Clean Development Mechanism (CDM) , CFL Lighting Scheme

Clean Development Mechanism (CDM)

CFL Lighting Scheme - Bachat Lamp Yojana (BLY)

EOI template for SEB/DISCOM (Revised as on 6th May 2010)

Bachat Lamp Yojana PoA is Registered on 29 April 2010 details on UNFCCC web-link - cdm.unfccc.int

BLYLogo(jpg ; cdr format)

CFL Lighting Scheme - Bachat Lamp Yojana (BLY) promotes replacement of inefficient bulbs with Compact Fluorescent Lamps (CFLs) by leveraging the sale of Certified Emission Rights (CERs) under the Clean Development Mechanism (CDM) of the Kyoto Protocol.

Bachat Lamp Yojana PoA is Registered on 29 April 2010 details on UNFCCC web-link - cdm.unfccc.int

Hindustan Times 2nd May 2010 Page 10 , New Delhi Edition

CFL-for-bulbs to be world’s biggest carbon credit project
Will Shut Out 40M Tonnes Of Carbon From Atmosphere Annually
Nitin Sethi | TNN
The project, which will allow the government, investors, discoms and CFL manufacturers to sell CFLs at Rs 15 each, instead of the Rs 100 they currently cost on average, has been approved by the UN

New Delhi: India has bagged the world’s largest carbon credit project that will help replace 400 million incandescent light bulbs with energy saving CFL bulbs at dirt-cheap prices in a year while preventing 40 million tonnes of carbon from entering the atmosphere annually.
The project, which will allow the government, investors, discoms and CFL manufacturers to sell CFLs at Rs 15 each, instead of the Rs 100 they currently cost on average, has been approved by the UN under the global carbon credit scheme called Clean Development Mechanism.
The mammoth size of the project can be gauged from the fact that the world’s second largest CDM project earns only about 1.5 million credits a year in comparison.
“Almost half the households in India will immediately benefit from the scheme and as other areas get electrified, those villages will get added on. There are roughly 400 million light points at present in the country that we will provide the subsidised CFL bulbs for,” said Ajay Mathur, director general of the Bureau of Energy Efficiency, which is the nodal agency for the grand project.
The scheme — called Bachat Lamp Yojna — works like this. The discom in a state decides to implement the scheme. It picks up a financial investor, which lends the upfront finance to buy the CFL bulbs at market price to replace the bulbs in the discom’s area. The discom then distributes the bulb to its consumers at Rs 15 apiece and collects the regular bulbs, which it then destroys.
For every ten bulbs that consumers use for a year, a tonne of carbon is prevented from escaping into the atmosphere as CFL bulbs use substantially less power than incandescent ones. For every tonne of carbon saved, the Bureau of Energy Efficiency, acting as the anchor, gets a carbon certificate from the UN, which it then hands over to the investor.
The investor sells the carbon credit in the international market where buyers —such as manufacturers and power producers in Europe — buy the certificates to meet the greenhouse gas emission reduction targets the countries have set for them. At present, each certificate sells at around 10-12 Euros in the international spot market.
BEE estimates that investors will be able to recover the rest of the Rs 85 per bulb by 5-6 years and by the 7th year, earn some on the top. BEE has in its scheme ensured that the CFL bulbs are of a standard that they last that long.
Several states and cities have been ready to take advantage of the scheme the moment it becomes operational. Kerala is one such state. It has already found investors and tied up with manufacturers to distribute roughly 1.5 crore bulbs in the state. In anticipation of the project clearance, it has begun distribution of the energy saving bulbs to consumers.

Times of India 2nd May 2010 Page 12 , New Delhi Edition

BLY India Coverage (click to enlarge)

The Bachat Lamp Yojana is designed as a public-private partnership between the Government of India, private sector CFL suppliers and State level Electricity Distribution Companies (DISCOMs). The CFL suppliers would sell high quality CFLs to households at a price of Rs. 15 per CFL within a designated project area in a DISCOM region of operation. The CFL supplier will be chosen by the DISCOM through a due diligence process from a list of CFL suppliers empanelled by BEE. Under the scheme 40 Watt, 60 Watt and 100 Watt incandescent Lamps will be replaced with 9-10 Watt, 13- 15 Watt and 20 - 23 Watt CFLs respectively. BEE will monitor the electricity savings in each project area in accordance with the monitoring methodology prescribed by the Executive Board of the CDM.
For this purpose, BEE has developed smart meters based on GSM technology that are fitted between the socket and the CFL in sample households in each project area. The GSM based meter collects the data on hours of use and energy consumed by the sample CFL and sends this information by SMS to the central server.

An independent agency has already been selected for this job and meters have been installed in Vizag, Andhra Pradesh and Yamunagar, Haryana. Test of these meters have been carried out in NABL accredited labs. It is expected that around 50 lakh CFLs will be replaced in each DISCOM area

In order to reduce the transaction costs associated with the approval of CDM projects, BEE has developed a Programme of Activities (PoA) which would serve as an umbrella CDM project, and would be registered with the CDM Executive Board. The individual projects, designed to be in conformance with the umbrella project, would be added to the umbrella project as and when they are prepared. The development of the PoA is a voluntary action on the part of BEE, and it would not seek any commercial or CDM revenues from the PoA. On the other hand, BEE will, on behalf of the Government of India take the responsibility of monitoring of all project areas after the DISCOMs and the CFL suppliers have entered into a tripartite agreement (TPA) with BEE.

Empanelment of CFL Manufacturers & Traders

Stakeholder Consultation on the Bachat Lamp Yojana

National Launch of Bachat Lamp Yojana

Bachat Lamp Yojana Launched - The majority of lighting needs of the households in the country is met by incandescent bulbs which are extremely energy inefficient as 95% of the electricity is converted in heat and just 5% is used for lighting. Lighting accounts for about 20% of electricity consumption and has a significant potential for reduction of the load without compromising on the lumen output by use of energy efficient lighting in place of incandescent bulbs. CFLs provide that energy-efficient alternative to the incandescent lamp by using one-fifth as much electricity as an incandescent lamp to provide the same level of illumination. Government’s efforts for promotion of CFLs are having the desired impact on the market with the sales of CFLs in India having grown from about 20 million in 2003 to around 200 million in 2008. However, the penetration of Compact Fluorescent Lamps (CFLs) in household sector remains low at about 5% -10% largely due to the high price of the CFLs, which is 8-10 times the cost of incandescent bulbs. The Bachat Lamp Yojana focuses on this first cost barrier to reduce the cost of CFLs to that of incandescent bulbs. The scheme was launched today by the Union Minister of Power, Shri Sushilkumar Shinde in New Delhi. The Bachat Lamp Yojana promotes replacement of inefficient bulbs with Compact Fluorescent Lamps (CFLs) by leveraging the sale of Certified Emission Rights (CERs) under the Clean Development Mechanism (CDM) of the Kyoto Protocol. The scheme provides a unique platform for a robust public-private partnership between the Government of India, Private sector CFL suppliers and State level Electricity Distribution Companies (DISCOMs) and provides a the framework to distribute high quality CFLs at about Rs.15 per piece to the households of the country. Under the scheme only 60 Watt and 100 Watt incandescent Lamps have to be replaced with 11to15 Watt and 20 -25 Watt CFLs respectively. BEE will undertake monitoring of each project area as required under an approved methodology of CDM. For this purpose, BEE has developed smart meters based on GSM technology that are fitted between the socket and the CFL in sample households (around 200 in each project area). The GSM based meter collects the data on hours of use and energy consumed by sending SMS to the central server. An independent agency to undertake this job has already been selected and meters have been installed in Vizag and Yamunagar and are under installation in several other areas like Jaipur, Himachal Pradesh, etc.

Given the high transaction cost of preparation and registration of CDM projects and the fact that public sector in India do not possess adequate capacities to undertake them, BEE has developed a Programme of Activities (PoA) which would serve as an umbrella CDM project, once registered with the CDM Executive Board. The individual projects, designed to be in conformance with the umbrella project, would be added to the umbrella project as and when they are prepared. The development of the PoA is a voluntary action on the part of BEE and it would not seek any commercial revenues from the PoA. On the other hand, it will on behalf of the Government of India take the responsibility of monitoring of all project areas after the DISCOMs and the CFL suppliers have entered into a tripartite agreement (TPA) with BEE. This will be the largest PoA to be submitted to the CDM Executive Board by anyone in the world. Alongwith the PoA, BEE has also prepared model project documentation in accordance with requirements of the CDM to enable states and other private investors to take them up. ...PIB (26 February 2009)

National Launch of Bachat Lamp Yojana & Scheme for Star Labeling for Office Buildings launched by Shri Sushilkumar Shinde Hon'ble Union Minister of Power on Wednesday, 25th February, 2009 at 4.00PM at Hotel Le-Meridien, New Delhi - English ; English poster 5Mb ; Hindi ; Hindi poster 1.6Mb

The Union Power Minister, Shri Sushilkumar Shinde launching the Bachat Lamp Yojna in New Delhi on February 25, 2009.

Bureau of Energy Efficiency
4th Floor, SEWA Bhawan ,
R. K.Puram New Delhi - 110 066 INDIA
Tel: +91-11-26179699 Fax: +91-11-26178352

Ms. Vandana Thakur, Manager BLY

Ms. Vijeta Jangra, Project Engineer, BEE

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Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing industrialised countries with a greenhouse gas reduction commitment (called Annex 1 countries) to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. The most important factor of a carbon project is that it establishes that it would not have occurred without the additional incentive provided by emission reductions credits.

The CDM allows net global greenhouse gas emissions to be reduced at a much lower global cost by financing emissions reduction projects in developing countries where costs are lower than in industrialized countries.

The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the Conference of the Parties (COP/MOP) of the United Nations Framework Convention on Climate Change (UNFCCC).

The CDM was an important feature of the negotiations leading up to the Kyoto Protocol. Some governments desired flexibility in the way that emission reductions could be achieved and proposed international emissions trading as a way of achieving cost-effective emission reductions. At the time it was considered a controversial element and was opposed by environmental NGOs and, initially, by developing countries who felt that industrialised countries should put their own house in order first and feared the environmental integrity of the mechanism would be too hard to guarantee. Eventually, and largely on US insistence, the CDM and two other flexible mechanisms were written into the Kyoto Protocol.

