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

Castro, Paula; Michaelowa, Axel

doi:10.1080/17565529.2011.582275

Cited by 25 publications

(30 citation statements)

References 15 publications

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“…Although structural CDM reform has been discussed extensively, research suggests that proposed market-based options would fail to encourage project development in LDCs while underlying constraints persist. Replacing the current project focus with a sectoral CDM or creating preferential LDC access measures would be unlikely to yield benefits (Castro & Michaelowa, 2010;Murphy, Cosbey, & Drexhage, 2008). Given the low mitigation potential, neither is it clear that grants and loans for LDC project developers to ease the financial burden of constraints (HLPCD, 2012) would sufficiently incentivize action.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Can CDM finance energy access in Least Developed Countries? Evidence from Tanzania

2015

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Policy documents and academic literature suggest that Clean Development Mechanism (CDM) finance could complement traditional 'energy access' (EA) funding in developing countries, including the Least Developed Countries (LDCs). Yet these propositions have not been empirically tested. This study helps fill this gap by examining constraints to CDM project passage through five stages of an idealized project development cycle (PDC) in Tanzania, and their implications for the ability of the CDM to contribute to financing energy access in LDCs. Twenty-five semi-structured interviews and documentary material were analysed using an analytical framework developed for systematic investigation of constraints. Institutional constraints such as the under-performance of Tanzania's Designated National Authority were the most often mentioned obstacles for project development. Yet non-institutional constraints such as limited energy sector mitigation potential, indigenous skill shortages, and low carbon market prices also hinder project development. Institutional constraints buttress, rather than supersede, pre-existing noninstitutional constraints, and together they prevent energy projects from completing the PDC and accessing CDM finance. The number and severity of constraints suggest that the situation is unlikely to change rapidly, and that the CDM sustains and exacerbates existing global inequalities. Since traditional energy access funding is insufficient to address these inequalities, new funding and policy mechanisms are required. Policy relevanceThe CDM fails to fill the EA financing gap in Tanzania. This is also true for other LDCs where comparable project development challenges prevail. The CDM therefore appears to sustain uneven development patterns overlooking those most in need. Claims about its potential to enhance EA are misplaced, and the situation is unlikely to change rapidly. CDM and carbon market projects more widely will have limited ability to help financing EA in LDCs, even if the institutional setting within which they are implemented were reformed in the future. Yet traditional energy funding will be inadequate on its own. The debate over extending the CDM post-2017, when the second Kyoto Protocol commitment period expires, should be informed by honest appraisal of its merits and defects. Policy makers should revisit lessons provided by this article and wider research to help ensure that new EA mechanisms are not hampered by constraints and can benefit those most in need.

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Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Can CDM finance energy access in Least Developed Countries? Evidence from Tanzania

2015

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“…The attractiveness of a country or region as project host depends on its marginal abatement cost of emissions reductions, its institutional capacity, and business climate for investors (Castro and Michaelowa, 2011;Winkelman and Moore, 2011;Dinar et al, 2011;Castro, 2012;Jung, 2006;Oleschak and Springer, 2007). While developing countries often have more low-cost mitigation potential than industrialized countries due to inefficiencies in the energy sector, they are also more likely to have less regulatory certainty, more economic and political instability, and lower institutional capacity than industrialized countries (Oleschak and Springer, 2007).…”

Section: Clean Development Mechanism and The Programme Of Activitiesmentioning

confidence: 99%

“…The CDM has disproportionately benefited certain countries, most notably China and India, as shown in Figure 1. acteristics needed to attract investment in CDM projects (Greene, 2005;Castro and Michaelowa, 2011 (Michaelowa and Jotzo, 2005).…”

Section: Clean Development Mechanism and The Programme Of Activitiesmentioning

confidence: 99%

“…In practice, the vast majority of CDM projects have been implemented in rapidly industrializing countries, notably China and India. In contrast, small and poor countries in Sub-Saharan Africa and elsewhere have implemented few CDM projects (Okubo and Michaelowa, 2010;Castro and Michaelowa, 2011). For example, of the 8,815…”

