Clean Development Mechanism and Poverty Reduction Developing a Regional Strategy for the CDM in Asia and the Pacific Reg

1. Clean Development Mechanism and Poverty ReductionDeveloping a Regional Strategy for the CDM in Asia and the Pacific Region30-31 March 2006Bangkok Batu Krishna Uprety Chief, Environment Assessment Section Ministry of Environment, Science and Technology Kathmandu, NEPAL 30 March 2006, Thursday

2. Background: UNFCCC and KP UNFCCC • Signature: 12 June 1992 • Ratification: 2 May 1994 • Entry into force in Nepal: 31 July 1994 • First INC Report prepared with GEF/UNEP assistance: July 2004 and shared with Parties Kyoto Protocol • Entry into force (global): 16 February 2005 • Deposition of instrument of Accession: 16 Sept. 2005 • Entry into force in Nepal: 14 December 2005 CDM • Ministry of Environment, Science and Technology (MoEST) designated as DNA: 22 December 2005 • Structure of DNA in progress

3. Policy Focus Tenth Plan (2002-’07) • Poverty reduction from 38 to 30 percent by 2007 • Main focus on high, sustainable and widened economic growth, development of social sector and rural infrastructures, targeted programmes, and good governance • Carbon trade for resource management and for poverty reduction • Implementation of sustainable development agenda for Nepal • Promotion of the use of environment-friendly technologies, CP, energy efficiency, clean energy and EMS, adoption of PPP and pollution fees • Promotion of clean and alternative energy in rural areas • Implementation of MEAs including UNFCCC

4. Priority Areas (2002-’07) • Agriculture, sustainable management of natural resource and biodiversity • Development of rural infrastructures and rural energy (alternative/renewable energy) • Population management, social service and basic social security • Development of tourism, water resources, information technology and industries with private sector’s involvement • Human resources development and women empowerment • Strengthening of local bodies, NGOs and CBOs • Environment conservation and promotion etc.

5. Responsibilities of Two Institutions Ministry of Environment, Science and Technology • Formulation and implementation of environmental policies, plans, programmes, laws, and standards • Study and research on environment • Environmental management and pollution control • Dissemination of environmental information, awareness creation, and HRD • Monitoring of environment-related activities • Focal point for MEAs including CDM activities and international organisations Alternative Energy Promotion Centre • Promotion of clean and environment-friendly energy (biogas, micro-hydro, solar, wind) • Improvement of rural people through energy supply – social transformation, economic activities and poverty reduction - GHT abatement

6. GHG Inventory of Anthropogenic Emissions (1994/95) in Gg

7. Possible Impacts of CC • Western Nepal might receive more precipitation than Eastern Nepal due to climate change (reverse in the existing trend) • About 20% of the glaciated area above 5000m will likely be snow and glacier free due to increase of air temperature by 10C • About 70% of area above 5,000m will be affected due to about 40C rise in temperature • Change in glacier areas – development of glacier lakes resulting to increase in potentials of GLOF

8. Possible Impacts of CC .. • 50% increase in annual precipitation may lead to 20% increase in sediment yield, land use remaining the same • Warming effect will be significant in the sub-alpine and alpine regions, and vegetation could be pushed up to 500m. • By the increase of 20C and 20% precipitation, possible extension of tropical and sub-tropical moist forest, change of sub-tropical and warm temperate dry forest to warm temperate moist forest, cool temperate moist forest to warm temperate moist forest etc.

9. Development of Tso Rolpa Glacier Lake

10. Recommendations in First INC Report • Increase and conserve vegetative coverage to capture CO2 • Expand carbon sinks through afforestation, reforestation, enhanced regeneration and agro-forestry with community participation • Upgrade technologies and promote use of efficient cooking stoves and lighting devices • Introduce stringent emission control mechanisms for vehicles to reduce about 35 percent of GHG reduction by the year 2030 • Promote mass transportation (electric), and use less GHG intensive fuels • Develop hydropower – a clean energy – as substitution for fossil fuels etc. etc.

