Clean Development Mechanism

Distribution of registered CDM projects by host country (as of September 2018)

Cumulative number of registered CDM projects (as of September 2018)

The Mechanism for Environmentally Compatible Development ( English Clean Development Mechanism , abbreviation CDM ) is one of the three flexible mechanisms for the reduction of greenhouse gas emissions provided for by the Kyoto Protocol . Its aim is to support developing countries - as defined by the United Nations Framework Convention on Climate Change (UNFCCC), these are countries that are not listed in Annex I of the Framework Convention on Climate Change - to achieve sustainable development and to contribute to the prevention of dangerous climate change. At the same time, the mechanism is intended to support the industrialized countries listed in Annex I in meeting their quantified emission limitation and reduction obligations under Article 3 of the Kyoto Protocol.

As part of this mechanism, measures to reduce emissions can be implemented in developing countries and these savings can be certified. The resulting certificates ( emission reduction units , English Certified Emission Reductions or CER for short ) can be offset against the reduction targets in industrialized countries.

Emergence

The Clean Development Mechanism was set up in 1997 as part of the Kyoto Protocol. The mechanism was negotiated in the course of the negotiations for the Kyoto Protocol without much public debate in the last days of the third conference of the parties to the Framework Convention on Climate Change (COP-3). An alliance of industrialized countries, developing countries and the alliance of small island states (AOSIS) negotiated the foundations of this mechanism in order to resolve several critical negotiation points: Firstly, the aim was to actively involve the developing countries in climate protection, but without imposing this more specifically To deter reduction targets that the developing countries would not have agreed to anyway. Second, the developing countries wanted financial support for their own sustainable economic development from the industrialized countries. Thirdly, the industrialized countries were looking for the cheapest possible way to achieve their mandatory reduction targets. Since the exact form and the practical function had not yet been worked out at the time of the final Kyoto negotiations, the application of the mechanism was delayed until agreement on the modalities and procedures in Marrakech in 2001.

function

An industrialized country that is subject to reduction obligations and is listed in Annex B of the Kyoto Protocol can generate CERs from a country that is not listed there by implementing emission reduction measures. A CER proves an emission reduction of one tonne of CO ₂ equivalents. These CERs can then be offset against the emission targets entered. The basic idea of ​​the CDM is that it is often cheaper to reduce greenhouse gas emissions in developing countries than in industrialized countries. For example, the retrofitting of existing industries and infrastructures in industrialized countries is more cost-intensive than the sustainable design of the often rudimentary industries in developing countries. The financial and technological investments by the Annex II countries are also intended to promote the sustainable economic development of the host countries. In its final form, the CDM should represent a win-win situation for industrialized and developing countries. In the EU , the national reduction targets have largely been passed on to the main private sector emitters. This is done via EU emissions trading (EU-ETS), which largely feeds the demand for CERs. The shift in obligations to the private sector has resulted in a number of regulated companies getting involved in the development of CDM projects.

organization

The key political decisions on the CDM are made by the Conference of the Parties to the Kyoto Protocol. The technical aspects of the mechanism are primarily negotiated by the CDM Executive Board, established in 2001. It is composed of six members from the developing countries and four members from the industrialized countries. The Supervisory Board determines the rules of the Clean Development Mechanism with a 3/4 majority. In addition, the CDM Executive Board decides on project registration and the issuing of CERs.

Development of the Mechanism

The CDM is designed as a bottom-up mechanism, which means that the methods, tools and procedures were primarily promoted by project developers and only checked and approved by the CDM Executive Board. This initially led to sluggish development. After these initial difficulties, including regulatory and financial hurdles for project developers, had been overcome, the CDM developed very dynamically. At the beginning of July 2013, the 7000th CDM project was registered.

This period also marked the climax of the CDM. The number of applications for project registration has recently decreased significantly. In August 2018, a total of 7805 projects were registered under the CDM. This development of the CDM is closely linked to the overall development of international climate protection and the corresponding instruments. As a result of Japan, Russia, Canada and New Zealand not participating in the second commitment period of the Kyoto Protocol, the CDM is also being used less and is becoming less and less important. Furthermore, the very low prices in European emissions trading (EU-ETS) had a negative impact on the CDM's situation. The drop in the price of emissions certificates on the emissions trading exchange with the highest turnover, caused by an oversupply of pollution rights, also led directly to lower demand for certificates from CDM projects.

