A Tool For Attaining Sustainable Development Environmental Sciences Essay

Published: 2021-07-06 11:30:04
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Of the 148 Parties to the Kyoto Protocol,' more than 100 were developing countries. These developing countries ratified the Kyoto Protocol to the United Framework Convention on Climate Change (UNFCCC) [1] for varying reasons. For example, the small island developing states of Palau and the Marshall Islands are Parties to the Kyoto Protocol because they wanted to mitigate the impacts of climate change as soon as possible for national security reasons. [2] Within the next hundred years, several of these islands will no longer exist due to rising sea levels that result from global warming. Other developing countries had become Parties to promote sustainable development especially in terms of improved energy services in addition to mitigating the impacts of climate change.
The Clean Development Mechanism (hereinafter referred as CDM), the only flexible mechanism in the Kyoto Protocol that developing countries can use, addresses all these issues. [3] The CDM links sustainable development directly with greenhouse gas (GHG) [4] emission reduction, thus implementing the UNFCCC's principle to promote sustainable development. [5] The CDM aims to help developing countries achieve sustainable development and mitigate climate change by enabling industrialized countries to acquire credits against their Kyoto targets in exchange for investing in emission reduction projects in developing countries. The benefits accruing to developing countries include climate change mitigating technology, new investments, and assistance with capacity-building.
The age old saying "Everybody talks about climate and nobody does anything about it" was proved to be wrong after the Nobel committee awarded the prestigious Nobel prize to Al Gore of USA and Dr. R.K. Pachauri, Chairman of IPCC of India in 2007 for gathering scientific proof on climate change and popularizing the matter and bringing to the forefront of human thinking. In early 80’s, scientific evidence showed that global climate change processes had set in, which were attributed predominantly to emission of greenhouse gases (GHG). While CO2 was contributing to almost 80% of the global warming, there were other six gases namely Methane, Nitrous Oxide, Hydro fluorocarbon, Per fluorocarbons (CF4 C2F6 ) and SF6. [6] 
As set out in Article 12, paragraph 2, of the Kyoto Protocol, the purpose of the CDM is to assist developing countries in achieving sustainable development and in contributing to the ultimate objective of the Convention (i.e. to achieve a stabilization of atmospheric GHG concentrations at a level that will prevent dangerous human induced climate system interference) and to assist developed countries in complying with their emission limitation and reduction commitments.
Climate change mitigation projects in developing countries can yield numerous benefits, such as the transfer of technology, rural energy provision, and reduction of pollutants, contributions to livelihood improvement, employment creation and increased economic activity. This project has made an attempt to throw some light on the advantages of CDM in India, its contribution to sustainable development, the process vis-à-vis its implementation and challenges faced by it.
Chapter2. The Science behind Climate Change
2.1. Climate Change
2.2. Science Involved
The evidence of global warming is now clear. [7] Most scientists believe anthropogenic activity has influenced this trend-especially in regards to the burning of fossil fuels-which has resulted in an increase of greenhouse gases in the atmosphere. [8] 
The atmosphere works as a greenhouse. Incoming solar rays are reflected, but also penetrate the atmosphere. If there had been no global warming, the planet would not have been habitable; it would have been too cold. However, since the Industrial Revolution, the concentration of various greenhouse gases has increased due to fossil fuel use, increasing the temperature on the earth beyond normal variations. [9] The impact is projected to increase both the level and frequency of severe weather. Already the icecaps are melting at an alarming rate and the glaciers are receding. The Arctic shows the greatest evidence of global warming; scientists predict that polar ice in this region will melt away completely during the summer months by 2070.15 Temperatures, in general, are projected to increase by 1.4°C to 5.8'C by 2100;16 and the sea level is projected to rise anywhere from 0.09m to 0.88m within the same time period.
