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Environmental Studies

CDM- How Clean is the Clean Development Mechanism?

The Beginning
The Kyoto Protocol

United States: 
economy vs. ecology

International Reaction to US

Where India Stands

Citizen Science in India

References & Links

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CDM- How Clean Is The Clean Development Mechanism?


            The protocol aimed to develop a mechanism which would result in a worldwide reduction of emissions of carbon based gases by 10% below 1990 levels by 2012. Under the Protocol industrialized countries (Annex 1) are expected to cut their overall carbon emissions by at least 5% below 1990 levels in the commitment per ion 2008-2012. And the developing countries are to receive help from the industrialized nations in developing more efficient and greener technologies.

            The dispute over the Protocol is mainly about one of the alternate methods of accounting ones carbon credits. The protocol allows a certain trading mechanism: Clean Development Mechanism between developed and developing countries. There are major loopholes in the Protocol that would allow developed countries to continue emmiting the same amount of pollutants in the future as they do today. Many also feel that the protocol is governed more by economic concerns rather than ecological; it seems to be more of a trading agreement.  


            At the Third Conference of the Parties (COP 3) to the United Nations Framework Climate Change Convention (UNFCCC) held in Kyoto in November 1997, it was agreed that three flexibility mechanisms would be created in order to increase the number of methods available to Annex 1 Parties to reduce their GHG (green house gas)emissions. These ‘flexibilty mechanisms’ aroused special concern. These mechanisms were: Emissions Trading (ET), Joint Implementation (JI) and the Clean Development Mechanism (CDM)3. Joint implementation was proposed by the North and rejected by the South in the first round of negotiations. CDM is simply a more economically centered revision of joint implementation.

    It was agreed at Kyoto that an Executive Board would supervise the CDM and would be subject to the authority and guidance of the COP/MOP (MOP: Meeting of the Parties).           

            This mechanism conveniently allows developed countries to account for cuts in their emissions by developing ‘green’ projects in developing countries. Thus, they allow the buying or selling of national emissions or buying or selling of reduction units from projects. This mechanism is ‘as unclear as it is unclean’.[1]

    The major points, underlying a confusing article 12 of the Kyoto Protocol are[2];

1.    The primary purpose of CDM is not to assist the south, but to help the Annex1 parties meet their commitment to reduce emissions.

2.     The committed countries which have to curtail emissions can do so by investing in developed countries; and can do so by buying certified emission reduction and will thereby get credit for saving carbon dioxide emissions in their own balance sheet; the develping countries will not get any credit.

3.     Investment rating companies will rate the developing  countries based on their ‘compliance capability’. This will force developing countries to compete with each other to be the ‘cheapest and most efficient’; and thus offer themselves to annex 1 parties on a platter. [3]

4.      CDM is a market based instrument. The north may invest and buy carbon credits but there is no additional aid or technology transfer which is promised.

5.     Both public and private parties can be involved in carbon trading.


            The Clean Development Mechanism (CDM) depends on ensuring that projects in developing countries reduce emissions below a hypothetical baseline, ‘what would have happened without the project’. Unlike trading and Joint Implementation (JI), it also permits Industrialized Countries to increase their overall allowed emissions because of the ‘credits’ earned from the reductions in developing countries. The key issue is price; what is the cheapest price the south would be willing to pay for its emission units? The interest is to bargain for the cheapest and the most efficient deal. One approach to getting that is by developing a portfolio approach which drives each project towards competition. The World Bank’s prototype carbon fund was one of the first steps in that direction.

            With the Kyoto protocol, one thing is unambiguous- climate change or any other global issue cannot be dealt with in the ‘environmental lobby’, but must enter the world of money and trade.

            The World Bank offered to perform the role of the honest broker in these trade-offs. The proposal is to set up ‘ global markets for green house gas investments’; this fund develops a number of projects with potential to reduce global warming in countries which have a low contribution towards it in the first place. The Bank would then sell these projects to industrialized countries looking to reduce their own emissions. For example, if the United States were to assist India in developing more efficient power stations, the credit for reducing GG emissions would go to the States because they paid for it. While the World Bank looks at this proposal as a ‘win-win’ situation many beg to differ; there are three main reasons why trading credits is not a ‘win’ for anybody, according to Environmental organisations  in developing countries.

             1. Firstly, the developing countries do not get credit for the more efficient technologies that they are using. Once these countries have reached their maximum state of efficiency, there will be no more room for investments from industrialized countries and the latter will have to come back home; and the developing countries will have to manage the efficiency on their own. At this point in time costs to reduce carbon emissions will be even higher.

            2.  Secondly, it creates competition among the developing countries; for industrialized countries to invest in them. As a result they offer themselves on a platter, selling their rights as cheap as possible.

            3.  Thirdly, the Kyoto protocol is about the creation of new property rights regime for a global resource- the atmosphere.  But this ‘commodification’ of the atmosphere in the absence of property rights is unacceptable. The developing countries are being asked to sell their resource in the absence of property rights. The atmosphere is a global resource. These entitlements give room for low level polluters to sell their unused emissions to high level polluters.

[1] [2] the Centre for Science and Environment: briefing paper
[3] developing countries will be forced to compete because CDm is disguised to be a brilliant mechanism that will greatly benifit them with the influx of money coming fom international Governments and co-operations.



The Kyoto Protocol: more politics than science

The Kyoto Protocol- More Politics than Science

Last updated:  2/2/2006


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