National Environment Agency Launches Clean Development Mechanism (CDM) Documentation Grant
The National Environment Agency (NEA) launched the $500,000 Clean Development Mechanism (CDM) Documentation Grant yesterday. This is a co-funding scheme to encourage companies to develop CDM projects in Singapore and support them in engaging carbon consultancy services for the documentation needed.
The funding is capped at $100,000 for each CDM project and would be provided for up to 30% or 50% of the qualifying cost of engaging a carbon consultant to develop a Project Design Document (PDD), which depends on the need to develop a new methodology or just to use an existing approved methodology. The cost of implementing the CDM project would not be supported under the grant.
NEA Chief Executive Officer, Mr Lee Yuen Hee, said:
CDM is mutually beneficial for companies and the environment. CDM projects not only help to cut down carbon dioxide emissions; they are also a means for companies to reap economic benefits. CDM therefore helps to make projects on sustainable development in non-Annex 1 countries economically viable and gets the projects implemented. With the launch of this grant, NEA would like to see more companies coming forward to participate in this win-win scheme
Currently, there are four local CDM projects by Bee Joo Industries (waste heat recovery), Power Seraya Ltd (switching from fuel oil to natural gas), Kim Hock Corporation (biomass energy) and IUT Global (food waste biomethanisation). These projects will reduce Singapore’s annual carbon emissions by about 533 kilotons per year.
Background about CDM under the Kyoto Protocol
Under the Kyoto Protocol, developed countries (Annex I countries) are required to reduce their greenhouse gas emissions below specific target levels, between 2008 and 2012. To give developed countries some flexibility in meeting their targets and for developing countries (non-Annex I countries) to benefit from investment and technology in carbon-reducing projects, the Protocol developed three flexibility mechanisms. They include:
- Clean Development Mechanism (CDM): this mechanism provides for Annex I countries to implement projects that reduce emissions in non-Annex I countries, in return for certified emission reductions (CERs) that can help meet their emissions targets.
- Joint Implementation (JI): this mechanism provides for an Annex I country to implement an emission-reducing project or a project that enhances removals by sinks in another Annex I country, and use the resulting emission reduction units (ERUs) to meet its own target.
- Emissions Trading: this mechanism provides for Annex I countries to purchase units from other Annex I countries and use them to meet their targets.
Developed countries are required to take domestic actions (“significant element”) to reduce their own emissions and the use of the mechanisms should be “supplemental to domestic action”. In other words, carbon trading should not be used as a shortcut way to meet emissions targets.
Details about Clean Development Mechanism (CDM)
Currently, the CDM is the favoured mechanism to earn CERs or commonly known as carbon credits. These CERs are traded in the global carbon market with ready buyers and sellers. A typical CDM project undergoes the following:
- The project developer undertakes a CDM project in a developing country (host country).
- The project must satisfy two criteria – additionality and sustainable development. Additionality means that the project must have reduced emissions in addition to those that would occur in the absence of the project. The project must also help the host country move towards sustainable development and this criteria is determined by the host country.
- The project developer describes the project details in the Project Design Document (PDD) based on approved methodology by the CDM Executive Board (EB).
- The host country appoints a Designated National Authority (DNA) to approve the CDM project. The National Environment Agency (NEA) is Singapore’s DNA.
- The PDD and approval from the DNA is submitted to a Designated Operational Entity (DOE) who is approved by the EB to conduct the validation of the proposed project.
- After validation, the DOE submits the PDD to the EB for approval and registration.
- After registration, the project developer implements the CDM project according to the PDD and monitors the emissions.
- The DOE verifies the emissions from the project and requests the EB to issue the CERs.
Most of the CDM projects deal with hydropower, biomass energy, renewable energy and energy efficiency. The UNFCCC CDM website reported that there are 1,143 registered projects and 68 requesting registration, and more than 3,000 projects in the pipeline (as of 15 Aug 08). The expected average annual CERs from the registered projects amount to about 220,460,680. This means that the implementation of the CDM projects have the potential to reduce emissions in developing countries by about 220 million tonnes of carbon dioxide equivalent. For more information about CDM, visit the UNFCCC CDM website.