2.3. Consequences
2.4. United Nations Framework Convention on Climate Change
In order to address the climate change issue, the international community took multilateral action by adopting the UNFCCC in 1992. [10] The objective of the UNFCCC is to "achieve stabilization of atmospheric concentrations of GHGs at a level that would prevent dangerous anthropogenic interferences with the climate system ..." [11] Today, 189 states-which translates into ninety-seven percent of the international community-have become parties to the UNFCCC and have therefore agreed to take action with regard to climate change. [12] 
The UNFCCC, adopted at the United Nations Conference on Environment and Development (also referred to as the Rio Conference), [13] included the following principles in its provisions: the precautionary approach, the principle of common but differentiated responsibilities, and the right to sustainable development. [14] At the Rio Conference, all of these principles were also included in general terms in the Rio Declaration. [15] 
The precautionary approach emphasizes the importance of taking cost- effective action to prevent the causes of climate change when there are threats of serious or irreversible damage, even when lacking full scientific certainty, rather than taking a wait-and-see approach. [16] 
The principle of common but differential responsibilities is at the core of the UNFCCC and Kyoto Protocol. [17] Clearly, climate change is a global issue that needs to be tackled by all nations. Yet, taking into account the previous actions by industrialized states-having industrialized without internalizing the environmental costs, an action that has lead to global degradation-the principle of common but differentiate responsibilities, accordingly, stipulates that they are the ones which should take the lead in combating climate change. [18] Using the principle of equity, special considerations or "differential treatment" should be given to developing countries to promote their participation in the climate change treaties. This is not to say that they will not have binding commitments to limit their emissions in the future, but rather that industrialized states should, on account of their greater historic contribution to climate change, take the first steps. Allowing for differential treatment in the name of fairness and reasonableness may also be looked upon as essential for real equality when taking into account the disparities in resources and capabilities among nations. With their advanced technologies and financial resources, industrialized nations are more capable of mitigating climate change and adapting to it than are developing countries. The UNFCCC "urged" the Annex I Parties (industrialized countries) [19] to reduce their GHG emissions to 1990 levels by the year 2000. However, this was not a binding commitment, only a goal. The Parties to the UNFCCC agreed at the outset that the developed countries, having historically contributed the most to the climate change problem had to "take the lead" to deal with the problem by reducing their emissions in accordance with the principle of common but differentiated responsibilities. [20] Accordingly, the industrialized nations were to bear a greater burden than the developing countries. However, the UNFCCC required all Parties to develop inventories of anthropogenic emissions and measures to mitigate climate change. [21] Furthermore, the UNFCCC also obligated all Parties to produce a report on the action they have taken to implement the UNFCCC, called "national communications" [22] To fulfill their reporting obligations, Annex I Parties were given six months from the entry into force of the UNFCCC to submit their reports, while non-Annex I Parties (developing countries) were given three years and the least developed States were not given a deadline. [23] 
The supreme body of the UNFCCC is the Conference of the Parties (COP), which has representatives from all State Parties. The Conference of the Parties meets annually to review the implementation of the UNFCCC
Chapter3. Kyoto Protocol
The 1997 Kyoto Protocol to the 1992 United Nations Framework Convention on Climate Change (UN-FCCC) provides a first step towards reducing the future risks of climate change. The Kyoto Protocol's core commitment is that Annex I Parties shall reduce their GHG emissions by at least five percent below 1990 levels in the first commitment period, 2008-2012. [24] The Quantified Emissions Limitation and Reduction Objectives (QELROs), as the Protocol called them, range from 8 percent for the European Union member countries collectively ,7 percent for the United States, 6 percent for Japan, stabilization for the Russian Federation and most countries with transitional economies, to an increase of 8 percent for Australia and 10 percent for Iceland. [25] Currently, there are 192 Parties (191 States and 1 regional economic integration organization) to the Kyoto Protocol to the UNFCCC. The total percentage of Annex I Parties emissions is 63.7%. [26] 
In meeting these objectives, there are four flexibility mechanisms under the Kyoto Protocol that can be utilized by these industrialized countries: "Bubble" Mechanism (Article 4), Emissions Trading (Article 17), Joint Implementation (Article 6), and Clean Development Mechanism (Article 12).
Bubble Mechanism refers to the European Union member countries that agreed to have a collective QELRO of 8 percent, regardless of the actual individual countries reductions. Emissions Trading (ET) refers to exchanging assigned amount of emissions between Annex I countries, expectedly between rich Annex I countries.
Joint Implementation (JI) involves investment by an Annex I country in another Annex I country, with emissions reductions that are credited to the investing country.
