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Enhancing the Clean Development Mechanism to
Support Low-emission Development Strategies
a report by
Industry Outlook
Wytze van der Gaast
Researcher, Joint Implementation Network
The Clean Development Mechanism (CDM) was a typical ‘product’ of the Finally, the The Potential of Transferring and Implementing Sustainable
1997 climate talks in Kyoto. In Kyoto, during the final negotiation stages Energy Technologies through the Clean Development Mechanism
industrialised countries were willing to adopt stricter greenhouse gas (ENTTRANS)
5
study argued that the current CDM structure with its
(GHG)-emission reduction or limitation commitments, which they could strong focus on GHG abatement has a tendency to lead to ad hoc
partly fulfil by investing in emission-reduction projects in developing investments without a clear link to the development strategies of host
countries. Given the relatively low investment costs, this option enabled countries. There is a risk that projects result in one-off investments
industrialised countries to achieve their commitments at lower costs. This without strong spin-off potential in the host country.
project-based mechanism, including the participation of developing
countries, is referred to as the CDM. Based on these concerns and in light of the ongoing discussion on
improving the functioning of the CDM, this article explores how the
Next to this GHG-emission-reduction component, CDM projects mechanism could become more powerful in terms of transferring
should also contribute to the sustainable development of the low-emission technologies, which are more strongly embedded in the
developing country hosting the project.
1
As sustainable development development strategies of host countries. It explains an approach to
is a context-related concept, it was decided that it should be defined identifying such strategies and how the CDM could be aligned
by the government of the host country.
2
Consequently, while the to support these. It suggests an efficient working relationship between
procedures for calculating the GHG emission reductions from a CDM the CDM Executive Board and the Technology Mechanism proposed
project are determined and observed by a UN-based executive body, by the Copenhagen Accord.
its sustainable development contribution is determined by the host
countries themselves. Identifying Strategic Low-emission Technologies
This situation has given rise to concerns. The term ‘sustainable Assessing Technology Needs
development’ is sufficiently broad to consider in principle any CDM The ENTTRANS study suggested an approach for identifying
project sustainable, and the first developments with the CDM pipeline technologies for CDM projects, first by exploring energy service needs
between 2005 and 2008 seemed to indicate that projects were mainly (e.g. heating, electricity and transport), and second by selecting
selected for their GHG-emission-reduction potential. During this phase, low-emission technologies that would help to meet those needs. Such
most of the emission reductions were generated through CDM projects technologies could then be offered to CDM investors so that CDM
in China, India and South Korea in the field of reducing emissions of projects would be directly related to country needs.
industrial process-based gases such as hydrofluorocarbons (HFCs),
perfluorocompounds (PFCs) and nitrous oxide (N
2
O), which have a A similar approach has been suggested by the updated Handbook for
relatively strong global warming potential and can be reduced Conducting Technology Needs Assessment for Climate Change
at relatively low costs. produced by the UN Development Programme (UNDP) and the UN
Framework Convention on Climate Change (UNFCCC) Secretariat at
However, in the meantime, since the potential of such industrial gas the request of the Bali Climate Talks of 2007.
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This handbook supports
projects is relatively small, the share of renewable energy and energy developing countries in selecting technologies that will enable them to
efficiency projects has been increasing. This development is shown by achieve development equity and environmental sustainability and
the CDM statistics: 76% of issued credits (realised emission reductions to follow a low-emission, climate-resilient development path. The
of ongoing projects) originate from industrial gas reduction projects handbook presents a systematic approach to identifying,
and 12% from renewable energy projects; in terms of expected credits evaluating and prioritising technologies (known as technology needs
(until 2012 from ongoing and new projects), 26% is expected from assessment [TNA]).
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HFC, PFC and N
2
O reduction efforts, whereas 35% of the credits
should come from renewable energy projects.
3
The first step in this TNA approach is to explore a country’s
development priorities in terms of economic development (e.g. energy
Another concern was that CDM projects are unequally distributed system improvement and improvement of economic infrastructures),
across countries and regions. Currently, the share of the Asia-Pacific protection of the environment (e.g. reducing local air pollution)
region in the project pipeline is 78%, whereas the share of the African and improvement of social circumstances (e.g. health improvement and
continent is only 3%.
3
A study by Bakker et al.
4
has suggested several poverty alleviation). These priorities result in a vision of where the
ways to modify the CDM structure so that stronger incentives can be country would like to be in the short, medium and long term. As a next
created for projects in currently underrepresented regions, e.g. by step, strategic sectors can be identified for achieving these
‘overcrediting’ projects from these regions. development priorities. As GHG-emission reduction is an important
© TOUCH BRIEFINGS 2010
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