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Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

Clean Development Mechanism (CDM) and Government Initiatives for Promotion of CDM Project Activities in Pakistan Syed Amjad Hussain Acting Head, CDM Cell. Government of Pakistan Ministry of Environment. Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan.

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Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

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  1. Clean Development Mechanism (CDM) and Government Initiatives for Promotion of CDM Project Activities in Pakistan SyedAmjadHussainActing Head, CDM Cell Government of Pakistan Ministry of Environment Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  2. Overview Presentation Part-1 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 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

  3. Part 1: Climate Change and CDM Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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 -7% EU -8% Japan -6% All Developed Countries - 5.2% Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  9. Mechanisms Under the Kyoto Protocol • The Kyoto Protocol introduces three market based flexible mechanisms for the emissions reduction: • - Joint Implementation (JI), • - Emission Trading Scheme (ETS) and • - Clean Development Mechanism (CDM) Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  10. 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

  11. Concept of CERs/ Carbon Credits Developing Country (Host) Sold to Developed country ($) CERs GHG reduction GHG Emission Projections Baseline Scenario CDM Project Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  12. Eligible GHG’s Reduction under Kyoto Protocol The KPs emissions targets cover the six main GHGs: Name Formula GWP (CO2 eq.) 1. Carbon- dioxide (CO2) 1 2. Methane (CH4) 21 3. Nitrous oxide (N2O) 310 5. Per- fluorocarbons (PFCs) 92,00 4. Hydro- fluorocarbons (HFCs) 11,700 6. Sulphur hexafluoride (SF6) 23,900 Sinks (carbon sequestration) Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  13. CDM Project Cycle Project Identification and Formulation of PDD Host Country Approval National CDM Authority Designated Operational Entities Validation Registration Project proponents Implementation and Monitoring Verification & Certification Issue CERs Executive Board Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  14. Time Required for Completion of Different Component within CDM Project Cycle Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  15. 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

  16. 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

  17. 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

  18. 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 Types of CDM Projects Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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 Resource Management in June 2007. Workshop on ‘Carbon Credits Potential in Oil and Gas Sector of Pakistan in September 2007. Workshop on ‘Carbon Credits Potential in Cement Industry of Pakistan in January 2008. Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  24. 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

  25. 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

  26. CDM Capacity Building Initiatives Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  27. (Cont…) Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  28. (Cont…) Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  29. Memorandum of Understanding (MoU) Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan • 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

  30. Part 2: Criteria for Host Country Approval in Pakistan Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  31. 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

  32. 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

  33. 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

  34. Host Country Approval to 14 CDM Projects 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. Cattle Waste Management, Landhi Cattle Colony, Karachi, Pakistan. 84 MW New Bong Escape Hydropower Project in Azad Jammu and Kashmir. Pakarab Fertiliser Co-generation Power Project, Multan Generator Change Project at Maple Leaf Cement Company Limited, Mianwali. Fuel Switch and Energy Efficiency Project at Prosperity Weaving Mills Limited. 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

  35. 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. Biogas-based Cogeneration Project at Shakarganj Mills Ltd., Jhang. Installation of natural gas based cogeneration system at Century Paper & Board Mills Ltd., Lahore. Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  36. 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

  37. CDM Projects in Pipeline More than 60 CDM Projects are in Pipeline in different sectors Energy (Efficiencies/Renewable/alternate energy) 35 Projects Waste Management/Industrial Processes 20 Projects Afforestation/Reforestation CDM05 Projects Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  38. 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 • 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 • Development of a strong supportive institutional framework • Develop Programmatic and Bundling Approaches for CDM Potential sectors of Pakistan • 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

  39. 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: cdmcellpakistan@gmail.com Web: www.cdmpakistan.gov.pk Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

  40. THANK YOU Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

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