FAQs on Environmental Accounting

FAQs on Environmental Accounting

1.   Cost or Additional cost of the project Project Cost depends upon the nature (type / scale) of the project which a company wants to setup as per the approval of UNFCCC. There is no limit defined on the project cost by UNFCCC.

2.   Are Entities using Green Technologies which are not polluting, entitled to CERs under Kyoto protocol There are some UNFCCC approved methodologies under which projects for the generation of CERs can be registered. If a proposed project is not covered by the existing methodologies, then UNFCCC would first need to evaluate and analyze the project and approve the methodology for future guidance as well.

Two pre-conditions need to be satisfied for the registration of any project for generation of CERs:

• The proposed project leading to the reduction of GHG gases is not required to be set up by local laws.
• The project would be economically unviable if the proposed revenue stream from CERs was not taken into account.

3.   How do we compute the costs of forests (new ones), so that new forest get CERs (This with reference to Kyoto) The cost of the forest depends upon the scale of the project, and will be verified and scrutinized by UNFCCC in the course of considering the proposal. The approved methodology for this type of project would specify the method for computing project costs.

The main issue is to determine the impact of reduction of GHGs from the forest i.e. how many CERs the project could generate. There is an existing methodology i.e. Reforestation of Degraded Land, which is related to reforestation. If the project is covered by this methodology, then one can generate CERs.

4.   How do you measure CERs (Authenticity wise) Initially, an entity desirous of setting up a CDM project needs to registered the project with the CDM Executive Board of the UNFCCC. Once the project is registered and becomes operational, the performance of the CDM project is monitored and verified periodically by agencies (DOE Designated Operational Entity) nominated by UNFCCC to determine emission reductions and the quantity of such reductions.

5.   If I am going to build a clean green house using clean technologies like solar, bio-gas, bio-mass, water treatment plant, am I allowed CERs? (As I am not changing technologies, but installing technologies a fresh)There are some UNFCCC approved methodologies under which projects for the generation of CERs can be registered. If a proposed project is not covered by the existing methodologies, then UNFCCC would first need to evaluate and analyze the project and approve the methodology for future guidance as well. For approved list of CDM project methodologies, please refer to link below:
http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html

6.   Can you please mention the name of agencies accredited by UNFCCC as certifying agencies? Following three agencies are accredited by UNFCCC as certifying agencies.

• SGS Nederland BV, Nederland
• DNV (DET NORSKE VERITAS), Norway,
• BVQI (BUREAU VERITAS), France

Names of other agencies are listed at:
http://cdm.unfccc.int/DOE/list/index.html

7.   If CDM are installed in developing countries for the sake of carbon reduction in developed countries, what is the assurance that carbon emissions reduce as developed countries continue to pollute increasingly The thinking behind reduction of GHGs is that overall global emissions need to be restricted, no matter where the reduction occurs. Developed countries have quotas defined under the Kyoto Protocol, to which they are signatories, and hence cannot exceed the quota and actually have to work towards year on year reduction as defined by the limits. The increase in emissions due to developing countries will take place till quotas are imposed on them as well. Developing countries that have no quota assigned to them can put up CDM projects at lower costs. The developing countries are paid by the developed countries for reduction in GHGs, while globally emission reduction goal is still achieved.

8.   What is the criteria for registration for CERs under UNFCCC Following are the main conditions need to be satisfied for the registration of any project with UNFCCC for CERs:

• The proposed project must reduce emission of green house gases e.g. carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), hydrofluorocarbons (HFCs), Perfulourocarbons (PFCs), Sulphur Hexafluoride (SF6) etc.
• The proposed project leading to the reduction of GHG gases is not required to be set up by local laws.
• The project would be economically unviable if the proposed revenue stream from CERs was not taken into account.

9.   How do we know the net CERs Net CERs will be calculated as the difference between emissions of GHG before (base line measurement) and after the project. The project for reducing GHGs may also use energy and other inputs. These would result in emission of GHGs. While calculating net gains (emission reductions) the above GHGs emissions are reduced from the gross reductions.

10.   Once you get the registration and eligible for CERs, for how many years you are eligible Eligibility to generate CERs in terms of period depends upon the number of years for which a project is approved from UNFCCC. Developed countries have the target to reduce GHG emissions up to year 2012 and hence the demand for CERs would extend up to 2012 only. However, if the project life extends beyond 2012, the project would continue to generate CERs, which may or may not find a market, depending on the developments in the ongoing negotiations on climate change.