Baselines for suppressed demand: CDM projects contribution to poverty alleviation

Abstract

Projects implemented under the Clean Development Mechanism (COM) need to establish a baseline. The baselines is a projection of greenhouse gas emissions that would have occurred without the project. Establishing baselines that allow for sustainable development through COM projects is a key challenge, especially in poor communities. The COM rules explicitly allow for baselines that account for emissions "above current levels due to specific circumstances of host parties". This provision lends support to crediting of growth in demand for energy services where it is currently suppressed as a result of poverty and/or lack of infrastructure or suppressed demand. The question is whether the existing level of consumption is the baseline or the future expected level of consumption including "development" advances in provision of energy services and as a result of poverty alleviation is the baseline. Or should development be allowed to get dirty before it qualifies to become clean? The paper presents a baseline methodology that provides opportunities for suppressed demand to be predicted and counted.

Would preferential access measures be sufficient to overcome current barriers to CDM projects in least developed countries?

“…Poverty or lack of infrastructure reduces the demand for energy services in poor countries: energy use would be higher if people could afford it or the infrastructure was in place. Depending on whether this suppressed demand is taken into account or not, baselines for CDM projects may change significantly (for a discussion of the issue see Winkler and Thorne, 2002).…”

How can the current CDM deliver sustainable development?

“…At the other pole, much of the literature posits a more expansive view of SD encompassing a broader ‘sustainable’ development component for CDM projects. Such SD in the CDM has been difficult to realize because of negotiation issues such as national sovereignty,18,21 the inclusion of industrial gas destruction (such as hydrofluorocarbon‐23 (HFC) and N 2 O) creating a ‘race to the bottom’,22 and the inability of the CDM to assist countries and communities where emissions are low, but growing 23. More fundamentally, the inherent difficulties of defining a term that most agree is beneficial, but upon which few can agree on realistic operationalization,24 render broad SD inclusion to any ‘mechanism’ a difficult task.…”

Clean development mechanism as a solution to the present world energy problems and a new world order: a review

“…Fischer (2001) pointed out that a relative baseline leads to a subsidy to production since the amounts of emission credits generated are proportional to actual output. However, Winkler and Thorne (2002) stated that such a subsidy effect is beneficial to sustainable development in some situations, including those where the project leads to the provision of goods (energy, for instance) that would otherwise not be provided. Such analyses suggested that absolute baselines favour the environment (emission reductions) while relative baselines favour the development (production).…”