CLIMATE CHANGE: A Development Mechanism That Cleans Little

• by Julio Godoy (berlin)
• Wednesday, March 18, 2009
• Inter Press Service

Lambert Schneider, expert on climate change policies at the German Institute for Applied Ecology, and who has been researching the impact of CDM since its inception, says that the mechanism must be radically reformed or supplanted by more efficient instruments.

'CDM has raised awareness in developing countries and among investors of the urgent need of reducing greenhouse gases emissions (GHG) such as carbon dioxide (CO2) to stop global warming,' Schneider told IPS.

But at the same time, the huge business opportunities associated with CDM have led to a massive abuse of the tool, 'through the non-compliance of numerous international agreed environmental and development standards of the projects in emerging countries such as China and India,' said Schneider.

The Kyoto Protocol compels the industrialised countries that ratified it to reduce their collective GHG emissions by 5.2 percent compared to 1990 levels. To this effect, and among other instruments, the Kyoto Protocol created the CDM to allow industrialised countries to invest in projects that reduce emissions in developing countries as compensation for unachieved emission reductions in their own countries.

Under this scheme, an energy provider say in China, enjoying financial support from industrialised countries, might choose to build an efficient, low CO2 emitting gas-fired power plant, rather than a cheaper, more polluting coal-fired generator. The difference in the potential CO2 emission between the two can be converted into CDM units to be sold to an industrialised country that is a signatory to the Kyoto protocol.

Although many gases cause global warming, CO2 matters most because it is emitted in large quantities and has a long atmospheric lifetime. The energy sector is generally the largest emitter of CO2 in any country.

Chinese energy providers have become the CDM scheme's major beneficiary, according to the UN Framework Convention on Climate Change (UNFCCC). The agency, based in the German city Bonn, estimated Mar. 7 that by the year 2012 European Union countries and private companies will have invested more than 10 billion euros (some 12.5 billion dollars) in Chinese energy ventures, in the framework of the CDM.

Such projects in developing countries qualifying for the CDM are meant to comply with numerous environmental standards, which are supposed to be monitored and certified. The projects must also generate sustainable development in the recipient countries.

But according to Schneider, several problems plague the CDM. 'On the one hand, numerous projects with overstated environmental achievements have been approved without proper certification. On the other hand, numerous projects, which would have been implemented without the CDM anyway, have become beneficiaries of the system.' Several of the projects do not generate sustainable development, Schneider added.

And yet, all these projects, after having been qualified as compatible with the CDM, generate additional GHG emission rights for industrialised countries or for private companies, without generating real reduction in emissions. 'At best, from the perspective of global warming reduction, these projects are a zero-sum-game,' Schneider said. But they have become a global business worth hundreds of millions of dollars.

Schneider carried out a study of more than 100 CDM projects for the UN Climate Change Conference to be held in December in the Danish capital Copenhagen. That meeting has been called to formulate a new global regime of emission reductions to replace the Kyoto protocol, which expires in 2012.

Schneider said that in the short term, the CDM monitoring and certification must be improved considerably. 'Sanctions must be imposed on the certification agencies when they do not operate properly,' he said. Furthermore, the agencies' independence must be enhanced. 'They should be paid by the UN agencies involved in the Kyoto protocol, rather than by their clients.'

Eventually, Schneider said, the CDM must be eliminated, because it does not lead to a reduction of emissions; it only brings a trade-off between potential emissions avoided in developing countries and a real reduction in emissions in industrialised countries.

'The new international regime to be discussed in Copenhagen must foresee real reduction of emissions in emerging economies,' Schneider said. 'To that end, the CDM must leave place for other more efficient mechanisms, such as emission trade.'

Schneider's conclusions corroborate the findings of earlier studies.

Researcher Michael Wara found in an investigation carried out at Stanford University in 2007 that 'there is near unanimous agreement that the CDM has succeeded in engaging many buyers and sellers and...reducing emissions of the six Kyoto Protocol gases (CO2, methane, nitrous oxide, hydro fluorocarbons, perfluorocarbons and sulphur hexafluoride).'

But he said that 'in other, and perhaps more important ways, the CDM is failing to deliver results. Initially, the market was expected to create strong incentives to invest in infrastructure for low-carbon energy in developing countries. Yet a detailed look at CDM projects producing and selling credits reveals that nearly two-thirds of emissions reductions involve neither CO2 nor energy production.'

According to Wara, for the period beyond 2012, signatories to the Kyoto protocol should recognise that measures additional to the CDM are needed to set the developing world on a path towards a sustainable energy future. These must include substantial increases in technology investment, agreements to share low-carbon technologies, a commitment to fostering resilient energy markets, and security arrangements so that it is in the interest of key developing nations to foster low-carbon economic growth.

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service