Achievements of the CDM

In the course of the dynamic development of the CDM, a wide range of experiences with the implementation of climate protection projects in developing countries could be gained and administrative and application-related capacities for greenhouse gas monitoring were built up. The numerical success of the CDM has not only to mobilize private investment in CO ₂ out low-carbon technologies, but also demonstrated cost-effective climate protection potentials in different sectors.

Criticism and potential for improvement

Ecological integrity

The reduction performance of a CDM project is always hypothetical, as the actual emissions of the project are compared with a reference scenario, which states how many emissions would have been emitted without the project. Thus, in CDM trading, hypothetical savings are traded against real emissions. Any CDM project that is overrated or not added means more emissions. A study published in 2007 assumes that 40 percent of the CDM projects registered at the time were not additional. Various recent studies have also expressed doubts about the additionality of numerous CDM projects and, in particular, questioned large-scale infrastructure measures in this regard. Doubts about the additionality of many CDM projects could not be completely dispelled, even ten years later. A study published in 2016 concluded that 85% of the projects examined had doubts about additionality.

The CDM continues to be criticized for providing perverse incentives, especially in the past. For example, industrial gas projects, which have so far generated almost 60% of CERs, are often accused of artificially increasing production in order to generate additional certificates by destroying the waste products that are created.

Sustainable development

Another point of criticism is that the CDM does little to achieve one of the most important envisaged goals, namely promoting sustainable development in the host countries. The main reason for this is the lack of specific international guidelines and definitions for ecological, economic and social sustainability of CDM projects. Since these criteria are a matter for the nation states and they often do not specify any details regarding sustainability in their environmental laws and project requirements, this aspect is often not taken into account in project implementation.

Uneven national and sectoral distribution of projects

The geographical distribution of CDM projects is still dominated by China and India. More than two thirds of the projects are implemented in these two emerging countries. The inequality with regard to the certificates issued is even greater: 61 percent of the certificates issued so far were generated in China, 13 percent in India, which is 75 percent. South Korea, Brazil and Mexico follow in places 3–5. In contrast, hardly any projects are being implemented in the poorest developing countries ( Least Developed Countries , LDC for short) and the structurally weak regions of Africa. In terms of sectors, the CDM is shaped by projects on renewable energies such as wind and water power. In terms of the certificates distributed, industrial gas projects to avoid emissions of particularly climate-damaging hydrofluorocarbons and nitrogen oxides dominate . Other economic sectors, such as the high-emission transport sector, do not have a significant share in the CDM projects. With a share of almost 60% in all CDM projects, the major projects dominate the CDM. The resulting neglect of the small projects means that significant reduction and development potentials have so far hardly been exploited.

High transaction costs

Another problem relates to the cost of validation and registration as a CDM project. Since this is only economical for projects with savings of around 15,000 tonnes or more of CO ₂ equivalents, major projects dominate with a share of around 57 percent of all CDM projects. In the opinion of many observers, this is to the detriment of possible sustainability effects that would more likely be brought about by a large number of small projects.

Measures to improve the CDM

In response to the weaknesses of the CDM described above, various actors are making intensive efforts to improve the mechanism. With a view to ecological integrity, for example, from the buyer's perspective, the EU has taken various quality assurance measures: In the EU ETS, certificates from industrial gas projects (HFCs) and from large hydropower projects that do not meet the requirements of the World Commission on Dams are not permitted. In addition, certificates from new projects are only recognized if these projects are carried out in LDCs.

In addition to state actors, other actors are also active in the field of quality assurance. One example is the Gold Standard Foundation, an NGO that certifies CDM projects according to clear quality standards. The CDM Gold Standard is a kind of seal of approval with a number of voluntary specifications for CDM projects, which are intended to ensure the high quality of the project when it comes to achieving environmental and development goals in the host country.

Furthermore, the rules and procedural structures of the mechanism are constantly discussed and further developed, for example to counteract the unequal regional and sectoral distribution. In this context, the opportunity was created to bundle many small individual measures into so-called Programs of Activities (PoAs). This is intended to support small projects in particular. PoAs reduce the procedural effort of individual projects, as only the overarching program has to go through the usual CDM / JI approval procedures, but not the individual measures that take place under the umbrella of the program. With a view to the low contribution to sustainable development, the CDM Executive Board introduced the Sustainable Development Tool in 2014. With this tool, project developers can show the sustainability contributions of their projects on a voluntary basis. However, the use of the tool recently fell significantly short of expectations. In August 2018, only 32 CDM activities had used the SD tool.

