Panel Seeks to Assure UN Clean Development Mechanism's Future

The future of the first--and still largest by far--multi-lateral market-based initiative to address climate change by seeking to promote and foster development of sustainable, low carbon economies - the  United Nations Kyoto Protocol's Clean Development Mechanism (CDM) - is in doubt. That has led to the formation of a high-level panel and the commission of a broad research project aimed at reforming the CDM in order to assure it has a future.

Established under the auspices of the United Nations and signatories to the Kyoto Protocol, the CDM is the most substantial vehicle to date for the transfer of clean energy technology and development of clean energy projects between developed and less developed countries. It enables clean energy and clean tech project developers who qualify to earn CDM carbon emission offset credits that can be bought and sold on carbon emissions offset markets for each metric ton of greenhouse gas (GHG) emissions avoided.

Creation of the CDM “has spawned more than 4,500 projects in 75 developing countries, everything from wind energy and efficient cookstove projects to landfill gas and large industrial projects,” the CDM Policy Dialog panel notes in a press release.

The CDM's future is in doubt, despite its overall success, however. “Credited with creating the first global environmental currency, [the CDM] is now under threat due to the current low prices paid for credits, the result of low demand and uncertainty over the timing and level of future demand, which is tied to countries’ emission-reduction commitments,” the panel explains.

Tbe CDM reform movement: Disintegration not an option

Allowing the CDM to “disintegrate,” could prove fatal to a broad, international political consensus regarding the increasingly urgent need for and benefits of governments establishing strong, persistent and proactive clean energy and clean technology policies and national action plans, the CDM Policy Dialog panel asserts.

In a press release they note that the CDM “has helped nations mitigate approximately one billion tonnes [metric tons] of GHG [greenhouse gas] emissions in a manner that realized US$3.6 billion in savings for developed countries,” the panel found as a result of its research. “Over this same period, the CDM has mobilized more than US$215 billion in investments in developing countries, thereby accelerating economic growth and poverty alleviation,” the CDM study authors state.

Forging such a broad, wide-ranging international institutional program is no easy task, and the CDM, administered by the World Bank, has come in for its share of criticism over the years. Lack of transparency, lack of monitoring and enforceability, lack of accountability, lack of local and small stakeholder engagement, a cumbersome, exclusive and slow-moving bureaucratic process, and misguided and even fraudulent CDM project approvals—are all criticisms that have been levied against the market-based clean energy technology development and technology transfer program.

Aiming to address the claims of critics and assure the CDM's viability, the CDM Policy Dialog panel officially presented its final report at the 69th meeting of the CDM Executive Board in Bangkok, urging “that its recommendations be implemented fully and without delay with a timetable that will bring them into effect by the United Nations Climate Change Conference scheduled for December 2013.”

The panel's CDM reform report specifies 51 actions spanning 12 areas. They cover issues such as “the crisis of demand, mitigation impact, linking of carbon markets, sustainable development, regional distribution, governance structure, additionality, stakeholder and public engagement, as well as mechanisms for appeals and grievances.”

“The CDM was set up to do two things: give countries with a commitment under the Kyoto Protocol some flexibility in how they meet those commitments, and assist countries to achieve their sustainable development goals,” the panel explains. To address its shortcomings and critics' contentions, panel members have made the following recommendations:

• more systematic reporting, monitoring, and verification of sustainable development impacts;


• greater access for under-represented regions through simplified procedures;


• revised criteria for the composition of the CDM Executive Board (CDM EB) to reflect not only regional distribution, but also professional knowledge and experience;


• implementation of standardized methods, such as performance benchmarks and positive lists, for assessing additionality.

They also make several recommendations intended to enhance the CDM's role in fostering development of sustainable, low-carbon economies and give it greater flexibility to adapt to changing political and market conditions:

• new approaches, such as sectoral crediting or national REDD+ programmes, be implemented;


• new projects that reduce HFC-23 or N2O from adipic acid plants be phased out;


• robust standards to enable linking and harmonization of current and emerging carbon markets be set;


• the rapid implementation of the Green Climate Fund be supported.