The future of the CDM: same same, but differentiated?

Abstract

CLIMATE POLICY 11 (2011) 752-767Policy-makers and scientists have raised concerns about the functioning of the Clean Development Mechanism (CDM), in particular regarding its low contribution to sustainable development, unbalanced regional and sectoral distribution of projects, and its limited contribution to global emission reductions. Differentiation between countries or project types has been proposed as a possible way forward to address these problems. An overview is provided of the different ways in which CDM differentiation could be implemented. The implications for the actors involved in the CDM are analysed, along with a quantitative assessment of the impacts on the carbon market, using bottom-up marginal abatement cost curves. The discounting of CDM credits, quota systems, or differentiated eligibility of countries could help to address several of the concerns raised. Preferential treatment may also make a limited contribution to achieving the aims of CDM differentiation by increasing opportunities for under-represented host countries. The impact on the carbon market appears to be limited for most options. Keywords

Creating a mutual gains climate regime through universal clean energy services

“…The Kyoto Protocol attempted to assist developing countries in climate change mitigation: the Clean Development Mechanism (CDM) allows the crediting of emission reductions from GHG abatement projects in developing countries and has been used both to implement many specific projects and to enable developed countries to cut their emissions modestly (Metz, 2010). However, although the CDM process has evolved as an offsetting mechanism, it has been cumbersome and largely ineffective in providing the incentives for developing countries to pursue climate-protecting development paths consistently and at the necessary scale (Sterk et al, 2007;Schneider, 2009;Bakker et al, 2011).…”

The Clean Development Mechanism, Stochastic Permit Prices, and Energy Investments

“…One main line of criticism concerns the additionality criterion, since often projects that would have gone ahead without the CDM were reported in such a way to make it CDM conform (Wara, 2008;Bakker et al, 2011). This in turn led to an oversupply of CDM credits and consequently depressed emission prices.…”

Diminishing Returns: Carbon Market Crisis and the Future of Market-Dependent Climate Change Finance

“…Existing studies within the fields of global environmental politics (GEP), international development studies and environmental justice have sought to assess the CDM in relation to questions regarding CDM governance and international cooperation (Michaelowa and Michaelowa 2007b;Newell 2009;Newell et al 2009;Dinar et al 2011), its capacity to generate development dividends in host countries (Holm Olsen 2007;Michaelowa and Michaelowa 2007a;Sutter and Parreño 2007;De Lopez et al 2009;Bakker et al 2011;Simon et al 2012) and the environmental efficacy, distributional fairness and human rights implications of CDM projects (Lohmann 2006;Böhm and Dabhi 2009;Bond et al 2012;Corbera and Friedi 2012). Literature addressing the specific relationship between carbon finance and the CDM has tended to focus on the challenge of scaling up and expanding the scope of CDM project activities in order to reduce transaction costs and enhance the mechanism's breadth and capacity to leverage funds (Sterk and Wittneben 2006;Kraiem 2009;Streck 2009;Bowen 2011).…”