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CDM and India

Mains-GS3-Environment, Mains-GS3- Economic Development

What is CDM?

1. Clean Development Mechanism (CDM) is a market instrument that can help the industry as well as climate.

2. It is a product of the Kyoto Protocol, established to finance adaptation projects in developing country that are vulnerable to climate change.

3. It allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2.

4. These CERs can be traded, sold and used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol.

5. The mechanism stimulates sustainable development and emission reductions.

6. It gives industrialized countries some flexibility in how they meet their emission reduction limitation targets.

7. CDM is the main source of income for the United Nations Framework Convention on Climate Change (UNFCCC) Adaptation Fund.

8. The Adaptation Fund is financed by a 2% levy on CERs issued by the CDM.

How has CDM benefitted India?

1. India is a leader in CDM since its inception in 2007.

2. A number of energy-efficiency projects in India owe their origin to the financing support from CDM.

3. The number of CDM projects registered in India is 1,376 out of total 7,979 globally. 89 percent of these projects are still active.

4. India has about 250 million Certified Emission Reduction (CER) units under CDM.

Why is CDM in danger?

1. CDM has benefitted developing countries such as China and India.

2.  But it may change in 2021 when market mechanisms mandated under the Paris Agreement come into operation.

3. Most developed countries are opposing to permit the carryover of CDM projects and their credits into the Paris Pact’s mechanisms.

4. CDM projects will have to go through the process of registration again with the new mechanism. It will involve additional costs.

Which are the arguments against CDM?

1. CDM has failed to demonstrate environmental as well as technological benefits.

2. CDM’s transition to new mechanisms will have adverse impacts on carbon prices and investor sentiments in future markets.

Source- Indian Express