The purpose of the CDM was defined under Article 12 of the Kyoto Protocol. Apart from helping Annex 1 countries comply with their emission reduction commitments, it must assist developing countries in achieving sustainable development, while also contributing to stabilization of greenhouse gas concentrations in the atmosphere.

The major greenhouse gases are water vapor, which causes about 36–70% of the greenhouse effect on Earth (not including clouds); carbon dioxide, which causes 9–26%; methane, which causes 4–9%, and ozone, which causes 3–7%. It is not possible to state that a certain gas causes a certain percentage of the greenhouse effect, because the influences of the various gases are not additive. (The higher ends of the ranges quoted are for the gas alone; the lower ends, for the gas counting overlaps.) Other greenhouse gases include, but are not limited to, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, perfluorocarbons and chlorofluorocarbons.

To prevent industrialised countries from making unlimited use of CDM, Article 6.1 d) has a provision that use of CDM be ‘supplemental’ to domestic actions to reduce emissions. This wording has led to a wide range of interpretations - the Netherlands for example aims to achieve half of their required emission reductions (from a BAU baseline) by CDM and JI.

The CDM gained momentum in 2005 after the entry into force of the Kyoto Protocol. Before the Protocol entered into force, investors considered this a key risk factor. The initial years of operation yielded fewer CDM credits than supporters had hoped for, as Parties did not provide sufficient funding to the EB. This left it understaffed.

An industrialised country that wishes to get credits from a CDM project must obtain the consent of the developing country hosting the project that it will contribute to sustainable development. Then, using methodologies approved by the CDM Executive Board (EB), the applicant (the industrialised country) must make the case that the carbon project would not have happened anyway (establishing additionality), and must establish a baseline estimating the future emissions in absence of the registered project. The case is then validated by a third party agency, called a Designated Operational Entity (DOE), to ensure the project results in real, measurable, and long-term emission reductions. The EB then decides whether or not to register (approve) the project. If a project is registered and implemented, the EB issues credits, called Certified Emission Reductions (CERs, commonly known as carbon credits, where each unit is equivalent to the reduction of one metric tonne of CO2e, e.g. CO2 or its equivalent), to project participants based on the monitored difference between the baseline and the actual emissions, verified by the DOE.

To avoid giving credits to projects that would have happened anyway ("freeriders"), rules have been specified to ensure additionality of the project, that is, to ensure the project reduces emissions more than would have occurred in the absence of the project. There are currently two rival interpretations of the additionality criterion:

1. What is often labelled ‘environmental additionality’ has that a project is additional if the emissions from the project are lower than the baseline. It generally looks at what would have happened without the project.

2. In the other interpretation, sometimes termed ‘project additionality’, the project must not have happened without the CDM.

A number of terms for different kinds of additionality have been discussed, leading to some confusion, particularly over the terms 'financial additionality' and 'investment additionality' which are sometimes used as synonyms. 'Investment additionality', however, was a concept discussed and ultimately rejected during negotiation of the Marrakech Accords. Investment Additionality carried the idea that any project that surpasses a certain risk-adjusted profitability threshold would automatically be deemed non-additional. 'Financial additionality' is often defined as an economically non-viable project becoming viable as a direct result of CDM revenues.

Many investors argue that the environmental additionality interpretation would make the CDM simpler. Environmental NGOs have argued that this interpretation would open the CDM to free-riders, permitting developing countries to emit more CO2 while failing to produce emission reductions in the CDM host countries.

It is never possible to establish with certainty what would have happened without the CDM or in absence of a particular project, which is one common objection to the CDM. Nevertheless, official guidelines have been designed to facilitate uniform assessment set by the CDM Executive Board for assessing additionality.

Establishing a baseline - The amount of emission reduction, obviously, depends on the emissions that would have occurred without the project. The construction of such a hypothetical scenario is known as the baseline of the project. The baseline may be estimated through reference to emissions from similar activities and technologies in the same country or other countries, or to actual emissions prior to project implementation. The partners involved in the project could have an interest in establishing a baseline with high emissions, which would yield a risk of awarding spurious credits. Independent third party verification is meant to ameliorate this potential problem.

Reference - en.wikipedia.org

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Expression of interest (EOI) - delivery, installation and one year management of a data acquisition system as a pilot project for the CDM based CFL Scheme (18 June 2007)
The proposed scheme seeks to utilize the Clean Development Mechanism (CDM) of the Kyoto Protocol to increase penetration of energy efficient Compact Fluorescent Lamps (CFLs). Download - EOI , AM0046 , adv.

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Bureau of Energy Efficiency 4th Floor, SEWA Bhawan , R. K.Puram New Delhi - 110 066 INDIA Tel: +91-11-26179699 Fax: +91-11-26178352
Ms. Vandana Thakur, Manager BLY	Email - vthakur@beenet.in
Ms. Vijeta Jangra, Project Engineer, BEE	Email - vjangra@beenet.in