The Clean Development Mechanism (CDM) was established under Article 12 of the Kyoto Protocol adopted by the Third Conference of the Parties to the Framework Convention on Climate Change on December 11, 1997.
The dual goals of the CDM are to promote sustainable development in developing countries and to allow industrialized countries to earn emissions credits from their investments in emission-reducing projects in developing countries. To earn credits under the CDM, the project proponent must prove and have verified that the greenhouse gas emissions reductions are real, measurable and additional to what would have occurred in the absence of the project.
IISD is focusing on the CDM as an important implementation tool of the Kyoto Protocol, and an opportunity to underpin sustainable development initiatives in developing countries.
Key areas of work on the CDM include:
The CDM in Chile's Transportation Sector
IISD has recently completed a project in conjunction with Climate Change and Development Consultants (CC&D) in Chile and the Center for Clean Air Policy (CCAP) in Washington, D.C., to build Chile's capacity to apply the CDM as an effective clean investment tool in the transportation sector.
As in many developing countries, the transportation sector is the largest source of energy-related carbon dioxide (CO2) emissions in Chile. In 1994, the transportation sector accounted for 36 per cent of total CO2 emissions from energy consumption, and transportation CO2 emissions could increase by a factor of four by 2020 without mitigation measures.
The CDM represents a crucial opportunity to develop a sustainable transportation sector for Chile that would also increase funding flows, enhance capacity and expand technology transfer opportunities. For this to be successful, it will be critical to have in place the technical and institutional capacity to develop, review and approve CDM projects in a systematic manner; assess and remove barriers to project implementation; and market its project opportunities effectively. The project currently underway seeks to address these needs.
More information can be obtained at the project Web site.
Realizing the Development Dividend
As the CDM comes into effect, a number of concerns have been raised regarding the quality and quantity of emission credits that are being generated. Experience to date has found that, in many cases, the low-cost projects under development do not garner the type of sustainability benefits developing countries were hoping for when they agreed to the establishment of the CDM. Additional challenges include low prices for carbon, and concentration of investment toward a handful of developing countries such as India, China and Thailand, already receiving higher proportions of foreign direct investment. Lesser developed countries are not attracting CDM investment dollars, even though many have dedicated considerable financial and human resources towards building their capacity to participate in this mechanism. This situation has the potential to undermine the success of the CDM and its contribution to the wider objectives of the UNFCCC.
To address this situation, IISD initiated a project that explores how to provide host countries with socio-economic and environmental gains—a "development dividend"—while simultaneously meeting investors' need for low-cost emission reduction opportunities. The project has two phases:
-
Phase I
Through consultations with host countries, investors and donors, Phase I of the project is developing a background paper that seeks to understand the current status of the CDM and present ideas about how this market mechanism may be enhanced.
-
Phase II
Key individuals from a cross section of groups will further explore the concepts presented in the background paper through participation in the Development Dividend Task Force. The group will hold its first meeting in Ottawa, June 28-29, 2005.
More information, including a copy of the analysis paper, can be found on the Development Dividend project website.
CDM Component of the TERI-Canada Energy Efficiency Project
IISD has conducted CDM research as part of the TERI-Canada Energy Efficiency Project undertaken with our partners, The Energy and Resources Institute (TERI) in India, and the Pembina Institute for Appropriate Development which led the CDM research in Canada. The TERI-Canada project was launched in 1999 with the objective of analyzing market-based, fiscal and regulatory approaches to promote energy efficiency and conservation. Full details can be found at the TERI-Canada project Web site. The project was supported by the Canadian International Development Agency (CIDA).
The CDM research component aimed to contribute to sustainable development at the international level, with a special focus on four Asian countries and Canada. Besides TERI, the other partners were institutes based in Bangladesh, China and Indonesia—all affiliated with the Asian Energy Institute, for which TERI is the secretariat. The CDM component explored the application of CDM in Asia (Bangladesh, China, India and Indonesia) and in Canada.
There were two phases to this research:
-
Phase I
Publication of country reports for Bangladesh, China, India, Indonesia and Canada including the identification of project opportunities
-
Phase II
Case study analysis of project opportunities from Phase I in Bangladesh, China, India and Indonesia; and facilitation of linkages between Canadian companies and CDM project opportunities in Asia.
Further information can be found at the TERI-Canada project Web site – CDM research page
Decentralized Renewable Energy and the CDM
Members of the Climate Change Knowledge Network (CCKN) published Seeing the Light: Adapting to climate change with decentralized renewable energy in developing countries in 2004. The publication highlights the positive contribution decentralized renewable energy (DRE) can make towards integrated climate policy. Through five country case studies by member organizations, Seeing the Light explores how well-designed DRE projects can build adaptive capacity. The case studies review the DRE and CDM experience in Argentina, Bangladesh, Brazil, Senegal and Zimbabwe. The book concludes with recommendations regarding how the CDM should be supported in host countries, by investor countries, and in a multilateral context by agenda-setting institutions like the United Nations and the World Bank.
Establishing National Authorities for the CDM
As one of the key requirements for participation in the Clean Development Mechanism, National Authorities offices are an important first step toward involvement by developing country in this flexibility mechanism. Published in 2002, the book identifies the specific steps needed to establish national programs and, by presenting various Latin American experiences, encourages other countries to adapt the lessons learned to their local needs.
The book incorporates the evolving decisions on the CDM from the international negotiation process and specific requests from developing countries. Updated to COP-7 and peer reviewed by some of the leading professionals in the field of international climate politics, the guide is a useful tool in Africa, Asia as well as Latin America. The publication was an activity of the Climate Change Knowledge Network, and the full publication is available on the network's web site.
|