Clean Development Mechanism (CDM), the focus of this paper, is a mechanism similar to JI, except that it applies only for investment in developing countries, or countries not included in Annex I of FCCC. CDM also contains provisions for channeling funds to support adaptation to climate change. CDM has a vast opportunity to be further shaped so that the benefits are enhanced and the costs are minimized. Michael Grubb, of the Royal Institute for International Affairs in the United Kingdom, states of CDM that if "handled well, [it] could provide substantial new financial resources to assist developing countries to develop along cleaner paths. It may also help them adapt to the effects of climate change, and bring local as well as global environmental and social benefits in accordance with their development needs. Handled badly, it could dump an everlasting supply of ‘hot tropical air’ into the trading mechanism proposed for implementing Annex I commitments, just as negotiators are struggling to remove the threat of Russian ‘hot air.’" [27] 
Deemed as the "Kyoto surprise," CDM is the only link between the Kyoto Protocol and developing countries. Its workability will help ensure the effectiveness of the Kyoto Protocol and of developing countries willingness to participate in a future global emissions regime. [28] Since emissions from developing countries will eventually surpass those from the Annex I countries, developing countries full participation in such a regime is crucial.
Among developing countries, there is a spectrum of opinion regarding CDM, as there are different interests among the developing countries. While all developing countries hold a common position that its function is first and foremost to foster sustainable development, the African countries are particularly concerned about how this function remains very ill defined. [29] 
The United States of America, which generates twenty-five percent of the world's CO2 emissions, needs to ratify the Kyoto Protocol if the U.S. is to comply with its commitment under the UNFCCC-the commitment from industrialized countries to take the lead in addressing climate change. [30] Furthermore, at least some of the developing countries will need to take on the binding emission limitation targets in the near future, since some of them, such as China and India, are quickly closing the gap on industrialized countries with regard to GHG emissions.
India and UNFCCC
India signed the UNFCCC on 10 June 1992 and ratified it on 1 November 1993. Under the UNFCCC, developing countries such as India do not have binding GHG mitigation commitments in recognition of their small contribution to the greenhouse problem as well as low financial and technical capacities. The Ministry of Environment and Forests is the nodal agency for climate change issues in India. It has constituted Working Groups on the UNFCCC and Kyoto Protocol.
Clean Development Mechanism? [31] 
The CDM allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. [32] These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.
The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets.
The CDM is the main source of income for the UNFCCC Adaptation Fund, which was established to finance adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change. The Adaptation Fund is financed by a 2% levy on CERs issued by the CDM.
CDM aims to provide a market-based mechanism for industrialized states to meet their emission reduction commitments while at the same time promoting sustainable development and climate change mitigation in developing countries. The CDM, being a market-based mechanism, constitutes a new approach in regard to global environmental problem-solving. [33] Through this mechanism, developing states will increase their participation in efforts to address climate change, while simultaneously taking important steps to promote sustainable development.
Its ultimate objective is to stabilise greenhouse gas (GHG) concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. The Clean Development Mechanism (CDM) is one of the three mechanisms established by the Kyoto Protocol to assist Annex I (industrialised) countries in meeting their reduction targets.
Countries with commitments under the Kyoto Protocol to limit or reduce greenhouse gas emissions must meet their targets primarily through national measures. As an additional means of meeting these targets, the Kyoto Protocol introduced three market-based mechanisms, thereby creating what is now known as the "carbon market." [34] 
The Kyoto mechanisms are:
Emissions Trading [35] 
The Clean Development Mechanism (CDM) [36] 
Joint Implementation (JI) [37] 
Bubble mechanism [38] 
The Kyoto mechanisms aim to:
Stimulate sustainable development through technology transfer and investment
 Help countries with Kyoto commitments to meet their targets by reducing emissions or removing carbon from the atmosphere in other countries in a cost-effective way
Encourage the private sector and developing countries to contribute to emission reduction efforts
 JI and CDM are the two project-based mechanisms which feed the carbon market. [39] JI enables industrialized countries to carry out joint implementation projects with other developed countries, while the CDM involves investment in sustainable development projects that reduce emissions in developing countries.
The carbon market is a key tool for reducing emissions worldwide. It was worth 30 billion USD in 2006 and is growing since then at a fast pace. Annex I Parties must provide information in their national communications under the Protocol to demonstrate that their use of the mechanisms is "supplemental to domestic action" to achieve their targets. This information is assessed by the facilitative branch of the Compliance Committee.
While investors profit from CDM projects by obtaining reductions at costs lower than in their own countries, the gains to the developing country host parties are in the form of finance, technology, and sustainable development benefits. [40] 
The basic rules for the functioning of the CDM were agreed on at the seventh Conference of Parties (COP-7) to the UNFCCC held in Marrakesh, Morocco in October-November 2001. Projects starting in the year 2000 are eligible to earn CERs if they lead to "real, measurable, and long-term" GHG reductions, which are additional to any that would occur in the absence of the CDM project. This includes afforestation and reforestation projects, which lead to the sequestration of carbon dioxide.
