Unpacking the Black Box of Technology Distribution, Development Potential and Carbon Markets Benefits

Abstract

In 2005, the international carbon market was launched under the Kyoto Protocol, creating an innovative financing design for low-emissions development initiatives. Just over 10 years after its inception, the carbon market can now provide insight on the opportunities and limitations of “blended finance” approaches, whereby private-public partnerships are employed to pursue global development goals such as poverty alleviation and development. Utilizing process-tracing and value chain methods, this chapter adds granularity to debates on whether and how carbon markets can support local economic development, as measured through the creation of local enterprises and the support of local livelihoods. It offers a “Livelihood Index” to assess the employment impact of the carbon intervention in order to address the core question: how is the carbon credit pie divvied up? Three carbon projects in Cambodia, aimed at household level interventions (water filters, biodigesters for cooking and fertilizer production, and fuel-efficient cookstoves) are evaluated through the livelihood index and results indicate that distribution strategies matter for local economic gains. Distribution strategies to deliver low-carbon technologies within the carbon market are currently a “black box”, understudied and undocumented in the project pipeline; this paper argues that opening the black box may be useful for policymakers, standard setting organizations and academics interested in promoting pro-poor impacts through carbon market interventions.