11. Potential Areas for CDM Projects in Nepal • Prospects for clean energy investments: • Decentralized renewable energy – micro-hydro, biogas, solar PV • Hydropower • Agriculture • Forestry • Solid Waste • Cement, Brick and other Industries • Fuel substitution from fossil fuels to clean electricity in transportation, industrial sector, residential sector, agriculture…

12. Ongoing CDM projects in Nepal Project CERs in 10 years Status • Biogas Sector Partnership 6,200,000 PDD being Validated • AEPC/REDP – MHP Project 270,000 PDD being revised • Improved Water Mil 136,000 PIN completed • Solar Tuki 82,000 PIN being prepared • Improved Cooking Stove 1,200,000 PIN being prepared • Safa Tempo – transportation 61,000 PIN being prepared • Landfill Solid Waste Mgmt 174,000 PIN being prepared • Vertical Shaft Brick Kiln 1,400,000 PIN being prepared • Trolley Bus 131,000 Pre-feasibility completed • Hydropower for export (WS) Pre-feasibility study • Electric Train – (E-W highway) Pre-feasibility study • Community Forestry Studies ongoing

13. Prospective Industries for CDM • Brick Industries • Cement industries • Hotels • Noodles factories • Dyeing industries • Dairy industries • Metal – steel industries • Others

14. Example: Brick Industry Bull’ Trench Brick Kiln Vertical Shaft Brick Kiln

15. CDM Status in Nepal • Registered projects – 2 • The biogas CDM projects • Registered on 27 December 2005 • Net emission reductions over the first 7 year crediting period is 657,000 tons • Project developer: Alternative Energy Promotion Center (AEPC) • Buyer: Community Development Carbon Fund of World Bank at $7/t CO2

16. Tentative costs of developing a CDM project • Project Idea Note – US$ 1,000 • Project Design Document – US$ 20,000 • DNA Approval - ? • Validation – US$ 10,000 • Registration – US$ 5,000 – 30,000 • Verification – US$ 5,000 annually

17. Proposed structure for DNA Ministry of Environment, Science and Technology (MoEST) Steering Committee Chairman: Secretary, MoEST Members: MOF, MFSC, MOLTM, MOAC, MOWR, MOTCA, MLD Experts (2) (NGO, private, academic and banking sectors) Member-Secretary: Joint-Secretary, MoEST Secretariat of DNA Member-Secretary (Joint-Secretary) Desk Officer Technical Advisory Committee Environment Assessment Section Environmental Standards and Monitoring Section Environment Promotion and Awareness Section

18. 1 week 1 week 1 week Meets national criteria? Member-Secretary Initial Screening and forward to the Technical Advisory Committee Secretariat of the DNA Receipt of assessment report and public comments No Project proposal (PDD) submitted by the project developer Assessment report and project PDD available for public comment Letter of No Objection Re-Evaluation Yes Secretariat of the DNA Review of PIN Member-Secretary Receipt of assessment report PIN Submission by project developer 4 weeks Letter of Approval issued by DNA Secretariat Evaluation by Technical Advisory Committee Proposed CDM Project Approval Process

19. Areas of Concerns International Level • Bringing GHG emitters under the umbrella of KP • Defining commitment targets beyond 2012 • Minimising costs accrued from CC effects in low income countries/low GHG emitters • Commitment of high GHG emitters for additional assistance to low income countries to bridge the resource gap • Refining CDM investment procedures • Making transparent and easy validation and approval process on CDM projects • Preparatory costs for PIN and PDD and requirements for advance payment

20. Areas of Concerns … Regional Level • Developing and implementing joint projects • Replacing thermal power by clean energy (hydro-power) • Generating data and information, and sharing • Transferring clean technologies • Developing regional voice with common understanding on regional issues National Level • Awareness raising - opportunities • Policy and strategy formulation and implementation • Institutional set-up and strengthening • HRD and support to resource gap

21. Areas of Concerns … • Capacity building of: • Project developers – negotiation skill • Consultants, NGOs (Technical skill providers) – developing Project Idea Note (PIN) and Project Design Document (PDD), cost vs. benefits • Academic institutions • Government (DNA, other ministries and departments) – evaluation of PIN/PDD, decision time, and negotiation • Transaction cost for CDM projects preparation and documentation • Mainstreaming CDM in development planning

22. Areas of Concerns … • Pre-investment to bridge resource gap (transferring costs after delivery of CER), and benefit sharing • Funding large/small scale projects • Targeting CDM projects in rural areas • Promoting CDM projects in following sectors for poverty reduction • Natural Resources • Transportation • Industries Thank you very much