At COP-7, it was decided that the following types of projects would qualify for fast-track approval procedures: [41] 
redbullet.jpg (4598 bytes) Renewable energy projects with output capacity up to 15 MW 
redbullet.jpg (4598 bytes) Energy efficiency improvement projects which reduce energy consumption on the supply and/or demand side by up to 15 GWh annually
redbullet.jpg (4598 bytes) Other project activities that both reduce emissions by sources and directly emit less than 15 kt CO2 equivalent annually.
The CDM will be supervised by an executive board, and a share of the proceeds from project activities will be used to assist developing countries in meeting the costs of adaptation to climate change
What are Carbon Credits?
The primary purpose of the Protocol was to make developed countries pay for their ways with emissions while at the same time monetarily rewarding countries with good behaviour in this regard. Since developing countries can start with clean technologies, they will be rewarded by those stuck with dirty ones. [42] This system poises to become a big machine for partially transferring wealth from wealthy, industrialised countries to poor, undeveloped countries. A CER or carbon Credit is defined as the unit related to reduction of 1 tonne of CO2 emission from the baseline of the project activity. [43] 
Carbon credits are a tradable permit scheme. [44] They provide a way to reduce greenhouse gas emissions by giving them a monetary value. A credit gives the owner the right to emit one tonne of carbon dioxide. A company has two ways to reduce emissions. One, it can reduce the GHG (greenhouse gases) [45] by adopting new technology or improving upon the existing technology to attain the new norms for emission of gases. Or it can tie up with developing nations and help them set up new technology that is eco-friendly, thereby helping developing country or its companies ‘earn’ credits.
India, China and some other Asian countries have the advantage because they are developing countries. Any company, factories or farm owner in India can get linked to United Nations Framework Convention on Climate Change and know the ‘standard’ level of carbon emission allowed for its outfit or activity. The extent to which I am emitting less carbon (as per standard fixed by UNFCCC) I get credited in a developing country. This is called carbon credit.
Kyoto Protocol [46] 
4 mechanisms
Joint Implementation Emission Trading Bubble Mechanism CDM
Between Annex I countries Between Annex I NonAnnex I countries
What are the key eligibility criteria for CDM PROJECTS approval?
The general eligibility requirements for participation in CDM projects are that [47] :
The host country is a Party to the Kyoto Protocol
It is participating voluntarily in the project activity
It has designated a national authority for the CDM.
A Party not included in Annex I may participate in a CDM project activity if it is a Party to the Kyoto Protocol [48] 
If a project is financed by sources of public funding, this must not result in a diversion of official development assistance, and the sources of public funding must be separate and not be counted towards the financial obligations of the Annex I countries. [49] 
The project should not result in unacceptable negative impacts on the environment. If it is expected that the unintended environmental impacts of the project are significant, then an Environmental Impact Assessment (EIA) [50] in accordance with the procedures as required by the host country should be carried out.
The project concept must be acceptable to the host country and conform to its CDM requirements.
The project developer should define the period over which CERs will be claimed.
·The emission reductions of the project need to be measurable and need to be validated/determined and verified by an Operational Entity (OE)/Independent Entity.
The CDM has a two-fold purpose
(a) to assist developing country Parties in achieving sustainable development, thereby contributing to the ultimate objective of the Convention, and
(b) to assist developed country Parties in achieving compliance with part of their quantified emission limitation and reduction commitments under Article 3.
Each CDM project activity should meet the above two-fold purpose
The project proposal should establish the following in order to qualify for consideration as a CDM project activity
Additionalities [51]  
Emission Additionality: The project should lead to real, measurable and long term GHG mitigation. The additional GHG reductions are to be calculated with reference to a
Financial Additionality: The funding for CDM project activity should not lead to diversion of official development assistance. The project participants may demonstrate how this is being achieved.
Technological Additionality: The CDM project activities should lead to transfer of environmentally safe and sound technologies and know-how.
Sustainable development indicators  [52] 
How does a CDM project contribute towards Sustainable Development?
