The Clean Development Mechanism and large dam development: contradictions associated with climate financing in Cambodia

Abstract

Since 2000, the Kyoto Protocol’s Clean Development Mechanism (CDM) has been facilitating climate change financing in support of large hydropower dam development. Although the CDM was designed to reduce greenhouse gas emissions and promote sustainable development, it has financed hydropower dams that have caused serious environmental and social impacts. We consider the case of the Lower Sesan 2 dam in northeastern Cambodia, the largest and most environmentally and socially damaging hydropower dam ever built in Cambodia. LS2 has not received climate change financing through the CDM, as four other large dams in Cambodia have, because the market price for carbon credits is too low to justify the expense required to apply for them. However, it could be registered to receive climate financing post-construction. We highlight the apparent lack of improvements in critical areas of the CDM despite years of criticisms and suggest that there are framing and structural issues that will make reforming the CDM difficult. This topic is particularly timely because the CDM is scheduled to end in 2020, after which time it will be replaced by a new but yet unspecified climate change financing mechanism.