The Clean Development Mechanism and Joint Implementation – “has been” climate mechanisms or foundations of the fight against climate change?
By Gareth Phillips
The Clean Development Mechanism (CDM) and Joint Implementation (JI) must feel like unloved offspring of the Kyoto Protocol, once billed as a significant part of the global flight against climate change but today, almost reviled by some countries and NGOs. What’s gone wrong, and what can we salvage from 20 years of investment?
Governments have realized that tackling climate change is not going to be easy. They are baulking at the potential costs of breaking the link between growth in GDP and growth in emissions and the global financial crisis has not helped. The science, whilst complicated, is no longer controversial and whilst it is not yet complete, it is already compelling but I accept that it is difficult for people to relate to it from the perspective of their day to day activities, especially in the West.
What’s more, the implications of climate change policies are very hard to predict and with any wrong step being communicated globally in minutes, Governments are understandably nervous about how to make progress. Meanwhile the so-called flexibility mechanisms of CDM, JI and to a degree, International Emissions Trading (IET) have taken the brunt of the criticism. Despite this, more and more national and regional governments are taking steps to define climate policies and on the international scene, the signatories to the UNFCCC (the Parties) are continuing to define the post-2020 “Durban Platform for Enhanced Action”. A couple of weeks ago, countries have completed a series of workshops on mechanisms and instruments which can be used to manage greenhouse gas emissions in the future and deliver on the 2⁰C commitment.
If we fast forward to 2050 and assume the workshops and negotiations deliver, then 99% of all our GHG emissions will be under control. Four instruments will be in use to achieve and maintain this goal:
– Carbon Market mechanisms – these are mechanisms which enable the international transfer of emission allowances or “unit” and they are critical for the effective involvement of the private sector in the fight against climate change. The mechanisms include a range of activities and cover a range of sources but critically they deliver real permanent and additional savings. In practice, the kinds of sources which can deliver real and permanent emissions savings are power stations (“stationary combustion units” in the jargon) and industrial facilities. We have learnt from the CDM that these sources can monitor and measure their emissions to a high level of accuracy, whilst we know that domestic emissions, for example, are much harder to quantify. We also learnt from JI and IET that additionality can only be delivered across multiple sources (i.e. at scale) through the creation of caps and the issuance of allowances onto a registry. Units which are emitted and units which are transferred internationally must be cancelled on the registry. The challenge is to get the allocation right
– but the CDM has a widely accepted “allocation” process in its baseline methodology and recently, standardized baselines. Hence, the model for the new market mechanism is a hybrid of CDM and JI which uses approved methodologies or “standardized baselines” as the basis for allocation and holds and cancels the units for individual facilities on a registry.
– Non-carbon market mechanisms are for sources which cannot easily deliver units which meet the criteria of real, permanent and additional – so these include sources such as land use change, certain transportation sectors other than shipping and aviation, and domestic emissions. That means that these sources are controlled through regulations, standards, voluntary action, taxes and grants etc. For example, vehicle emissions standards are used in the US to bring down emissions from the national car and light truck fleet. The split between carbon market and non-carbon market mechanisms is entirely defined by whether or not the emissions savings can meet the prescribed criteria.
– International treaties could play a role to address non-CO2 GHGs. Placing HFC23 under the Montreal Protocol is an obvious example which is already being progressed. But you could just as easily finance methane capture and destruction / utilization at landfills, coal mines and oil and gas fields around the world via an international treaty.
– And last but not least, CDM will, for a long time, have a role as a project based, i.e. facility level, activity for countries and sectors which lack the institutional capacity to implement any of the above.
Wind the clock back to today, when maybe 30% of global emissions are under some sort of control and you can see the scale of the task which is facing Governments. How do we get from where we are today to where we need to be in 2050 and beyond?
There is no question that we must build on the experience we have from CDM, JI and IET.
We know that environmental integrity is key to climate action and 20 years of expert input has failed to come up with any other ways of delivering integrity other than what we see today in these three mechanisms. Sure, we need to continue the reform of the CDM and ensure that it ceases to be a pure offset mechanism and as well as being a fantastic development tool, contributes to host country mitigation in a transparent manner. And yes, we need to address the ‘hot air’ which fed through to JI. And IET is not really working because the caps were not deep enough and the global recession meant we are on track to achieving them anyway.
But what we have learnt from these experiences is that we can design mechanisms and instruments which can put us on the road to where we need to be. Whilst the future of CDM, JI and IET in their current form may be under the spotlight, the knowledge, experience and skills we have gained is now, more than ever before, needed to solve the climate change existential crisis.
Baselines, monitoring, reporting and verification and technical solutions to reduce GHG emissions from measureable sources across the entire global economy are needed. We need to design and implement policies and measures to reduce emissions from ‘soft’ sectors where we cannot measure emissions cost effectively. And we need to design tools to finance all these different actions.
Flexibility mechanisms are alive and well, we may even be on the cusp of a new era for these proven abatement tools.