The Brundtland Report, Our Common Future, defined sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own need" [53] Despite these efforts, there is still no universally accepted definition of sustainable development or an agreed basis for determining whether a specific action, such as a proposed CDM project, would contribute to sustainable development. However, it is widely agreed that sustainable development comprises of three mutually reinforcing dimensions, namely economic development, social development, and environmental protection. [54] Owing in part to the absence of an accepted international definition of sustainable development, the responsibility for determining whether a CDM project contributes to national sustainable development as defined by the host country currently resides with its designated national authority (DNA). The DNA therefore states in its letter of approval of the CDM project that, in its judgment, the proposed CDM project will contribute to the country’s sustainable development. A designated operational entity (DOE) must ensure confirmation by the DNA of the host country that the project activity assists in achieving sustainable development in the host country.
It is the prerogative of the host Party to confirm whether a clean development mechanism project activity assists it in achieving sustainable development. The CDM should also be oriented towards improving the quality of life of the very poor from the environmental standpoint.
How much a CDM project contributes to Sustainable Development depend upon various factors and indicators [55] . These indicators could be qualitative or quantitative. As yet there is no agreed list of indicators suitable for CDM projects. In the report [56] a set of 15 indicators were empirically derived from a representative sample of 350 CDM projects.
Many projects claim reduction of GHG emissions as a contribution to sustainable development. A reduction in GHG emissions is excluded from the sustainable development indicators since this is a prerequisite for a CDM project.
The following aspects should be considered while designing CDM project activities: 
 Social well-being
Labour conditions and/or human rights
Promotion of education
Health and safety
Poverty alleviation
Engagement of local population
Empowerment of women, care of children and frail
Economic well-being
The CDM project activity should bring in additional investment consistent with the needs of the people. 
Direct/indirect financial benefits for the local and/or regional economy
Local/regional jobs generated directly/indirectly
Development/diffusion of local/imported technology. Investment in the local/regional infrastructure.
Environmental well-being
Efficient utilization of natural resources
Reduction in noise, odours, dust or pollutants
Improvement and/or protection of natural resources
Available utilities
Promotion of renewable energy
Technological well-being
The CDM project activity should lead to transfer of environmentally safe and sound technologies with a priority to the renewable sector or energy efficiency projects that are comparable to best practices in order to assist in upgradation of the technological base
Baselines [57]  Marrakech Accord states that: The baseline for a CDM project activity is the scenario that reasonably represents the anthropogenic emissions by sources of greenhouse gases that would occur in the absence of the proposed project activity (3/CMP.1, Annex, paragraph 44).
"The Baseline may include a scenario where future anthropogenic emissions by sources are projected to rise above current levels, due to the specific circumstances of the host." [58] 
The project proposal must clearly and transparently describe the methodology of determination of the baseline. It should conform to following: 
a) Baselines should be precise, transparent, comparable and workable; 
b) Should avoid overestimation; 
c) The methodology for determination of baseline should be homogeneous and reliable; 
d) Potential errors should be indicated; 
e) System boundaries of baselines should be established; 
f) Interval between updates of baselines should be clearly described; 
g) Role of externalities should be brought out (social, economic and environmental); 
h)Should include historic emission data-sets wherever available; 
i)Lifetime of project cycle should be clearly mentioned;
The baseline should be on a project-by-project basis except for those categories that qualify for simplified procedures. The project proposal should indicate the formulae used for calculating GHG offsets in the project and baseline scenario. Leakage, if any, should be described. For the purpose of Project Idea Notes (PIN), default values may be used with justification. Determination of the base project which would have come up in the absence of the proposed project should be clearly described in the project proposal.
Financial indicators 
The project participants should bring out the following aspects: 
a) Flow of additional investment 
b) Cost effectiveness of energy saving
c) Internal Rate of Return (IRR) without accounting for CERs 
d) IRR with CERs 
e) Liquidity, N.P.V., cost/benefit analysis, cash flow etc., establishing that the project has good probability of eventually being implemented 
f) Agreements reached with the stakeholders, if any, including power purchase agreements, Memoranda of Understanding, etc.
g) Inclusion of indicative costs related to validation, approval, registration, monitoring and verification, certification, share of proceeds
h) Funding available, financing agency and also description of how financial closure seeks to be achieved
Technological feasibility 
The proposal should include following elements: 
The proposed technology/process, product/technology/material supply chain 
Technical complexities, if any 
Preliminary designs, schematics for all major equipment needed, design requirement, manufacturers name and details, capital cost estimate 
Technological reliability 
Organizational and management plan for implementation, including timetable, personnel requirements, staff training, project engineering, CPM/PERT chart etc.
