The Hindu Business Line : Projects seeking to sell carbon credits racing against deadline

TIME is running out. Several Indian projects seeking to sell carbon credits may lose out on revenues if they are unable to get their projects registered at the United Nations Framework Convention on Climate Change (UNFCCC) by December this year.

The deadline is applicable to those clean development mechanism (CDM) projects that started activities between January 1, 2000 and November 18, 2004 and could have generated CERs (certified emission reductions) during this four-year period had their projects been registered. Each CER stands for one tonne of carbon dioxide reduction and can be traded globally.

If these projects are registered after December 31, they can trade those CERs that they accumulate in 2006 and later, they cannot liquidate the value of net green house gas emission reduction obtained during the earlier period, Dr Ram Babu, Associate Director, PricewaterhouseCoopers, said.

About 50 Indian projects with a potential to generate 30-million tonnes of CERs over a 10-year period may get affected if the deadline is not extended, he said.

Explaining the logic behind this, Dr Ram Babu told Business Line on the sidelines of a seminar, "This is applicable according to the modalities of Marakkesh Accord of Kyoto Protocol. Thus, several projects would get affected if they are unable to be registered at UNFCCC before December 31, 2005, unless the CDM Executive Board extends the deadline."

"According to the UNFCCC guidelines, the projects registered after December 31, 2005 wouldn't be able to register their CERs before the registration period," Mr Sunil Kathuria, Lead Auditor, TUV Suddeutschland India, pointed out.

Mr Dipankar Ghosh, Managing Consultant, Ernst & Young, said "Several projects implemented in India could qualify for CDM once appropriate, approved methodologies are available." If the project is already implemented, it should have at least obtained the validation and submitted registration fee by December 31, 2005 to obtain CERs, he added.

In order to obtain CERs for projects, companies owning these projects are required to first get a host country approval from the designated national authority, which is the National CDM Authority, Environment Ministry. They are then required to get their projects validated at the UNFCCC, which involves obtaining an approval for the project methodology.

The validation process takes relatively less time if the project is based on a method that has already been approved by the Methodology Panel.

However, validation for each new method as a CDM project would take relatively longer. It is only after validation that projects can be applied for registration at the UNFCCC along with the registration fee.

According to the Marakkesh Accord, a project activity starting as of the year 2000 shall be eligible for validation and registration as a CDM project activity if submitted for registration before December 31. If registered, the crediting period for such project activities may start prior to the date of its registration but not earlier than January 1, 2000.

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