CA Rajkumar S. Adukia

The Threat to the environment, posed by the global climate change is real. Human activities are increasing the atmospheric concentrations of greenhouse gases. All theoretical models predict that these increases in greenhouse gas concentrations will cause changes in climate, both regionally and globally — with adverse consequences likely for human health, as well as to ecological and socio­economic systems.

Carbon dioxide, the most important greenhouse gas produced by combustion of fuels, has become a cause of global panic as its concentration in the Earth’s atmosphere has been rising alarmingly. This devil, however, is now turning into a product that helps people, countries, consultants, traders, corporations and even farmers earn billions of rupees while in turn benefiting the environment. This was an unimaginable trading opportunity not more than a decade ago. Carbon credits can form a massive source of revenue for the developing world.

Over a decade ago, most countries joined an international treaty to address the danger of global climate change. The United Nations Framework Convention on Climate Change (UNFCCC) is an international environmental treaty that sets general goals and rules for confronting climate change. The UNFCCC provides the basis for concerted international action to mitigate climate change and to adapt to its impacts. Its provisions are far-sighted, innovative and firmly embedded in the concept of sustainable development.

With 195 Parties, the United Nations Framework Convention on Climate Change (UNFCCC) has near universal membership and is the parent treaty of the 1997 Kyoto Protocol. The Kyoto Protocol, an addition to the UNFCCC treaty, has been ratified by 193 of the UNFCCC Parties. Under the Protocol, 37 States, consisting of highly industrialized countries and countries undergoing the process of transition to a market economy, have legally binding emission limitation and reduction commitments.

The ultimate objective of both treaties is to stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system.

The clean development mechanism (CDM) allows emission-reduction projects in developing countries to earn certified emission reductions (CERs), each equivalent to one tonne of CO2. CERs can be traded and sold, and used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol. With more than 4,500 registered projects in 75 developing countries, the CDM has proven to be a powerful mechanism to deliver finance for emission-reduction projects and contribute to sustainable development.

The greenhouse emission reduction credit or “carbon credit” market has become a multi-billion dollar industry for credits issued under the Kyoto Protocol internationally. India is being heralded as the next carbon credit destination of the world. On 7th September 2012, the one billionth CER credit under the Kyoto Protocol’s Clean Development Mechanism (CDM) was issued to a project at a manufacturing plant in India that has switched its fuel source from coal and oil to locally gathered biomass.

LEGISLATIONS REGULATING CARBON CREDITS MECHANISM

The UNFCCC was adopted at the United Nations Headquarters, New York on the 9 May 1992. In accordance with Article 20, it was open for signature at Rio de Janeiro from 4 to 14 June 1992, and thereafter at the United Nations Headquarters, New York, from 20 June 1992 to 19 June 1993.

Pursuant to Article 22, the Convention is subject to ratification, acceptance, approval or accession by States and by regional economic integration organizations. States and regional economic integration organizations that have not signed the Convention may accede to it at any time.

The Convention entered into force on 21 March 1994. Currently, there are 195 Parties (194 States and 1 regional economic integration organization) to the United Nations Framework Convention on Climate Change.

The Kyoto Protocol is an international and legally binding agreement to reduce greenhouse gas emissions worldwide and is an addition to the UNFCCC treaty.

The Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) was adopted at the third session of the Conference of the Parties (COP 3) in Kyoto, Japan, on 11 December 1997. In accordance with Article 24, it was open for signature from 16 March 1998 to 15 March 1999 at United Nations Headquarters, New York. Pursuant to Article 22, the Protocol is subject to ratification, acceptance, approval or accession by Parties to the UNFCCC. Parties to the UNFCCC that have not signed the Protocol may accede to it at any time.

The Protocol entered into force on 16 February 2005 and currently, there are 193 Parties to the Kyoto Protocol to the UNFCCC.

India signed UNFCCC on 10th June 1992 and ratified it on 1st November 1993. India acceded to the Kyoto Protocol on 26th August 2002. Under the UNFCCC, developing countries such as India do not have binding GHG mitigation commitments in recognition of their small contribution to the greenhouse problem as well as low financial and technical capacities.

The Ministry of Environment and Forests, Government of India, is the nodal agency for climate change issues in India.

OPPORTUNITIES FOR PROFESSIONALS AND BUSINESS IN THE CLIMATE CHANGE INDUSTRY

In today’s increasingly challenging and volatile macro world, the role of the Chief Executive Officers (CEO’s) and Chief Financial Officers (CFO’s) of their companies has also evolved significantly. Their roles have expanded and evolved as strategic partners and advisors. The Key Personnel of an organization perform four main functions of Steering, Operating, Motivating and Planning, – they are in the best position to guide their organizations in shifting their business models towards adherence with the climate change agenda.

Organizations also stand to gain from environment protection and sustainable development. New business can be started as green businesses. Credits can be earned under the Clean Development Mechanism of the United Nations Framework Convention on Climate Change, thereby benefiting the Organisation and the Environment as a whole.

