Climate change emerged on the political agenda in the mid-1980s with the increasing scientific evidence of human interference in the global climate system and with growing public concern about the environment The United Nations Environment Programme (UNEP) and the World Meteorological Organizations (WMO) established the Intergovernmental Panel on Climate Change (IPCC) to provide policy makers with authoritative scientific information in 1988. In its first report in 1990, IPCC concluded that the growing accumulation of human made green house gases in the atmosphere would "enhance the green-house effect, resulting in an additional warming of the Earth's surface" by the next century, unless measures were adopted to limit emissions. The UN general assembly responded to this by launching negotiations to formulate an International treaty on global climate protection which resulted in completion of the United Nations Framework Convention on Climate Change (UNFCCC) in May 1992.

The convention was opened for signature at the Earth Summit in Rio de Janeiro in June 1992, when it was signed by 154 states and European Community. It entered into force on March 21, 1994. India signed UNFCCC on 10th June 1992 and ratified that in 1993.

KYOTO PROTOCOL

The convention established the Conference of Parties (COP) as its supreme body. During COP3 in Kyoto, Japan, the Parties agreed to a legally binding set of obligations for 38 industrialized countries and 11 countries in Central and Eastern Europe, to return their emission of GHGs to an average of approximately 5.2% below their 1990 levels over the commitment period 2008-2012. This is called the Kyoto Protocol to the convention. The Protocol entered into force on February 16, 2005 and targets six main greenhouse gases: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF₆).

Recognizing that relying on domestic measures alone to meet the emission targets could be difficult, the Kyoto Protocol offers considerable flexibility through following three mechanisms:

• Joint Implementation (JI) which allows countries to claim credit for emission reduction that arise form investment in other industrialized countries, which result in a transfer of 'emission reduction units' between countries;

• Emission Trading (ET) which permits countries to transfer parts of their 'allowed emissions' (assigned amount units); and

• Clean Development mechanism (CDM) through which industrialized countries can finance mitigation projects in developing countries contributing to their sustainable development.

At COP-7 in Marrakech, Morocco in 2001, the Parties agreed to a comprehensive rulebook "Marrakech Accords" on how to implement the Kyoto Protocol. The Accords set out the rules for CDM projects. It also intends to provide Parties with sufficient clarity to consider ratification.

CLEAN DEVELOPMENT MECHANISM (CDM)

The Clean Development Mechanism (CDM) was instituted in 2001, under the Kyoto Protocol to enable developed countries to meet their Green House Gas (GHG) reduction targets at lower cost through project in developing countries.

It is designed as an element of the sustainable development strategy allowing industrialized countries investing in "clean" projects in developing countries also to gain emission credits. These credits are given in the form of certified emission reductions (CERs) which, like all the other Kyoto accounting units, are expressed in tons of carbon dioxide equivalent. The financing country can use these units to offset its own emissions of greenhouse gases during a given period, or sell them to another country. It can also bank them for use during a subsequent period. Since these investments are viewed in a positive light they also add to the reputations of project developers and investors. At the same time the recipient country gains from an increase in investment - which may be from private or public sources - in sustainable development.

The CDM is meant to work bottom up- to proceed from individual proposals to approval by donor and recipient governments to the allocation of "Certified Emission Reduction" (CER) credits. In other words a CDM project has to follow a definite CDM Project Cycle. The CDM is supervised by Executive Board which comprises 10 members, elected by the Conference of Parties (COP).

All projects must result in a net GHG reduction, as in the case of energy efficiency improvement or power generation from renewable energy. Small-scale CDM projects (renewable energy project activities with a maximum output capacity ≤ 15 MW, energy efficiency improvement project activities which reduce energy consumption, on the supply and/or demand side, by up to the equivalent of 15 GWh per year; and other project activities that reduce anthropogenic emissions by sources, and directly emit less than 15 kilo-tonnes of carbon dioxide equivalent annually) are eligible for fast track clearance. As defined by CDM Executive Board, there are 15 sectoral scopes under CDM.

WHY CDM?

The CDM enables the Parties to meet their reduction commitments in a flexible and cost-effective manner. It allows public or private sector entities in Annex I countries to invest in GHG mitigation projects in developing countries. In return the investing parties receive credits or certified emission reductions (CERs) which they can use to meet their targets under the Kyoto Protocol.

While investors profit from CDM projects by obtaining reductions at costs lower than in their own countries, the gains to the developing country host parties are in the form of finance, technology, and sustainable development benefits.

Out of three mechanisms of KP, CDM is the only mechanism where developing countries can participate in the Protocol and join the global offers to mitigate the climate change.

Through CDM, the developed countries can implement GHG mitigation process in developing countries at reduced costs. For example; it requires US $50 for mitigating one ton of CO₂ eq. in developed countries whilst in developing countries the same can be done at the rate of US $15 per ton of CO₂ eq.