R.P.SINGH, IA& AS
Principal Accountant General (Audit) Punjab & UT Chandigarh
Earth’s environment is finite and fragile. Earth’s eco-system is under severe stress due to pollution of air and looming threats of global warming, ozone depletion, trans-boundary air pollution,
Developmental activities have brought in a host of environmental problems. Degradation/denudation of forests for economic development through mega projects, mining etc., and forest encroachments, forest fires have reduced natural carbon sink. The atmosphere in all the metropolitan cities is also heavily polluted due to vehicular emissions resulting in a number of health hazards to the human population. Problems are also arising out of lack of development, which is deforestation due to fuel wood extraction, and the fossil fuel burning for cooking resulting in emission of Green House Gases.
Greenhouse gases (GHGs) means those gaseous constituents of the atmosphere both natural and anthropogenic that absorb and re-emit infrared radiation. An increase in the levels of GHGs (Carbon dioxide, Methane, Nitrous oxide, Hydro fluorocarbons Per fluorocarbons and Sulphur hexafluoride) in atmosphere could lead to greater warming of earth’s surface which in turn can impact the world’s climate leading to phenomenon known as Climate Change.
Climate change means a change of climate, which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods.
The prime sources emitting air pollutants can be classified as
Vehicles on Road, Railways, Aircrafts, Ships and Other combustion engines
Air pollutants emitted from the engines are Carbon dioxide, Carbon monoxide, un-burnt hydrocarbons, oxides of hydrogen, oxides of sulphur and inorganic lead and particulate matter.
ii) Industrial & Commercial processes
Industrial units and power generating stations use combustion of coal, coke, and petroleum for generation of heat and power emitting greenhouse gases.
The green house gases already in the atmosphere affect the earth’s temperature for at least one or two centuries even if we stop burning fossil fuels and processes producing Carbon dioxide (CO2) and Chlorofluorocarbons (CFCs). For CO2, CFCs atmospheric life is of the order of 50-400 years.
1.1 Relevant Acts and Regulatory Agencies
For holistic management of environment, a clearly drawn policy is vital as it more often conflicts with other economic activities, which have more influence on governance. In India, the legislative enactment of Air (prevention and control of pollution) Act, 1981 has the objective of preventing and controlling the air pollution as the top priority by means of command and control method. Air pollution prevention is implemented through statutory control and administrative regulation by Regulatory bodies such as Central Pollution Control Board and State Pollution Control Boards under the Ministry of environment and Forests. For successful implementation of policy, adequate infrastructure of Regulatory Agencies, thorough scientific understanding and monitoring skills of its personnel etc are of paramount importance. The Energy Conservation Act, 2001 provides for efficient use of energy and its conservation and also led to establishment of Bureau of Energy Efficiency. The Electricity Act, 2003 requires State Electricity Regulatory Commissions to specify a percentage of electricity to be procured from renewable sources by electricity distribution companies. Electricity Regulatory Commissions have also linked tariffs to efficiency enhancement, providing incentive for renovation and modernization.
2.SAIs Role in Auditing Environmental Accords
2.1 Importance of auditing environmental accords
The mere existence of environmental accords does not guarantee a higher degree of environmental protection. Despite their importance very little is known about national implementation and compliance with accords. The Global Environmental Outlook 2000 (GEO 2000), published by the United Nations Environmental Programme (UNEP), states that assessment of implementation, compliance and effectiveness of environmental accords is complicated and plagued with gaps in data, conceptual difficulties and methodological problems.
This deficiency makes the basic question of availability and adequacy of data and information about compliance and effectiveness of environmental policy relevant: are the government and parliament well informed on the state of execution of policies related to environmental accords? Supreme Audit Institutions (SAIs), with their specific competencies, could play an important role in assessing data gaps, and even make an effort to examine the state of affairs concerning national implementation, compliance and effectiveness of accords.
2.2 Types of Audit
Environment Audit may be conducted within the broad framework of Regularity (financial and compliance) and Performance Audit.
