second national communication to UNFCCC.
3.
To tape donor funds to initiate the process of developing national
policy/ action plan for climate change mitigation and adaptation as
envisaged under national environmental policy.
Progress Made so Far
Ministry of Environment, UNIDO and Economic Affairs Division have
approved the project documents.
Current Status
The project is in process of implementation now
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
(Cont…)
Project Name
Hands on Capacity Building of Forest Official in Developing Proposals
for Afforestation/ Reforestation Project Design Documents (PDDs)
under CDM
Period
2007- 2009
Total Cost
Rs. 9.84 million
Funding
Swiss Agency for Development Cooperation through Inter- Cooperation,
and Ministry of Environment
Objectives
To build capacity of Provincial Forest Departments to develop and
manage CDM projects in forestry sector o Pakistan.
Progress Made so Far
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Three training sessions have been organized
National Definitions have been developed of CDM forestry
Draft Project Design Documents have been completed
5 A/R CDM Projects will be readily available in May-June, 2009.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Memorandum of Understanding (MoU)
• Government of Pakistan has signed a Memorandum of
Understanding (MoU) on Cooperation in CDM with Japanese Carbon
Fund (JCF) through Japan Bank for International Cooperation
(JBIC) has been signed in July 2008.
• Government of Pakistan has signed a Memorandum of
Understanding (MoU) in August 2008 with CAMCO International for
the realization of CDM projects in Pakistan.
• A number of similar MoU for promotion and enhancement of CDM
Project Activities in Pakistan
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Part 2: Criteria for Host Country Approval in Pakistan
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Criteria for Host Country Approval
– Consistency with the national laws and sustainable development policies,
strategies and plans.
– No obligation of the GoP to the investors other than CERs.
– Environmental Criteria
• Significant reduction in the emissions of GHGs
• Conservation of local resources and/or improvement of the local environment.
– Social Criteria
• Poverty alleviation, jobs creation, benefits to local communities etc.
– Economic Criteria
• Positive impact on balance of payments (not result in net increase in external debt
burden), cost effective.
– Technological Criteria
• Technology and know how transfer
• Not result in import of obsolete technology
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Tax and Credit Sharing Policies
– No income tax or duty on transfer/ sale of CDM
emission credits
– Credits to be awarded fully to the project sponsors
– Banks and other financial institutions to be
encouraged to provide special incentives to CDM
Project Proponents
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Project Approval Process
– Project proponent has to submit CDM Project Design Documents
(PDDs) to the DNA.
Mr. Jawed Ali Khan, Director General (Environment),
Focal Person of DNA
– The Submitted CDM project will be evaluated according to
National CDM Criteria.
– Letter of approval will be issued by DNA within one month of
the project submission.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Host Country Approval to 14 CDM Projects
1. Catalytic Nitrous oxide Abatement at the Tail Gas End of Pakarab Fertilizers (Pvt.) Ltd,
Multan. The project got registered with CDM Executive Board in November 2006.
2. Cattle Waste Management, Landhi Cattle Colony, Karachi, Pakistan.
3. 84 MW New Bong Escape Hydropower Project in Azad Jammu and Kashmir.
4. Pakarab Fertiliser Co-generation Power Project, Multan
5. Generator Change Project at Maple Leaf Cement Company Limited, Mianwali.
6. Fuel Switch and Energy Efficiency Project at Prosperity Weaving Mills Limited.
7. Construction of additional cooling tower cells at AES Lal Pir (Pvt) Limited, Muzaffar Garh,
Pakistan.
8. Almoiz Bagasse Cogeneration Project, D. I Khan, Pakistan.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
9.
Fuel Switch to a less Carbon Intensive Fuel at S. Fazalilahi and Sons Pvt Limited, Karachi
10.
Community-Based Renewable Energy Development in the Northern Areas and Chitral,
Pakistan.
11.
Gul Ahmed Combined Cycle Gas Turbine Project, Karachi.
12.
Composting of Organic Content of Municipal Solid Waste in Lahore.
13.
Biogas-based Cogeneration Project at Shakarganj Mills Ltd., Jhang.
14.
Installation of natural gas based cogeneration system at Century Paper & Board Mills Ltd.,
Lahore.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
• Expected Benefits from these 14 CDM Projects in Pakistan
– Foreign direct investment = US$ 345 million
– GHG Reduction = 3.35 million tones per annum
– Other sustainable development, social, economic and
environmental benefits to Pakistan.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM Projects in Pipeline
• More than 60 CDM Projects are in Pipeline in different sectors
 Energy (Efficiencies/Renewable/alternate energy)
Projects
 Waste Management/Industrial Processes
Projects
 Afforestation/Reforestation CDM
Projects
35
20
05
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Ways Forward for Promotion of CDM Projects in Pakistan
–
There is need of identification and assessment of CDM potential in all CDM
eligible sectors of Pakistan
–
Need more Awareness raising workshop/Seminars
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Capacity building initiatives for Project Design Documents (RDD) for both
public and private sectors need to enhance CDM Projects activities in Pakistan
–
Development of policies to encourage CDM projects in all relevant sectors
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Development of a strong supportive institutional framework
–
Develop Programmatic and Bundling Approaches for CDM Potential sectors of
Pakistan
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Enhance the portfolio of potential CDM Project through public/ private
partnership like development of linkages among all stakeholders of CDM
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Contact DNA- Pakistan
Clean Development Mechanism Cell
Ministry of Environment, Govt. of Pakistan
4th Floor, ENERCON Building,
Sector: G - 5/ 2, Islamabad.
Ph: 051-9205510
Fax: 051-9245533
Email: [email protected]
Web: www.cdmpakistan.gov.pk
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
THANK YOU
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan