Safeguarding the Clean Development Mechanism will benefit Southern and Northern nations alike

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Safeguarding the Clean Development Mechanism will benefit Southern and Northern nations alike

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Date: 20th October 2012
Type: Feature
Organisations: Atmosfair, WWF

Yolanda Kakabadse, who founded CDKN alliance partner Fundacion Futuro Latinamericano, shares her experiences of working on the high-level panel of the CDM Policy Dialogue and urges governments to restore the world’s only global carbon-trading mechanism.

Governments meeting at the forthcoming Doha climate change conference must urgently address the future of the United Nation’s Clean Development Mechanism (CDM). This policy tool, which helps developed world countries meet their Kyoto greenhouse gas emissions targets via sustainable projects in developing countries, is in danger of collapse because of the low price of carbon and the failure of governments to guarantee its existence into the future. If it is not resurrected, we will lose the only truly global mechanism for reducing greenhouse gas emissions, along with a decade of experience and lessons learned. This would seriously set back international climate cooperation with potentially devastating consequences for all.

This is the main finding of the report Climate change, carbon markets and the CDM: A call to action, for which I was a member of the investigating panel. The role of our team, which comprised 11 people with an array of experiences from diverse parts of the world, was to challenge our own ideas and information from different sources so we could make recommendations for sensible and achievable action. Despite recognising the CDM’s failings of often being too inefficient, opaque and politicized, we concluded that a strong CDM is needed to support the political consensus essential for future climate progress. Therefore we must do everything in our hands to keep it working.

The CDM came into being in 1997 when the UN’s Kyoto Protocol established binding greenhouse gas emissions targets for 37 industrialised nations. These countries are allowed to purchase Certified Emissions Reduction units, issued to CDM projects, to offset their emissions. To be accredited, projects must demonstrate that avoided emissions are additional to those that would otherwise be prevented from reaching the atmosphere. Once accredited, they receive one CER for each tonne of carbon saved from being emitted. Projects range from wind farms and hydropower initiatives, to programmes aimed at increasing industrial efficiency. Just over one billion CDM credits have been issued to date.

One African project exemplifies how Southern countries can benefit while helping Northern ones meet their emissions targets. In northern Nigeria, use of firewood for cooking has led to severe deforestation and greatly increased the price of wood. A project accredited with the widely endorsed WWF Gold Standard this year, by German non-profit foundation Atmosfair, will disseminate 100,000 cook stoves that use 80 per cent less wood than traditional methods. As well as helping local families save money, the five-year project will save 250,000 tonnes of CO2-equivalent annually, which equates to the emissions released from energy used in 20,000 American homes in one year. If the CDM collapses, both Southern and Northern countries will lose out from the demise of such projects.

The current poor state of the CDM has come about primarily through the recent economic crisis experienced in various parts of world. The price of CERs has fallen from a pre-economic downturn high of US$20 to little more than US$3. The decline in industrial activity, coupled with the effects of over-generous emissions quotas issued early on in the CDM’s history, means that many companies no longer need to buy CERs to top up their emissions allowances. As a result, investment in CDM projects has fallen. However, once the economic crisis is over, we will be in a better state and will be able start addressing the carbon markets again.

In the long term, new initiatives and mechanisms may well be developed to replace the CDM. The European Cap-and-Trade Scheme already exists, and Japan, China, South Korea and Australia are developing similar systems. However, while these may be successful and interesting schemes, they will not be able to replace a global process where all governments have the same opportunities; they would be better off feeding into a global system. If at any time the CDM is recognised as not being the best mechanism through which to continue trading in the long-term, it can still fill the vacuum that will exist until a better initiative is in place. No other mechanism has ten years’ experience and lessons that can be shared.

The scientific evidence and reality of climate change-related catastrophes around the world are so strong that politicians and decision makers must take stronger action. The panel’s recommendations, laid out in the report, are aimed at securing stability in the global carbon markets, and ensuring the CDM adapts to new conditions, introduces operational reforms and is governed better. The CDM is, and will continue to be for some time, the best means of promoting practical collaboration among developing and developed nations and the private sector. I urge governments convening in Doha to elevate greenhouse gas emissions targets, adopt the report’s recommendations and safeguard the CDM for everyone’s sake.

Read the full report  - Climate change, carbon markets and the CDM: A call to action

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