Current Clean Development Mechanism Research Articles

해외 조림사업 방향성 모색을 위한 인도의 A/R CDM 사업 현황분석 및 평가

The Clean Development Mechanism (CDM) has been internationally implemented as a part of the Kyoto Mechanism to reduce Greenhouse Gases (GHG) for mitigating climate change. Although forest is considered as the only carbon sink and its significance has increased, the number of registered Afforestation/Reforestation (A/R) CDM projects has recently decreased. Also, the Paris agreement, the new regime of climate change, sets to outline Sustainable Development Mechanisms (SDMs) to substitute CDM including A/R CDM, but the rulebook does not finalize yet. Therefore, it is essential to review the status of registered A/R CDM projects to build a best practice model on forestry sectors before entering the new framework. This study would research A/R CDM projects implemented in India, which is the most active country to be interested in Afforestation and Reforestation. The used materials were 19 Project Design Documents for A/R CDM projects in India, including statistical and spatial data. Those documents were used to identify the status and analyze the environmental and socio-economic factors in the study area. As Sustainable Development Goals (SDGs) is important during project decision making process, the relationship between current CDM projects and SDGs, the other important framework to be achieved, used for the analysis. The major project areas were in Uttar Pradesh carried out by Divisional Forest Officer (DFO) from Indian administration. The climates of A/R CDM projects areas including Uttar Pradesh were mostly warm, dry, and well-drained, and the native plants were highly preferred. Unlike the other project areas, Uttar Pradesh was economically worse, which means that the area was highly related to SDG 2 and 15. This research could contribute to achieving SDGs by matching each goal with the environmental and socio-economic factors. Throughout the matching, host countries could select the suitable factors to achieve SDGs by implementing the A/R CDM projects. This study would suggest the framework which should be considered before implementing A/R CDM or other projects related to forestry sectors. As a result, it could be connected to respond to climate change, forest management, and GHG reduction ultimately.

Economic feasibility analysis of small hydro power projects

The clean development mechanism (CDM) was created with two main goals: help developed countries achieve the greenhouse gas emissions reduction targets set out in the Kyoto Protocol and provide sustainable development to developing countries who host the projects. Sustainable project management shares the same goals as the CDM project, which could be a valuable asset in the development of new projects. Much has been discussed about the effectiveness of the program in achieving those goals and even more in the post-2012 period when the CDM has experienced fewer new projects and lower certified emissions reduction (CER) prices compared to previous years. Based on Brazilian CDM project data, this works aims to analyze the economic aspect of sustainable management by observing the influence of the obtained CERs on the internal rates of return (IRRs) of a small hydro plant (SHP) according to the current CDM scenario, marked by CER prices reaching their lowest historical values. For this study, a spreadsheet was developed to simulate a project’s cash flows and thus determine its IRRs. The results show that using the current CER prices, carbon credits do not significantly affect SHP projects’ IRRs, with increases of less than 0.2% compared to a scenario with no credits. CDM projects may benefit more from optimizing the investment costs or increasing energy production. These results highlight a need to emphasize the sustainable benefits of the CDM program rather than only focusing on the economic return perspective.

Stakeholder participation in CDM and new climate mitigation mechanisms: China CDM case study

