An assessment of clean development mechanism projects in the energy sector in India

Abstract

India as a developing nation had shown its willingness to contribute towards carbon emission mitigation by signing the Kyoto Protocol in August 2002 itself. An extensive literature review showed that there was very little understanding of the various aspects of CDM projects, the process of earning carbon credits, carbon credit accounting, and the sustainable development outcomes of CDM projects. The study is based on the experiences of CDM projects in the Energy Industry as maximum CDM projects were registered in this sector. Primary data was collected and multi-stage purposive sampling was used to select the projects. EFA was done using the SPSS 22.0 package and as data is not normal, non-parametric statistical tools like Kruskal Wallis, Mann Whitney U test, and Kendal Theil Regression analysis were used for analysis purposes. Analysis shows that around 69% of all CDM projects are concentrated in the six states of Gujarat, Rajasthan, Maharashtra, Tamil Nadu, Andhra Pradesh, and Karnataka. The stakeholders exhibit a low level of awareness regarding the Kyoto Protocol, the CDM, and the rationale behind the implementation of such projects. The analysis makes it clear that government support is crucial to developing CDM projects to achieve sustainable goals. Private companies demonstrated greater ease in establishing Clean Development Mechanism (CDM) projects compared to public companies. The withdrawal of incentives and tax holidays for the CDM projects was a blow to the viability of the projects for many small companies who had entered into the energy business due to the Clean Development Mechanism. The Public Companies are lagging behind the Private Companies in confirming the accounting standard guidelines giswven by the ICAI. The lack of proper Accounting Standards is a major hurdle in following accounting and disclosure norms for all types of companies. CDM projects have been found to positively impact economic growth, social upliftment, and environmental protection in the localities where they are situated and do not have much effect on technology transfer. The study has implications for policy, operations, finance, technology, capacity-building, and international cooperation. These implications can drive improvements in the initiatives that the government is going to take in the future to become carbon neutral.