Regularity Audit of environmental issues may be dealt with as compliance audit to Legislation, Rules and Acts and Financial statements. Compliance auditing with regard to environmental issues may relate to providing assurance that governmental activities are conducted in accordance with relevant environmental laws, standards and policies. Audit of financial statements with regard to environmental issues may include the initiatives to prevent abate or remedy damage to the environment, conservation of renewable and non-renewable resources, consequences of violating environmental laws and regulations, consequences of liability imposed by the state.
Performance Audit of subjects of sustainable developments and environment management may be dealt with at the first level relating to programmes and activities in the context of explicit commitments consequent upon international treaties on environment. The scope of audit would also extend to an examination of the environmental policies and initiatives of Government and of the measures taken to respect its international commitments.
Example: New Zealand had done performance audit of Accord-The United Nations Framework Convention on Climate Change (UNFCCC).
Goal: To report to Parliament whether or not resources have been applied effectively and efficiently and in manner consistent with Government policy.
Subject: Compliance with and implementation of environmental accord. The specific accord may be chosen to analyze a wide range of central government departments, regional and local activities.
Audit questions and criteria:
· Were Parliament and interested groups notified and consulted with at the negotiation stage of the agreements?
· Were impact statements prepared for proposed new agreements covering: reasons for being party to the agreement, advantages and disadvantages to being party, imposed obligations, economic, social cultural and environmental effects, the costs of compliance, measures to be adopted, provision for withdrawal from the agreements, statements setting out consultation with stake holders?
· Was the original wording of the agreements used in new legislation or amendments to existing legislation in order to implement the agreements?
· Did the responsible agencies get roles and responsibilities assigned, and were these properly documented and understood? Are there any gaps between agencies roles and responsibilities?
· Were resources allocated, empowering legislation and/or Cabinet direction for the fulfillment of the agreements’ obligations matching the allocation of roles and responsibilities?
· Is the state meeting the obligations of the Agreement (Sample examples)
- Has the state adopted a national policies to mitigate climate change through limiting anthropogenic (human induced) greenhouse gas and sink reservoirs.(UNFCCC)?
· Is planning, budgeting, operational commitment, and monitoring and reporting to Parliament of achievements and under-achievements to meet the obligations adequate?
· Are the agreements obligations being met, monitored and reported and where appropriate, amalgamated as a single composite report when there are several responsible agencies?
· Have the consequences of any shortfall in meeting the obligation been explicitly considered and reported to Parliament?
Audit activities: Agreement will be examined to determine States obligations and compared with reports of its fulfillment. Interview key agency staff and examine files and other documents to determine pre-signing processes, implementation arrangements, and by examination of performance reporting documents. Agency roles and responsibilities will be examined through a mix of interviews, examination of legislation, agencies own accountability documents and budgets.
Product: A report to Parliament covering:
· The robustness and completeness of the processes of negotiating and accepting the environmental agreements. In particular will be described pre-signing consultations with interest groups, the reasons, advantages and disadvantages, obligations, impacts, and costs and the means of ratifying the agreements.
· The fulfillment of the obligations of the agreements.
· The adequacy of the information provided to parliament.
· Lessons for future multilateral environmental agreements.
3. Applying the ‘line of reasoning’
Working Group on Environmental Auditing of the International Organization of Supreme Audit Institutions (INTOSAI) outlines the approach by which the audit of international environmental accords may be carried out and describes ways of co-operation between SAIs. Also a booklet was brought out to stimulate the thinking of SAIs about auditing international environmental accords, which presents a line of reasoning. The line of reasoning is designed to make transparent the choice of an environmental accord to be audited.
It contains two criteria that deal with aspects of national implementation of accords:
I Available information on an accord
II Signs of non-compliance with an accord
Next, four criteria related to characteristic of accords are dealt with:
III Environmental risks underlying an accord
IV Obligation to comply with an accord
V Period of implementation of an accord
VI Strictness of an accord
Finally it contains a criterion about the topicality and timeliness of an audit report:
VII Important coming events
3.1 Available information on an accord
Inadequacy of basic information about an accord, and the use and reliability of that information, could be a strong argument for auditing by the SAI (at national level).