Professional Opportunities in the Climate Change industry include:

1. Conceptualizing the Clean Development Mechanism (CDM) project

2. Quantification of greenhouse gases (GHG) Carbon Footprint

3. Selection of Cleaner technologies for New projects

4. Project risk analysis

5. Registration of project – both national and international level

6. Obtaining Host country approval

7. Preparation of Project Concept Note

8. Preparation of Project Design Document

9. Selection of Methodologies and Baseline

10. Legal and regulatory advice during negotiations with host country Designated National Authority (DNA)

11. Advice on the appointment of independent validators

12. Assistance to achieve registration of the project by the CDM Executive Board

13. Assistance in getting verification done by Designated Operational Entity (DOE)

14. Ensure Compliances

15. Assisting various Ministries associated with National Action Plan on Climate Change (NAPCC)

16. Carbon Finance

17. Energy Audit under The Energy Conservation Act 2001

18. Advise on investment in carbon credit

19. Accounting advisory services

20. Taxation advisory services

Professional Opportunities in Environmental Laws and Green Sectors:

1. Professionals as consultants can obtain consents for establishment of a Unit under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981.

2. Before establishing an industrial unit a certificate from a professional about proposed Capital Investment or Gross capital investment (Land, building, plant and machinery) is required to be submitted along with the consent application for establishment of a Unit. This certificate is also known as Gross Block investment certificate. This certificate should include the cost of land, building, plant and machinery without depreciation.

3. Professionals as environment consultants can play an important role in obtaining environmental clearance under the Environment Impact Assessment Notification. The environmental consultant should be conversant with the existing legal and procedural requirements of obtaining environmental clearance for a proposed project. The consultant should guide the project proponent (i.e the person who is going to establish an industrial unit) through initial screening of the project and establish whether Environment Impact Assessment (EIA) studies are required to be conducted and if so finalise the scope of such study. The consultant should also be fully equipped with required instruments and infrastructure for conducting EIA studies. The environmental consultant is responsible for supplying all the environment-related information required by the State Pollution Control Board (SPCB) and Impact Assessment Agency (IAA) through the project proponent. The consultant is also required to justify the findings in the Environment Impact Assessment and Environmental Management Plan (EMP) during the meeting with the expert groups at IAA.

4. Professionals can also assist the Industrial Units in record keeping of various hazardous wastes, chemicals etc, as prescribed under the Hazardous Wastes (Management and Handling) Rules, 1989 and Manufacture, Storage, and Import of Hazardous Chemicals Rules, 1989.

5. Professionals can also provide information on the capital and recurring (O&M) expenditure on various aspects of environment protection such as effluent, emission, hazardous wastes, solid wastes, tree-plantation, monitoring, data acquisition etc. This is important information to be given in the application for consent to establish/operate/renewal of consent.

6. Status of compliance of Rules 5, 7, 10,11,12,13 and 18 under the Manufacture, Storage, and Import of Hazardous Chemicals Rules, 1989 need to be given in the application for consent to establish/operate/renewal of consent. This status of compliance can be given by a professional in the form of a certificate of compliance.

a. Rule 5- Notification of major accident

b. Rule 7- Notification of sites

c. Rule 10 – Preparation and submission of safety report

d. Rule 11 – Updation of safety report

e. Rule 12- Requirements of further information to given to the authority

f. Rule 13 – Preparation of on-site emergency plan by the occupier g. Rule 18-Import of hazardous chemicals

  1. After consent to establish/operate is obtained under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981, professionals can ensure on a monthly/quarterly/half-yearly basis that the conditions of the consent order are complied with by the industrial unit.
  2. In the same manner professionals can also ensure on a monthly/quarterly/half-yearly basis that the conditions of the authorization are complied by the industrial units under the Hazardous Wastes (Management and Handling) Rules, 1989.

  3. Professionals can give a report or certificate with regard to capital investment under the Biomedical waste (Management and Handling) Rules, 1998. This is an important document to be submitted along with the application for authorization.

  4. Professionals as environmental consultants can give opinion on – viability of various projects, technologies to prevent pollution and clean up polluted resources.

  5. Environmental audits can be conducted by Professionals. Environmental auditing refers to the monitoring of environmental management system of the Unit, checking the status of consent orders, compliance of consent orders, water cess, other legal requirements, industrial data collection regarding product process, electric consumption, water consumption, raw materials and energy balance etc.

To Read more Download Free E-Book Written By CA Rajkumar S. Adukia

Contents of the Book 

  1. Introduction
  • Legislations regulating Carbon Credits Mechanism

  • Opportunities for Professionals and Business in the Climate Change Industry

  • Climate Change and Global Warming

  • Structure of United Nations Framework Convention on Climate Change (UNFCCC)

  • Structure of The Kyoto Protocol

  • The Clean Development Mechanism

  • India’s National Action Plan on Climate Change

  • Energy Conservation

  • Environmental Laws and Green Audit

  • Sustainable Development and Sustainability Reporting

  • Useful Websites

  • Click here to Read/Download Other Articles/Books written by CA Rajkumar S. Adukia

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