Stakeholder participation is recognized as a key principle for effective climate governance. Climate mechanisms such as the Clean Development Mechanism (CDM), REDD+, and the Green Climate Fund (GCF) provide guidelines for local stakeholder consultation (LSC). However, little empirical research exists on how LSC is practised, and synergies between climate mechanisms are largely unexplored. This study explores how international LSC rules are practised at national and local levels. It aims to better shape future LSC in climate mechanisms by learning from the case of China. First, LSC policies in CDM, REDD+, and GCF are identified. Relevant rules in China's local policies are analysed. To understand the interaction between CDM policies and China's local LSC rules, a selection of Chinese CDM Projects Design Documents (PDDs) are analysed, providing an overall impression of the stakeholder process and results. Afterwards, we focus on a single case for an in-depth understanding of LSC in practice. Results point to the weakness of current CDM LSC rules and lack of good practice guidance, e.g. regarding who to consult, what approaches to be used, and when and how consultations shall take place. It also points to the lack of a clear relationship between global CDM policies and national LSC rules. The weaknesses of existing CDM LSC practices and procedures are not unique to the China case but are relevant to other countries and climate mechanisms. REDD+ and GCF provide good examples of LSC rules, where CDM can learn, share experiences, and explore synergies for future revisions.Policy relevanceContributing to the debate on public participation and effective climate governance related to United Nations Framework Convention on Climate Change (UNFCCC) Article 6, this study examines stakeholder participation in the CDM and explores synergies with other mitigation mechanisms such as REDD+ and the GCF. Stakeholder participation in China is investigated to present realities on the ground. It points out the lack of detailed guidelines and provides insights into how national regulations and cultural practice take precedence over international CDM rules. The findings point to proposals for improving international regulations on stakeholder participation in the CDM and beyond for a stronger framework across climate governance mechanisms.

Technology transfer in the CDM: the role of host-country characteristics

Technology transfer is not an explicit objective of the Clean Development Mechanism (CDM). However, it constitutes a potential co-benefit by helping to improve living conditions in developing countries. Understanding the drivers and barriers of technology transfer in CDM projects is therefore essential to direct investment flows in host countries and enhance the current CDM framework. In this respect, the contribution of this article is twofold. First, it identifies stepping stones and stumbling blocks to technology transfer in the CDM. Higher applied tariff rates on environmental goods and services as well as burdensome administrative procedures to start a new business are found to be negatively associated with the likelihood of a technology transfer. The results are robust to the exclusion of large host countries such as China and India from the sample. Second, as an extension, the article analyses the correspondence of these supporting factors and barriers with the likelihood of a transfer of the different types of technology (equipment, knowledge, or both). The article concludes with policy recommendations for non-Annex I governments, and suggestions for improvements to the CDM to better assess technology transfer in offsetting projects.

Carbon Trading in Malaysia: Review of Policies and Practices

ABSTRACTThe idea of trading greenhouse gas emissions has become an important tool to tackle the problem of global climate change. Malaysia has started to strive towards a low carbon economy through various policies and initiatives. The main objective of this article is to document the exiting policy developed by the Malaysian government and review some of the current practices pertaining to the Clean Development Mechanism (CDM). The objective of such analysis is to understand what initiatives have been taken by the Malaysian government. Challenges and barriers will be documented for further research to provide a solution. In addition, it will also provide insight into the current CDM practices in Malaysia. It aims to provide a useful reference that could act as a foundation for future study to explore these issues further, particularly in the Malaysian context. It could also be an important reference for practitioners starting a CDM project. Although a review of the existing policy indicates that Malaysia has undertaken several initiatives, much more can be done. More research is now being carried out in order to provide support to the government. Stakeholder engagement is one way of acquiring input for the government to formulate a new policy. The main stakeholders – industry and the bankers – need to be engaged and made to understand to ensure smooth implementation and easy acceptance. Malaysia can also look to the advanced countries if necessary and modify what it learns for the Malaysian context. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.

Determinants of Unilateral Clean Development Mechanism Project Registration: An Empirical Analysis

The Clean Development Mechanism (CDM) was initially designed as a bilateral instrument involving the participation of the private sector in industrialized and developing countries. Developing countries have, however, early on in the negotiations defended the unilateral approach, i.e. self-financing of CDM projects, allowing them direct access to carbon mitigation revenues from the sale of Certified Emission Reduction (CER) units. Unilateral CDM however contributes to an inequitable distribution of projects because countries do not face equal opportunities for CDM investment. To help explain this observation, the paper considers four different indicators to study the link between the level of financial development and unilateral CDM project registration in a sample of 71 developing countries over the period 2005-2011. Results suggest that a determining factor to facilitate self-financing of CDM projects is access to domestic credit in the economy, which could explain why countries with lower capital cost, like South Korea, tend to register more unilateral CDM projects. These results are consistent with the UNFCCC’s initiative to lauch a CDM Loan Scheme to improve CDM access for countries hosting less than 10 projects. The question however still remains open as to how low income countries will be able to implement new market mechanisms at the sectoral level as these will be even more challenging to verify and monitor compared to the current CDM project-based approach.

