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CDM Tag

The below analysis was covered in a story by Bloomberg. You can read that article here.   After the launch of Renewable Certificate Mechanism (REC) in India, a frequent question in the minds of project developers is the comparison between Clean Development Mechanism (CDM) and REC mechanism. The below section covers some of the questions regarding the eligibility for CDM and REC, and the relative benefits under both mechanisms. Q: Is a project eligible for REC benefit if it is already availing of CDM benefit? A: The REC and CDM mechanisms are independent of each other. REC is a national mechanism which is focused on renewable energy generation whereas CDM is an international mechanism which is focused on Green House gas abatement. Nowhere in its regulations the CERC has specified that availing of CDM benefit will disqualify a RE generator from accessing REC markets. Further, the CERC has clarified that “REC and CDM are different mechanisms” (Statement of Objects and Reasons dated January 14, 2010). Q: Is the project eligible for CDM benefit if it also avails the REC benefit? A: As mentioned above, the REC and CDM mechanisms are independent of each other, and from the CERC's perspective, can co-exist. However, one of the fundamental aspects of eligibility for carbon credits in the “Additionality” criterion*. If the additional benefit of RECs is considered (even at a minimum of Rs 1.5/unit), it is likely that several projects that meet the additionality criterion under CDM without REC, are likely to not meet the criterion in the future when REC benefit is included. However, for every project an analysis will have to be done on a case-by-case basis. For example, a project that meets the additionality criterion based on the feed-in tariff of a state, may still meet the criterion if the APPC + REC price is considered in one state, but not in another. Q: How does the benefit under CDM and REC mechanism compare? A: The benefit needs to be compared under various parameters:

Options REC CDM
Monetary Benefits More Less
Access ( Profit/Cost ) Less time More time
Certainty of Revenue Depends on enforcement of the mechanism Reasonable