To CDM or not to CDM?

Rs 400 crores ($85 million) flowed into India in 2009 through CDM projects, but India's share of the global CDM pie fell from 28% in 2008 to 16% in 2009.

In 2009 India had 4.9 million CERs issued valued at Rs 400 crores (it was 2.8 million CERs in 2008) as compared to the global CER issuance of 32 million CERs valued at Rs 2400 crores (it was 10 million CERs globally in 2008).

(Editors note: While we continue to provide coverage on the performance of the CDM market, it is quite evident that this mechanism (CDM) has a small role to play in the overall strategies for moving towards a low carbon economy. Study after study have shown that the magnitude of investment required is higher by orders of magnitude. Our belief is that market driven initiatives hold the solution and deserve for attention and focus. Clean technology venture investment totaled Rs 26,000 crores ($5.6 billion) in 2009. Capital investments by natural gas and energy companies, cement manufacturers, transporation companies, etc. that have the potential to be more carbon efficient are significantly larger in magnitude.)

2009: Copenhagen does not seem to have made a dent
As we look at figures for CER issuance and leading indicators of the pipeline for future projects, the market players continue to believe in the existence of some ongoing carbon market. The leading indicator of projects submitted for prior consideration in December was strong. 256 projects were submitted as compared to the annual average of 158. The trend has continued into January of 2010 where 60 projects were submitted in the first 10 days.

India's share of the CDM market continues to be characterized by a large volume of projects but smaller CER capacity (and issuance) per project.

In December though, we have seen a surge of programmatic projects (not only from India). This trend began in October (see our review on the earliest programmatic submissions link 1 and link 2) and since then has been increasing. The CDM pipeline report by Risoe attributes this rise to the streamlining of procedured by the executive board (see here).

Analysis
The four stages at which data has been captured form the continuum in the CDM process. The first two stages are leading indicators, and the last two provide information on credits that have been issued (or likely to be issued).

Leading Indicator 1: Submitted for Prior Consideration
Globally, a total of 1897 projects were submitted for prior consideration of the CDM in 2009. Of these 728 (38%) were from India. The number of projects being submitted continues to be on an increasing trendline as though the market is assuming that there will be an alternate mechanism to absorb these projects post 2012.

Number of CDM projects submitted for prior consideration:

38% of the projects submitted in 2009 were from India:

 
Projects Registered
A total of 565 CDM projects were registered in 2009 with a potential of generating 76.9 million CERs annually. Of these 88 projects (15.5%) came from India with a potential of generating 5.2 million CERs (6.8% of the amount issued globally). This continues to follow from past trends where the projects from India tending to be smaller in size.

Count of projects registered withthe UNFCCC in 2009:

CERs expected from the projects resgistered in 2009:

The projects registered from India in 2009 are listed at the end of this article. 

CER Issuance for 2009
A total of 4.98 million CERs (approx value of US$ 80m based on the spot prices) were issued over the last year in India with the levels continuing to follow a cyclical pattern since the larger CDM projects come up for review only in Q1 and Q2. Average CER per project from India (47K CERs per project) continue to be lower as compared to the global average (82K CERs per proeject) for 2009. This compares to the India’s 2008 average of 41K CERs per project and the global figure of 56K CERs issued per project for the same period.

CER Issuance from Jan 2008 till date

Break-up of CER Issuance in 2009

 

Projects registered with the UNFCCC in 2009