Estimating changes in emissions from bus rapid transit: making best use of transport sector experience

AbstractBus rapid transit (BRT) systems have been implemented in the last 30 years in Europe, Latin America, Oceania, United Kingdom, Asia, and North America to provide improved levels of public transport service. The associated benefits of reduced greenhouse gas emissions and energy consumption have been increasingly recognized. The clean development mechanism (CDM) provides two approved methodologies for estimating and verifying reduced greenhouse gas emissions due to modal switch induced by BRT. However, the methods do not fully account for established transport sector experience on the complexities of forecasting and measuring the direct and induced changes in travel behavior. Incorporation of relevant experience from the transport sector would lead to improved methods for ex ante estimation of changes in emissions and energy consumption. Similarly, by focusing on the key factors that influence emissions and energy consumption, verification procedures could be made more relevant and efficient. Transport sector experience also indicates limitations in the approach used to derive the baseline case in the CDM methodologies (i.e., the situation that would have been the case without the project). Current CDM methodologies also do not distinguish between vehicle drivers and passengers when considering the impact of a switch from private vehicles, and do not adequately take account of the changes in location and travel behavior that could occur. These limitations, which are equally applicable to other rapid transit improvement projects, are reviewed, and examples are given of the extent of misestimation that could occur. Consideration is also given to improved methodologies. The benefits of learnings from the transport sector are illustrated.This article is categorized under: Energy Efficiency > Economics and Policy Energy Policy and Planning > Economics and Policy Energy and Development > Economics and Policy Energy and Development > Climate and Environment

Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World

In this article we discuss the mechanics of linking different types of climate change policies and identify areas where linkage will be difficult. Our goal is to identify opportunities for constructive linkage and policy choices that may limit or hinder linkage. We argue that the basic approach underlying emission reduction credit systems like the Kyoto Clean Development Mechanism (CDM) and Joint Implementation can be extended to create linkage opportunities in diverse emission control systems in ways that do not necessarily suffer from the shortfalls of the current CDM. Moreover, although emission reduction credit systems are designed to work with market-based systems like cap and trade, we describe ways in which they can also interact with tax systems as well as certain regulatory systems.

DESIGNING THE GREEN CLIMATE FUND: HOW TO SPEND $100 BILLION SENSIBLY

Confronting and responding to climate change is one of the foremost issues of our time, with the burden of response spread unequally around the globe. In general, climate impacts are hitting, and w...

Technology Transfer in the Clean Development Mechanism: The Role of Host Country Characteristics

Technology transfer is not an explicit objective of the Clean Development Mechanism (CDM). In some projects it however constitutes a valuable co-benefit as it exposes developing and emerging countries to clean technologies and helps improve local living conditions. Understanding the drivers and barriers to technology transfer in CDM projects is therefore essential to direct investment lows in host countries and promote enhancements of the current CDM framework. In this respect, the contribution of this paper is twofold. First, it identifies stepping stones and stumbling blocks to technology transfer in the CDM. A one percent increase in research and development expenditure is found to be associated with a 48 percentage point increase in the likelihood of a technology transfer. Second, the paper analyzes the correspondence of these supporting factors and barriers with the likelihood of a transfer of the different types of technology (equipment, knowledge or both). The paper concludes with suggestions for improvements of the CDM to better assess technology transfer in future offsetting projects.