Intergovernmental Panel on Climate Change (IPCC) was established in 1988 with an objective of evaluating the scientific evidence on global warming, assessing the environmental and agricultural impacts of climate change and formulating responses. In 1992, the first United Nations Conference on Environment and Development (UNCED) was held at Rio de Janeiro, Brazil popularly known as the Earth Summit resulted in Treaties on Biodiversity and Climate Change.
The United Nations Framework Convention on Climate Change (
UNFCCC) was adopted in 1992, which came into force in 1994 with the ultimate objectives to stabilize greenhouse gas concentration in the atmosphere at a level that would prevent dangerous anthropogenic interference with climate system, within a timeframe sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.
This Convention also led to establishment of a Conference of Parties (COP), the supreme implementing body of the Convention. In 1997, the third COP session held in Kyoto, Japan resulted in adoption of Kyoto Protocol to the UNFCCC. The Kyoto protocol came into force in February 2005 and calls for legally binding commitments to reduce greenhouse gas emissions by 5.2% below 1990 levels by the period 2008-2012. The Kyoto targets cover emissions of six direct greenhouse gases (GHG):
Carbon dioxide (CO2)
Nitrous oxide (N2O)
Hydro fluorocarbons (HFCs)
Per fluorocarbons (PFCs) and
Sulphur hexafluoride (SF6)
The other indirect GHGs are Sulphur dioxide (SO2), Oxides of Nitrogen (NOx), Carbon Monoxide (CO), Non-Methane Volatile Organic Compounds (NMVOC)
The individual targets for Annex I parties to the convention are listed in Annex B to the Kyoto Protocol. The major distinction between the convention and the protocol, the convention encouraged the industrialized countries to stabilize GHG emissions; the protocol commits them to do so.
The Parties should protect the climate system for benefit of present and future generations of mankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Protocol places heavier burden on developed countries recognizing that developed countries are principally responsible for the current high GHG emissions in the atmosphere as result of 150 years of industrial activity. In 2001, the detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakech called “ “Marrakesh Accords”. Under the Treaty, countries must meet their targets primarily through national measures. The Protocol offers an additional means of meeting their targets by way of three market based mechanisms viz.
Ø Emission Trading (ET) known as carbon market
Ø The Clean Development Mechanism (CDM)
Ø Joint implementation (JI)
Parties with commitments under the Protocol (Annex B Parties) have accepted targets for limiting or reducing emissions. The targets are expressed as levels of allowed emissions of assigned amounts over 2008-2012 divided into assigned amount units (AAUs).
The Clean Development Mechanism (CDM) defined in Protocol allows an Annex B Party to implement an emission reduction project in developing countries. Such Projects can earn saleable Certified Emission Reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting targets. The mechanism stimulates sustainable development and emission reductions. CDM Executive Board oversees the mechanism.
The Joint Implementation (JI) defined in the Protocol allows an Annex B Party to earn Emission Reduction Unit (ERU) from an emission reduction in sources or emission removal by sinks projects in another Annex B Party, each equivalent to one tonne of CO2, which can be counted towards meeting its targets. The host Party benefits from foreign investment and technology transfer.
The other units which may be transferred are one tonne of CO2 in the form of Removal Unit (RMU) on the basis of land use, land use change and forestry (LULUFC) activities such as reforestation.
Adaptation Fund was established to finance concrete adaptation projects and programmes in developing countries that are parties to Kyoto Protocol. The fund to be financed with a share of proceeds from CDM project activities and receive funds from other sources.
3.2 State of (non) compliance with an accord
Actual signs of non-compliance or inadequate implementation might be a reason for SAIs to direct attention towards the accord. Has the country adopted a national policy to mitigate climate change through limiting anthropogenic (human induced) greenhouse gases?
Government initiatives represented a broad spectrum of efforts to integrate climate change concerns in sustainable development for the diffusion of renewable energy and energy-efficient technologies, joint forest management, water resources management, agricultural extension services and environment education. Climate concerns in the development processes are mainstreamed through high- level multi stakeholder committee viz National Committee to Assess the Impacts of Climate change and Prime Minister’s Council on climate change. Integration is institutionalized through specialized institutions such as Ministry of New& Renewable Energy, Bureau of Energy Efficiency, and Technology Information Forecasting & Assessment Council with specific mandates to promote clean energy/climate friendly technologies.