Outlook: the future of the CDM

The future of the Clean Development Mechanism is uncertain. The Kyoto Protocol ends in 2020, the year from which the Paris Agreement will apply. The contracting states of the Paris Agreement are currently negotiating whether the use of CDM certificates should be made possible under the Paris Agreement. The question of the extent to which CDM projects can be transferred to the Paris Agreement, for example by re-registering under the "Mechanism to avoid greenhouse gas emissions and promote sustainable development" (Article 6.4) , which was created as a successor to the CDM, has also not yet been answered has been. A decision on this can be expected at the end of 2018, when the rulebook of the Paris Agreement is adopted at COP 24 in Katowice, Poland. The further use of existing projects and their certificates therefore remains uncertain. At the 2015 Paris climate negotiations, however, the contracting states agreed that when designing the new climate protection mechanism in accordance with Article 6.4, experience with earlier mechanisms must be taken into account. The CDM is likely to play a central role here and can thus shape future instruments of international climate protection beyond its own existence.

Movie

Business with Hot Air - The Greenhouse Gas Trade. Documentation by Cornelia Uebel and Yüksel Ugurlu, 45 min., 2009.

literature

• United Nations Framework Convention on Climate Change [UNFCCC] (Ed.): Kyoto Protocol Reference Manual on Accounting of Emissions and Assigned Amount . Bonn 2008, ISBN 92-9219-055-5 (English, unfccc.int [PDF; 1.8 MB ; accessed on June 29, 2013]).

Web links

• UNFCCC CDM website
• UNFCCC website with statistics on registered CDM projects
• Homepage of the CDM Gold Standard project
• Current information and project examples on CDM
• EU-funded overview and discussion of examples of good practice in technology transfer (PDF; 2.22 MB)
• Carbon Market Watch
• CDM / JI internet portal of the German Federal Environment Ministry
• Report of the Öko-Institut 2017 and comments on it on the BMUB website

Individual evidence

1. ↑ Oberthür et al .: The Kyoto protocol: international climate policy for the 21st century . Springer Verlag, Berlin 1999 (English).
2. ↑ BMU (2012): The Clean Development Mechanism. Investing in environmentally friendly development. (BMU) Berlin.
3. ↑ cdm.unfccc.int
4. ↑ cdm.unfccc.int
5. ↑ zeit.de
6. ↑ Kreibich, N., Fechtner, H. (2013) Is your potential exhausted and hurdles overcome? CDM and JI in the first Kyoto commitment period ( Memento from February 14, 2015 in the Internet Archive ). JIKO Policy Paper 02/2013. Wuppertal Institute for Climate, Environment and Energy. Wuppertal.
7. ↑ Institute for Applied Ecology: Crediting the displacement of non-renewable biomass under the CDM , April, 2007.
8. ↑ Haya, Barbara (2009): Measuring Emissions Against an Alternative Future: Fundamental Flaws in the Structure of the Kyoto Protocol's Clean Development Mechanism. Berkeley, CA: Energy and Resources Group University of California, Berkeley.
9. ↑ Wara, M & Victor, D. (2008): A realistic policy on international offsets ( Memento from June 1, 2008 in the Internet Archive ) PESD Working Paper 47.
10. ↑ Cames, M., Harthan, RO, Füssler, J., Lazarus, M., Lee, C., Erickson, P., & Spalding-Fecher, R .: How additional is the Clean Development Mechanism? Analysis of the application of current tools and proposed alternatives . Ed .: DG CLIMA. Berlin 2016 ( europa.eu [PDF]).
11. ^ Lambert Schneider: Assessing the additionality of CDM projects: practical experiences and lessons learned . In: Climate Policy . tape 9 , no. 3 , May 1, 2009, ISSN  1469-3062 , p. 242-254 , doi : 10.3763 ​​/ cpol.2008.0533 (English).
12. ↑ Shishlov, I & V. Bellassen (2012): 10 lessons from 10 years of the CDM. In: Climate Report, 37.
13. ↑ UNEP Risoe CDM / JI Pipeline Analysis and Database, October 1st 2013
14. ↑ cdm.unfccc.int
15. ↑ jiko-bmu.de ( Memento of the original from November 1, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
16. ↑ UNEP DTU Partnership: UNEP DTU CDM / JI Pipeline Analysis and Database. August 2018, accessed August 2018 .