The impact of discounting emission credits on the competitiveness of different CDM host countries

Discounting the value of emission credits has been proposed as a possible approach for addressing some of the shortcomings of the Clean Development Mechanism (CDM). It could be used to compensate for non-additional CDM projects; to increase the incentive for advanced developing countries to move from the CDM to own mitigation commitments; and to improve the competitiveness of less developed countries as hosts for CDM projects. We assess the impact of discounting on the distribution of CDM projects in host countries, with a special focus on Least Developed Countries (LDCs). CDM-specific abatement cost curves are built for 4 regions: China, India, other advanced Asian countries and LDCs. Abatement costs are estimated using the information provided in the project documentation of 108 projects from 17 subtypes in 16 host countries. Abatement potentials are derived from the current CDM pipeline for each region. For LDCs, we additionally include an optimistic potential estimation by adding to the current pipeline the potential found by a World Bank study for LDCs in Sub-Saharan Africa. We then assess the effect of two emission credit discounting schemes on these abatement cost curves. Credit discounting is differentiated by host countries, based on an index composed of per capita GDP and per capita emissions. In the first scheme, it only affects the most advanced CDM host countries; in the second one it also affects China. We find that discounting has an impact on the competitiveness of individual CDM host countries in the carbon market, as it affects their abatement cost curves. It could become an instrument for incentivising advanced developing countries to leave the CDM and engage in other farther-reaching climate-related commitments, as a result of the resulting emission credit cost increases. However, even with discounting, LDCs remain unimportant in terms of abatement potential if the financial, technical and institutional barriers to CDM development in these countries are not overcome.

How can the current CDM deliver sustainable development?

AbstractThe two aims of the clean development mechanism (CDM) were to reduce greenhouse gases cost effectively and contribute to sustainable development (SD) in developing countries. So far, however, SD components of the mechanism have been questionable. In this opinion article, we argue for a more theoretically informed engagement with the CDM that could be empowered through the better provision of transparent and clear information in the project implementation processes. Drawing on our work in Latin America, we concur with other authors that the CDM as it stands does not ‘deliver’ SD, but that improved information and a research agenda that focuses on the multi‐level political economy of project‐based CDM could assist in the mechanism delivering on multiple forms of SD in local contexts. Copyright © 2010 John Wiley & Sons, Ltd.This article is categorized under: Climate and Development > Decoupling Emissions from Development Policy and Governance > International Policy Framework

Climate Change Mitigation in Advanced Developing Countries: Empirical Analysis of the Low-Hanging Fruit Issue in the Current CDM

Under the Kyoto Protocol, developing countries can voluntarily participate in climate change mitigation through the Clean Development Mechanism (CDM), where emission reduction credits from projects in developing countries are bought by industrialized countries to meet their own commitments. Before its implementation, developing-country experts opposed the CDM, arguing that it would sell off their countries’ cheapest emission reduction options and force them to invest in more expensive measures to meet their future reduction targets. This paper analyzes this “low-hanging fruit” argument empirically. CDM projects’ emissions abatement costs and potentials are estimated for different technologies in eight countries, using capital budgeting tools and the information from the projects’ documentation. Through a comparison with theoretical marginal abatement cost curves, we discuss whether the low-hanging fruit argument holds. We find that the CDM is not yet capturing a large portion of the identified abatement potential in most countries. While the costs of most emissions reduction opportunities grasped lie below the average credit price, there is still plenty of low-cost opportunities available. Mexico and Argentina appear to use the CDM exclusively for harvesting the low-hanging fruit, whereas in the other countries analyzed more expensive projects are also accessing the CDM. This evidence challenges the low-hanging fruit claim.