Risk analysis 
The project proposal should clearly state risks associated with it including apportionment of risks and liabilities; insurance and guarantees, if any.
The credentials of the project participants must be clearly described.
Institutional Arrangement for CDM [59] 
Institutional structure
The institutional structure created for implementation of CDM includes three new
Executive Board;
Designated National Authority; and
Designated Operational Entity. [60] 
Executive Board (10 member board)
To supervise the implementation of CDM, an Executive Board has been set up and it operates under the authority of the Parties. It is serviced by the UNFCCC Secretariat. The Executive Board consists of ten members, including one representative from each of the five official UN regions (Africa, Asia, Latin America and the Caribbean, Central and Eastern Europe and OECD), one representative from the small island developing countries and two representative each from developed and developing countries. The Executive Board maintains a CDM registry for issuance of "Certified Emission Reductions (CERs)", management of account levied for administrative expenses and adaptation fund, and for keeping record of CER account for countries developing country participating in CDM projects. The Executive Board also accredits Designated Operational Entities (DOEs).
2. Designated National Authority (DNA) [61] 
Countries participating in CDM are required to identify Designated National Authority, usually a government Department to serve as a focal point for consideration and approval of CDM project proposals.
3. Designated Operational Entity (DOE) [62] 
The Designated Operational Entities will be authorized to validate the candidate project proposals and subsequently verify the emission reduction resulting from the projects which could be considered for issuance of CERs. The institutions willing to serve as operational entities are required to obtain accreditation from the Executive Board. For designation as operational entities, the applicant institutions/agencies should have necessary professional expertise and no conflict of interest with the project participants.
CDM Process Cycle [63] 
The CDM rules govern a number of stages and entities in the CDM, which can be divided into two phases - the development phase and the implementation phase. [64] The typical CDM project cycle is as follows:
Project Design
EB Government Approval DOE
Certified Emission Reductions
A . Project Design Document [65] one of the 3 doc to be submitted along with val. Report and LOA from DNA
The project design document (PDD) is the key document involved in the validation and registration of a CDM project activity. It is one of the three documents required for a CDM project to be registered, along with the validation report from the designated operational entity (DOE) and the letter of approval from the designated national authority (DNA).
The PDD is reviewed by the DOE during the validation process to ensure that a project meets the requirements for validation. The PDD is also used as the basis of consultation with stakeholders, which is conducted by making the PDD and related documentation publicly available on the UNFCCC website.
The project design document is then included in the request for registration which is submitted by the DOE to the Executive Board.
Content of a Project Design Document: A PDD must contain the following
Describe the project and establish a project boundary [66] (limits of the project from the perspective of calculating emission reduction and anthropogenic activity from sources)
Describe the baseline methodology [67] 
Establish the duration and crediting period [68]  of the project: The crediting period for a CDM project activity is selected by the project participants, and may be either: (duration time selected by the project participant for which CDM project activity will be implemented and GHGs reductions will be generated.)
A 7-year crediting period, renewable twice; or
A single 10-year crediting period.
Describe how the project is additional;
Describe the environmental impacts of the project;
Provide information on the sources of public funding for the project
Summarised stakeholder  [69] comments: Stakeholders must be consulted with during the planning of a CDM project activity. This is a requirement for validation. The designated operational entity selected by project participants to validate a project activity, being under a contractual arrangement with them, shall review the project design document and any supporting documentation to confirm that the following requirements have been met. Comments by local stakeholders have been invited, a summary of the comments received has been provided, and a report to the designated operational entity on how due account was taken of any comments has been received (3/CMP.1, Annex, paragraph 37(b)).
Describe the monitoring plan and
Set out all relevant calculations.
B. Letter of Approval [70] 
Written approval from a Party involved (called the letter of approval) is the authorisation from that country of the participation by a project participant in the proposed project activity. Obtaining a letter of approval is a requirement for registration of a project activity under the CDM.
C. Validation: Validation is the process of determining that the project is eligible to be registered as a CDM project, by confirming that the project meets the requirements of the CDM. In some domestic offsets and emissions trading schemes, this validation or project approval process is carried out by a central scheme administrator or regulator.  For CDM projects, however, the process is outsourced to private entities (known as designated operational entities (DOEs), or 'validators').