Has the country implemented the policy through various measures for
· Enabling Access to Clean Energy
· Enhancing sustainable development and mitigating climate change
· Accelerated introduction of clean energy technologies through CDM
· Adaptation to climate impacts
· Mainstreaming climate change in sustainable development
3.2.1Patterns of consumption and Increased Industrial energy efficiency
Per capita energy consumption in India is less than 500kgoe compared to global average of nearly 1800kgoe.
India’s per capita CO2 emissions are approx one tonne per annum as compared to world average of 4 tonnes per annum
Since 2004, the Indian economy has grown at a rate of 9% per year, supported by an energy growth rate of less than 4% per year
Policies driven by imperatives of sustainable development have as a co-benefit led to decline in the intensity of energy use and CO2 emissions as well.
3.2.2 Policies to promote Energy efficiency and Renewable Energy
(i) Electricity from renewable sources
(ii) Enhancing efficiency of power plants
(iii) Introduction of labeling Programme for appliances
(iv) Energy Conservation Building Code
(v) Energy Audits of large industrial consumers
The Electricity Act, 2003 requires State Electricity Regulatory Commissions to specify a percentage of electricity to be procured from renewable sources by electricity distribution companies. Notified preferential prices for electricity from renewable sources. India has over 7000MW of wind energy capacity (Fourth largest in the world). National Hydro energy policy has accelerated the hydropower in India. Electricity Regulatory Commissions have also linked tariffs to efficiency enhancement, providing incentive for renovation and modernization. New Plants are encouraged to adopt more efficient and clean technologies for power generation.
An energy-labeling programme for appliances was launched in 2006. The labels provide information about energy consumption of an appliance enabling consumers to make informed decisions.
An Energy Conservation Building Code (ECBC) was launched in May 2007, which addresses the design of new, large commercial buildings to optimize the building’s energy demand. Compliance to ECBC has also been incorporated in Environment impact assessment requirements for large buildings. Nearly 100 buildings are already following this Code.
Conducting of Energy Audits of large energy consuming units in industrial sectors made mandatory in March 2007. These units are required to employ certified energy managers and report energy consumption and energy conservation data annually.
India is especially vulnerable to the adverse impacts of climate and over 2% GDP is currently spent on measures to adapt to these impacts through adaptation programmes: Crop improvement, Drought proofing, Health, Risk financing, Disaster management, Livelihood preservation.
3.2.3 Accelerated introduction of clean energy technologies through CDM
The National Designated Authority has approved over 700 CDM projects, and the CDM executive Board registered about 300 of these projects. The registered projects have already resulted in over 27 million tonnes of certified CO2 emissions reductions and directed investment in renewable energy and energy projects.
3.3 Environmental risks underlying an accord
The most important criterion for SAIs choosing an accord to audit is the urgency of environmental issues. Auditing an environmental accord with high environmental risks might need priority.
Intergovernmental Panel on Climate Change (
IPCC) projects that the global mean temperature may increase between 1.8o and 4o centigrade by 2100. This unprecedented increase is expected to have a severe impact on the global hydrological system, ecosystems, sea level, crop production etc. The impact would be particularly severe in tropics, which mainly consist developing countries. Energy use, Transport and land management have sharply increased atmospheric concentration of GHGs.
3.3.1Melting of Gangotri Glacier
Scientists studying this glacier have found it retreating at a rate of 20 metres a year as compared to about 16 metres per year in the past. If the present trend continues, then over the next 25 years, the Ganges can initially swell in volume because of increased melting but then dry out as the water supply in the mountains will run low. This will endanger the lives of about 400 million people who live in the river’s plains whose very lives depend on this river.
3.3.2 Impact on Forest Ecosystems
Climate is the most important determinant of vegetation patterns and has significant influence on forest distribution, species dominance, plant productivity and in general the ecology of forests. Biodiversity in India is under threat and is projected to decline in future due to multiple pressures such as increased land-use intensity, forest land conversion, non-sustainable extraction of biomass, overgrazing and forest fires (removal of carbon sinks). Any impact on forest vegetation and biodiversity will have adverse implications for the livelihoods of forest-dependent communities.