Section: Introductionmentioning

confidence: 99%

“…1 Only South Africa (48 projects) and Kenya (25 projects) were on the list of top 20 countries hosting the largest number of CDM projects, while large African countries with potential for CDM projects, such as Ghana and Zambia, were home to less than four CDM projects. Scholars have noted that the observable bias against the least developed countries (LDCs) is related to a lack of institutional capacity, which means that the cost of CDM project implementation outside large economies is high (Michaelowa and Jotzo, 2005;Okubo and Michaelowa, 2010;Castro and Michaelowa, 2011;Buen, 2013).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Small and beautiful? The Programme of Activities and the least developed countries

Bayer

Pinkerton

Urpelainen

2014

Climate and Development

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Most carbon abatement projects under the Kyoto Protocol's Clean Development Mechanism (CDM) have been implemented in rapidly industrializing countries, notably China and India. To support small carbon abatement projects and to promote decarbonization in the least developed countries, the Programme of Activities (PoA) modality was introduced. But are the determinants of project implementation different under the PoA from those for conventional CDM projects? To answer this question, we conduct a statistical analysis of the global distribution of CDM projects and PoAs during the years 2007-2012. In regard to country size, large countries clearly dominate both the CDM and PoA, suggesting that the PoA may do only little to facilitate project implementation in small countries. However, the number of PoAs has a strong negative association with the proportion of a country's corruption level, while the importance of corruption for the CDM is much smaller. Moreover, per capita income has no effect on PoA implementation, while high wealth levels have a weak positive effect on CDM projects. Thus, the PoA modality seems to promote sustainable development in poor countries that have exceeded a certain threshold of good governance. In this regard, PoAs are directing carbon credits to new areas, as many had initially hoped.

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Certified emission reductions weights for improved CDM projects

Francois

Hamaide

2010

Env Pol Gov

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As currently designed and implemented, the Clean Development Mechanism (CDM) under the Kyoto Protocol is a market mechanism that creates 'offset' credits, named CERs (certifi ed emission reductions). These credits are issued to Annex I Parties that invest in projects both reducing emissions and contributing to sustainable development in developing countries. This paper explores how CER weights could be used to reform and improve this mechanism. On the one hand, weights strictly lower than 1, or discount factors, would improve the environmental effectiveness of the CDM, enhancing global greenhouse gas emission mitigation while addressing the additionality concern. On the other hand, weights higher than 1, or multiplication factors, could increase the competitiveness of project types and/or host countries currently underrepresented in the CDM pipeline. This paper concentrates on stimulating investment from developed nations to less developed countries and aims at reducing the disparity between the three main CDM host countries (Brazil, India and China) and less developed nations. Based on statistical data published by the United Nations Framework Convention on Climate Change, our analysis then considers different policies, estimates their impacts, and shows how a sensible mix of discounting and multiplication could lead to a more equitable geographical distribution of CDM projects and possibly create atmospheric benefi ts.drawbacks of this approach. We fi rst analyse the environmental effectiveness of the CDM, and thus call for discounting only and then consider the uneven distribution of CDM project activities, a problem that would best be handled through a sensible mix of discounting and multiplication. promoting sustainable development and fl exibility. 9 In particular, Michaleowa (2008) proposed an approach in which the discount factor would be linked to the level of development of the host country (the development index being defi ned as a combination of per-capita income and per-capita emissions thresholds).

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

Cited by 25 publications

References 15 publications

Can CDM finance energy access in Least Developed Countries? Evidence from Tanzania

Can CDM finance energy access in Least Developed Countries? Evidence from Tanzania

Small and beautiful? The Programme of Activities and the least developed countries

Certified emission reductions weights for improved CDM projects

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