In carrying out its validation work, the DOE shall ensure that the project activity complies with the requirements of paragraph 37 of the CDM modalities and procedures. The CDM Validation and Verification Manual (VVM) are used by DOEs as a basis for developing guidelines in order to promote quality and consistency in the validation and verification work of DOEs. [71] 
D. Registration [72] : Registration is the formal acceptance by the Executive Board of a validated project as a CDM project activity. Registration is the prerequisite for the verification, certification and issuance of CERs relating to that project activity.
The CDM project cycle is as follows:
The operational entities (OE) will validate proposed CDM projects on the basis of project design documents. This will include a check to ensure the validity of the baseline, on which basis the emission reductions will be calculated, and the project’s monitoring plan;
The executive board will formally register the project under the CDM;
Once the project is running, the participants will monitor the project;
A different OE will verify the monitored emission reductions;
This different OE will eventually certify those emission reductions as legitimate CERs.
Based on this, the executive board will issue the CERs and distribute them to project participants as requested.
The CERs generated by projects will be subject to a levy (officially termed the "share of proceeds"). Two percent of the CERs of each project will be paid into newly created adaptation fund to help particularly vulnerable developing countries adapt to the adverse effects of climate change least developed countries are exempt from this part of levy in order to promote the equitable distribution of projects).
Benefits of Clean Development Mechanism
Technology transfer via CDM projects
The transfer of technology is considered an important benefit to assist developing countries in achieving sustainable development. Some host countries specifically detail it as a requirement for approval of a project. As most GHG mitigation technologies are researched and designed in developed countries, [74] to reduce emissions in developing countries the technologies need to be transferred to those countries. [75] The CDM is one mechanism by which they could be transferred. Other mechanisms for transfer of technology include licensing, foreign direct investment, trade and, more recently, establishment of global research and development networks, acquisition of firms in developed countries, and recruitment by firms in developing countries of experts from developed countries
Technology transfer [76] ;
"a broad set of processes covering the flows of know-how, experience and equipment for mitigating and adapting to climate change amongst different stakeholders such as governments, private-sector entities, financial institutions, non-governmental organizations (NGOs) and research/education institutions" [77] 
This definition covers every relevant flow of hardware, software, information and knowledge between and within countries, from developed to developing countries and vice versa whether on purely commercial terms or on a preferential basis. But, United Nations Conference on Trade and Development (UNCTAD) excludes the mere sale or lease of goods from technology transfer. [78] Equipment that embodies a technology new to a country must be accompanied by transfer of sufficient knowledge to successfully install, operate and maintain the equipment.
Beneficial to both Host and Investor Country [79] 
It benefit both the investor and host countries by contributing to sustainable development in the host developing countries and by allowing investor countries to meet their GHG reduction targets at the lowest possible cost by taking advantage of the lower marginal cost of reducing GHG emissions in developing countries.
It would also bring in improved productivity and operational efficiency.
Improvement in the livelihood of communities through the creation of employment
Increase in foreign investment and source of foreign currency.
CDM activities within LULUCF will support afforestation activities. [80] 
fbe Related to CDM
There are few crucial issues that developing countries must address with regard to CDM projects and these include:
National Institutional Structure – it is the authority within the host country to evaluate potential CDM projects and give approval for the projects. The national CDM authority must have open communication with the government agencies of the sectors relevant to the CDM to ensure that the national interests are strictly followed in the selection of CDM projects. [81] 
Synergy between CDM projects and National Sustainable Development Priorities – the Kyoto Protocol stipulates that the CDM projects must assist 14 developing countries in achieving sustainable development in order to fulfill the eligibility criteria. However, it is in the self interest of the host country not see the sustainable development dimension merely as a requirement of CDM. National authorities can use the sustainable development criteria to evaluate key linkages between national development goals and CDM projects and ensure selection of projects that enhance such synergies.
Establishment of Sustainable Development Criteria [82] – One way of establishing a linkage between CDM projects and national sustainable development criteria is through the use of project evaluation indicators that reflect specific CDM project issues such as financial costs and GHG emission reductions as well as development criteria including economic, social, and environmental sustainability dimensions.
PDD issue: Need for better quality, transparent & comprehensive documentation of the projects for CDM approval. [83] 
Low level awareness. There is no training and development of specialized human resource for CDM for reaching out to all Indian industry sectors.
There is an imbalance in CERs demand and supply
Market barriers: The CDM process involves market barriers and the transaction costs are too high while the potential benefits are uncertain. Another issue of concern arises from the apprehension that time required to fulfill the procedural requirements will be long and the payback for CERs will not be commensurate.
