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Enhancing the Clean Development Mechanism to Support Low-emission Development Strategies
Figure 1: Preparing Low-emission Strategies Based on Technology Needs Assessments
Government and business
Obje
Sectors
ctives: Technologies: Acceleration of Output:
Identification of
• development • identification technology • strategies
strategic sectors for
• mitigation • familiarisation transfer and • projects
low-emission
• adaptation • prioritisation development • capacity-building
development
The process of assessing technology needs and developing studies have suggested modifications in the CDM, such as adjusted
low-emission strategies is fully in accordance with the objectives of the crediting systems (i.e. relatively more credits being given to projects in
CDM. Moreover, the TNA process could use several of the lessons poorer countries)
4
and more flexible accounting procedures for projects
learned from the CDM. For example, the CDM project portfolio that are clearly based on national low-emission growth strategies.
5
provides insights into what could be an efficient way to establish
co-operation between project stakeholders. The experience that CDM An important event in facilitating these improvements could be
transaction costs might become too high to make small-scale the establishment of the Technology Mechanism after 2010. The
projects with relatively little GHG emission reduction profitable has led Copenhagen Accord contains a paragraph on this mechanism, which,
to the decision by the CDM Executive Board to allow programmes of if adopted, would be part of a larger programme, including funding
activities instead of individual projects. Such CDM programmes with for supporting technology development and transfer to developing
a focus on a particular technology could be an important input for a countries.
9
Co-operation between the Technology Mechanism and
sustainable sector strategy. CDM Executive Board would enable projects derived from the
development strategies of host countries (e.g. through a TNA) to
The CDM has also established an important first step in creating make efficient use of international carbon markets, such as under a
networks for projects and technologies with consultants, government post-2012 climate policy regime, the EU Emissions Trading Scheme,
officials, investors, technology operators, plant owners, financial the US Federal Emissions Trading Scheme under the new energy and
institutes, etc. The key role of networks for implementing change has climate law, etc.
been recognised in many studies
8
and is highly recommended in the
TNA handbook. Specifically, it could be agreed that any investment in a technology
prioritised by a TNA team in a developing country for which an
With respect to the funding of technologies, the CDM has provided implementation action plan has been formulated as part of the TNA
insights into the risks related to project finance and ways to deal with process would automatically be considered eligible under the CDM.
these, as well as the role of the carbon markets, with revenues paid in This could considerably reduce project transaction costs. First,
US dollars or euros, in mitigating project risks. additionality would not need to be demonstrated any more, as the
output of the TNA process is a strategy to accelerate the development
A limitation of the CDM with respect to supporting low-emission and transfer of priority technologies beyond what would happen
technologies is that the focus is likely to remain on technologies that within the sector/country under business-as-usual circumstances.
are in a pre-commercial stage but relatively close to commercial Second, since through the TNA process the priority technologies are
implementation, i.e. in either the deployment or early diffusion already embedded in the host country’s long-term development
stages. The value of GHG-emission reduction credits is generally too strategies, the designated national authority for the CDM does not
small to support technologies in the stages of research, development need to assess whether these projects contribute to the country’s
and demonstration. sustainable development.
Clean Development Mechanism Projects as a In order to increase the environmental strictness of this concept,
Result of a Technology Needs Assessment the Technology Mechanism’s Executive Committee and the CDM’s
As already discussed, the CDM experience has shown that CDM Executive Board could agree that these simplified procedures would
project choices are largely driven by the value of the GHG-emission only hold for projects with renewable energy and energy efficiency
reductions. Therefore, projects with a relatively large carbon market technologies, so that fossil-fuel-based technologies (e.g. increased
value have been more popular in the market than projects with a efficiency of a coal-based power plant) would not qualify for
relatively large contribution to the development priorities of host simplified CDM rules even if such technologies were part of a
countries. This has also led to a relatively large share in the CDM country’s portfolio with priority technologies.
market of host countries where the GHG-emission-reduction potential
is relatively large (e.g. the Asia-Pacific region). Conclusions
The CDM was among the decisive elements during the Kyoto
In order to ensure that future market development is more balanced Protocol negotiations in 1997. Since 2005, the mechanism has been
and in line with the original double objective of the CDM, several growing rapidly, with a current pipeline of over 5,500 planned and/or
MODERN ENERGY REVIEW VOLUME 2 ISSUE 1
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