The Evolution of the CDM in a Post-2012 Climate Agreement

Despite the many calls to reform the Clean Development Mechanism (CDM), its conceptual underpinnings are strong and it will most likely survive in the post-2012 climate regime. Some modifications may be considered in the short term to strengthen the effectiveness and transparency of the mechanism without modifying the Marrakech Accords. In the medium term, substantially increased mitigation efforts in developing countries may require a combination of three possible financial mechanisms: the current activity-based CDM albeit improved, a second market mechanism that would seek to improve the long term emission trends of developing countries by promoting broad-based emission reduction programs primarily in the private sector, and a third— nonmarket—financial mechanism that would provide an incentive for the adoption of policy changes leading to a low carbon path, but where emission reductions would not be used as international offsets.

A Formal Model on How the Clean Development Mechanism of the Kyoto Protocol Produces Perverse Effects

One of the main environmental problems in the contemporary society is global warming. In 1997, as a result of negotiations on that issue, several countries signed the Kyoto Protocol that institutes the Clean Development Mechanism (CDM) as an ancillary instrument to decrease the global emissions of greenhouse gases (GHG). We argue that the current CDM design, contrary to many suppositions, produces the perverse effect of increasing the global emissions of GHG. In this study we propose a formal model to support our central argument. Initially, we use game theory to formalize our explanation about how the two players (Kyoto Protocol ANNEX1 and NON-ANNEX1 countries) cooperate by such mechanism, in a non-zero sum game. Eventually, microeconomic theory is used to model the dynamic of interactions of Carbon Tradable Offsets (CTO) buyers and sellers, thereby demonstrating that the cooperation between players produces the perverse effect. This explanatory study used rational choice theory and gathered data in books, scientific articles and official documents purposing to figure out how the CDM works and to support the argument. The main conclusion of our model is that after the CTO demanded quantity be supplied, NON-ANNEX1 countries will use the revenue from CTO markets to increase their productive capacity, so that there will be a turn over in the engagement for reducing GHG emissions by these countries, and the perverse effect of global increasing at such emissions level will follow.

A review of carbon dioxide capture and sequestration and the Kyoto Protocol’s clean development mechanism and prospects for Southern Africa

AbstractThe clean development mechanism (CDM) of the Kyoto Protocol is a financial incentive intended to make economically marginal greenhouse gas (GHG) prevention projects more feasible. Carbon dioxide capture and sequestration (CCS) is a possi-ble GHG mitigating strategy. The Intergovernmental Panel on Climate Change (IPCC) defines a CCS project as a process consisting of three phases: the separation of carbon dioxide from industrial and energy-related sources; transportation of the carbon dioxide to a storage location; and long-term isola-tion of the carbon dioxide from the atmosphere. This paper focuses on prospects of CCS as CDM projects in general and in the context of Southern Africa. Currently there is no evidence of a long term proven track record of integrated CCS systems; only three industrial scale CCS projects exist global-ly. Nevertheless, new concepts have been proposed for CCS CDM projects such as long-term liability and certified emission reduction (CER) cancellation. However, these concepts are not in the current CDM framework at present. It is thus difficult to prove CCS as an eligible CDM project without first addressing possible expansion and shortfalls of the current CDM structure. More research is also required to quantify the trade offs presented between mitigating carbon dioxide from the atmos-phere at the possible detriment of the areas of stor-age in the Southern Africa context. Only then may CCS projects be deemed more viable in the CDM context. Finally, although the potential for CCS in South Africa has been noted due to major point sources, the cost of capture and storage is a major obstacle; matching point sources and geological storage options is problematic for South Africa and neighbouring countries due to large transport dis-tances. The regulatory risks associated with CCS are further deterrents for the implementation of CCS CDM projects in Southern Africa in the near future.