EIA criteria and stakeholder consultations : For preparation of EIA report, it is necessary to spell out the aspects which need to be dealt with in the EIA study. Requirements of EIA as per the existing system in different countries are not similar. The CDM project approval process requires consultation with stakeholders at three stages.
Baseline criteria: The CDM project approval process has introduced certain key issues like Baselines, Additionality, Project boundaries and leakage. These are essentially for achieving the desired emission reductions while pursuing the objective of sustainable development. If these issues are not duly understood and addressed, it may affect the CDM and in turn become a market barrier.
Additionality criteria: To meet the environmental additionality criteria, the project proponent has to explain the measures that reduce emissions, while excluding measures that would have been introduced anyway. One way to establish environmental additionality is to prove that the technology to be used is the best available under the circumstances and better than the typical technology.
Project boundaries and leakages: The Executive Board has defined leakage as the net change of anthropogenic emissions by sources of greenhouse gases which occur outside the project boundary, and which is measurable and attributable to the CDM project activity. The concern is that we may draw project boundaries too narrowly – there will be pressure to do so from potential project participants, as it simplifies the calculation – and miss significant leakage effects. If, for example, we do not include the effect on submerged vegetation within the project boundary for a large hydro project, we may miss significant amount of methane emissions. To take another example, if we displace diesel generators with solar power in a CDM project should we be concerned about what happens to the generators?
Return on Investment: During the project cycle, there are potential risks of price fluctuations from the projected level besides the possibility of not obtaining theexpected CERs. Another issue of concern is the high cost of penalties for failure to deliver the contracted amount of CERs. In some of the schemes, the penalties are prohibitively high which calls for a provision of insurance against such risk.
An Overview of CDM projects [84] 
As of April 2010, more than 2100 projects are registered as CDM projects. China continues to dominate with a share of more than 36 percent, followed by India (23 percent), Brazil (8 percent), Mexico (5 percent), Malaysia, Indonesia and Philippines. [85] 
In terms of the expected average annual CERs from the registered projects, China is likely to get almost 60 percent of the total CERs, followed by India (12 percent) and Brazil (6 percent).
In terms of the regions, Asia and Pacific countries dominate the CDM projects with a lions‘ share of more than 75 percent. Latin American countries come next with close of 22 percent of the registered CDM projects. African countries are still to make their presence felt through CDM projects.
The highest number of projects (61percent) have been registered under energy industries (including renewable and non-renewable sources), followed by waste handling and disposal (18 percent).
India by far has registered 694 projects [86] . The ion estimated emission reductions 52996 CO2 eq. per year. India claims annual emission reduction to 42%.
In India, the CDM projects are from different areas such as Renewable Energy, Energy Efficiency, Waste Management, Fuel Switching, Fuel substitution, Transport Sector, Bio-diesel, A & R Projects etc. The power sector reform and Rural Electrification programmes also likely to generate substantial CERs
The CDM will be an effective tool for increasing developing countries national capacity to mitigate climate change by facilitating their switch to clean technologies and energy efficiency. However, major questions remain as to whether the CDM will succeed as "credible" mechanisms that can offer adequate environmental safeguards in issuing CERs, while also remaining attractive to investors. To help guarantee the credibility of the CER, the executive board initially set a high standard for the procedures and modalities of the CDM. [87] 
Domestic preparations, systems and procedures for hosting or investing in CDM project activities are still underway. Currently, there is a huge need for Annex I Parties to assist in capacity-building, especially to promote the establishment of designated national authorities (DNAs) in developing countries. With regard to project developers, incentives are demand driven. The first project developers will undoubtedly be more susceptible to the financial risks inherent in this new system, yet they can take advantage of the opportunities that will not be available at a later stage in the game. [88] 
CERs generated by the CDM will compete with other Kyoto Mechanisms. An interesting question remains as to how the CDM will fit in with future international actions on climate change (after the end of the second commitment period in 2018).
In summary, assuming all the CDM verification procedures are ironed out, and host nation systems and procedures are put into place, the CDM looks to be a promising tool for assisting industrialized countries in fulfilling their Kyoto Protocol commitments, while assisting developing countries achieve sustainable development. The CDM will provide developing countries with an opportunity to move toward a sustainable energy development path, while offering public and private investors opportunities to develop profitable climate change mitigating technologies.

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