3.3.3 Impact on Agriculture
In the tropics and sub-tropics with prevailing high temperatures, crops are already growing at a particular threshold where dry land, non-irrigated agriculture dominates. Therefore, even with slight changes in temperature, yields are likely to decrease noticeably.
Agricultural productivity is sensitive to two broad classes of climate-induced effects: direct effects from changes in temperature, precipitation, radiation, or CO2 concentrations and indirect effects through changes in soils. The Third assessment report of IPCC indicates India’s rice and wheat production will drop significantly.
3.3.4 Impact on Coastal Environment
IPCC (2007) predicted that the coastal belts are more prone to the devastating impacts of global warming. Assessments show that one metre sea level rise can lead to welfare loss of $1259 million in India. India’s coastal line is about 7500 km long and is also densely populated as well as low lying. There is a concern that global warming may affect tropical cyclone characteristics because sea surface temperature plays an important role in determining both weather and tropical disturbances. Most of coastal regions are fertile and under paddy cultivation which is sensitive to inundation and salinisation. Coastal infrastructure and onshore oil exploration are also at risk.
3.4 Obligation to comply with an accord
An environmental accord is best suited for auditing by SAIs when respective states have ratified it and are therefore obliged to comply with it. The commitments itself would become the criteria.
Commitments of All Parties to the convention are to
· Develop, periodically update, publish make available to the COP, national inventories of anthropogenic emissions by sources and removals by sinks of all greenhouse gases using comparable methodologies agreed upon by the COP.
· Formulate, implement, publish and regularly update national and where appropriate regional programmes containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all GHG and measures to facilitate adequate adaptation to climate change.
· Promote and cooperate in the development, application and diffusion including transfer of technologies, practices and processes that control, reduce or prevent anthropogenic emissions of GHG in all sectors including energy, transport, industry, agriculture, forestry and waste management sectors.
· Promote sustainable management, promote and cooperate in the conservation and enhancement of sinks and reservoirs of GHG including biomass, forests and oceans as well as terrestrial, coastal and marine ecosystems.
· Cooperate in preparing for adaptation to climate change
· Develop and elaborate appropriate and integrated plans for coastal zone management, water resources and agriculture
· Take climate change considerations into account in their social, economical and environmental policies and actions such as impact assessments to minimize adverse effects on economy public health and the environment
· Promote scientific research, education, training, public awareness related to climate change, causes, effects, magnitude and timing and the economic and social consequences of various response strategies.
· Communicate to the COP information related to implementation.
3.5 Period of implementation of an accord
Accords can only be audited when respective governments have had the opportunity to implement them at the national level and to develop policies to comply with the accords. The Kyoto Protocol calls for legally binding commitments for Annex I parties to the convention (Developed countries) to reduce greenhouse gas emissions by 5.2% below 1990 levels by the period 2008-2012 (emission targets included in Annex B to the protocol).
3.6 Strictness of an accord
When an accord imposes clear and stringent obligations on states, which can easily be recognized as matters of compliance, SAIs can obtain clear audit standards from the accord itself. Strictness is of highest order for developed countries (Annex I Parties) and little less for developing countries.
3.7 Important coming events
COP – 14 meet to be held in Poland during December 2008.
1. Text of United Nations Framework Convention on Climate Change
2. Text of Kyoto Protocol
3. Article on Global warming in Enviro News, 2007
4. Survey of the Environment, 2007
5. India: Addressing Energy Security and Climate Change – October 2007 publication by MOEF, MOP, BEE
Climate system means the totality of atmosphere, hydrosphere, biosphere and geosphere and their interactions
Reservoir means a component(s) of the climate system where a greenhouse gas is stored.
Sink means any process, activity or mechanism, which removes a greenhouse gas, an aerosol or a precursor of a greenhouse gas from atmosphere.
Source means any process or activity, which releases a greenhouse gas, an aerosol or a precursor of a greenhouse gas into the atmosphere.