The Effect of Temporary Certified Emission Reductions on Optimal Forest Rotations and the Supply of Sequestered Carbon

This paper examines the effect of the regulations under the Clean Development Mechanism (CDM) in creating temporary certified emission reductions (tCERs) on optimal harvesting decisions and supply of carbon removal services in forest plantations. The paper develops a theoretical model examining optimal harvesting strategies when revenues from sequestered carbon dioxide are considered under the CDM guidelines. We find that the current CDM rules with 5-year verification intervals of tCERs may result in socially inefficient timber rotations because they do not fully internalize the carbon sequestration function of trees. Decreasing the intervals between carbon credit verification periods increases the optimal rotation lengths. Other factors that lengthen rotation intervals, such as decreasing timber price and increasing harvesting cost, will increase the supply of tCERs. Fast growing tree species with shorter rotation intervals have relatively more inelastic carbon credit supply curves than slow growing tree species with longer rotation intervals.

Does the current Clean Development Mechanism (CDM) deliver its sustainable development claim? An analysis of officially registered CDM projects

This article presents an analytical framework for analyzing Clean Development Mechanism (CDM) projects in terms of their contribution to employment generation, equal distribution of CDM returns, and improvement of local air quality. It assesses 16 officially registered CDM projects with regard to whether they fulfill the two objectives required by the Kyoto Protocol: greenhouse gas emission reductions and contribution to sustainable development in the host country. While a large part (72%) of the total portfolio’s expected Certified Emission Reductions (CERs) are likely to represent real and measurable emission reductions, less than 1% are likely to contribute significantly to sustainable development in the host country. According to our analysis, there are currently no UNFCCC registered CDM projects that are likely to fulfill the Kyoto Protocol’s twofold objective of simultaneously delivering greenhouse gas (GHG) emission reduction and contributing to sustainable development.

National forest policy as a platform for biosphere carbon management: the case of community forestry in Cameroon

Little attention has been given to the development of national policies relevant for the uptake, development and implementation of Clean Development Mechanism (CDM) projects. In this paper we examine the compatibility between forestry and related policy provisions in Cameroon and the CDM provisions for Land Use, Land Use Change and Forestry (LULUCF). For each CDM requirement such as eligibility, additionality, impact assessment and sustainable development, relevant national forestry policy questions are identified. These relevant policy questions are applied to community forestry policy instruments in Cameroon to analyse the likelihood that they can enhance or inhibit the uptake and implementation of biosphere carbon projects. We found that choosing a single crown cover value (from between 10 and 30%) presented a serious dilemma for Cameroon given its diverse vegetation cover. Adopting any single value within this range is unlikely to optimize national carbon management potential. The current forest institutional and regulatory policy framework in Cameroon is inadequate for promoting carbon forestry under current CDM rules. We conclude that national policy in Cameroon would need to recognise the need for and adopt a pro-active approach for biosphere carbon management, engaging in institutional development, integrated planning, project development support and providing adequate regulatory frameworks to enhance sustainable development through CDM projects. The need for CDM/Kyoto capacity building support for proactive national and local policy development is highlighted.

A data support infrastructure for Clean Development Mechanism forestry implementation: an inventory perspective from Cameroon

Clean Development Mechanism (CDM) forestry project development requires highly multi-disciplinary and multiple-source information that can be complex, cumbersome and costly to acquire. Yet developing countries in which CDM projects are created and implemented are often data poor environments and unable to meet such complex information requirements. Using Cameroon as an example, the present paper explores the structure of an enabling host country data support infrastructure for CDM forestry implementation, and also assesses the supply potential of current forestry information. Results include a conceptual data model of CDM project data needs; the list of meso- and macro-level data and information requirements (Demand analysis); and an inventory of relevant data available in Cameroon (Supply analysis). From a comparison of demand and supply, we confirm that data availability and the relevant infrastructure for data or information generation is inadequate for supporting carbon forestry at the micro, meso and macro-levels in Cameroon. The results suggest that current CDM afforestation and reforestation information demands are almost impenetrable for local communities in host countries and pose a number of cross-scale barriers to project adoption. More importantly, we identify proactive regulatory, institutional and capacity building policy strategies for forest data management improvements that could enhance biosphere carbon management uptake in poor countries. CDM forestry information research needs are also highlighted.